August 5, 2022

Actually Pronouncing Specific Challenges In The Housing Market Can Be Hard To Do

Say “WUPPERTALER SCHWEBEBAHN” three times very fast to get you in the mood for the following issue of Housing Notes.

This photo was taken in 1913 and the railway is still in use.


[Wikipedia]

This is tangible proof that we can solve problems if we actually try, even if we can’t say “WUPPERTALER SCHWEBEBAHN” very well.


The Final Shout Out To My Columbia Grad Students

My final class of the summer semester was held yesterday Columbia University campus this week, and my ±150 students learned an important lesson!

Best wishes to all – you’re participating in the terrific MRED program and I wish all of you success in your journey.

But I digress…

Despite The Slowdown In NYC Metro Sales Volume, New Listings Are Falling

I’ve been the author of an expanding series of market reports for Douglas Elliman since 1994. These New Signed Contracts reports present the reported supply and demand for the month. They contain only contracts signed in the month and only inventory that entered the market that month.

What is clear now is that the new signed contract volume peaked in March and has been falling ever since. However, what is NOT widely understood is that new listing (not cumulative) inventory peaked at about the same time and has also been falling ever since:

Elliman Report: July 2022 New York New Signed Contracts

Here are a set of Manhattan charts derived from report data – the other markets can be found in our chart gallery.


No Matter How Hard The Fed Pushes, Rates Drift Lower, Now Below 5%

Mortgage rates fall below levels seen in mid-April. Per Sam Khater, Freddie Mac’s chief economist:

“Mortgage rates remained volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth,” said Sam Khater, Freddie Mac’s Chief Economist. “The high uncertainty surrounding inflation and other factors will likely cause rates to remain variable, especially as the Federal Reserve attempts to navigate the current economic environment.”

The Wall Street Journal had a good take on the falling rate phenomenon: Mortgage Rates Drop Below 5% for First Time Since April

MBA: Mortgage Payment To Rent Ratio – Both Jumped

I’m unsure about the value of tracking these metrics together since the two indicators seem to move in lockstep – perhaps that’s the point? The spread between the two is probably defined by the tax breaks for homeownership to equalize costs.

While Florida Sales Volume Is Easing, New Listings Are Falling Too

These New Signed Contracts reports present the reported supply and demand for the month. They contain only contracts signed in the month and only inventory that entered the market that month.

What is clear now is that the new signed contract volume peaked in March and has been falling ever since. However, as I mentioned earlier and NOT widely understood that new listing (not cumulative) inventory peaked at about the same time and has also been falling ever since:

Elliman Report: July 2022 Florida New Signed Contracts

Here are a set of Miami-Dade charts derived from report data – the other markets can be found in our chart gallery.

The West Coast Seems To Be The Most Home Equity Rich

Statista has a great chart using ATTOM data via Bloomberg that illustrates how much home prices surged in the west and Florida to the point where homeowners have unusually high equity. One can argue that in many of these locations, especially Florida where housing economies have been restructured by remote work.

Rick Sharga, executive vice president of market intelligence at Attom, said in a statement: “After 124 consecutive months of home price increases, it’s no surprise that the percentage of equity rich homes is the highest we’ve ever seen, and that the percentage of seriously underwater loans is the lowest. While home price appreciation appears to be slowing down due to higher interest rates on mortgage loans, it seems likely that homeowners will continue to build on the record amount of equity they have for the rest of 2022.”

Although Southern California Sales Are Falling, So Are New Listings

These New Signed Contracts reports present the reported supply and demand for the month. They contain only contracts signed in the month and only inventory that entered the market that month.

What is clear now is that the new signed contract volume peaked in the spring and new inventory has been falling:

Elliman Report: July 2022 California New Signed Contracts

Here are a set of LA charts derived from report data – the other markets can be found in our chart gallery.


Home Showings Declined From Record-Highs

ShowingTime, that little button inserted in seemingly every MLS system, is another useful way to track market momentum. Their regional reports can be found here. I’ve always had a fondness for new unique and credible ways to track housing, even more so because I got to keynote their first conference!

Getting Graphic


My favorite charts of the week of our own making

My favorite charts of the week made by others


Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

TAF Spent $1.4M Of Appraiser’s Hard-earned Money On Lobbying Fees!

To set the stage of the complete disdain for the appraisal industry and the public trust…

In the 2019 TAF 990 Filing, and based on the assumption their compensation has increased in the last three years, The two leaders of TAF Dave & Kelly, run a 12 employee entity and make a staggering ±$750,000 annually. No wonder they don’t want to accept grant money to enable oversight in a not-for-profit!


But it gets worse….

TAF spent $1.4 million dollars lobbying over the past four years using the revenue they take in from appraisers in what amounts to a bureaucratic money making institution that is supposed to be a not-for-profit.


What are they lobbying for? I can only assume it is to keep the status quo. I urge TAF to share with the world what they are spending all that money on. Perhaps I’ll get another chickenshit letter that I can frame in my office. Remember this is the leadership that thought sending this bat-shit crazy letter was a good idea.

Hat tip to commenter “Baggins” on my Appraiser Blogs post “TAF Charging for Misleading Classes” for sharing the links to the 990!

AI’s Sham Petition Process Wins The Second Time In Three Years, So JA Stays In Power Forever

I don’t know how good of an appraiser he was, but AI CEO Jim Amorin’s latest flavor of the sham petition process worked, proving he is a master of institutional takeovers. All the FOJs that feed at the trough must be thrilled. Paula Konikoff was announced as the winner. If you remember, she was the national nominating committee’s selection, likely because one of the regions was not included in the vote. Crazy, right?

I hear she is a very good commercial appraiser and authored a book on Arbitration that AI is marketing for her, but as an FOJ, has a significant lack of enthusiasm for residential appraisers as I’ve discussed before.

In other words, because there are no apparent public efforts to pull in more residential appraisers, AI will continue to ignore them as part of the institutional zeitgeist. Just think about the residential committee formed in 2017 by JA to offset the ire he caused from taking all local chapter funds. JA loaded the panel with several residential people I respect and several I think are poison for the residential appraiser profession; the committee did nothing tangible, reported nothing, and communicated nothing to the membership and the public. It was simply a stunt to quell the membership outrage at the time.

AI’s treatment of designations is embedded with an inflationary effort that continues to devalue the SRA to the point where it means nearly nothing to anyone outside of AI. Of course, through inaction, the MAI brand is already deteriorating.

OFT (One Final Thought)

Karen Chesleigh, a friend of mine for twenty years, a senior executive at Douglas Elliman, and the wife of one of our appraisers passed unexpectedly this week. The Go Fund Me page A Legacy of Love: Honoring Karen Chesleigh whose title always makes me tear up, says it all. It has been wonderful to see the outpouring of support. Please visit:


Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll be pronounceable;
  • You’ll pronounce things more accurately;
  • And I’ll be more pronounced decisions.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive, and it helps me craft the following week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


July 29, 2022

Spacing Out On Inflation And Crying About The Housing Market Pause

No, this isn’t CGI.

A Weekly Shout Out To My Columbia Grad Students

Our third class of the summer semester was held on the Columbia University campus this week, and my ±150 students energetically scrambled to class on time…

…and were engaged in conversations about the recent market pivot through the slew of charts I shared. Also, to my students: don’t worry about the Appraiserville section near the bottom of this newsletter but you may find it interesting!

See you next week!

But I digress…

The Hamptons Market Sets Price Records As Sales Come Down From Sugar High

I’ve been the author of an expanding series of market reports for Douglas Elliman real estate since 1994. Covering the East End of Long Island, namely The Hamptons and North Fork, has been especially challenging. One of the characteristics of The Hamptons is that it has long been closely correlated with Manhattan real estate trends until the pandemic era. While Manhattan slumped after the pandemic lockdown ended, the East End soared, largely because of the new found ability to work remotely. The Hamptons shifted from a luxury second home vacation market to a “co-primary” or alternative primary market.

The surge in activity is now coming to an end as the Fed continues to batter the economy with a baseball bat.

Bloomberg shared our data through an article and charts (a chart two-fer!!)

Prices are at record levels…

But listings are starting to rise (but remain very low)…

There was other good coverage on the state of the market out east worth reading, including:

  • Hot Long Island housing market shows signs of slowdown in second quarter [Newsday]

  • Low Supply and Rising Rates Slow Hamptons Sales, but Prices Are Still Going up [Mansion Global]

  • Long Island, Hamptons sales slow and listings tick up [The Real Deal]

________________________________________________
HAMPTONS HIGHLIGHTS

Elliman Report: Q2-2022 Hamptons Sales

“Price trends pressed higher as sales volume slowed, responding to a combination of lack of supply and rising mortgage rates.”

  • Median sales price has reached both record and near-record levels for nine consecutive quarters
  • Bidding wars accounted for one out of three sales during the quarter
  • Listing inventory rose quarter over quarter from a new low to the third lowest on record
  • The number of sales fell sharply year over year, restrained by a combination of low supply and rising mortgage rates

________________________________________________
NORTH FORK HIGHLIGHTS

Elliman Report: Q2-2022 North Fork Sales

“The market was in sync with its southern counterpart with record prices, but lower sales volume caused by limited supply and growing economic uncertainty.”

  • Median sales price has reached both record and near-record levels for eight consecutive quarters
  • Bidding wars accounted for nearly one out of two sales during the quarter
  • Listing inventory rose quarter over quarter but remained roughly one-third of normal levels
  • The number of sales declined year over year, restrained by a combination of low supply and rising mortgage rates

[Business of Home Podcast] Jonathan Miller on rising mortgage rates and the folly of Zestimates

I joined Dennis Scully on The Business of Home podcast to talk about the changes to housing in the pandemic era. Their audience covers a lot of the verticals that rely on the performance of the housing market. It was a fun conversation.

The pandemic has shifted the housing market in fundamental ways that are still playing out, says Jonathan Miller, president and CEO of Miller Samuel Real Estate Appraisers & Consultants. “This doesn’t seem like a reactive, short-term move,” he tells Dennis Scully on this week’s episode of The Business of Home Podcast. “This seems more structural.”


[click on image to play]

Long Island Prices Set Records As Sales Continue To Cool

Sales have been slowing year over year for the past three quarters but the reasons for the slowdown prior to the current quarter was the collapse of listing inventory. However with the spike in mortgage rates at the beginning of the spring market, sales are slowing because mortgage rates have essentially doubled since the end of December, crushing affordability.

Newsday produced an awesome summary table in their coverage of the second quarter results:

________________________________________________
LONG ISLAND HIGHLIGHTS

Elliman Report: Q2-2022 Long Island Sales

“Price trends pressed higher as sales volume slowed, responding to a combination of lack of supply and rising mortgage rates.”

  • Median sales price has reached both record and near-record levels for thirteen consecutive quarters
  • Bidding wars rose to a new high and accounted for six of ten sales during the quarter
  • Listing inventory rose sharply quarter over quarter but was half the pre-pandemic level
  • Luxury median and average sales prices reached new highs and remain well-above pre-pandemic levels
  • Luxury listing inventory fell year over year for the tenth straight quarter to the fourth lowest
    level on record
  • Luxury bidding wars rose to a new high for the eighth time in ten quarters

An Important Remind That The Repeat Sales Methodology Has No Seasons

Housing has seasons.

That’s a fact. It’s in the data. Yet the repeat sales methodology as an academic exercise does not. It is used as a leading economic indicator and is loved by academia but it has no real place in market analysis because of the reporting lag is much longer than aggregating methods and takes a very top level view, unable to drill down reliably to local submarkets.

I had this thought when I was reading the essential Calculated Risk Substack and saw this chart. Even on a national level, the NAR’s Existing Home Sales approach is much more nuanced. This is a relative comparison only. I’m not suggesting you use national data to illustrate local market trends!


Ritholtz: The Great Resignation Is Kaput

My friend and prolific econ blogger/writer/podcaster/wealth manager makes the case that with a weaker economy and higher unemployment, consumers won’t have the same work flexibility they recently enjoyed.

Perhaps the most eye-opening observation for me was that wages since the 1960s have been deflationary (they haven’t been keeping up with inflation), and now they have become inflationary. Fascinating. But I’m happy to see real wage growth and a possible slow down in the erosion of the middle class.

C’mon, Tree Houses Are Overrated

Looking Forward To Jim’s Note

I’ve known Jim Duncan, a Realtor in Charlottesville, VA, vicariously through our respective online musings since 2005ish. He stood out to me among the noise but my wife told me anyone you only know online are “fake friends” until you meet them in person.

Well I did meet Jim in person eventually and did a video interview with him a few years ago for a podcast. About two years ago he added a substack to his efforts. I always look forward to receiving his thoughts and absorbing his take on real estate and being human.

I highly recommend his substack: Jim’s Note. “Charlottesville, Virginia real estate trends, insight, stories. For people, not Realtors.”

My Photo Shoot At The Waldorf!

