A Housing Epiphany For 2023
After a rough year for the housing market, I’m glad it’s coming to a close. I just had an epiphany. Let’s find the housing market reality that lives between the wildly fantastical #realestateInstagram world and the insanely doom and gloom that lurks in the minds of real estate pundits who race to push out the most absurd things they can think of. After all, this time it’s a bit different. #lackofsupply
Happy Holidays everyone!
a christmas epiphany pic.twitter.com/OvUc20HFnp— Saturday Night Live – SNL (@nbcsnl) December 18, 2022
But I digress…
Made In The Hamptons Podcast: Jonathan Miller
Afew weeks ago, I had a fun conversation with Jill Laurence and Adam Hofer of Douglas Elliman on the state of the Hamptons housing markets. Here’s the link to the Instagram promo.
New Fed Rent Index Shows New Leasing Data Leads Total Leasing Trends
There was a fascinating Bloomberg piece this week on new ways to measure rental trends to resolve the big lag in CPI calculations: US Rent Inflation Is Slowing Fast in New Index Built by Fed Team
Because of the mechanics of how housing is captured in the official inflation data, there’s typically an extended time-lag before real-time market conditions show up in the numbers. That can leave policy makers at the Fed and elsewhere flying somewhat blind when it comes to shelter costs, which are largest component of the CPI basket.
The subject of the article was a pretty interesting paper, Disentangling Rent Index Differences: Data, Methods, and Scope but a bit too wonky for me – here’s the abstract:
Prominent rent growth indices often give strikingly different measurements of rent inflation. We create new indices from Bureau of Labor Statistics (BLS) rent microdata using a repeat-rent index methodology and show that this discrepancy is almost entirely explained by differences in rent growth for new tenants relative to the average rent growth for all tenants. Rent inflation for new tenants leads the official BLS rent inflation by four quarters. As rent is the largest component of the consumer price index, this has implications for our understanding of aggregate inflation dynamics and guiding monetary policy.
Shelter costs are the largest component of inflation, and rental data is the measurement relied on. This paper seeks to explain the differences between the primary sources. Several new indices reflect faster changes in rent than the current CPI methodology.
During the pandemic era, Manhattan rental data was far more volatile in trend than purchase data. We only have access to new leasing data and not renewal data which is propriety data maintained by landlords. This paper suggests a one-year delay in renewal trends versus new leasing trends.
No real conclusion here – just thinking out loud, distracted by the thought of consuming eggnog tomorrow.
Consumer Sentiment Is Really Caving
The Surveys of Consumers, University of Michigan, University of Michigan: Consumer Sentiment © [UMCSENT], retrieved from FRED, Federal Reserve Bank of St. Louis, December 23, 2022, continues to tank. After all, the Fed is taking a baseball bat to the economy.
Outlook For Next Year Using A 1929 Perspective
A farmer born in 1842 talking about life and change, 1929. pic.twitter.com/aDq7NhLZWz— History Defined (@historydefined) December 20, 2022
My favorite housing market charts of the week made by others
2000-2020: China and U.S. trade partners— New Low Observer (@NewLowObserver) December 20, 2021
Always bet on the one trading at a new low. Alternatively, don't buy the one at a new high.
My favorite random charts of the week made by others
There's a real effect on the other platform! Very cool pic.twitter.com/oWjCxwuuYq— Ben Golub 🇺🇦 (@ben_golub) December 17, 2022
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
Appraisal Waivers Way Down From COVID Peak, But Way Up From Pre-Pandemic
It’s Been A Rough Year For TAF Leadership, But A Better Outlook For AI
Time Magazine’s Appraisers of The Year if there was one should have been Dave Bunton and Jim Amorin. Their recognition is based key people that were bad for the appraisal profession 2022.
Dave Bunton The Appraisal Foundation, the organization that wrote the bat-shit crazy letter, the chickenshit letter and is the subject of an active investigation by HUD on whether USPAP promotes a lack of diversity in the appraisal profession (BLS: 97.7% of appraisers are white), has had a tough year as the status quo has been under harsh criticism.
I suspect (hope) TAF executives will be ousted at some point during 2023, but that may be wishful thinking. I know many who have been trying for years to join the BOT/ASB/AQB who come from highly respected places in the industry but are always denied because they will ask too many questions and disrupt the status quo at TAF. Think about the loss to the industry from this behavior. I saw this in the person that tried to set me up for the chickenshit letter this year with the hope of getting on the ASB, but instead, it became a badge of honor for me. C’mon on HUD!
