It's A Housing Market Controlled By Dogs, So Don't Be A Sheep

June 2, 2023

It’s A Housing Market Controlled By Dogs, So Don’t Be A Sheep

Sheepdog Herding sheep, as seen from the sky.
by in oddlysatisfying

Good Sheepdog Herding Sheep
by u/1KinGuy in nextfuckinglevel

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Did you miss last week’s Housing Notes? May 28 – Housing Is Running On Empty

But I digress…

New Signed Contract Reports Show May’s Return To Better Than Seasonal Gains

I’ve been the author of an expanding series of market reports since 1994 for Douglas Elliman Real Estate. During the global pandemic era, we launched a monthly series of newly signed contract reports that capture the demand and supply of the most recently completed month.

Elliman Report: May 2023 New York New Signed Contracts
Elliman Report: May 2023 Florida New Signed Contracts
Elliman Report: May 2023 Colorado New Signed Contracts
Elliman Report: May 2023 California New Signed Contracts

Here are a random sample of charts for the reports. For more, view the chart library.




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Apparently, Elon Doesn’t Understand The Housing Market because “It Isn’t Rocket Science”

This was a fun thread to follow. Elon Musk chimed into the doomsday take on commercial real estate saying that “home values next.” Glen Kelman of Redfin and others jumped in to explain why that was a wrong assumption. THREAD.

The Fantasy Of Buying A Ghost Town Explored

I really enjoyed this recent WSJ piece: The Housing Supply is Tight. How About a Texas Ghost Town for $100,000?

Without context, I could take a cash advance from a couple of credit cards and buy Lobo, Texas. But why? According to the seller, it seems to be in the middle of nowhere (see map below, and a buyer needs an excellent rationalization to make the purchase. It last sold for $20,000 in 2001, but after adjusting for inflation, the price is $35,000 in today’s dollars. There are no apparent improvements that have been made per this article.

But still, to some, it would be cool to own a town. The wealthier other end of the asset spectrum might be to buy an island. In either case, they’re niche markets with a very small buyer pool. I wish the seller good luck.

The Realtor Exodus Has Begun

This Axios piece lays it out: Realtor boom ends as housing market slumps

The National Association of Realtors has been remarkably transparent about the ebbs and flows of its membership.

Here’s my chart of membership through April.

Without Zoning And HOA Oversight You Get This

While we’ve all been regaled with stories of noxious HOA politics and zoning requirements, I’ll bet you’ve never considered this:

Getting Graphic

My favorite charts of the week of our own making

My favorite housing market/economic charts of the week made by others

Kastle card swipe data charts

Remember that Kastle charts are overstating occupancy* because their pre-pandemic occupancy benchmark was 100% which is simply incorrect (*measures card swipe activity as a proxy for occupancy).

Len Kiefer‘s chart handiwork

My favorite random charts of the week made by others

Upcoming Speaking Events


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Appraiserville

Sudden TAF AQB Chair Removal Was More Involved Than We Thought

After my previous post about the removal of the prior AQB Chair, JR, by Dave for looking into the industry’s lack of diversity, it was more than that. JR was also removed because he kept loudly questioning his board’s independence within the TAF monarchy. For the uninitiated TAF is 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 (ranked 400th of 400 professions tracked by BLS).

JR openly questioned why the staff was running everything and all AQB chair decisions had to go through Dave for approval. We can safely assume the current ASB Chair is subject to the same control. Remember her extensive bloviating about her independence during the recent appraisal bias hearing? It was odd. That extra emphasis on independence had to come scripted from Dave. It would appear that she is quite the hypocrite. TAF is, indeed, a monarchy. Feedback tells us that Dave makes Board of Trustees, AQB, and ASB decisions of substance which is all the more problematic since TAF literally has no oversight.

And this: The combined 2021 budget for AQB & ASB was around $900K, and BOT’s budget was $989K. The total budget of the three boards was about 40% of the overall 2021 budget. Where did the other 60% go? The short answer: bloated salaries.

