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On Friday morning, I was one of five expert witnesses (and the only as an appraiser) to testify on the topic of appraisal bias in front of the Appraisal Subcommittee (ASC). The witnesses waited together in the green room, plus additional The Appraisal Foundation (TAF) staff. We had a delightful conversation – everyone was very friendly and a pleasure to be with, given the adversarial nature of our looming testimony.

I’ve spoken many hundreds of times on national television but never on C-SPAN, so participating in this event was a bucket list check-off for me. The FHFA auditorium and facilities were impressive – the organization of the event was first class and ran very smoothly (way to go, Julie!).

During the first hour of testimony, our fourth grandchild was born. My wife was in the audience and stepped out of the hearing (the nerve!) to take the call from my oldest son on the news of our new granddaughter.

The Appraisal Subcommittee (ASC) held a second hearing on challenges facing the appraisal industry, including barriers to entering the profession and racial bias in home appraisals. The panel’s first hearing on such topics occurred in January. The ASC is an interagency committee under the Federal Financial Institutions Examination Council and oversees real estate appraisal regulations. The Federal Housing Finance Agency hosted the event at its headquarters in Washington, DC.

It’s a three-hour hearing, but if you are connected to the appraisal industry in any way, I encourage you to listen. You can hear my opening statement at about the 26-minute mark. The text on the C-SPAN website was generated from unedited closed captions. Here was my formal statement, but since the timing was strictly limited to 5 minutes, I read this abbreviated version, which in hindsight, was better and more to the point.

Federal Housing Finance Agency (@FHFA) hearing on Appraisal Industry Issues – LIVE at 10 am ET on C-SPAN https://t.co/uyAqNgs1tk

— CSPAN (@cspan) May 19, 2023,

Afterwards…

Three regulators from the ASC came to me from the stage immediately afterward and said I was the best dressed in the room, and they loved my tie. I wasn’t expecting that. Ha. All were very nice. My wife and I immediately shared pictures of our new granddaughter.

Thoughts…

Morgan Williams, General Counsel, National Fair Housing Alliance – He was a compelling witness – he drove home that he wanted access to anonymized loan-level data to determine the potential valuation bias.

Angela G. Jemmott, Bureau Chief, California Bureau of Real Estate Appraisers, Member of the Association of Appraiser Regulatory Officials. She was a powerhouse of testimony, advocating practicum solutions in addition to PAREA.

Michelle Czekalski Bradley, Certified General Appraiser, Chair of the Appraisal Standards Board (ASB) of TAF, was earnest and towed the Dave Bunton narrative. When the CFPB head went after her for the conflict of interest of her position, she named me by name (an unforced error) and said there was no conflict. She may believe that with all her heart, but most of her peers in the industry think otherwise. Her husband is a senior official at McKissock, the largest provider of online appraisal courses, and they have a financial arrangement with TAF on USPAP courses – and Michelle heads the board that makes changes to USPAP. This is another example of the stunning lack of oversight for this not-for-profit (TAF) that modifies USPAP that becomes embedded into laws in the 50 states and five territories. I’m sure she means well and, in her mind, is giving back to the industry, but she is remarkably oblivious to the optics of her position. I believe Dave Bunton hand-selected her for her ability to follow orders. TAF is a monarchy, nothing less.

Brad Swinney, Chief Appraiser, Farm Credit Bank of Texas, Chair of the Appraiser Qualifications Board (AQB), had a hard time presenting and defending PAREA. He, like Michelle, was hand selected by Dave Bunton after the prior AQB chair was removed immediately because he wanted to explore the stunning lack of diversity in the appraisal profession. (We’re 98% white and dead last (400 of 400) as tracked by the BLS). So it follows that if the prior chair was removed immediately after trying to dig into the appraisal industry’s lack of diversity, then it’s just a hop, skip, and jump to assume that Brad was brought in to follow Dave Bunton’s position of staying away from the topic. Brad mentioned several times that “someone” (me) was saying 1,500 hours of experience were required, yet he stated only 1,000 hours were required for residential certification experience. As the AQB chair, he was uninformed. I was referring to the New York State requirement for 1,500 hours as a New York City appraiser, as noted on the New York State website.

I’m glad we’ve cleared that up.

