It’s Still February And Rents Are Rising And The Sky Isn’t Falling
Ha. This is a good uplifting take on the month of February…
But I digress…
Manhattan Rents Continue To Press Higher
I’ve been the author of an expanding series of housing market reports since 1994 for real estate firm Douglas Elliman This week the firm released our rental market research in New York City and the results continued to reflect robust activity as the market snapped back.
Elliman Report: January 2022 Manhattan, Brooklyn & Queens Rentals
Bloomberg created a nice chart (two versions) for their piece: Manhattan Apartment Rents Creep Closer to the Highest on Record
MANHATTAN RENTAL MARKET HIGHLIGHTS
“A low vacancy rate combined with a rapid drop in listing inventory led to record prices.”
- Net effective median rent increased annually at its highest rate record to the second-highest January ever recorded
- Listing inventory fell year over year at a record rate for the sixth straight month
- The vacancy rate fell below pre-pandemic levels for the second consecutive month
- Doorman median rent surged year over year for the sixth straight month at a record rate
- Non-doorman rent jumped annually at a record rate but remained below pre-pandemic levels
- Luxury average rent rose to the highest level in more than eleven years
- Luxury listing inventory fell to the lowest in six and a half years of tracking
- Luxury landlord market share of concessions had fallen by half from just before the pandemic era began
BROOKLYN RENTAL MARKET HIGHLIGHTS
“Heavy leasing volume against the backdrop of a sharp decline in listing inventory led to rapid rental price gains.”
- Listing inventory fell year over year by the highest rate on record
- New lease signings rose to the second-highest January since tracking began in 2008
- Net effective median rent rose year over year at the third-highest rate for the month of December
QUEENS RENTAL MARKET HIGHLIGHTS
“Record January leasing volume along with a rapid decline in listing inventory resulted in a surge in rental price gains.”
- Net effective median rent rose at its second-fastest annual rate on record
- Listing inventory fell year over year by the largest rate on record
- The number of new leases reached its highest level for January on record
This Monster NYT Cover Story Shows How Median Price Growth Since Pre-Pandemic Is Universal Across The 5 Boroughs
During the pandemic, I’ve contended that year-over-year trend comparisons should be made against the same period two years ago. Well, the NYT listened and the comparison across the five boroughs is amazingly consistent.
Here is how the individual boroughs trended out.
The Case Against Single Family Zoning
In recent years there is a growing chorus that makes the case against single-family zoning for fostering lack of diversity, more damage to the climate, and rising housing prices. A few years ago, Minneapolis banned single-family zoning and more cities and states are have abolished it to are considering it.
Here is a fun watch video on the topic. I’m convinced the world needs more sarcasm.
The Regional Plan Association presented this documentary on NYC metro housing in 1973. Narrated by Eli Wallach whose credits include The Good, the Bad and the Ugly, its obviously dated but was a compelling presentation.
How To Keep Your Historic Home From Eroding
The Onion Exposes Misleading Listings
I love The Onion’s hard-hitting news.
THREAD Ritholtz Gives Us The Breakdown On Transitory Inflation
My favorite charts of the week made by others
Len Kiefer‘s Chart Handiwork
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
NFHA Had To Remind TAF’s Dave Bunton How He Publically Misrepresented Facts About Their Report
It’s hard to believe that, in this day and age of pervasive video and audio recording, some people continue to try to re-write history for their own benefit. Apparently, Dave Bunton is one of those individuals but this time he picked the wrong group to mess with. This letter is an unbelievably detailed and clear takedown of Dave by NFHA over Dave’s glaring misrepresentation of TAF’s input into the study. This letter can be found on the ASC.gov website.
The National Fair Housing Alliance (NFHA) independently authored the Appraisal Standards and Appraiser Criteria Report along with Dane Law LLC, and the Christensen Law Firm for ASC and it was clearly in TAF’s interest to obscure the results.
Dave Bunton spoke at TAFAC (The Appraisal Foundation Advisory Council) on January 28, 2022, and shared comments with HousingWire. I have been a member of TAFAC in the past, attending meetings a few years ago. I also subscribe to HousingWire and have been quoted numerous times by different reporters on various topics. In other words, I am quite familiar with both organizations.
Dave Bunton is the 3+ decade president of The Appraisal Foundation whose mission ( I thought) was to uphold the public trust (from TAF’s website).
It is our mission to advance the valuation profession by setting standards of excellence, promoting education and upholding the public trust.
Yet it looks like Dave Bunton was trying to sow doubt about the integrity of the NFHA’s Appraisal Standards and Appraiser Criteria Report. NFHA took issue with his and his organization’s misleading statements and wrote him a detailed letter to expose just how wrong his statements were. It wasn’t even close or a nuanced miss. Isn’t this called lying?
