Thanksgiving’s Housing Tryptophan + Side Dishes

My wife and I hosted a Thanksgiving get together with our family and friends like most did yesterday – and tryptophan aside – we all agreed that this holiday celebration is our favorite of the year. Many on social media overuse words like #blessed, #thankful and #grateful to express their thoughts on a meaningful event. Yet those words seem inadequate to express how wonderful it is to bring many together you love at a social gathering and everyone actually wants to be there.

Of course we went through 3 different refrigerators in the prior 7 days to make the gathering possible. I used that un “cool” experience to illustrate Twitter’s new 280 character maximum.

Some people were actually hesitant about going home for Thanksgiving (to Staten Island):

And like our efforts to buy a new refrigerator, there are always daily items to file in the ‘Things Don’t Always Go As Planned’ department (even in stadium demolition).

And what about this mind-blowing Thanksgiving Survey from 538?…

Salad? These side-dish survey results were enough to force me to declare I’ll never spend the holiday on the west coast:

And let’s soak up the here and now because life seems to move faster as you age. I always reflect on this when a celebrity of my childhood passes away such as David Cassidy.

I loved watching the Partridge Family TV show circa 5th grade. It didn’t hold up well over time but the happy memories of watching it as a young kid was seared into my brain. David Cassidy’s passing was one of those reminders of my childhood. So c’mon, get happy as time passes by very quickly. A long time ago, my wife and I went with some friends to see David Cassidy and Sean Cassidy star in the play Blood Brothers on Broadway. It was awesome.

but I digress…

Hashtag ‘Thankful’: Greenwich scores its highest sale YTD and 3rd Sale ≥ $20 million YTD

A $31.5 million Greenwich listing sold at a 21% discount for $25 million and Wall Streeters were riveted to the story as it went to the #1 spot on the Bloomberg Terminals worldwide.

If you love drone video and cheesy ‘pull at the heartstrings’ music, then watch the listing broker video of this $25 million property. It seems like there isn’t enough privacy from neighboring properties, doesn’t it?

Bloomberg TV’s What’d You Miss: Talking tax impact to housing and $25 million homes

At the 53:50 mark of the show, I joined Julia Chatterley, Scarlet Fu and Joe Weisenthal on their great What’d You Miss to talk about the impact of the proposed tax bill. Before we went on camera, we talked about how the house and senate bills would probably change radically before they passed, if they actually would. All such discussions require disclaimers since no one had any idea what final form these bills will take.

What Does The Proposed Tax Reform Do To The Economy?

Here are survey results from Chicago Booth’s panel of economists on the impact of the proposed tax changes proposed in Washington, D.C.

It looks like only 2% think the economy will be better off in a decade and 100% think debt will grow faster than the economy. I’m not quite sure how interest rates can rise much at all if these survey results turn out to be right. They suggest that credit conditions can’t normalize with a weaker economy so lenders could remain in the fetal position on lending standards for a decade.

Here’s a good summary piece on Curbed: The House tax reform bill just passed—here’s what it means for housing

Potentially more impactful to the mortgage interest deduction is the bill’s proposal to double the standard deduction from $6,350 for individuals and $12,700 for married couples to $12,000 for individuals and $24,000 for joint filers.

The Tax Policy Center estimates this would cause the number of taxpayers who itemize their taxes to drop from 45 million to 18 million because millions would take the newly raised standard deduction instead, thus keeping untold millions from foregoing the mortgage interest deduction.

Pouring SALT into the housing market’s wounds…NAR isn’t happy about the Senate’s take on tax reform. It makes it harder for the middle class to buy a home.

Unlike the House bill, the Senate chose to eliminate all state and local taxes (SALT) including state and local income and sales taxes as well as state and local real estate taxes. This change will make it more difficult for homeowners to itemize their mortgage interest and when they do, they will face a much lower benefit from homeownership. In a perverse way, only those who can afford very expensive homes will be able to benefit from the real estate provisions of the tax code.

Highest Credit Scores in Weakest Rental Markets

According to Rent Cafe, rental applications submitted nationwide from landlords to a screening service known as RentGrow show that the average credit scores of approved renters up 12 points from 638 in 2014. Credit scores skew higher for more expensive apartments which is the softest segment of the residential rental market.

The NYC Economy is Slowing

Since the Financial Crisis, one thing the New York City housing market could count on was an expanding city economy to drive it. Now it looks like that may not be the case yet government spending is expanding rapidly. There’s a great read in Bloomberg about the state of the economy and a possible recession in 2020. Oh, and the ‘retail apocalypse’ I’ve been writing about here isn’t helping per this New York Times editorial board piece.

Private jobs in the biggest U.S. city grew by 56,000 last year after gaining more than 100,000 annually since 2012. Tax revenue also climbed at a slower pace. Budget monitors and credit analysts expect a deeper slowdown in 2020, with increasing risks of recession. At the same time, the city’s four-year budget calls for spending to rise 13 percent by then to $96 billion.

China’s 50-Lane Commute

While I realize that we are seeing a migration pattern from the city to the suburbs as the population seeks out great affordability, imagine contending with this. Citylab has the story – notice the smog in some of the images. I can attest as a visitor to Beijing and Shanghai that it is smog, not fog.

Janet Yellin wears a Fitbit

Finally, we learn how the Fed Chair kept inflation in check.


Hybrid Appraisals

Dave Towne is an appraiser in Washington State that gave me carte blanche to share his handiwork. He has a private list that he shares his thoughts on our profession. He’s a prolific writer and I encourage all readers of Appraiserville to sign up. Send a request to :


You need to be extraordinarily cautious and ‘think twice’ about completing Hybrid Appraisals (HA’s) – the kind of reports being promoted by multiple suppliers who claim these are a way to make ‘easy money’ while doing them dressed in your bathrobe and bunny slippers. The primary selling point is you don’t need to leave your office.