TAF’s representatives (Michelle & Brad) were under siege by the ASC board and did not do well under fire. They found themselves wiggling to defend the indefensible even though they were hand-picked by Dave Bunton for their ability to toe the party line. Both tried hard to frame themselves in a silo – Michelle – when it came to how board members were selected and Brad – how they had no responsibility for how much PAREA would cost appraisers. To be clear, TAF had always pushed back hard on PAREA until Dave realized that it could be used to divert attention from, and possibly have a positive influence, on our industry’s stunning lack of diversity.

When I was highly critical of the two-year cycle in my testimony and how TAF goes back and forth on rules that confuse everyone, Michelle brought up the current four-year run of USPAP without changes and how on January 1st, there will not be an expiration date. The problem with framing it that way was that TAF claimed USPAP was frozen for four years because of COVID. Dave saw the pressure coming for change and used COVID as an excuse, yet the reality was that Zoom became ubiquitous, and there was no reason to stop the cycle other than to use COVID to save face. Dave recently realized that because states required USPAP 7-hour update courses every two years, they were still going to benefit from a revenue flow from the classes and could still avoid grant money from the ASC so they wouldn’t have any “strings” attached to their actions. Dave can still fly all over the world on boondoggles to valuation conferences, dining on steak and fine wine without scrutiny. I brought up in my testimony that only about 15 minutes of each 7-hour update class contained new information.

To be clear, only one person of color has been on a technical board (ASB + AQB) in the 3+ decade history of The Appraisal Foundation, which has been led by the same person the entire time. And that one person, despite being highly qualified, was only accepted on the board because of significant outside pressure from myself and a handful of others. Proof of this is that no more persons of color were invited to any of their boards in the ensuing three years.

For many TAF board members, this is just a resume builder. They won’t do anything to forward progress in the industry because Dave Bunton and his sycophants will work hard to prevent it like they just did on the AQB. But some people will work as insiders to make a difference as long as Dave and Kelly don’t know who they are.

This TAF “byzantine and weird” corporate bureaucracy is an unfair burden to everyday working appraisers and is destroying the public trust. I hope last Friday’s testimony helped confirm a few reasons why there is no diversity in the industry, and it will enable the ASC to push for accountability and change at TAF.

Tags: The Appraisal Foundation, FHFA, TAF, ASC, Appraisal Subcommittee, diversity, C-SPAN, Appraisal Bias

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The OCC and an alphabet soup of 5 additional regulators: FDIC, CFPB, FHFA, NCUA and the Federal Reserve issued a joint press release that if adopted, takes a small step forward in the regulation of appraisal management companies, who are largely responsible for the collapse of valuation quality since the credit crunch began.

To many, this action is long overdue. Appraisal management companies control the vast majority all mortgage appraisals in the US, having been legitimized by HVCC back in May 2009. I’ve burned a lot of calories over the past several years pointing out the problems with the AMC industry so admittedly it is nice to see them getting attention. The fact that these institutions are not licensed to do business at a statewide level but the appraisers who provide the valuation expertise they manage is inconsistent at best.

Still, the recognition of this regulatory glitch probably won’t have a significant impact on appraisal quality provided by AMCs. As my friend Joe Palumbo maintains, is like fool’s gold.

I think proposal is at least a starting point.

A couple of highlights – regulators would:

• Require that appraisals comply with the Uniform Standards of Professional Appraisal Practice (today we had a clerical AMC staffer tell us that writing out the math calculations on the floor plan was a requirement of USPAP).
• Ensure selection of a competent and independent appraiser. (It is unbelievable to think this is necessary but it does make the legal exposure a little larger for AMCs.)

Housingwire has a good recap of the proposed regulations and so does the Wall Street Journal provides a nice overview (I gave them background for the piece).

The proposal by the Office of the Comptroller of the Currency, Federal Reserve and other regulators mandates that appraisal-management companies hired by federally regulated banks use only state-licensed appraisers with “the requisite education, expertise, and experience necessary” to complete appraisals competently.

Moral hazard There is no significant financial incentive for lenders to stop accepting the generally poor quality appraisals the AMC industry presents them daily. The hope is that the additional regulatory largess the AMCs have to confront will force the issue with lenders simply because the AMCs will have to raise their fees. Without a real “value-add” to the banks other than cost control and fast turn times, the lack of quality for a large swath of AMCs may no longer be overlooked by banks. Yes I can dream.

Residential appraisers, mostly 1-2 person shops, have largely been left without a voice and the bigger financial institutions have lobbied financial reform overtop of us without the regulators truly understanding what our role should to be to protect the taxpayer from excessive risk.