I was fortunate to have my photos taken at the Towers of the Waldorf-Astoria | Park Avenue Condominiums in Manhattan by Sara Fox. Fun!


Getting Graphic


My favorite charts of the week of our own making

My favorite charts of the week made by others

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

TAF Admits Their Fair Housing Course Is Misleading But Opts To Keep Using It Because, You Know, Money

Last week I shared the ASC letter sent to state appraiser regulatory officials pointing out that TAF’s USPAP update course is factually inaccurate and puts appraisers in legal jeopardy if they follow it.

I wanted to point out that TAF has known this course was misleading since January as presented by fair housing experts but because they have decided to lay low to reduce their exposure to the ongoing flood of criticism, it finally took the above ASC letter sent last week to get them to potentially do something about it.

I was surfing the Association of Appraiser Regulatory Officials (AARO) web site, and found the “TAF Letter to State Regulators” which has a link to the July 15 2022-23 7-Hour National USPAP Update Course letter. What I thought was odd was the fact that this letter does not appear on the TAF press section as of 12:30 pm today:

This letter was sent out to the same State Appraiser Regulatory officials that last week’s ASC letter was sent to. My guess was they wanted to respond to the states but didn’t want the public or appraisers to see they were admitting the flaws of their course.

While they say “We are sensitive to the concerns which have been raised regarding the 90-minute section of the course focused on bias as it relates to USPAP” they have not done anything about it! They’ve known about the misleading information in the course since January, so how sensitive to any concerns can they be? They are teaching appraisers misleading information. Shouldn’t that warrant a pull down of the course until it is fixed? And seriously, how long would it take to fix it, a few weeks?

Instead of having “retained the preeminent fair housing law firm Relman Colfax” firm to assist the review, they should have hired them before launching the course, right? And by the way, when you use a word like “preeminant” on a vendor, you are merely trying to score credibility points even though the problem was made public more than six months ago. Apparently, the law firm has not identified any issues, but they will update the course material anyway. In other words, TAF is dancing around the issue and agrees that the course needs to be updated – that’s an admission that the existing course is flawed. They haven’t provided any specific counters to the January report yet.

Before the new Fair Housing/USPAP course was rushed out the door by TAF and Dave exclaimed in his newsletter how “excited” they were about the course, why does Dave think TAF is a fair housing expert? Remember that TAF hired that preeminent firm AFTER the NFHA January report criticizing the course accuracy.

In the third paragraph of the TAF letter, they say:

Based on the guidance we have received, this course of action will ensure all students receive the same, up-to-date information and precludes the need to remove the course from the marketplace and unnecessarily disrupt the continuing education of appraisers.

This letter says NOTHING about when this update will take place!

Will it take another six months to pull a misleading course from the states? I’m sure this law firm has an hourly rate at the top end of the scale given their preeminent prefix. Given the six month delay so far and no specific date for an update and certainly no ambition to pull the course, do they just need to gin up their course revenue to pay for the legal fees? Six months of legal fees don’t suggest a small amount of money since TAF said they are sensitive to the issue and is going to update the course so its no longer misleading as it continues to generate revenue for TAF.

As a result, through incompetence, TAF has created massive confusion among the entire industry by:

  • Not recognizing they are not fair housing experts
  • Not engaging fair housing experts to write the course
  • Not engaging fair housing experts to review the course before its release
  • Not pulling a misleading course immediately after it was publicly pointed out by fair housing experts
  • Not providing any tangible response until ASC sent a note to state regulators
  • Requiring appraisers to take a USPAP update course yet USPAP has not been updated!!

And it gets worse…

Why is this letter coming from Dave Bunton, the director of TAF and not from Brad Swinney, the current chair of the AQB? (Screenshot taken today):


The executive team at TAF is separate from the technical boards (AQB and ASB) and Dave has always made a point that the technical boards are independent. Why would Dave usurp Brad? I can only assume that either Brad did not agree with this response, or because of the pressure closing in on TAF, Dave is no longer thinking like a savvy technocrat and more like a monarch under immense pressure. Why on earth would Dave be the one to speak to this issue and not the AQB?

This is why TAF needs oversight. This is a reactive and political response as they are not looking out for the industry nor care about the public trust.

TAF currently has no real oversight but this is not how Congress intended them to operate. The original concept was that TAF would be issued grant money from ASC each year with “strings” attached – those “strings” were intended to be the oversight. A few years ago TAF figured out a loophole and has been raising money off the backs of appraisers to self-fund and be independent. As a non-profit, TAF has around $12 million in the bank? For what? As they say in their 2030 Vision Statement: “Financial Independence.”

The Appraisal Institute Was Reinstated Back In March And Given $500K To Develop PAREA

I saw this press release on the TAF site and was reminded of the money connection. As TAF went on the offensive to aggressively tell ASC to f*ck off with their bat-shit crazy letter they needed an ally so they re-engaged with the Appraisal Institute. On the surface this is a great idea except for the fact that Dave and Jim are mortal enemies and this was a marriage of convenience. After 12 years of petty and serious fighting, how did they become best friends? What better way to get AI back as a sponsoring organization than pay them $500K to pay them to develop a PAREA course? Change my mind. Incidentally I’d be remiss without mentioning the TAF chickenshit letter too.

Before writing the PAREA course, here are some serious questions that should be thought through:

  • How much will this cost to the end user?
  • How many states will accept it?
  • How will it fit into USPAP?
  • How will it improve diversity in an industry that is 98% white?
The AI Sham Petition Process Results Will Be Determined On Thursday August 4th

Last week I shared a letter about someone who had direct experience working with FOJ and the NNC choice Paula Konikoff and it did not sound very pleasant. I’m hearing that there have been letters of opposition to her nomination. Supposedly there were 2 letters from the Savannah Chapter, 2 from Florida, 1 from Indiana, 1 from Nevada, 1 from New York and 1 from Pennsylvania. I haven’t seen any of them myself.

I was sent some readings about Paula. Here and here.

And Rick Borges, past AI President and someone who has had a business relationship with Paula for quite a while, picked her and pushed for her on the NNC. Why is a former president (he’s not the Chairman of NNC) on the NNC? Former presidents carry more weight with board members and executives at AI than those who haven’t. Are there so few members in AI now that they aren’t able to pick people with fresh ideas? There continues to be a closed group of people that hold multiple positions to keep the CEO in power (FOJs). This is the same pattern we see at TAF.

And worst of all, not all ten regions were represented on the NNC vote. Fascinating. I suspect that’s why the NNC was able to flip to an FOJ.

This truly is a sham and it is probably the last opportunity non-FOJs will have to get the current CEO out of office. Again, why isn’t the Illinois state prosecutors looking into this institutional takeover?

ANNOUNCEMENT: August 1, The Third Annual Residential Roundtable At House of Blues, Las Vegas.

While I realize this is late notice, if you happen to be in Las Vegas, this sounds like a fantastic event for residential appraisers. James Heaslet, Department of Veterans Affairs Chief Appraiser (and a champion of residential appraisers), Jeff Hogan, Vice President, Veros and Craig Capella, Member at Franklin, Greenswag, Channon & Capilla, LLC and former prosecutor for the State of Illinois Department of Financial and Professional Regulation.


Here is some information on the organization. When they meet, they draw several hundred residential appraisers and have 1,000 or more attend their video events. It is a free event to:

  • Educate residential appraisers
  • To enable experienced residential appraisers to give back to the profession they love
  • Open to all residential appraisers, not just members of AI

Here is a recap from NRT:

One of the reasons NRT is growing rapidly is the absence of any meaningful residential appraisal representation at the Appraisal Institute. For AI, its all about commercial appraisers. They can’t have it both ways. If AI wants to represent residential members, there has to be a reason for residential appraisers to join. Remember that residential committee formed in 2017 by JA and his FOJs? Of course most of you won’t remember since its literally done nothing for residential appraisers. It was created when JA wanted to take all the chapter money and control it (dubbed “The Taking”). This is why the professional value of the SRA designation has collapsed over the past decade. Designations require brand building and real effort. Lets help residential upstart organizations like NRT thrive in the absence of any AI support.

Cosmic Cobra Guy: West Virginia Appraiser Lori Noble Pivots to Shining Light On Occupational Regulation (hint: USPAP)

My good friend will help make a difference to all appraisers as well as other occupations in her new position. As Jeremy says below, we wish her the very best!

*** FOR IMMEDIATE RELEASE ***

APPRAISER WILL HELP EXPOSE OCCUPATIONAL LICENSING ABUSES NATIONWIDE

(July 29, 2022) – Her experience as a licensed real property appraiser in West Virginia turned out to be the perfect training ground for the study of public corruption, restraint of trade and government overreach. Who would have thought it?

After 27 years of being whipsawed by West Virginia’s notorious appraiser-licensing apparatus, the Appraisal Foundation – and the latter’s continually changing copyrighted standards – and a complicit federal monitor, Lori Noble has become truly inspired – inspired to warn the public of the dangers of uncontrolled growth in occupational licensing.

In July, the Daniels-based appraiser wrapped up her final assignment as a mortgage appraiser and began a new chapter in her life. She will serve as outreach and public relations coordinator at the Knee Center for the Study of Occupational Regulation. Housed at the University of West Virginia’s John Chambers College of Business and Economics, its mission is to provide information to citizens, policymakers and researchers about the extent, scope and effects of occupational regulation.

There she will help to catalogue and report on occupational licensing across the country.

“She has lived the ultimate cautionary tale,” said appraiser-author Jeremy Bagott. “She’s witnessed firsthand a licensing scheme run amok. You can’t get this from a book. Her career as a licensed real property appraiser in West Virginia will serve her well. She’s developed an eagle eye for identifying fiefdoms, restraint of trade, regulatory capture, conflicts of interest, self-dealing, government zealotry and rogue boards and commissions.”

Noble’s thinking over the years has evolved. She went from viewing occupational licensing as a necessary means to protect the safety and welfare of the public to a cynical tool promoted by established businesses to erect barriers against innovation and competition. This isn’t the case in all professions, she says, but it is in far too many.

Recently, working with lead sponsor state Delegate Brandon Steele, along with Delegates Geoff Foster and Josh Booth, she helped bring about West Virginia House Bill 4285, a long-overdue statute that was signed into law in April.

The statute helps counter cronyism. It attempts to keep the board from maintaining a perpetual scarcity of appraisers in the state, which the board has done by slow-walking applications for years. All West Virginians indirectly paid the price for the artificial scarcity. The new law now requires the board to provide applicants a written statement within 15 calendar days of its decision to deny an applicant’s license or renewal request.

“The West Virginia appraiser licensing board has been a petri dish, incubating all manner of petty corruption over the years,” said Bagott.

In an attempt to quash one reported scheme, the new law bans any member of the West Virginia Real Estate Appraiser Licensing and Certification Board from disciplining a licensee and then hiring on as an expert witness in a lawsuit involving the licensee. The statute attempts to remove the board members’ financial incentive to penalize appraisers by eliminating the possibility of future revenue attached to their disciplinary actions.

Noble points out that in the 1950s, only about 5% of all occupations required licensing or certification. Today, that percentage has grown to about one-quarter of all U.S. jobs. Occupational licensing and other onerous regulations now limit access to diverse professions like dance instructor, hair braider, manicurist, tour guide, interior designer and many more.

She also points out the way in which occupational licensing limits mobility of America’s once famously mobile workforce. If one spouse is in a licensed profession, the family may not be able to simply pull up stakes and move to accommodate the job prospects of the other spouse because of licensing concerns in the new state. It keeps workers from going to where the jobs are. It also disproportionately harms military spouses.

Even in professions where most would agree licensing makes sense, the requirements of licensing are often both burdensome and aimed at protecting the market share of licensees, rather than addressing public health and safety.

Early in her career, esoteric concepts like “regulatory capture” were not on her radar by name, but the deadweight loss she experienced due to increasingly gratuitous regulations placed on real property appraisers made her want to understand the phenomenon and take action.

“I’m grateful to the many who’ve traveled the problem-solving journey with me,” she said. “I’ll be working on research papers, helping to build a national database of occupational licensing across the United States and taking intelligence to policy makers to help them make informed decisions.”

We wish her the very best.

# #


Established in 2016, The Knee Center for the Study of Occupational Regulation (CSOR) is an academic research center currently within the John Chambers College of Business and Economics at West Virginia University. The Knee Center for the Study of Occupational Regulation offers student fellows the opportunity to conduct, analyze, and present research that goes toward developing a national database of occupational regulation, focusing on healthcare and other occupations.

# #


Jeremy Bagott, a licensed appraiser and former newspaperman, sends up a warning flare in his 2019 book “Dispatches from the Cosmic Cobra Breeding Farm.” He takes the reader deep inside a tiny Washington, D.C., foundation that has managed to have its copyrighted code of conduct enshrined in federal and state law. All 50 states, even the U.S. territories of Guam and the Northern Mariana Islands, now enforce it. The nonprofit, known as the Appraisal Foundation, has parlayed the arrangement into a lucrative publishing cartel. In his journey, the author uncovers a troubling trend deep in the plumbing of government.