YOUR Compliance with USPAP is a critical factor at play with these HA’s. No ‘form’ complies 100% with USPAP.

Compliance with USPAP is square on the back of the appraiser………no one else. So these new HA’s have been developed and promoted by lenders and their AMC’s as a way to ‘speed up the appraisal process and spend less money’ to arrive at an appraiser’s stated value conclusion for a certain property – without any real regard for the appraiser’s mandatory compliance with USPAP.

I’ve had the recent pleasure to ‘discuss’ these kinds of reports with a state regulator.

HA’s involve a two-step process. Step 1 is the subject inspection – done by someone other than the signing appraiser. (This is far different than the SoW on the GSE Exterior-only report forms where the appraiser does everything.) This “inspection” is done by an unidentified person called a ‘Field Inspector.’ Inspection info is uploaded to the client web site, and made available to the appraiser. Step 2 is the appraiser obtaining the subject inspection data (done by someone you don’t know), agreeing to the validity and accuracy of that data (per the SoW & EA on the form), then pulling comps from your local MLS, gridding those into the report, making adjustments (if required), stating a value, then signing and delivering the completed HA back to the client.

There are two principal USPAP compliance issues with these HA’s: 1) the person acting as the ‘field inspector’ is actually performing Appraisal Practice as defined by USPAP. Some may dispute that statement. But without the “field inspector’s’ inspection data, no actual Appraisal can be completed by the Appraiser – because the appraiser is not engaged as the ‘field inspector.’ It’s my guess that the majority of ‘field inspectors’ ARE NOT licensed appraisers. As such, an Appraiser who allows some un-identified person to perform Appraisal Practice in the preparation of a report is in violation of USPAP. (I know about an appraiser who had to forfeit his license back to the state for this very reason.)

2) Having someone besides the licensed appraiser contribute Significant Appraisal Assistance, without identifying that individual in the report, is also a USPAP violation charged back to the appraiser who signed the report. Significant Appraisal Assistance is discussed in FAQ #248 in USPAP ’16-‘17. INSPECTING the subject property IS considered to be an action that provides Significant Appraisal Assistance.

Don’t let the salespeople and others promoting these HA products try to persuade you otherwise…..just because you can do these in your bathrobe, bunny slippers, in your basement – for $50 – $75 a pop.

Your compliance with USPAP is absolutely paramount in YOUR conduct.

Followup email

It occurred to me while sending my last message that some appraisers have questioned the name ‘Hybrid Appraisal.’

That’s because the requesting client WON’T USE THAT NAME for the product.

When they call or email you, they’ll say something like “We have a really fast appraisal for you to do that you can do on your desktop without leaving your office.”, or “Can you do an exterior appraisal for us?” Or they might identify it by the ‘name’ that client uses for the product.

The FIRST question you need to ask is simple: WHO does the SUBJECT INSPECTION?

If they say ‘someone else does that’ …. then you need to “think twice” about doing the assignment.

Read my previous message thoroughly for the reasons why.

Changing the appraisal process still requires paying for the actual expertise.

The problem with hybrid appraisal products or the mantra of splitting expertise between inspectors and actual valuation analysis is the fact that the fees remain unsupportable for a valuation expert to survive by using them. That’s the Catch-22 with the valuation logic being hard-sold today by software vendors and AMCs. It all looks good on paper except for the “appraiser needs to make a living” part.

An appraiser I know recently forwarded me the new First American’s Solidifi Desktop Appraisal Report and he said:

Think about the title of this product and then tell me how the scope of work is different from a 2055 exterior fannie mae report? The answer is none, yet the fee is not $350 to $375 rather $50.

Also – note the “AI-Ready” branding and think hard about how the largest appraisal trade group has enabled this $50 product years ago.

Completing a review in 3-minutes to make a living

An appraiser sent me this recent request from an AMC.

Please confirm or decline your interest to complete approximately 30 compliance reviews by month end (10/31/2017). These are to be completed on the 2006RARS form. Fee offered is $30/each.

That’s a tough way to make a living. No time for actual review work. This is more like form-filling. Is that what lenders and regulators like FHFA really want?

AI National’s Sales Pitch on Finance and Governance

As I reported last week, the Appraisal Institute was not allowed to rejoin TAFAC (The Appraisal Foundation Advisory Council) by a 2 to 1 margin of votes, largely because of their adversarial posture towards The Appraisal Foundation and their refusal to agree to the organization’s mission statement. This adversary posture towards membership is also evidenced towards membership, especially residential, by past president Scott Robinson’s recent presentation to some of the regions. NOTHING that has been screamed by the membership over the past year in near anarchy, as well as a much overdue resignation of AI National CEO, has had any impact on AI National’s leadership path towards self-destruction. They really want to keep flying first class with their spouse all over the world as illustrated in AI National’s own words a few weeks ago. So for all of the AI members that read Appraiserville, it must be disappointing to have such an embedded and bankrupt national leadership. They appear to be inextractible – how much discussion is going on about a replacement for the empty CEO position. I’m betting it is president Jim Amorin who represents the past that got the organization into such dire trouble. Thoughts?

Here are two key documents that were shared with me from an MAI:

A Brilliant Idea

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. They’ll no longer need to change the date for Thanksgiving, you’ll stop your neighbor from stealing your newspaper, and I’ll admit that rock and roll ain’t noise pollution.

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants

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