Anumber of smart appraisers I know have created a petition whose sole purpose is the get the attention of the CSFB to address the issue of “customary and reasonable” fees. Our industry has no other way to reach the regulators or the ability to lobby our views in Washington. I hope they are listening.

Tags: FHFA, Appraisal Management Companies, FDIC, AMC, Petition, OCC, CFPB, NCUA, Press Release

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Had a great visit with Tom Keene this morning on Bloomberg TV’s Surveillance along with Scarlet Fu and Sara Eisen. It was simulcast on Bloomberg Radio.

Also in studio was James Lockhart, vice chairman of WL Ross & Co., formerly the head of GSE regulator FHFA. We were also joined by Nicolas Retsinas, a senior lecturer in real estate at Harvard Business School who called in – he has been on my old podcast a few times. Both provided great insight to the housing narrative.

Here’s the second clip from the same session. My basic premise is that while new home sales are rising, it will not be enough to address the collapse of listing inventory which will drive housing prices higher in the US. Hint: It’s mostly about tight credit. Housing is local and credit is national.

Tags: Tom Keene, Sara Eisen, Scarlet Fu, Bloomberg Surveillance, FHFA, Nicolas Retsinas, James Lockhart, GSE, Radio

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I few weeks ago I was dressed down by an analytics friend of mine who is in the business. Based on his employment and housing sales analysis in Alabama (I’ve never been) he suggested my comments about mortgage rates influencing housing prices as anecdotal and hypocritical (who says analysts have to have tact) – that only employment can be correlated. And further…since mortgage rates can not be proved to influence housing sales through multiple regression, any such claims are hearsay and anecdotal. While I agree that housing’s largest influence comes from employment, I was a bit surprised by the out-of-left-field agita I inspired.

He was focused on the predictive element of a trend versus a knee jerk reaction to a sudden change in a metric. My comment about a spike in mortgage rates at this moment (not predicting it) as ending the party – is apparently what caused him to lose faith in my analysis. Appreciative of the constructive feedback, I whipped up a couple of US macro price charts.

Yes, US employment trends correlate with US housing prices and mortgage rates correlate by showing an inverse trend against housing prices.

Predictive? Only if considered with other metrics.
Anecdotal? Hardly.

Tags: FHFA

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Tags: Case-Shiller, FHFA, NAR, National Association of Realtors

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FHFA, the oversight agency for Fannie Mae and Freddie Mac, released their monthly US Housing Price Index for April. The index shows some stabilization since January however, April is the last month of the federal tax credit for first time buyers and existing homeowners so it would be reasonable to expect declines over the next 2-3 months.

U.S. house prices rose 0.8 percent on a seasonally adjusted basis from March to April, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 0.3 percent increase in March was revised to a 0.1 percent increase. For the 12 months ending in April, U.S. prices fell 1.5 percent. The U.S. index is 12.8 percent below its April 2007 peak.

Index Background
The index lags NAR’s Existing Home Sale by one month but it is a repeat sales index rather than an aggregate report. The index tracks Fannie and Freddie purchases mortgages where they acquire the paper or provide a guaranty, which dominates the mortgage business and provides the standardization that the secondary mortgage market relies on. This promotes liquidity of the US mortgage market but is limited to conforming mortgages of $417,000 in most of the country and $729,750 in designated high priced housing markets like the NYC metro area.

As a result of its data source, this repeat sales index is NOT a proxy for the US Housing market because it is skewed toward the sub-million housing market, roughly 80% of the US housing stock but is performing much better than the remainder because of the standardization provided by the former GSEs (Fannie and Freddie) and the backing of the federal government. Still, it represents the majority of the US housing market and warrants observation.

Since I am wary of seasonal adjustments my chart tracks the non-seasonally adjusted index, even though the press release relies on seasonal adjustments – the trend is the same but the month over months vary somewhat.

Tags: FHFA, GSE

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The St. Louis Fed, in their Economic Synopses publication contained a research piece called Home Prices: A Case for Cautious Optimism (Hat tip: Joe Weisenthal over at BusinessInsider) that does a great job lining up 3 housing related indexes and makes the case that we aren’t through yet despite positive month over month trends of the past 6 months.

The title for this Fed research piece is simply wrong. It should be re-named: Home Prices: Not Much of a Case for Cautious Optimism.

The chart shows the Case Shiller Home Price Index, FHFA Home Price Index and NAR Housing Affordability Index of Median Household Income presented in alignment.