OFT (One Final Thought)

While this happened ten days ago, it still gets to me when I watch it. Wait for it.

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll cry;
  • You’ll cry;
  • And I’ll cry.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive, and it helps me craft the following week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


July 22, 2022

Housing Is Pivoting So Look Carefully At The Signs

Literally, look at the signs. There is nothing more satisfying than a sign war. Read the thread.


A Weekly Shout Out To My Columbia Grad Students

Our second class of the summer semester was held on the Columbia University campus this week, and as usual, my ±150 students survived my three hour lecture and shared many additional insights. One of the charts that got the most attention was this one:

Looking at rents alone doesn’t necessarily provide enough context to understand the current condition:

And best of all, everyone was on time! Keep it up!

But I digress…

The Greenwich Housing Market Experienced The Last Gasps Of Its Pandemic Frenzy

I’m the author of an expanding series of U.S. market reports since 1994 for Douglas Elliman Real Estate. You can sign-up to receive them (and other cool stuff)here.

One of my favorite markets to cover has been Greenwich Connecticut. The reason has been the extent that luxury became disconnected from market conditions was astonishing. The specific period in question was from the peak of the housing bubble to several years before the pandemic began.

Bloomberg had a great piece on what is happening now and a pretty darn cool chart.


________________________________________________
GREENWICH, CT SALES HIGHLIGHTS

Elliman Report: Q2-2022 Greenwich Sales

“The number of sales declined but remained well above pre-pandemic levels.”

  • Single family sales fell at the highest rate on record from the year-ago boom, but sales remained well-above pre-pandemic levels
  • Single family median sales price hasn’t seen a year-over-year decline in more than three years
  • Condo bidding wars rose to the second-highest share on record, accounting for nearly three out of ten sales
  • Luxury market bidding wars nearly doubled annually to the second highest share on record
  • Luxury median sales price rose annually for the eighth time in nine quarters


________________________________________________
FAIRFIELD COUNTY, CT SALES HIGHLIGHTS

Elliman Report: Q2-2022 Fairfield County Sales

“Listing inventory nearly doubled quarter over quarter but still remained unusually low.”

  • Bidding war market share county-wide rose to a new high, more than two-thirds of all sales
  • Listing inventory nearly doubled quarter over quarter but remained historically low
  • Overall price trend indicators increased annually and continued to be well above pre-pandemic levels
  • Luxury listing inventory rose quarter over quarter for the first time during the pandemic era
  • Luxury listing discount fell to a new low, reflecting an overall premium paid because of the record market share of bidding wars
  • Luxury median sales price was the second highest on record and nearly fifty percent higher than pre-pandemic

Mega (Wall Street) Single Family Investors Are NOT The Dominators As Widely Assumed

From Calculated Risk’s Substack: Record Single Family Investor Buying in Q1, Possible evidence of Slowdown in Q2

For context on single family home investors, this chart is spectacularly clarifying since Wall Street is NOT dominating the space, it’s small and median sized investors.


My good friend and leading U.S. housing analyst Ivy Zelman describes the situation between builders and investors like this:

[Investors] are the ones that are canceling too, because when I was chatting with the builder in Boise and home prices are up 70%. They’re like, “Oh yeah, we’re seeing price cuts. We’re seeing incentives. We’re seeing huge cancellations”. So, when people are cancelling, are they saying why? And this builder said, oh, they’re just the investors that you know, realize home prices have peaked…

NY1 – Converting Office Space To Rentals Could Help, But Not Cost Effective

Here’s a smart piece on the pros and cons of converting office buildings into apartments by NY1.


Kastle Charts Show Rising Office Occupancy

I’ve shared these charts on Housing Notes before. Kastle tracks and aggregates security card swipes in the 2,600 U.S. buildings they have systems installed. I presented the first chart to my Columbia grad class this week and several observations were shared with me including:

The pre-covid numbers weren’t much higher than 60% and the U.S. sample size is relatively small.

To both points, I’d suggest this – during the pandemic there was not a sense of how much offices in commercial towers were being used. This data series, a brilliant marketing tool for Kastle, is just about the only source on the topic that is out there. So its fine to use as long as its messaging is not over-weighted for its importance.


For Those You Not Familiar With How Steep The Upward Trajectory Of U.S. Housing Prices Are…

The following WSJ chart look like a sustainable trend? Of course not. The jump in mortgage rates should be welcomed since lower rates in this cycle have essentially made housing less affordable!

So of course, sales are beginning to fall…


Incidentally, I love this explainer piece on GRID: What is happening with the housing market? Why big interest rate hikes are scrambling an already strange real estate landscape.

The NY Post Is Having Fun Illustrating The Surge In Rental Prices

Gotta love the comparison made by the New York Post in this: What $5,000 rent in NYC gets you now vs. last year — the difference is shocking


VIDEO: 2022 NAR Report On International Buyers

NAR just published their 2022 International Transactions in U.S. Residential Real Estate report.

While surveys as a rule are a big drop in reliability from actual transaction data, its just about all there is available on the topic.


Here’s an interview I did this week with a Chinese-American television outlet on the topic. They dug up clips of me teaching real estate at Columbia! Gotta love the extra step.


Bloomberg has a good break out of the patterns:


VIDEO More Housing Market Pivot Talk (Bay Area v. NYC)

Here is the second interview I did with NTD this week.


The Housing Shortage Explained: Its No Longer Exclusive To The Coasts

There is a terrific piece in The New York Times’ Upshot section: The Housing Shortage Isn’t Just a Coastal Crisis Anymore:

Getting Graphic


My favorite charts of the week of our own making

My favorite charts of the week made by others

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

TAF Is Making Appraisers Pay To Be Misleading And Exposed To Legal Jeopardy

From the organization that brought you the bat-shit crazy letter and the chickenshit letter, they are charging for classes that are misleading.

ASC just sent a letter to state appraiser regulatory officials pointing out that the USPAP update course is factually inaccurate and puts appraisers in legal jeopardy if they follow it.

Letter From Jim Park, Director ASC to State Appraiser Regulatory Officials: 2022-2023 7-Hour National USPAP Update Course


The letter references findings and recommendations found in the already presented report 6 months ago: Identifying Bias and Barriers, Promoting Equity: An Analysis of the USPAP Standards and Appraiser Qualifications Criteria

This is the meat & potatoes of the July 8, 2022 ASC letter:

The new fair housing module contained in the 7-hour continuing education course reflects welcome effort, but fails to provide accurate and effective guidance to appraisers. The module provides an inaccurate summary of fair housing law, while failing to include any content from the applicable statutes themselves (namely, the federal Fair Housing Act) or its implementing regulations. It also fails to provide specific guidance and examples of what is prohibited by law. This outcome is consistent with views expressed in interviews conducted with members of national appraisal organizations. They observed that The Appraisal Foundation has not produced accurate and effective guidance with respect to fair housing issues (and other topics of a legal nature, such as privacy laws).

ASC is essentially telling the 55 states and territories they don’t need to enforce this aspect of USPAP because the TAF course is inaccurate. In fact, the NFHA report that came out last January 2022 goes into specifics on why TAF’s effort is misleading. Yet TAF hasn’t pulled the USPAP class because it is their cash cow.

Why do we need a USPAP update class at all in this cycle? Key word here is “update” since we are in the third year of the two year renewal cycle “extended because of COVID” (lol), and we are still required to take the update class.

Let me summarize the situation for you:

  • There have been no changes to USPAP in more than two years yet they have no problem charging appraisers to take an “Update” class to maintain certification. This is the definition of both a money grab and busy work, both of which come out of the appraiser’s pocket and takes away from time they could be making a living.

  • The fair housing module to the class is factually innaccurate and can place an appraiser in legal jeopardy as a result.

Beyond that, TAF’s focus of the update class really is:

“How do I not get accused of bias?”

…rather than giving appraisers the tools they need to understand things like the difference between implicit and explicit bias.

Echoes of misleading

Does this situation sound familiar? It should. Remember when I called out TAF more than a year ago for their reckless use of the term “misleading,” because they doubled down by saying either “unintentional” or “intentional” misleading statements could place your license in jeopardy. They placed the appraiser on the hook in reference to the term “misleading” and are too lazy to take it out immediately until it is fixed or never put back in. How hard is that to do? How many minutes would it take to do their actual job on fixing the “misleading definition?” My wild guess would be 5-10 minutes.

As always, this addition to USPAP was done without legal review which is one of the core problems of the USPAP process. TAF has now brought in a law firm, but my goodness, this has been going on for more than three decades and the interpretation of “misleading” is still on the books?

For a small staff, this is an incredibly bloated institution.

Sham Petition Process Part, Year 3 [SPP3] Is Gearing Up For An August Showdown

Jim Amorin, the driver of all these creative machinations to keep his job, has come up with a doozy this year. (I continue to marvel out how his actions have not brought in law enforcement for the “taking” of an organization).

Jim Amorin and his FOJs came up with a whopper this year: AI Board to Consider 5 Candidates for 2023 Vice President in August

This year Paula Konikoff was submitted as a candidate by the National Nominating Committee, which represents a choice from the membership – although I get the impression that the NNC has been subjected to backroom glad-handing over the past year. What’s different this year is the vetted candidate is not being left twisting in the wind with reputational damage while Amorin desperately tries to maneuver around the process to save his skin.

However, this year, the gloves are off, and the sham petition process is no longer in hiding. There are now four more candidates being added to the list. I don’t really know which team each of these nominees is on yet, but it is clear that the fairness of the process has been destroyed and politicized to keep the CEO in his wildly overpaid position as well as the lackies that hang on his coattails for treats.

Things are a little different this year – the NNC candidate sounds like someone with a tremendous amount of appraisal skills, but someone with ZERO leadership and people skills per someone with first-hand experiences – and their first-hand experience was a doozy. I understand there are several other similar-themed letters, but I haven’t seen them yet. Here’s a redacted letter submitted to AI:

The bottom line here is AI is a hot mess.

OFT (One Final Thought)

When I learned that Rage Against The Machine had a new album out, I went down the rabbit hole, and then needed to come down from that intensive anger rock high to something smooth and relaxing. Pink Panther was it. Half of the fun of this video was watching the musicians stand up and sit down for their solos!

Brilliant Idea #1


If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll read more signage;
  • You’ll be more aware of signage;
  • And I’ll try to soften my rage against the machine.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


July 15, 2022

Lawn Chair Precision Shows Us Folding Chair Sanity In A La-Z-Boy Housing World

Why? Because they can – and for the past 36 years. Arguably the past four months of fed policy have felt like we’ve been carrying a La-Z-Boy for 36 years.


A Weekly Shout Out To My Columbia Grad Students

Our first class of the summer semester was held on the Columbia University campus this week, and my ±150 students powered through a fire alarm and the summer heat to survive my three hour lecture (with an arguably inadequate supply of dad jokes). They were eager to absorb and peppered me with terrific questions and observations. Perhaps the biggest lesson of the day was that being on time, means being 5 minutes early!

See you next week!

But I digress…

This week’s read is a short one but long on charts!

Manhattan Rental Frenzy Despite Office Towers That Are 60% Empty

I’ve been the author of an expanding series of market reports for Douglas Elliman Real Estate since 1994. Douglas Elliman just published our June rental market research and the results were record-setting.

While all three boroughs tracked showed price records for average and median rents, there is likely more room for addition growth. Manhattan average rents reached the $5,000 threshold for the first time in history, mainly because mortgage rates are surging after the pivot in the fed policy this spring. Because mortgage underwriting hasn’t normalized, remaining tighter than normal since the great financial crisis, would-be home buyers priced out of the market are being pushed into the already tight rental market, making it even tighter. On top of that, New York City leasing season doesn’t;t peak until August, so we anticipate more demand in the coming months, pushing rents up further.

Bloomberg had a cool chart median rent chart cracking the $4K threshold last month:

And that article became the fifth most read article world wide on the 350K Bloomberg Terminals. I guess the world worries about their rents.

But there were other charts like this monster from the NY Post.

And this one from Axios that shows quite a spike from the depths of the pandemic.

Elliman Report: June 2022 Manhattan, Brooklyn & Queens

______________________________________________________
MANHATTAN RENTAL MARKET HIGHLIGHTS

“Average rent reached the $5,000 threshold for the first time as the vacancy rate remained under 2%.”

  • Average rent reached the $5,000 threshold for the first time as median rent set a record for the fifth straight month
  • New leases expanded month over month for the fifth consecutive time
  • The vacancy rate remained under two percent for the seventh straight month
  • Doorman’s net effective median rose to a record as landlord concessions fell to a new low
  • Non-doorman net effective median rent reached a new high for the third straight month
  • Luxury net effective median rent rose to a new high as landlord concessions fell to a new low
  • Luxury market share of bidding wars exceeded non-luxury market share of bidding wars for the fourth straight month

______________________________________________________
BROOKLYN RENTAL MARKET HIGHLIGHTS

“Net effective median rent reached a new high for the second straight month as landlord concession continued to fall.”