Jim Amorin On a parallel path, I harbored the same feelings about Jim Amorin, the CEO of the Appraisal Institute and his sycophants who had focused on self-dealing through doling out positions via choice teaching assignments, strategic committee assignments to garner control to keep the votes of members out of the process, weaponizing the sham petition process for self-gain, insanely high executive compensation using industry comps (wildly ironic), a steady decline in membership, maximum disrespect by inaction to residential members, first-class tickets all over the world with leadership’s support spouses, and more.
And then suddenly Jim resigned! He is leaving on Valentine’s Day next year. Hope is restored. That guy was unmatched when it came to corporate takings. His FOJ sycophants suddenly found themselves neutered and facing long-deserved punishment of irrelevance after years of living on the gravy train. They forgot the CEO reports to the board, which is beholden to the members, and it had been the other way around.
The exit of this one person may set the Appraisal Institute off in the right direction and on the way to restoring the credibility of this once-respected institution. Fingers crossed. I’m glad to help them in any way I can. That’s what my efforts to bring transparency to this corruption were all about. It’s been a long time since I saw the bulsh*t video by Leslie Sellers explaining why they were leaving the TAF and proceeded to lose 10,000 members over the next decade which helped tarnish the industry and make us vulnerable.
Thanks To All My Appraiser Colleagues/Friends
To the many, many, many appraisers I have spoken with or interacted with over the year: Thank you for your friendship and professionalism. I’ve learned a lot and feel very fortunate to know you.
OFT (One Final Thought)
Fonts are powerful.
Brilliant Idea #1
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Brilliant Idea #2
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Reads, Listens and Visuals I Enjoyed
- wp 2238 disentangling rent index differences [Cleveland Fed]
- U.S. Home Sales See Biggest Annual Decline at Least a Decade [Mansion Global]
- MSD, Apollo Close $536M Loan for 25 Water Street’s Resi Conversion [Commercial Observer]
- Charlie Munger Not Pleased With UCSB’s Megadorm Report [The Real Deal]
- Nearly One-Third of U.S. Home Purchases Were All-Cash Deals in October [Mansion Global]
- US Rent Inflation Is Slowing Fast in New Index Built by Fed Team [Bloomberg]
- Housing Market Doesn’t Need Much for Buyers to Return [Bloomberg]
- Audm presents: Can a Building Be Too Tall? [Audm]
- Wall Street Isn’t Close to Meeting Its Own Goals to Help Black Homebuyers [Bloomberg]
- WSJ News Exclusive | Casino Mogul Steve Wynn Is Betting on the Luxury Market, as He Unloads $300 Million in Personal Real Estate [Wall Street Journal]
- Housing and Mortgage Markets Declined Significantly in 2022, Not Expected to Meaningfully Recover Until 2024 [Fannie Mae]
My New Content, Research and Mentions
- This area is predicted to be NYC’s hottest neighborhood in 2023 [NY Post]
- Podcast: Jill Laurence discusses Hamptons Real Estate | Jonathan Miller | Made in the Hamptons
- The Year in Rent [Curbed]
- 4 of the top 10 most expensive US homes sold in 2022 are in California [Mercury News]
- The top 10 most expensive home sales nationwide are giving us déjà vu [Chicago Business]
- Inside the largest mansion for sale in Malibu, going for $58.8 million [CNBC]
- The Top 10 Most Expensive US Home Sales Are Giving Us Déjà Vu [Bloomberg]
- Serhant nabs Saunders & Associates Broker in Hamptons [The Real Deal]
Recently Published Elliman Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 11-2022 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 11-2022 [Miller Samuel]
- Elliman Report: California New Signed Contracts 11-2022 [Miller Samuel]
- Elliman Report: Normandy Isles/Normandy Shores New Signed Contracts 11-2022 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 11-2022 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 11-2022 [Miller Samuel]
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 10-2022 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 10-2022 [Miller Samuel]
- Elliman Report: California New Signed Contracts 10-2022 [Miller Samuel]
- Elliman Report: Normandy Isles/Normandy Shores New Signed Contracts 10-2022 [Miller Samuel]
Appraisal Related Reads
- Widespread Racial Bias Found in Home Appraisals. Increasing Diversity Will Diminish This Bias. [New York Law Journal]
- The Debate Surrounding Appraisal Modernization [Appraisal Buzz]
- Are foreclosures and short sales coming back to the housing market? [Sacramento Appraisal Blog]
- 5 Ways Homeowners Can Save Money [Birmingham Appraisal Blog]
Extra Curricular Reads
- The 2022 Hater’s Guide To The Williams-Sonoma Catalog [Defector]
- This Family Gave the World the Snow Globe [Atlas Obscura]
- Go ahead and feel sad and weird about Twitter [VOX]
- These were the most borrowed books from NYC’s public libraries in 2022 [Gothamist]