Here’s the problem with affordability as a measurement – it considers income, housing prices and interest rates but not the tightness of credit, which is THE story at the moment. The affordability index is significantly optimistic right now because of this gaping void over credit.

Its great to have lower prices for all those buyers only if they can get a mortgage to take advantage of the opportunity. Mortgage underwriting is very tight right now and therefore we are looking at a 3 legged kitchen table that originally had 4 legs.

Tags: Case-Shiller, FHFA

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FHFA released its

July 2009 monthly housing price index report today which showed more of the same – month over month price increases (up 0.3% from June) and year over year decreases (down 4.2%).

Since OFHEO (pronounced O-Fay-O), I’ve been wondering how to pronounce FHFA and not be kicked out of Acronym Heaven (aka Washington, DC).

Kathleen Hays of Bloomberg Radio interviewed me today on her new show “The Hays Advantage” M-F 1-3pm EST and dubbed FHFA (Foo-FA). That works for me.

While it is encouraging news that the bottom isn’t falling out of the housing market, this index basically reflects the low to mid layers of the housing market since it is based on data from Fannie Mae and Freddie Mac, who only handle conforming mortgage products. Currently this means mortgages of $417,000 or less in most of the country and $729,750 in the handful of “high priced” housing markets. That is the market that is recovering first since it has a secondary investor market for bamnks to sell their paper too and ifree up their capital.

I find it a bit troublesome that, as we hang on the edge of our seats each month, the revisions for prior releases are all over the map. Last month, the month over month was 0.5% (6% annual) which was revised downward to 0.1% (1.2% annual). Still, the news is better than its been.

If you are a believer in trend lines, the following chart suggests we have about 10% more to go until the market reaches the trend broken circa 2001. That means that the sideways motion we are experiencing would have to change for the worse over the next several years. Factors could include more foreclosures, rising mortgage rates, elimination of first time home buyers tax credit, etc. While I am concerned, thats more bad karma than I can process.

Read the report.

Tags: FHFA, OFHEO, Radio

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Confidence is more right here and now. Sentiment is more forward looking (it gives a snapshot of whether consumers feel like spending money.)

(a lame appraisal analogy would be estimated market value for a bank appraisal (today) versus anticipated sales price for a relocation appraisal (future))

but I digress…
I continue to be amazed with the types of analysis being done with the subjective nature of what is on the consumer’s mind – or in this case, what journalists are writing about:

The Dow Jones Economic Sentiment Indicator

The ESI, which was first published in April, aims to identify significant turning points in the U.S. economy by analyzing coverage of 15 major daily newspapers in the U.S.

The Dow Jones Economic Sentiment Indicator bottomed last November and has continued to edge higher. Newspaper coverage has become more upbeat about the economy (I assume they assume that consumers are sick of reading about bad news), the number of articles expressing either positive or negative sentiment about the economy has fallen now to approaching a third of the level of its peak in October 2008 following the collapse of Lehman Brothers.

A lot of people are drinking the Kool-aid right now.

I find this particularly ironic since the real estate industry has long blamed “the media” for the making real estate correction worse by “piling on.” However, I find the coverage today to be overly positive from sloppy interpretation of the 4 housing price indices: Case-Shiller Index, NAR Existing Home Sales, Commerce Dept’s New Home Sales and FHFA HPI, showed positive signs.

Actually all indices showed less negative results which were discussed excessively positive.

For example, The Conference Board’s recent Consumer Confidence Index was a little more positive:

Consumers’ assessment of current conditions improved slightly in August. Those claiming business conditions are “bad” decreased to 45.6 percent from 46.5 percent, however, those claiming conditions are “good” decreased to 8.6 percent from 8.9 percent. Consumers’ appraisal of the job market was more favorable this month. Those saying jobs are “hard to get” decreased to 45.1 percent from 48.5 percent, while those claiming jobs are “plentiful” increased to 4.2 percent from 3.7 percent.

While the recent Michigan Sentiment Index showed renewed weakness:

Confidence among U.S. consumers unexpectedly fell in August for a second consecutive month as concern over jobs and wages grew.

The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 63.2, the lowest level since March, from 66 in July. The measure reached a three-decade low of 55.3 in November.

I find the whole thing a bit foggy especially using monthly figures for comparison.

Further reading on this.

Tags: Case-Shiller, FHFA, Pending Home Sale Index, PHSI, Lehman, NAR, National Association of Realtors

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Here is my latest handiwork for the Huffington Post.