  • Net effective median rent rose to a new high for the second straight month
  • Landlord concession market share fell annually for the thirteenth straight month
  • Bidding war market share occurred in more than one out of five leases for the fourth consecutive month

______________________________________________________
QUEENS RENTAL MARKET HIGHLIGHTS

[Northwest Region]
“Rental prices remained elevated as the market share of landlord concessions continued to fall.”

  • Net effective median rent and median rent reached their second-highest levels on record
  • Landlord concession market share fell to its lowest in nearly six years
  • While new lease signings fell annually, they were higher than the same period three years ago pre-pandemic

Mortgage Rates Started Rising Again, Placing More Pressure On Rents


Apparently, TikTokers Might Quote Housing Experts Out Of Context: Who Knew?

A few weeks ago I shared my Bloomberg Radio interview by my friend Barry Ritholtz for his must-listen show “Masters In Business,” and something I said was exaggerated by Business Insider and then picked up by this TikTok guy. A bunch of real estate people started to share it with me, but it was a bit surreal seeing him parrot all I said to Barry. But the video went semi-viral with 22,000 views, up from his usual few hundred, so there’s that, I guess?

Here’s the transcript of my Bloomberg Radio interview with the specific segment mentioned below:

RITHOLTZ: So if you’re a contrarian, you become a buyer in the summer of 2023?

MILLER: Yes. Yeah, I think so. And what I find interesting is that, you know, when people look at pivoting conditions, pivoting markets, you upend the word forever, like prices are falling forever, prices are rising forever. It’s like this linear view. And if you look at some serious downturn periods in the housing market, like the housing bubble, you know, 15 or so years ago, 13, 15 years ago, really, prices really didn’t recover. It took about six years. But activity actually returned pretty quickly by late 2009, early 2010. So this isn’t like a decade or, you know, a generational thing. You know, it’s a shorter window than that.


@aaronknowshomeloans “Best Time to Buy a House will be Summer 2023 Says 30-Year Real Estate Expert. Is He Right?” #economy #besttimetobuyahouse #inflation #recession #mortgage #mortgages #realestateinvesting #mortgagerates #housingmarket #realtor #interestrates #realestate #housingbubble #homebuyertips #firsttimehomebuyer #housingcrash #housing #bubble ♬ original sound – Aaron Gordon


Blown Deals At Their Highest Since 2020

So 14.9% of contracts in June fell apart according to Redfin, but that’s not a crazy high number – I recall it was closer to 30% during the Great Financial Crisis. But it does tell us two things:

  • Surging mortgage rates are straining buyers efforts to purchase homes and this number is likely to rise.
  • Contract data is very fillable despite it being more current than closed data – how informative are contracts to market trends when a large chunk of them never close. Just like much to do with housing and market analysis, measuring trends takes understanding of a lot more than one metric.

Getting Graphic


My favorite charts of the week of our own making

My favorite charts of the week made by others

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

CRE® Top Ten Issues Affecting Real Estate – Chock Full Of Insights

I’m a proud member of the Counselors of Real Estate and every year they publish their Top Ten. It provides useful insights to all walks of the real estate industry.

[click to read the issues]

OFT (One Final Thought)

Here are some alternative versions of a “soft landing” that are certainly more entertaining than the “hard landing” the Fed seems to be steering us toward. Be sure to watch all four – with the last one being my favorite.

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll be armchair quarterbacks;
  • You’ll land softly;
  • And I’ll crash.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


July 8, 2022

This Crazy Housing Market Feels Like A Long Shot

Here is an epic long shot I recently discovered as well as the classic Ray Liota Steadicam shot from Goodfellas. I keep thinking of how many of those extras could really screw things up but somehow didn’t. So many analogies here for the current state of the U.S. housing market.

But I digress…

The Q2-2002 Manhattan Sales Report and June 2022 New Signed Contract Report Show The Market Pivot

We’ve been the author of Douglas Elliman‘s expanding market report series since 1994. What makes this relationship work is that I provide market data and insights independently, because they want their clients to be able to make decisions on reliable neutral benchmarks. All the top brokers I know at Elliman and other brokerage firms all do this for their clients, but the firms themselves don’t feel comfortable until well after the market pivots.

What made this report release so interesting was the timing of the pivot. Our Q2-2022 Elliman Report: Manhattan Sales showed market conditions leading up to the change in conditions while the Elliman Report: June 2022 New Signed Contracts showed the conditions after the fed rate hike.

Bloomberg did a good job articulating the pivot in this piece: Manhattan Home Prices Hit a Record While Sales Frenzy Winds Down.

Closed deals still show strength, with buyers paying a median of $1.25 million, but a timelier measure of contracts has been slipping for the past three months.

For some reason, both in the Bloomberg app and the web article, the chart is broken. However someone passed along a copy they saw in Drudge that appended a red arrow.

CNBC and The Real Deal also nailed the story. Lots of media coverage this week because of the market pivot.

______________________________________________________
MANHATTAN SALES MARKET HIGHLIGHTS

Elliman Report: Q2-2022 Manhattan Sales

Co-ops & Condos

  • Median sales price rose to a record high while average sales price reached its third-highest
  • The number of sales increased to the highest total for a second-quarter since 2007
  • Cash buyer market share rose to the third-highest tracked, rebounding from the low recorded five quarters ago
  • Co-op median sales price rose to the highest on record, the fifth straight year-over-year gain
  • Condo median sales price rose to the highest on record, the third straight year-over-year gain
  • Largest first to second-quarter rise in condo listing inventory in at least eight years
  • Overall luxury price trend indicators continued to rise year over year
  • The number of new development sales more than doubled from the same period last year
  • New development listing inventory increased sharply year over year for the third consecutive quarter

______________________________________________________
NORTHERN MANHATTAN SALES MARKET HIGHLIGHTS

Elliman Report: Q2-2022 Northern Manhattan Sales

Co-ops & Condos – The average sales price rose year over year for the fifth straight quarter to reach a new high – Listing inventory increased to a new high after five consecutive annual increases

Townhouses – All price trend indicators pressed higher year over year, rising collectively in three of the past four quarters – The number of sales has risen annually for the past six quarters by significant amounts

______________________________________________________
New York New Signed Contracts Report

Elliman Report: June 2022 New Signed Contracts

  • The New York report attached covers Manhattan, Brooklyn, Long Island, Hamptons, North Fork, Westchester County, Fairfield County, and Greenwich, CT.

Manhattan
Overall new signed contracts have been falling annually since April 2022 compared to the previous year’s unusually elevated activity. However, month over month, newly signed contracts have also fallen for the third month as the recent spike in mortgage rates has slowed demand and expanded new listings. The same pattern emerged for newly signed contracts at or above the $4 million threshold. New signed contracts, and new listings for June were less than the same period pre-pandemic.

Brooklyn
Overall new signed contracts have been falling annually for the past two months compared to the previous year’s unusually elevated activity. However, month over month, newly signed contracts have also fallen for the second straight month as the recent spike in mortgage rates has slowed demand and expanded new listings. New signed contracts, and new listings for June were well above the same period pre-pandemic.

Long Island (excluding H/NF)
Overall new signed contracts have been falling annually since June 2021 compared to the previous year’s unusually elevated activity. However, month over month, newly signed contracts have fallen for three of the past four months as the recent spike in mortgage rates has slowed demand and expanded new listings. As a result, new listings remain well below pre-pandemic levels.

Hamptons
Overall new signed contracts have been falling annually since May 2021 compared to the previous year’s unusually elevated activity. However, month over month, newly signed contracts have fallen for two of the past three months as the recent spike in mortgage rates has slowed demand and expanded new listings. The number of new listings entering the market is well above pre-pandemic levels.

North Fork
Overall new signed contracts have been falling annually since May 2021 (except for April 2022) in comparison to the previous year’s unusually elevated activity. However, month over month, newly signed contracts have only fallen once since February 2022 despite the recent spike in mortgage rates.

Westchester
Overall new signed contracts have been falling annually since June 2021 compared to the previous year’s unusually elevated activity. However, month over month, newly signed contracts have fallen for two of the past three months as the recent spike in mortgage rates has slowed demand and expanded new listings.

Fairfield
Overall new signed contracts have been rising annually since June 2021 in contrast to the region. However, overall, month over month, newly signed contracts have fallen for the first time since December as the recent spike in mortgage rates has slowed demand and expanded new listings.

Greenwich
Overall new signed contracts have been rising annually since January 2022 in contrast to the region. However, month over month, newly signed contracts have fallen for the past three months as the recent spike in mortgage rates has slowed demand and expanded new listings.

The New York Times Addresses The “Crazy” Housing Market

The real estate section’s cover story: What’s Up With the Crazy Housing Market? about the state of the U.S. housing market was a bookmark of the significant change that has occurred over the past three months, pulling in economists, brokers, and non-economists (me).

There have been few moments like this in housing history and although I hate the phrase “this time is different” I do think this time is different given the collpase of listing inventory as a byproduct of keeping rates too low for too long. With 50% of U.S. transactions going to bidding wars, how is that sustainable? We should look at this pivot with relief, not worry.

Excuse the indulgent sharing of my photo here but the NYT got my good side:

MARKETPLACE Is The Rental Market Slowing Down? Maybe.

Housing costs account for about a third of inflation calculations so, in order for the Fed to stop raising the federal funds rate, they need to see housing cool. The “For Sale” market is seeing slowing sales but prices are very sticky on the downside as sellers who don’t get their price often decide not to sell.

Rentals are the key segment to look at since the fed relies on the “rental equivalent” of the “for sale” market to understand housing. Something U.S. rental growth is showing signs of subsiding (not in NYC!) which will help the Fed decide to start backing off with their baseball bat.


Op-ed People To Follow On Housing and Economics

In addition to people I often mention in Housing Notes, I thought I’d add a few more whose work I’ve been reading a lot:

Jonathan Levin – Former Bloomberg Miami Bureau chief covering overing finance, markets and M&A.

Noah Smith – An econo blogger, formerly of Bloomberg, now with a substack account

Sam Ro, CFA – I’ve long followed Sam’s econ related work on Twitter and during his former gigs at Axios, Yahoo and Business Insider.

After Mortgage Rates Spike After A Fed Move, They Slide Back Quite A Bit

U.S. weekly averages as of 07/07/2022

It makes me wonder, no matter whether rental price inflation continues, whether the fed baseball “bat” can continue to bash the economy past the fall without serious damage.

Getting Graphic


My favorite charts of the week of our own making

My favorite charts of the week made by others

Len Kiefer‘s Chart Handiwork

Upcoming Speaking Events

As I was writing these Housing Notes, I took a short break and did a 30 minute interview on Barrons Live who produced an excellent show. I will share the video in next week’s Housing Notes.


Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

After Being Under Attack From All Sides, TAF Goes Dark

We are all scratching our heads, waiting for TAF, the authors of the bat-shit crazy letter and the chickenshit letter (proving they love to express their feelings in public), to address lingering issues that have essentially hung appraisers out to dry, like the ridiculously worded ethics rule, the definition of “misleading” and the absence of any kind of actions regarding the PAVE recommendations. Plus Dave sees PAVE as a “nothing burger” so the lack of transparency from this organization continues.

More details on all of this next week.

AI FOJs Proudly Announce SPP3

In order for Jim Amorin, AI’s wildly overpaid CEO, to save his job, he has created a new flavor of the sham petition process pushed shamelessly over the past two years. He is 1-1 but if he loses this year, he’s out and the gravy train for the FOJs stops. All those teachers stop getting the choice teaching assignments. Now version 3, the long expected sequel is here: Sham Petition Process Part III (SPP3)

More details on this next week and beyond.

And There’s More Coming!
  • AI’s China Expansion Was A Scheme To Travel Multiple Times Via First Class With Their Emotional Support Spouses On The Hard-Working Members Dime

  • A Dive Into TAF’s Finances Where The Question Comes Up: Why Does A Not For Profit Need A Reserve Fund Of $12 Million?

  • An Additional Look Into The Corruption Of The West Virginia RE Appraisal Board

In many ways, the marginalization of our own industry is inevitable, made possible by our own apathy and a handful of leadership that does what it does for themselves and not for the appraisers out there trying to make a living. They have made us vulnerable and we need to do something about it. Please.

OFT (One Final Thought)

In NYC “FAR” is a zoning term for “Floor Area Ratio” but in more practical terms its really “Fry Attachment Rate.”

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll go long;
  • You’ll be short;
  • And I’ll attch more fries to my order.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


July 1, 2022

Housing Enters Its “Bad Movie” Era

Please define “bad movie” for me because the following is great – a precursor to Sharknado.