TAF has stated that it is “disappointed that none of our board members who develop these standards and qualifications were interviewed as part of NFHA’s assessment.” Separately, you stated at the TAFAC meeting on January 28, 2022, that “no one from the Board of Trustees was interviewed.”
That statement appears to be misleading as we left it up to TAF to determine whom to include in the discussions. Moreover, NFHA Consortium staff did conduct discussions with board members.
In other words, Dave/TAF are trying to infer that they had no or limited input into this damning paper, when in fact TAF had full input and access to the process. To be clear, Dave/TAF was invited to bring whomever they wanted into the interview process and they clearly did. This letter has a timeline with a list of all the TAF attendees who were selected by TAF themselves to attend. Two of the bullet points in the NFHA couldn’t have been more clear:
• 10/26/2021-NFHA Consortium staff e-mailed TAF staff to set up a time for the interview, stating: “Of course, please feel free to invite any of your colleagues.”
• 11/1/2021-NFHA Consortium staff conducted an interview with the following TAF staff and board members, who were selected by TAF senior management:
o David Bunton, TAF CEO, Board of Trustees President
o Kelly Davids, TAF SVP
o Lisa Desmarais, TAF VP of Appraisal Issues
o Jeff Dickstein, Board of Trustees
o Leigh Lester, Board of Trustees, Co-chair of the Special Committee on Diversity, Equity, and Inclusion
o Jalin Debeuneure, Liaison for Diversity, Equity, and Inclusion Initiative
It is apparent that NFHA has some serious legal firepower or can write a master class on takedown letters for people that misrepresent their actions. Afterall, TAF shows little respect for lawyers – remember that TAF’s 2-year changes to USPAP are NOT REVIEWED BY ATTORNEYS yet are embedded into state laws around the country!
Here’s the TAF takedown by NFHA as a pdf or presented in full below:
Wow. This is getting real. TAF is going to get PAVED.
People Of Color Should Submit Their Names To The Trustee Nominating Committee NOW
Rinse, Lather, Repeat. In the TAF monthly newsletter, Dave Bunton is reaching out for the next crop of Board of Trustee Members:
The Trustee Nominating Committee is now accepting applications to fill three at-large positions. These three-year terms will begin on January 1, 2023.
The Appraisal Foundation is committed to welcoming a diverse, new generation of appraisers to the profession that is reflective of the United States, and we are working to also reflect that diversity in our boards.
As the February newsletter says (bold my emphasis):
If you are interested, we hope you will consider applying or sharing this application with any potential candidates who you think would be a good fit to serve on our Board of Trustees. Applications are due on March 1, 2022.
Be sure to click on the link above to apply.
I highlighted the reference to “good fit” since for the past three decades, a Board of Trustees “good fit” has only meant about three people of color. It really meant that the applicant had to be a FOD (Friend of Dave). This monarchy arrangement has evolved into one of the most insulated organizations I’ve run into. How can they protect the public trust when they are an echo chamber of largely shallow like-minded views?
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.
As we learned from watching Dean Dawson’s self-dealing real estate appraisal board operate in West Virginia (The “Dean” terms out in June because the Governor decided it was easier than removing him), boards dominated by appraisers overseeing the appraisal industry is bad for appraisers – it insulates leadership from new ideas, being aware of changing social mores, helps keep competition out and keeps fees higher for the few in power. In this case, this monarchy management style prevents the TAF boards from seeing a massive tsunami about to hit them. In other words…
TAF is going to get PAVED.
Phill Crawford Lets Loose On Desktop Appraisals, Relying On Batman For Help
Phil Crawford over at Voice of Appraisal Podcast is on a roll and this conversation continues the momentum.
The CFPB Does A Major Takedown Of TAF Over Its Stubborn Refusal Not To Comply With Federal Law
I’ve written about the insanity of TAF’s AO16 as HousingWire explains:
The Appraisal Foundation — a private group that is the de facto appraisal regulator — tells appraisers in its Advisory Opinion 16 not to rely on “unsupported conclusions relating to characteristics such as race, color, religion, national origin, sex, sexual orientation, gender, marital status, familial status, age, receipt of public assistance income, disability, or an unsupported conclusion that homogeneity of such characteristics is necessary to maximize value.”
But that guidance leaves room for “supported” conclusions that take those protected class characteristics into account, which the regulatory agencies said will not fly.
It’s that second paragraph that explains why TAF’s actions are so blatantly inappropriate and have been the focus of many including myself to get it removed. This is why TAF needs to have counsel review all recommendations by any of TAF’s boards (they don’t!) TAF is happy to define “misleading” in a ridiculous way but it seems unwilling to remove wording that violates federal law about discrimination.