Current Wave of Housing Euphoria May Extend Downturn

The article is below in full if you don’t want to click on the link:

Current Wave of Housing Euphoria May Extend Downturn
Jonathan Miller 7-30-09


The spring housing market is behind us and we are now fully ensconced in summer, able to sit at the beach, sip our drink and watch the waves roll in.

Waves of housing statistics that is.

Seemingly everyone from the consumer to the POTUS has been waiting for a rogue wave that will finally bring some good news on housing. In fact most of us are aching from bad news overload and desperately want good news or at least a temporary reprieve from the bad.

Like the closing scene from the 1973 movie Papillion where Steve McQueen’s character–when trying to escape from the island–determined that every seventh wave was big enough to enable him to float past the rip currents that surrounded the island.

The monthly gauntlet of key housing market reports from the past week show a rising tide of better-than-we-have-heard-in-three-years-news on the state of US housing market.

Here’s a recap:

July 22, 2009 Federal Housing Finance Agency news release headline: “U.S. Monthly House Price Index Estimates 0.9 Percent Price Increase from April to May.” This report reflects sales with conforming mortgages through Fannie Mae and Freddie Mac at or below $417,000 plus the high priced housing markets such as the New York City area that have a $729,750 mortgage cap. Housing markets that rely on conforming mortgages are expected to recover first because the that mortgage market has been the target of recent federal stimulus and bailouts. However the month over month price increase of 0.9% touted in the report headline is the first such increase since February. Although 5 of the 9 regions show a month over month increase in prices only 1 of those 5 regions had an increase in the prior month. In other words, this trend is not very compelling.

July 23, 2009 National Association of Realtors Existing Home Sales report headline: “Existing-Home Sales Up Again” The number of re-sale increased 3.6% in June from May, the third month over month increase in activity. The number of sales was only 0.2% below the level of last year’s activity in the same month. This was largely due the 31% market share of foreclosures, assumed to be purchased by speculators plus the impact of the federal tax credit for first time buyers which expires at the end of November. However, this seasonally adjusted sales 3-peat was also seen at the end of 2006 and the beginning of 2007 before sales activity fell sharply. In other words, this trend is not very compelling.

July 27, 2009 Commerce Department New Home Sale Index headline: “New Residential Sales in June 2009.” This is the report that got everyone excited because of the 11% increase in new home sales month over month and the largest such increase in 8 years. Floyd Norris of the New York Times points out that if you look at the actual number of sales in June, it was the second lowest month of sales on record since the metric was tracked in 1963. In other words, this trend is not very compelling.

July 28, 2009 S&P/Case-Shiller Index “Home Price Declines Continue to Abate.” The 20-City Composite has shown a lower annual rate of decline for 4 consecutive months and 13 of the 20 metro areas posted month over month increases but this is before seasonality is adjusted for. In other words, we expect prices to rise in the spring if they are going to rise at any point during the year. If seasonality is factored in, month over month gains evaporate. In the New York City region, the 20-city composite index doesn’t cover co-ops, condos, foreclosures and new development, more than half the sales activity. In other words, this trend is not very compelling especially after considering that along with the most recent month in the report, the index has declined year over year for 29 straight months.

In a stroke of irony, big media, which was on the receiving end of the real estate industry’s “blaming the media” ire for the past three years–as responsible for making the downturn worse–has taken the positive outlook and run with it. Nearly every major news outlet has begun to report each of these reports by cherry-picking and overweighting the positive elements results in a downright giddy tone. Over the past week, the general sentiment in news coverage is clearly moving towards the positive but mainly confined to the headlines.

As a reporter once told me (and I am paraphrasing) “Negative news only sells for so long – consumers eventually stop reading it as they become become numb to it.”
Perhaps this is best exemplified by yesterday’s kind of thin New York Times page 1 story on housing:

“3-Year Descent in Home Prices Appears At End.”

This was the headline that put me off a bit since the article itself wasn’t very committal to the notion that the housing market has bottomed. Perhaps this is why the web version of the article was titled with a more sedate headline that was more in sync with my view:

“Recovery Signs in Housing Market Stir Some Hope.”

Step back for a second and ask why would the housing market start to improve now to lead the economy?