But I digress…

Bloomberg’s Masters In Business Podcast: Jonathan Miller on Urban Real Estate

My Bloomberg Radio interview with Barry Ritholtz came out shortly after last week’s issue of Housing Notes. Apparently I am tied with Scott Galloway for most appearances (5) on this show. Master in Business is always a great show to listen to and Barry does a lot of reasearch on his guests.


Here’s the transcript.

Rising NYC Wages Seem To Support NYC Rent Growth

One of the problems with looking too narrowly at a housing market record, such as record rental price growth in NYC, is that you can miss the reason why and the understanding there is more room for more records.

Last month Douglas Elliman published our rental price research for The Elliman Report: May 2022 Manhattan, Brooklyn & Queens Rentals. It showed that the median rental price reached the $4,000 threshold for the first time, an all-time record. And I suggested there was more room for gains since new leasing doesn’t peak until August and therefore more opportunities for upward pressure exist.

But what about wages? Going to FRED, I compared NYC annual wages over the past decade against median rent and indexed Manhattan and Brooklyn to January 2008. For NW Queens I indexed to December 2011 because that was the extent of our data.

The following charts by borough show that there is more room for gains since wage gains remain higher than rent gains with Brooklyn seeing the least wiggle room. This doesn’t mean that rents are “affordable” but provides an argument that the market can probably absorb more rental increases. Any thoughts on this would be appreciated.

Visual Capitalist: Mapping Price Growth By State

Visual Capitalist always puts out some amazing infographics. Click to expand:


MARKET PROOF PODCAST WITH ARPIT GUPTA “Work From Home and the Office Real Estate Apocalypse”

Kael Goodman, founder/CEO of Marketproof interviews NYU Professor Arpit Gupta over his white paper: Work From Home and the Office Real Estate Apocalypse

Arpit’s white paper is a must-read for all real estate appraisers and brokers, especially those focused on commercial valuation. Kael does a great job on the interview.


EXPLAINER Rent Guidelines Board Increases

Natalie Sachmechi, a real estate reporter for Crain’s New York, is always good to follow on Instagram for bringing clarity to complex New York City real estate issues.

I meant to post this last week but was not very organized when we were away on vacation!


Sean Osher of Core Real Estate On Measuring Trends (Why I Was Right)

Recently I was a panelist for a REBNY virtual event with a bunch of other people I respect who track the state of the housing market and I remember thinking to myself: “real estate agents will get it but this conversation has to be very confusing to the consumer.” One of the items that always comes up by authors of contract reports is that closing data lags contracts therefore contract trends are the gold standard. The problem with this presumption is that there are many market periods where as many as 40% of contracts fall apart before they can close. That’s a tough sell as a full-proof market benchmark.

Former top-producing Douglas Elliman agent Sean Osher publishes Padkos: Food for Thought in Real Estate and Life, a weekly newsletter that was recently shared with me so I of course, subcribed. Sean left Douglas Elliman in 2005 to form Core Real Estate.

At that time, the company I was with had the only legitimate market report in the business, which was created by Jonathan Miller. Jonathan was the only legitimate analyst in the city and was (and still is) rightfully well respected and revered.

Of course, he’s obviously brilliant for saying that about me (ok, ok), but he also has a lot of thoughts about market analysis in his post “Data Dump!” specifically why “tracking transactions in real-time is impossible:”

A real estate trade is impossible to track in real-time because of the way deals happen. First, a home has an asking price, then there is a negotiation between the buyer and the seller, then there is a meeting of the minds, then a contract is signed, and then there is a closing. Months later, the transaction is made public on ACRIS.

My take: Ultimately closing price trends contain both sales levels and price levels because they represent a “successful” transaction.

Data Dump! [Padkos]

Rural Housing Markets Are Booming

The Wall Street put out a fascinating piece on the rural boom and wonders whether it will last:

Rural Counties Are Booming, but Can It Last? The pandemic and the work-from-home movement sparked an economic resurgence in sparsely populated areas as workers fled big cities

Such rural gains are in their early stages and could be vulnerable to a national economic downturn. They also depend on how far the back-to-the-office movement goes. In recent months, office reopenings and waning pandemic disruptions have drawn some workers back to urban life, a trend that is manifested in the rising rental prices of places such as New York City.

There’s a good piece by FreddieMac on the related urban phenomenon:

In Pursuit of Affordable Housing: The Migration of Homebuyers within the U.S.—Before and After the Pandemic

Please study this chart:


CoreLogic’s 2022 Hurricane Report

CoreLogic just published a 2022 Hurrican report that correlates housing stock to storm damage. Its a free download and its full of charts and maps. Of special note, Corelogic’s Chief Economist Frank Nothaft, whose work I respect, unexpectedly passed away this weekend.


JP Morgan on the Fed: One More Big One, Then A Bunch Of Small Ones To 3.5%

The Fed has chosen to front-end load rate increases in order to better clobber the economy with a baseball bat. This is probably better for the housing market than a tortuous slog of 25 basis point increases from day 1.

This JP Morgan research piece Market Outlook: Stocks, Inflation And Commodities In Focus At Mid-Year was insightful on rates.

NTD TV Interview (From My Hotel Room) On Weakening Market Conditions

I’ve been doing interviews for NTD for quite a while. This time I was in a hotel room on vacation and got an interview request – I grabbed a collared shirt while still in my shorts and tennis shoes and sat in my poorly lit hotel room. Still, it was a good interview.

Getting Graphic


My favorite charts of the week made by others

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

I’m still not ready to dive back into appraisal commentary – too much going on right now as proud owner of two homes and two mortgage payments for the next 30 days (2x the American Dream!) and moving our office two blocks in Manhattan.

OFT (One Final Thought)


Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll be in the bat cave;
  • You’ll buy shark repellent;
  • And I’ll continue to skip most good movies.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


June 24, 2022

Housing Is The Drug

I’m on vacation this week in the U.S. tourist mecca we all know as the Detroit suburbs and when I visit, I think back to my college days and the discovery of new music.

It’s the fiftieth anniversary of Roxy Music’s first album. My college roommates at Michigan State found some (well, most) of my music choices irritating and Roxy Music was one of them. It strayed quite far from the glam rock mainstays at the time of Boston, Styx, Journey, REO Speedwagon, Foreigner and Head East. Not that I disliked any of those, but it wasn’t Roxy Music. I absolutely loved their unique sound and quickly acquired their entire catalogue after hearing the following song. Plus of course “Love is the Drug” from Siren with the Jerry Hall cover.


But I digress…

Oh, and get ready for a slew of bombshell Elliman reports in July.

But I digress…again…

Marketplace Radio: Are rising mortgage rates already cooling the hot real estate market?

Yes.

Comedian John Oliver’s Take The U.S. Rental Market Is Darn Informative(NSFW)

This is a very detailed look at the state of the U.S. rental market – there’s so much more to it than high rents. And it’s not pretty.


Once Again, The Onion Proves To Be Real News: The Fed Raises Rates

Fed Raises Interest Rates In Effort To—Hey, Pay Attention, This Is Important! [TheOnion]


WSJ VIDEO: A Good Overview On The State Of The Housing Market


REBNY: State Of The New York Market From Many Perspectives

I had an informative conversation with my real estate colleagues on this week’s REBNY panel “How’s The Market: All-Stars Weigh In.” See the link below the promo image.


See link and password below. Be sure to copy the entire link.

WEBINAR RECORDING (go to 6:58)
https://us02web.zoom.us/rec/share/u-iQ3iZpDwDvhFWElPOlz_H5TqpumSx3oSqn7l7OBQOhh066FlGcVF1k3NW_iLnX.NzcZNYPQ-PTKajf1
Access Passcode: hi$@5mZL

Hey Guess What? Housing Markets Have Cycles, Even From 1850 to 1950!

Here’s a cool map I found at Bary Lawrence Ruderman Aintique Maps Inc.


An Architect Describes Basic Housing Styles In NYC

Stumbled across this recent clip that has excellent production values and lays out some of the distinct housing types in New York City.

Michael Wyetzner of Michielli + Wyetzner Architects returns to AD, this time breaking down five of the most common apartment types found in New York City. From long and narrow railroad-style abodes to stately multi-level brownstones and everything in between, Michael gives expert insight on the many different places you can call home in the big apple.


Solid As Sears?

Remember that old saying?

The housing affordability is made much more challenging to solve due to NIMBYISM and zoning. Falling affordability is not the builder’s fault.


Getting Graphic


My favorite charts of the week made by others

Len Kiefer‘s Chart Handiwork


Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

I’m on vacation this week so my plans to catch up on Appraiserville once again were too optomistic.

OFT (One Final Thought)

I’m not one for watching dance, but this was incredible choreography. Please watch the whole thing.


Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll be more Roxy Music in your music catelogue;
  • You’ll be worried about the uncertainty of the housing market;
  • And I’ll continue not to dance.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


June 17, 2022

The Fed Throws The Ceremonial First Housing Pitch

Ok, so the fed raised the federal funds rate by .75 but I really love this…

But I digress…

VIDEO EVENT Preparing For A Market Shift: Know Your Numbers

I had a great conversation with my friend Noah Rosenblatt of Urban Diggs, moderated by Eric Barron of The Agency. I hope you enjoy it. (TLDR: It’s already happened) Click the image to play.


[click to play]

Actually, The Rising Wage Trend Over A Decade Seems To Support The Record Manhattan Median Rent

Last week’s viral coverage of the monthly median record rent of $4,000 in our Elliman Report: May 2022 Manhattan Brooklyn & Queens Rentals

However I indexed our rental data against non-seasonally adjusted annual hourly wages and it would appear there is more room for rent gains based on wage growth, no?




Black Rock Goes All BF Goodrich On Us: “We’re The Other Guys”

I was a bit startled to see this Black Rock position piece essentially say they are not to be confused with “Blackstone” without actually saying “Blackstone.” Black Rock seems to be positioning itself for “Main Street” instead of “Wall Street” given the affordability crunch from the collapse of resale housing inventory, partly because Wall Street firms have been buying up homes in order to rent them.

Growing up I saw the Goodyear Blimp at lots of NFL games on TV and in many other forums.

And BF Goodrich, a competing tire maker, used the ubiquitous Goodyear Blimp in their “We’re The Other Guys” advertising effort. It’s almost as if Black Rock anticipates looming brand damage to the residential investment space and doesn’t want to be confused with Blackstone who is very active there.

But it’s weird to see Black Rock actually do this. And not because BF Goodrich built blimps for the U.S. Navy years ago.

These are the kind of BF Goodrich commercials I remember seeing as a kid.


Gotta love the Patridge Family and I’ll bet they weren’t renting their house from Black Rock!

Commuters Frequent Manhattan’s mid Business Districts On Wednesdays To Protect Long Weekends At Home

Wednesday seems to be the peak of weekly activity with Tuesdays and Thursdays coming in second place. Even the guy at coffee stand from whom I buy a bagel and coffee as I walk from Grand Central Terminal to my Midtown office told me he doesn’t bother to bring his stand to the city on Mondays and Fridays. I also observe this pattern on the commuter trains where the center of the week is packed and Mondays are empty. Yes, remote work is having a pronounced impact on business districts of which Manhattan’s office towers remain two-thirds empty.

I looked at how busy a steak restaurant was in its two locations by day of the week. I selected the FIDI (The Financial District of Manhattan) and Midtown (The Central Business District of Manhattan).

Midtown =======================>>>>>>> FIDI

VIDEO EVENT West Palm Beach State Of The Market

I moderated a panel back on May 12th just after mortgage rates jumped and this was how I spoke about it. It was a live event in a beautiful venue in West Palm Beach. The panelists were incredibly informative and insightful. Fun stuff!


This Week in Aspirational Pricing: Malibu & Manalapan

Malibu, CA
I’ve been covering the Malibu housing market for Douglas Elliman for about eight years now and the change in the numbers in the pandemic has been extraordinary.

Elliman Report: Q1-2022 Malbu/Malibu Beach Sales.

Emma Stone’s Malibu Home Closes a Month After Hitting the Market [Wall Street Journal]

Decades After Larry Ellison Landed, These Kingpins Are Sending Malibu Real Estate Even Higher [Wall Street Journal]


Manalapan, FL
And more recently, I’ve been covering Manalapan for Douglas Elliman, not far from Palm Beach.

Elliman Report: Q1-2022 Manalapan Sales.

A Billionaire Bought a Florida Home for $94.2 Million Last Year. Now He’s Selling It for Around $175 Million [Wall Street Journal]

Getting Graphic


My favorite charts of the week made by others


Upcoming Speaking Events

I am joining a panel on the New York housing market next week with all the people I respect that provide regular commentary on conditions. It should be fun and informative. Click on the image to register.


Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

Nothing this week as I’m currently headed to the midwest to visit family. Got lots to write about so hang in there because I plan to return to Appraiserville next week!