Incredibly, the AQB chair before JR did not include JR in the budget process, so he was not aware that it was one of his functions. Moreover, the budget is kept secret from the rest of the board. JR gave all board members a hard copy of the budget at the March 2022 meeting, which was a definite no-no in the Bunton monarchy and perhaps the last straw. Just 2 1/2 weeks later, JR was booted from the AQB Chairmanship without warning.

You can see how swarmy the internal mechanics of TAF are. The three boards are simply window-dressing for a monarchy. I have friends on the boards that believe they can work to improve the situation from within. I don’t have much hope of that being effective, albeit perhaps in small ways. TAF doesn’t want oversight and has worked hard after finding a loophole to avoid scrutiny.

I’m sure Congress didn’t intend to create a not-for-profit without oversight that creates laws embedded into the legislatures of 55 states and territories. Good grief.

Non-Disclosure of AMC Fees To The Consumer Is By Design

The mortgage applicant today generally has no idea that the institutional middleman (AMCs) can get 50% or more of the “appraisal fee” stated on the application. That’s been a specific lobbying effort by the appraisal management industry – hide the “admin” fee from the consumer so it looks like the appraiser gets it all. I’ve written extensively about this in the past and brought up the AMC fee taking in my recent testimony at the ASC hearing in Washington DC on May 19th. This matters because appraisers are economically unable to participate in the TAF-mandated two-year mentorship requirement. This is specifically why appraisers are dead last – 400th or 400 ranked by BLS in diversity.

AMC Fee Impact on Appraisal Fee [Appraisers Blogs]

AXIOS Relied On TAF To Explain How It Solved Appraisal Bias?

The Axios piece was disappointing: White House unveils plan to combat racism in home appraisals.

TAF – the maintainer of USPAP standards and the chief creator of the two-year mentor program that has caused concerns about appraisal bias so much that it became a White House platform,

“The Appraisal Foundation shares the PAVE Task Force’s commitment to root out bias and discrimination in the appraisal profession, and fully supports the very meaningful steps PAVE has been taking,” The Appraisal Foundation President Dave Bunton said in a statement, adding that the organization has already made nondiscrimination part of its professional standards.

I have reached out to Axios to discuss further.

Agencies Request Comment on Quality Control Standards for Automated Valuation Models Proposed Rule

Here we go! As we learned from AVM Zestimate numbers, Zestimates have a 7% median accuracy rate if the property is NOT listed. And that’s “median” accuracy which means that 50% of the time its within 7% of the actual sold price, and 50% of the time its NOT within 7%. AVMs are a false valuation promise at the moment. However, as data becomes better, their accuracy will improve, but I think, even with the potential of AI, that reasonable accuracy is still 1-2 decades away.


[Click on the image for more details]

RICS World Built Environment Forum June 15th in New York

As I mentioned earlier, I’m speaking at the RICS event in Manhattan which promises to be rich in content.


[Click image to open RICS article]

As an aside, I chimed in on a RICS article for their “MODUS” publication: Is climate change impacting property valuations?

One of the things not discussed in the piece was the shift in the mix. FEMA’s low premiums in comparison to the private markets have caused overbuilding on coastlines. FEMA even redrew the maps on Long Island, which would have pushed costs much higher, but the political forces stopped them from going into effect. We saw destroyed middle-class housing rebuilt as luxury housing. That ultimately will be the more prolonged impact of Hurricane Sandy.

OFT (One Final Thought)

My wife sent me this clip for some reason. Yes, I’ve got several large bins of old computer wires. In a wireless world (and a subscriber to “Wired” Magazine), I find them really tough to let go of. Like in college, I used to use an old extension cord to pull my car hood open.

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons at 2 p.m.) 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 sheep;
– You’ll be more cable-conscious;
– And I’ll go wireless.

Brilliant Idea #2

You’re clearly full of insights and ideas as a reader of these Housing Notes. Please share them with me early and often. I appreciate every email I receive, as it helps me craft the following week’s Housing Note.

See you next week!

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

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