If more people are losing their jobs and credit remains tight, how can we expect the number of sales and housing prices to over come this. Unemployment is still rising and is expected to continue rising through next year even though the recession could be over right now or close to it. Housing inventory is still high and the number of sales, exclusive of distressed asset sales is still low. Speculators may be on their way to becoming a force again in the market. Mortgage rates are expected to trend higher over the next few years with all the new debt taken on by the federal government. Credit is still very tight, and while there has been some discussion of loosening in mortgage underwriting, banks still aren’t enthusiastic about lending. There appears to be some easing on conforming mortgage underwriting but a chokehold remains on jumbo and new development financing.

Here’s the problem.

Sellers tend to “chase” the market when it is falling, unable to respond to the decline in values as quickly as the market does. If sellers take this positive news too seriously and don’t focus on the realities of their local markets, they may end up being over confident when negotiating a sale, losing the buyer and falling even further behind the market than they would have otherwise, eventually selling for less.

Luxury condo developers and especially the lenders behind them, many of whom are facing stalled projects, could experience a sense of renewed optimism from the recent depiction of the housing market, causing them to miss the market, eventually realizing a larger loss.

So let’s be clear. While I am hopeful that we will see a housing recovery at some point in the future, I’d rather it be real.

In the meantime, I’ll sit at the beach and count the waves.

Tags: Case-Shiller, FHFA, Huffington Post, Commerce Dept, Census, Seasonal Adjustment, Bailout Nation, NAR, National Association of Realtors

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To figure out how to fix it, you’ve got to understand what’s going on.

Brooking’s has a created a quarterly series of interactive reports on the 100 largest metro areas called the MetroMonitor:

The Metropolitian Policy Program has launched a series of interactive quarterly reports, the MetroMonitor, a barometer of the health of America’s metropolitan economies, ranking the nation’s 100 largest metro areas—which generate three quarters of U.S. output—on key economic indicators.

They look at a number of metrics in the largest 100 US metro areas.

• Overall Performance
• Employment
• Unemployment Rate
• Wages
• Gross Metropolitan Product
• Housing
• Real Estate-Owned (REO) Properties

My only criticism is their use of FHFA data which will overstate the recovery of housing since it only covers Fannie and Freddie data, while comprising 80% of current mortgages being issued, is outperforming the remainder. FHFA doesn’t address higher priced housing, often found in metro markets and are usually financed with jumbo mortgages. Only conforming mortgages have been addressed in the stimulus and federal bailouts. The secondary mortgage market for jumbo financing is essentially gone.

Still, its interesting to see how various metro areas stack up. For example, New York:

Regional employment has fallen 2.1%, compared to 2.9% in the US and ranked 34th out of 100 (1 being the strongest). However, wages have fallen 1.5% compared to +1% in US and ranked near the bottom at 97.

Tags: FHFA, Bailout Nation

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Here we go again.

Deutsche Bank prepared a report on the US housing market that forecasts how much further each market area has to go. The market that seemed to stick out like a sore thumb was New York. This was covered in a Time Magazine story.

home prices in metropolitan New York City (which includes Westchester, northern New Jersey and other nearby areas) to fall 40.6% from the prices that prevailed in March. Ironically, that dire forecast is wrapped in an improving forecast for nationwide home prices.

This study seems to be another “black box” model where we don’t fully understand the methodology even though it was disclosed in the prior report.

Prices would have to drop another 32% from the first quarter of 2009 to return the New York market to levels of affordability not seen since 1998. Deutsche Bank forecasts a total peak-to-trough decline of 52.1%. Rising unemployment and foreclosure activity are offsetting increased affordability. The bottom is considered the historical peak of affordability. In NY’s case, it was 1998.

The forecast brings prices to 1990 levels suggesting that the New York City metro area will overshoot the point of peak affordability (1998) by 8.6%.

I would think that home prices in Las Vegas and Phoenix can fall 50%+ because there an incredible amount of undeveloped land and limited constrain on supply – highly speculative from the get go. Prices can fall to very low levels in Detroit because the economy is under extreme duress and a declining population.

The market area covered was NYC, Long Island, Fairfield and Westchester, Northern NJ and 1 PA county. The 3 big national reports are the data source but FHFA and CSI exclude co-ops and condos, which are a significant portion of NYC housing units and NAR is light on co-op data.

Plus the report doesn’t speak to niche differences like conventional and jumbo mortgage financing constraint on the type of properties that will sell.

Despite my doubts about the reliability of the results, my takeaways are:

• The New York region is NOT done with price corrections. We have a ways to go.
• Spring market uptick was seasonal and more rebust due to the release of pentup demand after the dearth of activity Dec-March.

Download Deutsche Bank Report

Tags: FHFA

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