OFT (One Final Thought)

Harry Macklowe, a long time NYC developer, is just as well-known for his buildings as he is for getting into trouble. I tripped into his new One Wall Street Development intro clip which hasn’t gotten much buzz (the clip, not the building) since it appeared back in January. The funny details (like the lion swelling the fly in the intro) are completely unexpected. Good stuff.

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll be more accurate;
  • You’ll throw a strike;
  • And I’ll swing for the fences (but no guaranty on whether I connect with the ball).

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Real Estate Blockchain

Appraisal Related Reads

Extra Curricular Reads


June 10, 2022

The Housing Market Is Spiraling Downward With Dogged Determination


But I digress…

Manhattan Median Rent Reaches $4K Threshold, Setting All-Time High

I’ve been the author of an expanding series of market reports for Douglas Elliman Real Estate since 1994. This week they published our research on the rental market of New York City.

Bloomberg created some great charts on the results in their piece: Manhattan Apartments Hit $4,000 Median — and It’s Going to Get Worse

And here’s a couple of extra charts:

Elliman Report: May 2022 Manhattan, Brooklyn & Queens Rentals

______________________________________________________
MANHATTAN RENTAL MARKET HIGHLIGHTS

“Median rent reached the $4,000 threshold for the first time as lease signings continue to rise.”

  • Median rent reached the $4,000 threshold for the first time as average rent was just short of $5,000
  • New leases expanded year over year for the third straight month
  • The vacancy rate remained under two percent for the sixth consecutive month
  • Doorman’s net effective median rent reached a new high for the fifth consecutive month
  • Non-doorman net effective median rent and median rent rose to records for the second straight month
  • Luxury price trend indicators all rose to the second-highest on record
  • Luxury market share of one-year leases rose to a new high, exceeding half of all new leases
  • Luxury net effective median rent rose annually for the thirteen consecutive month

______________________________________________________
BROOKLYN RENTAL MARKET HIGHLIGHTS

“Net effective median rent reached a new high as landlord concession market share fell to a five year low.”

  • Net effective median rent rose to a new high as landlord concession market share fell to its lowest level since 2017
  • Landlord concession market share fell to its second-lowest level in four and a half years
  • Bidding war market share was nearly one in four new leases for the second straight month

______________________________________________________
QUEENS RENTAL MARKET HIGHLIGHTS

[Northwest Region]
“Net effective median rent rose to the second-highest on a record high as landlord concession market share fell to a six-year low.”

  • Net effective median rent reached its second-highest level on record
  • Landlord concession market share fell to its lowest level since 2016
  • New leases fell annually for the second straight month after twelve months of gains

Charted: Peak Manhattan Leasing And Inventory

New lease signings peak in August…

While listing inventory sees a December spike…


Bloomberg Citylab Visualization: More People Are Moving to Manhattan Than Before the Pandemic

A few weeks ago I got into a discussion with a smart economist on Twitter that didn’t agree with my point that Census data was lagging significantly and didn’t capture the recent migration and was therefore telling an incomplete story. Then I am shared this fascinating visualization by Bloomberg Citylab: More People Are Moving to Manhattan Than Before the Pandemic


CLOSED! PODCAST Jonathan Miller: Forecasting the NYC Housing Market

I had a great conversation with Lee Bergstein and Cooper Knowlton of real estate law firm Bergstein Flynn & Knowlton PLLC


Stop The Stereotypes, NYC Is Safer Than Small-Town America

I love this Justin Fox piece at Bloomberg Opinion: New York City Is a Lot Safer Than Small-Town America.

…the city’s homicide rate in 2021 still less than a fifth what it was in 1990…there’s a growing gap between New York City and most of the rest of urban America.


And he’s got the receipts charts (here are a few of them):

Alternative Inflation Indicators

Quartz has a good podcast episode Inflation: The price isn’t right.

And then this logic…


And this old thread on Mountain Lion Economies

Yet at this point, with so much inflation data coming our way, we might consider alternative information:

Inflation is so bad that Snoop Dogg just gave his full-time blunt roller a raise [Los Angeles Times]

PLANET MONEY PODCAST Home prices could fall, but is it a bubble?

A Housing Market Conversation Repeated Every Day

Getting Graphic


My favorite charts of the week made by others

Appraiserville

To all my hard working appraiser colleagues – you get a break from Appraiserville this week. I’ve get several things lined up but was overwhelmed by the viral press coverage of our NYC rental report this week (see above).

OFT (One Final Thought)

A contrarian survey…


Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll be more dogged;
  • You’ll let them slide;
  • And I’ll wait for the next Fed move.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


June 3, 2022

Housing A License For Jet Planes, Motorcycles, Boats, Parachutes, And Real Estate


But I digress…

New York Metro Is Seeing A Slowdown From Both Lack Of Inventory And Rising Mortgage Rates

I’ve been the author of an expanding series of market reports for real estate firm Douglas Elliman. The most recent series was born out of the pandemic, our new signed contract reports. With the slow down in new signed contracts, we are finally beginning to see an expansion of new listings from record lows in many markets outside the city.

Elliman Report: May 2022 New York New Signed Contracts

  • The New York report attached covers Manhattan, Brooklyn, Long Island, Hamptons, North Fork, Westchester County, Fairfield County, and Greenwich, CT.

A sampling of press coverage:

More breathing room for buyers? Increase in listings calms frenzied NYC sales market[Brick Underground]

Long Island gets rare listings lift [The Real Deal]

New York City Sales Drop as Market Sends ‘Mixed Messages’ [Mansion Global]

Hamptons home market shifting; North Fork down to 89 listings [The Real Deal]

Here are a few charts but many many (and I mean) many more are available in our chart gallery.

Douglas Elliman also published our new signed contract data in three other regions:

Elliman Report: May 2022 Florida New Signed Contracts

Elliman Report: May 2022 Colorado New Signed Contracts

Elliman Report: May 2022 California New Signed Contracts

Revisiting My Real Estate And Life Forecast From March 26, 2020

I wrote this post about a week into the pandemic lockdown “The Future of Real Estate (And Life) Is Happily Looking Remote” and I think I got most of it right. The jury is still out on the Man-Bun though:

The Man-Bun will make a big comeback due to the inability to get a haircut

There will be so much toilet paper to appear on store shelves that it will take years to use it up and toilet paper production-related employment will be bleak

Consumers will not regret hoarding toilet paper but will refuse to admit it in public

With everyone frustrated about being housebound, they will plot and plan to buy or rent a larger home as soon as this crisis is over

Buy a new refrigerator after burning out the refrigeration unit with thousands of sustained door-opens

A surge in the stock prices of Jenny Craig and WW

Gyms will see a new revival (see ‘Jenny Craig’)

People will discover they actually like to walk every day to clear their mind

Many people will begin to use Zoom.us every day and discover they like to see their friends and relatives’ faces when chatting – even in HD

Universities will incorrectly believe that students will want to learn remotely when really all they want to do is party in the dorms

Employees will decide they hate the time wasted on the commute even more because it is not completely necessary

Americans will love sleeping in until 8:30 am permanently changing the 9-5 standard to 10-6

Podcast usage will become a bigger thing than it ever was (see ‘walk every day’)

People will rush to cut their cable service after enduring endless hours, watching mindless cable shows, for reasons they can’t explain, but did realize being permanently pissed off was exhausting and unnecessary

The difference between weekends and weekdays will suddenly be thrust back into our daily lives and we’ll hate it despite the dated conventional wisdom that we should keep our personal and business lives separate (see ‘walk every day’)

The divorce rate will skyrocket as couples actually discover their real partner in close quarters

Parents will completely shed their ‘put their kids on the couch to watch tv’ shame as they consider how many episodes of Gilligan’s Island they have watched

Commercial real estate will never be the same again as millions of employees worked remotely and companies realized it wasn’t that big a deal

UPDATES

There will be a new generation classification known as Baby Boom II beginning nine months from now – ok, boomer? (see ‘divorce’)

Uncomfortable chairs will no longer be tolerated as Herman Miller Aeron Chairs will be the only office chairs made worldwide



CNBC: Hamptons Rental Frenzy Seeing A Downshift

Robert Frank of CNBC unleashed a media frenzy on the Hamptons rental market of which we provided some rental trend data.

A sampling of press coverage:

The Hamptons summer rental market is facing an unexpected chill as inventory piles up and prices come down [CNBC]

Hamptons rental market slumps. Yes, slumps [The Real Deal]

Hamptons landlords are dramatically cutting summer rental prices [New York Post]

Discussion: The Disconnect Between A Population Declining And A Booming Housing Market

The New York Post released a story with a very New York Posty title this week: NYC population plunged while rental rates spiked: Census. The population dropped by 300,000 from April 2020 to June 2021 according to Census data but Census data is lagging and some of the heaviest activity in the sales and rental markets occurred AFTER June 2021. In other words, Census data lags a lot. Here’s a Twitter thread from a month and a half ago that touches on the same topic.

THREAD

I realize household formation is a big part of this, but I contend a powerful part of the demand is the fact that remote enables people to be in the city that don’t work here. I mean, office towers are nearly two-thirds empty so its hard to peg the boom completely on household formation:

Amid record rent and sales activity, city office towers remain two thirds empty; people are making the most of their pandemic-granted ability to work remote, migrating to New York and working from home. This trend is intensely reflected in the upper half of the market, “because lower-wage earners are much more economically damaged by the lockdown and pandemic era,” said Miller. “Remote work and mobility has defined the boom we’re seeing in the city right now.”

On another related note:

Axios did a cool breakout of the Census data by cities over 50,000 in population:

And Bloomberg broke out the 50 states by wages. Fascinating stuff.

The 2022 Home Purchase Market ≥ $50M Is Shaping Up To Be The Second Highest On Record

While I realize I shared a similar sales chart on this topic (magenta colored!) last week, the Wall Street Journal just included this super cool version of it yesterday in Aspen’s Market Is So Crazy That Buyers Shop for Homes That Aren’t Even for Sale:

If sales continue at the same rate, 2022 would be the second most sales at or above the $50 million threshold, after the 2021 rocketship. What does this circus sideshow mean to mere mortals like myself and most Housing Notes readers? Nothing, actually. These sales are fun to track and represent a circus sideshow that has little to nothing to do with their respective overall housing markets.

The New Republic Podcast: The Rent is Too Damn High

I tripped into this podcast/article that provides a coffee shop conversation about the current rental market in New York as well as a shout-out. It’s in podcast form, but also a good read.


Craziness—I would say a more specific word is frenzy. A realtor used the word “scrum” to me. It’s at almost every single level of the process. There’s when you look at the actual listing on StreetEasy or Zillow or whatever, and you’re already told that people are applying without even seeing it, so then you get to the showing and you’ve applied already—which is psycho—just to get ahead. So you’ve paid the $20 application fee. You sent them your tax return and maybe even your parents’ tax return; they know more about you than the government. Then at the showing, you’re hearing people offering more money than the listed rent amount. Then, depending on if it’s a smaller landlord, they might want to know more about you and your vibe, and you’re writing a letter.

Incidentally, Douglas Elliman is publishing a new batch of our rental market data next week.

Inflation Talk Inflating As Recession Talk Isn’t Recessing

There has been a lot of inflation talk and it’s reinforced every time we go to the gas pump. For the first time in my life, I opted for regular instead of high-test for my thirsty 485 horsepower Dodge Challenger and saved more than a dollar per gallon.

My friend Barry Ritholtz maintains a good inflation archive at The Big Picture and he doesn’t think we are in a recession yet: Are We in a Recession? (No)

But in Argentina…

And here are some more good reads on this topic…

Fear The Vibe Shift: Are We Entering A Recession? [Planet Money]

Fannie Mae says a recession is likely to hit next year, and it could hit the housing market too [Fortune]

However this plays out, I find it increasingly difficult to believe that the fed will be able to raise the federal funds rate five more times as once thought. Mortgage rates have drifted downward for the past two weeks and the huge price gains of last year don’t appear sustainable anymore such as the latest FHFA 18.7% YOY figure:

NYT Magazine: I Moved To New York For…

I love this graphic because it isn’t focused so much on “work.” New York real estate is booming and yet the office towers are nearly two-thirds empty. How is that possible? The idea that people are moving here because of the possibilities that remote work has enabled, seems to be much more powerful than anyone could have imagined in early 2020.

Getting Graphic

My favorite charts of the week of our own making

My favorite charts of the week made by others

[Bloomberg]

Len Kiefer‘s Chart Handiwork


Upcoming Speaking Events

The Agency/Triplemint June 9 9AM ET
Here is the announcement for their webinar – click here or on the image below to register.

REBNY June 21 10AM ET
Here are two marketing pieces for the REBNY webinar – click here or either image to register:

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

A Corelogic Take On Appraisal Overvaluation

The results of this 2021 white paper: Appraisal overvaluation: Evidence of price adjustment bias in sales Comparisons co-authored by Frank Nothaft are pretty interesting. At first glance, I get the CoreLogic evil empire stuff, but step back and take it all in. Here’s the abstract.

