Waffling On The Housing Market
Cheryl & I just spent three days in Nashville visiting good friends and gaining some new friends. I was kind of checked out when it came to real estate this week, but not waffles. There were Waffle Houses seemingly everywhere Nashville, but I’ve never been to one. Although I had some excellent waffles during my stay (Thx Susan!), I’m still curious about the source of FEMA’s Waffle House Index inspiration (and my own waffle maker continues to impress.)
Manhattan’s Housing Decade As A Moving Window
As part of the expanding Elliman series of market reports, we produce a ten-year moving window on Manhattan with a slew of neighborhood breakouts. I’m going to be doing more of this in 2019 but this 57-pager should keep you busy for now.
The cover (click on the image to access entire report)
Page 4 (click the image to access entire report)
What is Zillow Up To?
Zillow had been running out of upside, having fully saturated the search revenue vertical. Raising revenue on the backs of real estate agents has its limits so they have been expanding their footprint into other businesses like mortgage and ibuyers. This hammered their stock price in 2018. They brought co-founder Rich Barton (I met him at a party on the day before Zillow launched – little did I know…) back into the CEO position to take over CEO Spencer Raskoff’s reign of incredible growth as they prepare to ramp up their efforts into new ventures.
The Basis Point has a good piece on how this will all work: Zillow just told us what the future of buying a home looks like. And it’s all about scale.
With the significant inaccuracy of their Zestimate product (50% of their Zestimates are NOT within 4.5% of the correct value and they aren’t using Zestimates for their iBuyer model?) and with regulators pushing appraisers out of the way without a replacement, with housing slowing and a non-housing recession probability gaining momentum, all bets are off for the future the housing market.
Nobody Lives Here
From cartography web site mapsbynik, a visual that is the opposite of what we would expect – where people don’t live. When I was 15, I rode my bicycle across the U.S. with what was then called Bikecentennial ’76 and the route was planned on roads with 10 cars or less per hour. I can personally attest that there is a heck of a lot of desolate areas in America.
Wrapping up NYC’s Self-Loathing About Amazon HQ2
At the end of the HQ2 debacle, the market will return to as it was before. Michael Hertzenberg of Spectrum News NY1 captures the sentiment so well. Click on image for video story.
Some of our favorite chart creations this week…
Upcoming Speaking Events
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
Smedley Dingledorf Saves The Day But Hurts The Consumer As Told By Bart Simpson
One of my lifetime best friends is Bart Simpson, who is an actual person. We grew up together from elementary school through high school but went our separate geographic ways to college. My other best friend during that era of my life was Harry Benson, who was also the key character in Michael Creighton‘s early best seller, “The Terminal Man” but that’s another story. Bart taught me how to ski and how to make plexiglass cookbook holders (hey it was the 70s). We spent our weekends riding bicycles everywhere, especially into D.C. on weekends to meticulously go through each of the Smithsonian museums – you could say we were sponges of random information. There must have been something borderline addictive in the Bethesda, Maryland water because we also both turned out to be real estate appraisers. He would tell me how he would leave messages to schedule appraisal inspections as “Mr. Simpson” because his full name caused many homeowners to think it was a crank call and not call him back.
Last week I posted an interview: The Apple Peeled – Ask the Experts: Market Dynamics with Jonathan Miller and Bart had something to say about it. He gave the most coherent spot-on description of the AMC situation most appraisers find themselves dealing with daily. However, these AMCs hire many of the lobbyists that have helped forge regulatory rule changes like the recent proposal that raises the de minimus to $400,000 without any concern for the consumer (or the taxpayer). Here is his perfect depiction of AMC interactions with appraisers:
I am so fed up with the AMC’s that spend plenty of time giving me the opportunity to bid on a job (Please provide your fee and turn time) when they have not even taken the time to see that I am not licensed in that state. They just send an email to everyone within a large radius and wait for us to research it and provide a fee. Last week, I had one ask for a fee and turn time. The crazy part was that they did not have an address or legal, just: “3o acre property by the river Per lender-Tax Ma 4, Parcel 6” If you research this property and find out details please provide them to us so that we can provide the details to the customer when quoting this assignment. Please confirm you can assist with this assignment and then provide your fee and turn time.