This is such a disaster that the Consumer Financial Protection Bureau (CFPB) wrote this note for public consumption on their position “Appraisal discrimination is illegal under federal law“. They also wrote TAF Standards Chair Michelle Bradly a terse letter.
This isn’t rocket science. TAF seems to try to make it as such. Appraisers and other agencies have been telling TAF for years that AO16 is improper, yet TAF does nothing. Combine this with the utter lack of industry diversity and lack of diversity in TAF, living in an insular environment is hurting all appraisers. What a train wreck.
TAF is going to get PAVED.
Fixing the flawed TAF Organization Is A Bipartisan Issue
Sometimes I get the feeling that TAF is paying only lip service to address the lack of industry diversity right now because they probably think the House of Representatives will flip in the fall and the new majority won’t care about the transgressions that have been regularly criticized here in Appraiserville. But I think TAF is wrong if they are thinking this way. The damage to appraisers and the public trust by the actions and lack of actions of TAF over decades reflects poorly on both sides of the aisle. Just because eliminating discrimination in housing appraisals is a key policy plank by the Biden White House, doesn’t mean the GOP doesn’t have other issues of concern with TAF even if they have the potential to control both houses of Congress this year.
DEMOCRATS – Minorities have been disenfranchised as evidenced by the 96.5% white composition of the industry per BLS and a nominal amount of leadership positions apparent within the industry and within TAF.
REPUBLICANS – Commerce is being adversely impacted by the aging out of appraisers and a private corporation created by Congress has no oversight and is stockpiling a massive amount of cash. I remember a letter that U.S. Senator Round and U.S. Senator Thune from South Dakota sent to TAF in 2015 expressing how pissed off they were but used skillfully professional language like a boss (and like the earlier NFHA letter). From the South Dakota U.S. Senator’s letter:
Surveys of former appraisers point to several reasons for this decline, including increasing regulatory burdens and volatile business climate that make it infeasible and unattractive to take on the added risk of trainees. As a result, young people do not see many job opportunities as appraisers today.
Phil Crawford’s podcast interview with the current South Dakota governor’s daughter a few weeks ago, provides clarity on why there is an appraisal shortage right now throughout the U.S.
Here’s the recipe for disaster to the public trust: Disenfranchisement of minorities + negative impact to commerce = problems enabled by TAF
TAF is going to get PAVED.
OFT (One Final Thought)
As my loyal readers can tell, I love music and share it in Housing Notes whenever I can. I thought I’d share some of the music I play while I’m writing these Housing Notes. If I have to be completely honest, I found a feature in Apple Music that enables me to share playlists on a web page.
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 get paved;
- You’ll love February;
- And I’ll look for more charts.
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.
Reads, Listens and Visuals I Enjoyed
- 1973 RPA Housing Documentary Offers Dose of Deja Vu [RPA]
- NYC Says It Will Take 20 Years to Restore Park Avenue to Its Former Glory [Vice]
- The Next Austin? What Companies Will Look for in a Headquarters City [Wall Street Journal]
- The Impact on Housing of Higher Mortgage Rates [Calculated Risk]
- U.S. Foreclosures Surge in January After End of Pandemic Freeze [Bloomberg]
- Diverse neighborhoods are made of diverse housing [Brookings]
- This Small Arkansas Bank Is Fueling America’s Skyscraper Boom [Wall Street Journal]
- In Covid-19 Housing Market, the Middle Class Is Getting Priced Out [Wall Street Journal]
- ‘Amazon for real estate’: how the StreetEasy app took over New York [The Guardian]
- New York Needs to Learn a Housing Lesson From … New Jersey? [Slate]
- The Gilded Age 5th Avenue Mansions of Millionaire's Row [Untapped New York]
- Wolf of Airbnb Accused of Short-Term Rental Scam [The Real Deal]
- National Housing Survey [Fannie Mae]
- Why Realtors Have Embraced Brutal Honesty. ‘Smells Like a Farmtown.’ [Wall Street Journal]
- This Red-Hot Housing Market Is Betting Interest Rates Will Never Rise [Bloomberg]
- U.S. Housing Costs Surge, With No End In Sight [Bloomberg]
- Manhattan Offices Face Reckoning as Older Buildings Get Left Behind [Bloomberg]
- There’s Never Been a Worse Time to Buy a Home in a Poll of U.S. Households [Bloomberg]
- Houses are expensive everywhere, and we don’t have enough of them [Grid News]