Home appraisal came under scrutiny for contributing to the home-price bubble and enabling the origination of risky mortgages that led to the post-2006 foreclosure crisis. Subsequent regulations tried to minimize or eliminate conflicts of interest and improve valuations. Nonetheless, our study of appraisals completed in 2015 and 2016 find that appraisal bias still occurred. Our analysis delves into the underlying appraisal development to identify causes of appraisal bias. Contributing factors are that comps are generally higher valued than the subject property, and appraisers are more likely to comparatively adjust upward lower priced comps but less likely to adjust downward higher priced comps.

 

Apparently The Future Of Valuation Doesn’t Include Women Or Diversity

By the time you read this, FIABCI will have already presented the webinar this morning – International Webinar: The Future of World’s Valuation Profession.

The Appraisal Institute and The Appraisal Foundation were represented on the panel yet continue to be unable to have their actions equal their promises about fixing the lack of women and diversity in the valuation profession.

Clearly, there are women and people of color (both significantly underrepresented) in the valuation profession yet time after time, we get a bunch of middle-aged white guys on these panels. I’m not bringing this up to be critical of the valuation knowledge of the individuals on this panel, but rather the lack of awareness of the zeitgeist that exists today by FIABCI and the organizations that are represented.

Remember that the Bureau of Labor statistics ranks appraisers as 400th of 400 professions in diversity. In other words, dead last. In high-profile events like this, the organizations and the individuals probably want to ask what the makeup of the panel is. Optics are important. I’ve made the same mistake myself more than once.

It is time for our industry to get off the bottom of that list.

REDUX – TAF Writes An Embarrassingly Badly Written Threatening Letter To Me

The organization that brought you the bat-shit crazy letter, brought us another example of non-governance which I dub the chickenshit letter. You can read my takedown in last week’s May 27th edition of Appraiserville if you missed it. However, I’ve provided it again below just because of its audaciousness. The fact that either of these letters was sent by TAF would be grounds for the removal of the authors and the insulated and detached c-suite of TAF (Dave/Kelly). There is no apparent governance at TAF which explains this inappropriate behavior of a defacto monarchy powered by Dave.

Here is a reprint of the May 27th Appraiserville post:

Appraisers: The Appraisal Foundation Writes A Chickenshit Letter On Your Dime

On Thursday I received a poorly written and threatening letter from the Appraisal Foundation for a blog post I wrote in Appraiserville back in February. I responded on the same day to their May 26th letter and have officially dubbed it the “chickenshit letter” for the petty misrepresentations it provides along the lines of the bat-shit crazy letter my loyal followers are very familiar with. Now I have two letters to constantly share here.

Here is the response I returned to them. I didn’t appreciate their misrepresentations and am baffled why they would write this as it just gives me more tangible evidence of their bad behavior as an organization. Specifically, I don’t currently represent RAC at TAFAC and haven’t represented RAC at TAFAC for several years. TAF’s inference in the letter illustrates just how poorly written this letter really was.


May 26, 2022

Hi Todd,

I received your letter today, and I am disappointed that TAF continues to hide behind its bureaucratic largess. Given my history, I am surprised you signed such a letter, but I also want to thank you for providing more tangible evidence of how The Appraisal Foundation operates. Unfortunately, you never attached the “documents” you cited which are the “Ethics Rule Suggested Amendments-Draft 1 2 24 22” as well as “Statement of Understanding on December 15, 2016 – I’m sure it was just an oversight. I’d appreciate your follow-up in sending the document for my records at your earliest convenience.

If your letter were sincere, you’d acknowledge that most TAF leadership have been well aware of my Appraiserville blog for several years, especially after I became highly critical of your organization’s practices. Dave and I spoke on a call shortly after I lost faith in TAF – in fact, my Appraiserville content prompted him to reach out by phone. Specifically, my final straws were with TAF’s overreach on the definition of “misleading” and Dave’s (now known as) “bat-shit crazy” letter to ASC.

You already know this per your letter, but I’ll recap it for Dave and others who will read this at TAF: I received a call from a colleague who is good friends with Michelle Bradley, who advised me to take the document down that you referred to (I did during that call). Unfortunately, I was unaware of a lifetime commitment to confidentiality for a position I no longer hold yet continue to receive random documents. Nevertheless, I’m glad you appreciated that I complied with the request.

The hypocrisy of your letter runs deep in an attempt to have the last word. The following excerpt from it conveys the same tactic you are claiming I took against Michelle. Here is your quote:

… a fair reading of your references to Michelle Bradley and her husband, as expressed in the second paragraph of your blog, suggest that you are questioning the integrity of both individuals because they are married vis-à-vis USPAP updates and the cost of USPAP; you’re not offering comments about the work of the ASB. We ask that in the future, you refrain from engaging in such allusions.

 

Here is what I actually wrote about Michelle:

This insular operational style prevents TAF from understanding the optics that the industry and consumers look through. For example, as chair of the Appraisal Standards Board, Michelle Bradley, is responsible for modifying USPAP every two years (enabling TAF to continue to move towards financial independence by forcing appraisers to pay for USPAP when ASC is happy to pay for it but she is also married to Dan Bradley, the Appraisal Curriculum and Content Director for McKissock, the largest appraiser online training course out there). Wow. People I met when I was active in TAF who knew about this situation, shared their concerns about conflict of interest. I’ve met Michelle at conferences and is clearly a nice, smart person as I’m sure her husband is too and both are probably very good at their day jobs, but how is something like this permitted? Corporate boards don’t allow potential conflicts of interest like this. The optics on this tells us that there isn’t any real governance in TAF.

 

Since my point in Appraiserville was about the lack of any real governance at TAF, it would clear the air to the public to confirm whether or not there is a conflict between these two organizations. Since you missed the point I was making, Dave needs to provide answers to the following questions about this financial relationship:

1) Has there ever been an RFP between TAF and McKissock on their working relationship? 2) If there was, how long has it been since the original was issued and when was the last one issued? 3) If there was no such RFP that McKissock would have won, why not?

I think it would be reasonable for TAF to share Dave’s answers to those questions with the public. The appearance of two related people in positions of power to make decisions on mutual commerce is the issue here, not how hard these people work, how nice they are, and the personal sacrifices it takes to hold these positions. I’ll assume it’s a significant personal sacrifice, etc. but the optics are still wrong without full disclosure and public sharing of the RFP process, if any, that established the relationship in the first place despite the potential conflict of interest. If there is no RFP – which I assume to be the case – then please provide evidence that this potential conflict was vetted.

In my view, TAF has clearly lost its way and so it remains critical that creating legitimate transparency should be all about the appraisers and the public trust, and not be about obtaining financial independence by 2030 on the backs of appraisers.

One more thing Todd. I’m sure you are a nice person too, are committed to the work that TAF does, and are excellent at what you do as a personal property appraiser, but did you personally drive the need for this letter yourself, run it by the TAFAC board for a vote and then freely sign it or is this yet another example of the FOD monarchy in action? Please advise.

Best,

Jonathan


Here is the TAF letter sent to me on Thursday if you missed the earlier link in the post:

OFT (One Final Thought)

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll be more licenses;
  • You’ll be licensed;
  • And I’ll be certified.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc. Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

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May 27, 2022

We’re At Peak TikTok Housing Shock (Hey, That Rhymes)

To my regular Housing Notes readers: I have arguably way too much content this week, but I thought it would be helpful to carry you through the holiday weekend, especially if the parades run long.

This week I came across two viral NYC rental market videos on TikTok shared by the New York Post and Newsweek. Inspired by these TikTok clips, this edition of Housing Notes has an unusually high number of podcasts and videos (to keep my friend and colleague Ryan Lundquist occupied while he’s comping).

@charlottesaround How is this NOT a fire hazard??? #nyc #apartmenthunting #nycapt #fyp #foryou #FrunktheBeat ♬ original sound – charlotte
@sarahloukiernan the apartment market is insane in Brooklyn, maybe 50 people for 1 apartment #brooklyn #nyc #apartment #newyork #ny #SearchForWonderMom ♬ Elevator Music – Bohoman

But I digress…

Bloomberg TV: May 26, 2022 Discussing ‘Peak’ Affordability (We Seem To Be Close)

I was the last guest interviewed on Bloomberg TV live from Davos yesterday on Surveillance with Tom Keene and Lisa Abramowicz. Always fun because they are so smart and so intellectually curious. Before we went live, Tom was talking about all the property I own in NYC (I don’t own any) but we were chuckling about it as the segment began.


Mortgage Rates Fell For The Second Straight Week

Echoes of the Fed’s attempt to push rates higher in 2018 seem to be getting louder. Mortgage rates have retreated in the past two weeks indicating to me that banks have simply been enjoying the spread as they slash costs. Since I am a proud non-economist that possesses just enough Fedspeak to be dangerous and I see the economy through housing, I wouldn’t take my views on this topic very seriously but still, I am skeptical that the Fed will be able to sustain their upward pressure far beyond the next 50-basis point increase. While I think that higher mortgage rates are ultimately a good thing for housing given the proliferation of bidding wars and the collapse of listing inventory, I am a bit surprised by how much on the ground activity has slowed in the past two weeks that is not showing up in the macro numbers. Past experience shows us that buyers take several weeks to wrap their minds (and wallets) around a jump in rates. There is a really good WSJ piece about this: Fed Searches for the Magic Number to Cool a Red-Hot U.S. Housing Market.


[click on image for more Freddie Mac insights]

More Than Half Of Housing Price Gains Since Late 2019 Are Due To Remote Work

‘Zoom” became ubiquitous 24-hours after the pandemic lockdown began and it’s with us for the rest of our lives. It has upended the housing market and our relationship between home and work.

Now there is a study that has measured its impact of it on housing prices:

Housing Demand and Remote Work by John A. Mondragon & Johannes Wieland

From the abstract…

What explains record U.S. house price growth since late 2019? We show that the shift to remote work explains over one half of the 23.8 percent national house price increase over this period.

Insider: This Is Not A Housing Bubble

Here’s the tweet thread:

Kastle: 38% Of NYC Office Space Is Occupied

Kastle has emerged as a great way to understand commercial occupancy. Their numbers for May show that law firms are nearly back at 75% while overall occupancy is only at 43% and NYC trails DC, Chicago and Houston at 38.2%. So New York’s office towers are a little more than 1/3 empty and yet we are seeing record sales volume and record rental prices. This continues to confirm that people have entered the residential market to be in NYC for other reasons than work. That’s the power of remote, baby.

Here’s a slew of cool charts from Kastle:

TRD’s Deconstruct Podcast: Housing Bubble 2.0?

Nope.

From The Real Deal’s Deconstruct podcast:

If you’ve tried to buy a house within the past two years, you know first hand how tough it’s been. Inventory is scant, prices are sky-high and if you do find a diamond in the chaos, chances are you’ll have to compete with other buyers to actually secure a winning bid. But now that mortgage rates are rising, are we seeing signs of a housing bubble? The Real Deal’s Deconstruct chats with George Ratiu, an economist at Realtor.com and TRD reporter Kathryn Brenzel about how concerned buyers should really be.


TRD Coffee Talk: Adam Piore on his book ‘The New Kings of New York’

The much-anticipated book release for “The New Kings of New York” occurred this week. I just started reading it and so far it is spectacular (and not because I am quoted a lot, ha)! It tells the story of the past two decades of New York City real estate up through the pandemic in a compelling way, rich with detail and obviously well-researched. Here’s an interview with the author. Here’s Adam’s website for the book.


Plain English Podcast: What’s Going On With The U.S. Housing Market (A: An Inventory Collapse)

I just tripped into Derek Thompson‘s new podcast: Plain English and his first episode covers something we love talking about here on Housing Notes: What’s Going on With the U.S. Housing Market?

In this podcast, we answer: What’s going on with the U.S. housing market? Is this a bubble? Is it bursting? Why are homes in America so expensive? Why are we so bad at building houses? Why is there so much homelessness in America’s richest cities? The Atlantic’s Jerusalem Demsas comes on the show to share her theories with Derek, and Derek explains why he thinks every important question about the U.S. housing market has the same fundamental answer: inventory, inventory, inventory. And here’s his recent article in The Atlantic: The U.S. Housing Market Has Peaked: But no, we’re not headed for anything even close to 2008.


Is The Plunge In New Home Sales A Recession Warning?

I don’t think so, but as Axios said: The real estate frenzy is over:


As the headlines scream: ‘Recession warning’: Sales of new homes plunge in April

Yet…

“the best thing for high housing prices are high housing prices”
   - someone on the Internet

My goodness, look at the progression of rising prices in the pandemic era caused by the combination of high land costs, construction supply chain issues, labor costs, and insatiable demand caused by the “too-low” mortgage rate trend since the pandemic lock-down ended.