So they wanted me to find a 30 acre parcel, assume that it was the one they needed appraised, research it and provide a fee, so they could respond to someone else that was clueless. I was not licensed in that state, so I did not waste my time.
The idea for AMC’s was logical – that they would be able to distribute the work without bias. Jonathan gets this appraisal, Bart gets the next one, and Whit gets the third. It is now standard practice to see: We collected $600 for an appraisal at Deep Creek Lake Bart charges $575, Whit will do it for $350, Bill can you do it for $300? Bill eventually will say yes just to get some work, but along comes Smedley Dingledorf, who just got his license and has never been to Deep Creek Lake. He is happy to visit and learn about it at the buyer’s expense, and takes the job for $275. No quality or expertise, but they got a piece of paper saying the house is worth what they need it to be.
The Appraisal Petition Against The Higher De Minimus Just Cracked 7,000
I strongly believe that our industry is our own worst enemy.
The notion that this appraisal petition started by Ryan Lundquist (whose essential blog just turned ten) and I hasn’t reached at least 75,000 signatures by now says a lot about why we’ve been taken advantage by our trade groups, appraisal management companies, lenders and regulators. Most of us aren’t paying attention. We just sit and wait for someone else to do it or for the fax machine to ring. Let’s turn this industry attitude around in 2019. We’ve come along way since 2016 and have been making progress but there is much to do and our attitude still, frankly, sucks as a complacent industry.
OFT (One Final Thought)
My nephew brings the boom!
Ok, one more thought.
With the passing of Peter Tork, there’s this.
Brilliant Idea #1
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Brilliant Idea #2
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See you next week.
Reads, Listens and Visuals I Enjoyed
- Zillow just told us what the future of buying a home looks like [The Basis Point]
- January home sales and price report [California Association of Realtors]
- Yet another sign from the housing market of a looming recession [Housingwire]
- Hudson Yards Is a Gilded City Straight Out of a Billionaire’s Fantasy [New York Magazine]
- Construction floor vs. Marketing Floors | Mechanical Voids [The Real Deal]
- Athens property boom: Greeks left out as prices rise [BBC]
- Negative Yields Mount Along With Europe’s Problems [The Wall Street Journal]
- Reykjavik Is Being Swamped by Empty Luxury Flats [Bloomberg]
- A real estate photographer tells you how to spot staging tricks in listing photos [Brick Underground]
- What Happened When I Bought a House With Solar Panels [Bloomberg]
- Nobody Lives Here, A Fascinating Map of the Many Areas in the United States With Zero Population [Laughing Squid]
My New Content, Research and Mentions
- These Miami brothers keep selling some of the priciest homes in the world. How do they do it? [Miami Herald]
- Estos hermanos miamenses han vendido una fortuna en residencias. ¿Cómo lo hacen? [el Nuevo Herald]
- Amazon jilted NYC. What does it mean for buyers, sellers, and renters? [Brick Underground]
- With Amazon HQ2 deal dead, what’s next for Long Island City real estate? [Curbed NY]
- Why Rich Snowbirds Are Trading Vacation Homes for Luxury Resorts [Fortune]
- Amazon’s about-face will hit Greenpoint developers, but it’s not a knockout punch [Brooklyn Daily Eagle]
- Amazon Reversal Scrambles Assumptions About LIC Rent, Real Estate Prices [New York 1]
- The Upside of a Global Downturn? Juicy Real Estate Deals
Recently Published Elliman Market Reports
Appraisal Related Reads
- The Final Frontier [Rachel Massey/Working RE]
- My blog is 10 years old today [Sacramento Appraisal Blog]
- 6 Steps Agents Can Take When There Are No Comps To Price A Listing [Birmingham Appraisal Blog]
- When This Old House was new [Curbed]
Extra Curricular Reads
- Peter Tork, endearingly offbeat bassist and singer in the Monkees, dies at 77 [The Washington Post]
- Different Kinds of Stupid [Collaborative Fund]
- Follow the Path of Least Resistance: An Oral History of ‘Office Space’ [The Ringer]
- Financial Stability in Abnormal Times | by Kenneth Rogoff [Project Syndicate]
- Why Does It Feel Like Everyone Has More Money Than You? [Harper's Bazaar]