- California attorney general accuses wealthy town of using mountain lions to skirt affordable housing law [LA Times]
- Strategies to Boost Housing Production in the New York City Metropolitan Area [CBCNY]
- This Week in "Rich People, Dumb Choices" … [Airmail News]
- Metaverse real estate sales top $500 million, and are projected to double this year [CNBC]
- Progressives and Hochul Battle Over Fate of $1.7B Developer Tax Break [The City]
My New Content, Research and Mentions
- Manhattan Rents Return to Pre-Covid Level After January Hike [The Real Deal]
- NYC median rents jumped in January, despite a plunge in new leases signed [Brick Underground]
- Park Avenue restoration will take 20 years, Subway hits post-omicron high, and more [Urbanize New York]
- West Side Rents Surge by 29% Bringing Back Pre-Pandemic Prices [w42st]
- NYC Apartment Rents Spike To Near Record, But 2022 Could Be Start Of Market ‘Normalization’ [Bisnow]
- Keeping an Eye on the Middle [NY Times]
- Westchester’s Biggest Brokerages, Ranked by Agent Count [The Real Deal]
- Listing on a Prayer: Bon Jovi Asks $21.5 Million for Manhattan Home [Wall Street journal]
- Manhattan rents surge 23%, nearing all-time record [NY Post]
- Where is ‘Only Murders in the Building’ Filmed? This Real-Life Manhattan Condominium [Wall Street Journal]
- Demand for South Florida Homes Pushes Buyers to New Heights [The Real Deal]
- Manhattan Apartment Rents Creep Closer to the Highest on Record [Bloomberg]
- What To Buy In An Ever-changing Market? A Contrarian's Guide To Investing [Real Estate Weekly]
- ‘Saturday Night Live’ Alum David Spade Gets $19.5 Million for Beverly Hills Home [Wall Street Journal]
- ‘Saturday Night Live’ Alum David Spade Gets $19.5 Million for Beverly Hills Home [Mansion Global]
- LA mansion headed to auction block is America’s most expensive home [Fox Business]
- How Pandemic Price Increases Push Rents in Greenpoint Sky High [Commercial Observer]
- How the pandemic made New York’s housing market even more ridiculous [The Guardian]
- Manhattan’s Signed Contracts Slow, Continued Low Inventory [The Real Deal]
- Sunday Summary: Viva la International Buyer [Commercial Observer]
- Kirk Douglas Home in Beverly Hills Sells for More Than $1 Million Over Its Asking Price [Wall Street Journal]
- Real Estate Records are Sweeping the Industry [Architectural Digest]
- Pandemic pricing is over. Manhattan real estate prices were near record highs last year [KTVZ]
- Pandemic pricing is over. Manhattan real estate prices were near record highs last year [CNN]
- U.S. Luxury Second-Home Markets Saw Strong Demand, Tight Inventory at the Highest End [Mansion Global]
Recently Published Elliman Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 1-2022 [Miller Samuel]
- Elliman Report: Manhattan Decade 2012-2021 [Miller Samuel]
- Elliman Report: Long Island Decade 2012-2021 [Miller Samuel]
- Elliman Report: Manhattan Townhouse 2012-2021 [Miller Samuel]
- Elliman Report: Normandy Isles/Normandy Shores New Signed Contracts 1-2022 [Miller Samuel]
- Elliman Report: California New Signed Contracts 1-2022 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 1-2022 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 1-2022 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 1-2022 [Miller Samuel]
- Elliman Report: Long Island Sales 4Q 2021 [Miller Samuel]
Appraisal Related Reads
- Appraisers testify 'communication path' needed to Senate panel [Keloland]
- Rounds, Thune Send Letter to Appraisal Foundation Chair Regarding Decrease in Real Estate Appraisers | U.S. Senator Mike Rounds of South Dakota [rounds.senate.gov]
- CFPB is the latest agency to criticize the Appraisal Foundation [HousingWire]
- Desktop Rubbers and Dropping Balls!? [Voice of Appraisal]
- 2-4-22 NFHA Letter to TAF [ASC]
- 5 Things Agents Should Know About ANSI [Birmingham Appraisal Blog]
- WUSA9 investigation prompts appraisal bias legislation, now a leading issue in Maryland's gubernatorial race [WUSA9]
- Choosing comps in a lopsided market [Ryan Lundquist/Sacramento Appraisal Blog]
- Appraisal discrimination is illegal under federal law [Consumer Financial Protection Bureau]
Extra Curricular Reads
- Apartment Listing Cagey About Whether Unit Has Floor
- This year may be the end for outdoor dining sheds [Crain's New York]
- Rob Beschizza [Boing Boing]
- Still Out There? The Ford Mach 2 Concept Car Remains Missing More… [Hemmings]
- Tom Brady Retires – What it Means to Think Big [GaryAcosta.com]
- When Did Picking a Meeting Time Turn Into a Power Trip? [Wall Street Journal]
- Michael Lewis Revisits ‘Liar’s Poker’ [NY Times]
- Ritholtz Wealth’s Michael Batnick: Crushing It With Content [Barrons]