So it follows that with conservative mortgage underwriting standards, new home sales have maxed out because affordability has peaked.


Whatever The Housing Market Trajectory, The Super Luxury Space Continues To Soar

Regular Housing Notes readers know that I have been tracking housing market sales at or above the $50M threshold since 2014, and 2021 was a banner year. But with 3 sales in the past week (1 of the 3 still has to close), 2022 results if annualized and the current pace persists, will be the second-highest in history at 36 sales, after the insanely high results of 2021. And we continue to see more super luxury sales coming

Ritholtz: Aspiring To Have More Housing Aspirations And More Properly Priced Inventory

At the end of 2015, I started embedding the word “aspirational pricing” into my writings. I remember using it on Bloomberg TV with Scarlet Fu sometime in January 2016 and got a laugh out of it (the clip seems to be long gone).

:

My friend Barry Ritholtz wrote about this in “Aspirational Pricing” on the must-read ‘Big Picture‘ blog, properly giving me credit for yet another shameless attempt by me to get into the urban dictionary. Its a ditty of a piece: Aspirational Pricing.

The tl:dr is that heading into the pandemic, we had a decade of reduced demand and underbuilding, a huge lag in household formation, building up to lots of pent-up demand.

And of course, now I’m highly attuned to the various uses of the word “aspirational” such as:

The rise of aspirational capitalism [Axios]

The Luxury Marketing Conundrum: From Aspirational To Inspirational [Forbes]

How This Brownfield Transformed into an Aspirational School Campus [Buildings]

Top of Mind Podcast With Rick Sharga of ATTOM

Two of my housing market thought-leader faves are Mike Simonson of Altos Research and Rick Sharga of ATTOM, who is known to cook a mean BBQ.


Jason Stanley of Local Logic Gives Us Housing Formation Rationale

I thought his commentary was refreshing, especially since he is looking at it from Canadian optics…

A rise in headship rate partly explains the boom in demand for housing on both the rental and for-sale sides. That has been supported by pandemic-era public supports and, since then, the roaring recovery of the labor market.

I just signed up for his newsletter.


Mike Deprete on Compass’ High Burn Rate

Readers of Housing Notes know that I became doggedly critical of Compass about a year after they launched, skeptical of their claims. Compass is the real estate broker Unicorn of Softbank, who brought us WeWork absent of due diligence and introduced the concept of disruption by capital. I’ve long noted that they are a traditional brokerage company and not a tech company but present themselves as such, presumably to get a higher valuation. I know a ton of great brokers at Compass and they will be just fine whether Compass implodes or not. My criticism isn’t about the brokers, but rather, about the business model and claims of being a tech company.

Well, the sh*t is starting to hit the fan as the market reshifts into the higher mortgage rate era with lower sales volumes. According to this detailed blog post by Mike DePrete, Compass’ Cash Burn Problem:

And as Thad Wong, co-CEO of @properties said in this Real Deal piece: Expansion teams: Residential brokerages take on new frontiers

Wong referenced the “Compass effect,” whereby the venture-funded brokerage rapidly gained market share by attracting top brokers with generous incentive packages, including stock options.

“Nobody joined Compass for their culture or anything,” Wong said. “They really joined because they were given more money.”

Getting Graphic


My favorite charts of the week made by others

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

Appraisers: The Appraisal Foundation Writes A Chickenshit Letter On Your Dime

On Thursday I received a poorly written and threatening letter from the Appraisal Foundation for a blog post I wrote in Appraiserville back in February. I responded on the same day to their May 26th letter and have officially dubbed it the “chickenshit letter” for the petty misrepresentations it provides along the lines of the bat-shit crazy letter my loyal followers are very familiar with. Now I have two letters to constantly share here.

Here is the response I returned to them. I didn’t appreciate their misrepresentations and am baffled why they would write this as it just gives me more tangible evidence of their bad behavior as an organization. Specifically, I don’t currently represent RAC at TAFAC and haven’t represented RAC at TAFAC for several years. TAF’s inference in the letter illustrates just how poorly written this letter really was.


May 26, 2022

Hi Todd,

I received your letter today, and I am disappointed that TAF continues to hide behind its bureaucratic largess. Given my history, I am surprised you signed such a letter, but I also want to thank you for providing more tangible evidence of how The Appraisal Foundation operates. Unfortunately, you never attached the “documents” you cited which are the “Ethics Rule Suggested Amendments-Draft 1 2 24 22” as well as “Statement of Understanding on December 15, 2016 – I’m sure it was just an oversight. I’d appreciate your follow-up in sending the document for my records at your earliest convenience.

If your letter were sincere, you’d acknowledge that most TAF leadership have been well aware of my Appraiserville blog for several years, especially after I became highly critical of your organization’s practices. Dave and I spoke on a call shortly after I lost faith in TAF – in fact, my Appraiserville content prompted him to reach out by phone. Specifically, my final straws were with TAF’s overreach on the definition of “misleading” and Dave’s (now known as) “bat-shit crazy” letter to ASC.

You already know this per your letter, but I’ll recap it for Dave and others who will read this at TAF: I received a call from a colleague who is good friends with Michelle Bradley, who advised me to take the document down that you referred to (I did during that call). Unfortunately, I was unaware of a lifetime commitment to confidentiality for a position I no longer hold yet continue to receive random documents. Nevertheless, I’m glad you appreciated that I complied with the request.

The hypocrisy of your letter runs deep in an attempt to have the last word. The following excerpt from it conveys the same tactic you are claiming I took against Michelle. Here is your quote:

… a fair reading of your references to Michelle Bradley and her husband, as expressed in the second paragraph of your blog, suggest that you are questioning the integrity of both individuals because they are married vis-à-vis USPAP updates and the cost of USPAP; you’re not offering comments about the work of the ASB. We ask that in the future, you refrain from engaging in such allusions.


Here is what I actually wrote about Michelle:

This insular operational style prevents TAF from understanding the optics that the industry and consumers look through. For example, as chair of the Appraisal Standards Board, Michelle Bradley, is responsible for modifying USPAP every two years (enabling TAF to continue to move towards financial independence by forcing appraisers to pay for USPAP when ASC is happy to pay for it but she is also married to Dan Bradley, the Appraisal Curriculum and Content Director for McKissock, the largest appraiser online training course out there). Wow. People I met when I was active in TAF who knew about this situation, shared their concerns about conflict of interest. I’ve met Michelle at conferences and is clearly a nice, smart person as I’m sure her husband is too and both are probably very good at their day jobs, but how is something like this permitted? Corporate boards don’t allow potential conflicts of interest like this. The optics on this tells us that there isn’t any real governance in TAF.


Since my point in Appraiserville was about the lack of any real governance at TAF, it would clear the air to the public to confirm whether or not there is a conflict between these two organizations. Since you missed the point I was making, Dave needs to provide answers to the following questions about this financial relationship:

1) Has there ever been an RFP between TAF and McKissock on their working relationship?
2) If there was, how long has it been since the original was issued and when was the last one issued?
3) If there was no such RFP that McKissock would have won, why not?

I think it would be reasonable for TAF to share Dave’s answers to those questions with the public. The appearance of two related people in positions of power to make decisions on mutual commerce is the issue here, not how hard these people work, how nice they are, and the personal sacrifices it takes to hold these positions. I’ll assume it’s a significant personal sacrifice, etc. but the optics are still wrong without full disclosure and public sharing of the RFP process, if any, that established the relationship in the first place despite the potential conflict of interest. If there is no RFP – which I assume to be the case – then please provide evidence that this potential conflict was vetted.

In my view, TAF has clearly lost its way and so it remains critical that creating legitimate transparency should be all about the appraisers and the public trust, and not be about obtaining financial independence by 2030 on the backs of appraisers.

One more thing Todd. I’m sure you are a nice person too, are committed to the work that TAF does, and are excellent at what you do as a personal property appraiser, but did you personally drive the need for this letter yourself, run it by the TAFAC board for a vote and then freely sign it or is this yet another example of the FOD monarchy in action? Please advise.

Best,

Jonathan


Here is the TAF letter sent to me on Thursday if you missed the earlier link in the post:


OFT (One Final Thought)

Here is a never-before aired episode of Scott Galloway‘s show on now-canceled before it was launched CNN+. I’ve always admired Scott for his ability to speak with clarity.

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll be on TikTok more often;
  • You’ll be on TikTok more often;
  • And I’ll stay on Twitter.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads


May 20, 2022

While Looking For Housing, I Dig A Pony

I always say, “lead with a ‘Dad’ joke”…(NSFW – wait for it)


…and end with a great song on a rooftop:

But I digress…

Manhattan Rental Prices Surge At A Record Price By A Record Rate

I’m a week late on sharing this but I was traveling last week in California and am currently in Florida but with more time on my hands. Douglas Elliman published out rental research for April that is a part of our expanding series I’ve been authoring since 1994.

Bloomberg created some telling rental price charts in their coverage of the April report:

Elliman Report: April 2022 Manhattan, Brooklyn & Queens Rentals

______________________________________________________
MANHATTAN RENTAL MARKET HIGHLIGHTS

“Net effective median rent rose annually to a new high at the largest rate on record.”

  • Net effective median rent surged by the highest annual rate on record to the highest level on record
  • The most significant annual decline in listing inventory for the month of April on record
  • The vacancy rate remained under two percent for the fifth consecutive month
  • Doorman’s net effective median rent surged annually at a record rate for the eighth time in nine months
  • Non-doorman rent rose by a record rate that was higher than for doorman rent over the past two months
  • Luxury median rent and net effective median rent rose year over year to their second-highest levels
  • Bidding wars accounted for more than one-third of all luxury rentals
  • Luxury landlord market share of concessions fell to the lowest on record for the third straight month

______________________________________________________
BROOKLYN RENTAL MARKET HIGHLIGHTS

“Net effective median rent increased year over year to the third-highest level on record.”

  • Net effective median rent increased annually at a rising rate for the past six months
  • Landlord concession market share fell to its second-lowest level in four and a half years
  • New lease signings reached the second-highest level for the month of April on record

______________________________________________________
QUEENS RENTAL MARKET HIGHLIGHTS

[Northwest Region]
“Net effective median rent increased year over year at the second-largest rate to the highest level on record.”

  • Net effective median rent rose to a record high at the second-fastest annual rate in history
  • Listing inventory has collapsed annually for the fifth consecutive quarter
  • Landlord concession market share fell to its second-lowest level in five and a half years

How Manhattan Looks From Above

It’s a sharp landing if you’re not careful.

PROVE ME WRONG: Disrupters Are Making Housing More Expensive

There was a super insightful article out of Curbed this week New York Now Has More Airbnb Listings Than Apartments for Rent

Bloomberg picked it up, then Crains, then Fortune.

Airbnb started in San Francisco and created the same problem there. Homeowners can make 2.5x the rental income per month they could over a traditional 1-2 year lease. The genie is out of the bottle as they say.

The idea here is that these short-term (usually illegal because they are less than 30 days) rentals are reducing the availability of traditional rentals, driving up rental prices to record levels.

This runs parallel to the institutional home buyers who are buying and building single families to rent out. Combine that phenomenon with mortgage rates being held too low for too long and supply collapses and price trends spike.

The Problem With Using YOY Percentages on Listing Inventory To Tell The Story To Mere Mortals

A great source on the state of housing market is Calculated Risk. I saw this recent chart tracking the year-over-year change in active inventory and I think it may be misinterpreted by most followers of the housing market.

To the casual observer (mere mortals like myself), it would appear that listing inventory has normalized or is surging to normal levels.

Yet we know that the low starting points yield high percentages like going from “1” to “2” is 100%.

Now for context, look at listing inventory in raw numbers from the same source, NAR. Yes listing inventory is climbing, but from an extremely low point and still woefully inadequate.

Getting Graphic


My favorite charts of the week made by us

My favorite charts of the week made by others

Len Kiefer‘s Chart Handiwork

Upcoming Speaking Events

This should be a great virtual discussion on the market:


Yesterday, I had a great time moderating an in-person event of 150 real estate agents on the real estate evolution of the north end of West Palm Beach at the spectacular Lake Pavilion.

Elliman Report: Q1-2022 West Palm Beach Sales

Also, I was gifted a terrific Florida quote from someone at the event that I will use forever:

There are two seasons in Florida: Summer and Hell.


Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

Voice of Appraisal E255 Life, Liberty and the Value of Property!!!

I’ve found it quite fascinating to observe the discourse on “appraisal bias” and how many appraisers are conflating “I am not a racist” with the optics of our profession to the public “400 out of 400 or dead last in diversity.” Phil takes a thoughtful deep dive on the topic and I’m thankful our profession has someone who is able to articulate it so clearly.


OFT (One Final Thought)

My primary thought as I fly home tomorrow…

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

  • They’ll dig a pony;
  • You’ll dig a pony;
  • And I’ll dig a pony.

Brilliant Idea #2

You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.

See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads

Get Weekly Insights and Research

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