A Housing Epiphany For 2023

December 23, 2022

After a rough year for the housing market, I’m glad it’s coming to a close. I just had an epiphany. Let’s find the housing market reality that lives between the wildly fantastical #realestateInstagram world and the insanely doom and gloom that lurks in the minds of real estate pundits who race to push out the most absurd things they can think of. After all, this time it’s a bit different. #lackofsupply

Happy Holidays everyone!

But I digress…

Made In The Hamptons Podcast: Jonathan Miller

Afew weeks ago, I had a fun conversation with Jill Laurence and Adam Hofer of Douglas Elliman on the state of the Hamptons housing markets. Here’s the link to the Instagram promo.

New Fed Rent Index Shows New Leasing Data Leads Total Leasing Trends

There was a fascinating Bloomberg piece this week on new ways to measure rental trends to resolve the big lag in CPI calculations: US Rent Inflation Is Slowing Fast in New Index Built by Fed Team

Because of the mechanics of how housing is captured in the official inflation data, there’s typically an extended time-lag before real-time market conditions show up in the numbers. That can leave policy makers at the Fed and elsewhere flying somewhat blind when it comes to shelter costs, which are largest component of the CPI basket.

The subject of the article was a pretty interesting paper, Disentangling Rent Index Differences: Data, Methods, and Scope but a bit too wonky for me – here’s the abstract:

Prominent rent growth indices often give strikingly different measurements of rent
inflation. We create new indices from Bureau of Labor Statistics (BLS) rent microdata
using a repeat-rent index methodology and show that this discrepancy is almost entirely
explained by differences in rent growth for new tenants relative to the average rent
growth for all tenants. Rent inflation for new tenants leads the official BLS rent
inflation by four quarters. As rent is the largest component of the consumer price
index, this has implications for our understanding of aggregate inflation dynamics and
guiding monetary policy.

Shelter costs are the largest component of inflation, and rental data is the measurement relied on. This paper seeks to explain the differences between the primary sources. Several new indices reflect faster changes in rent than the current CPI methodology.

During the pandemic era, Manhattan rental data was far more volatile in trend than purchase data. We only have access to new leasing data and not renewal data which is propriety data maintained by landlords. This paper suggests a one-year delay in renewal trends versus new leasing trends.

No real conclusion here – just thinking out loud, distracted by the thought of consuming eggnog tomorrow.

Consumer Sentiment Is Really Caving

The Surveys of Consumers, University of Michigan, University of Michigan: Consumer Sentiment © [UMCSENT], retrieved from FRED, Federal Reserve Bank of St. Louis, December 23, 2022, continues to tank. After all, the Fed is taking a baseball bat to the economy.

Outlook For Next Year Using A 1929 Perspective

Getting Graphic

My favorite housing market charts of the week made by others

My favorite random charts of the week made by others

Appraiserville

(For earlier appraisal industry commentary, visit my old clunky REIC site.)

Appraisal Waivers Way Down From COVID Peak, But Way Up From Pre-Pandemic

It’s Been A Rough Year For TAF Leadership, But A Better Outlook For AI

Time Magazine’s Appraisers of The Year if there was one should have been Dave Bunton and Jim Amorin. Their recognition is based key people that were bad for the appraisal profession 2022.

Dave Bunton The Appraisal Foundation, 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 (BLS: 97.7% of appraisers are white), has had a tough year as the status quo has been under harsh criticism.

I suspect (hope) TAF executives will be ousted at some point during 2023, but that may be wishful thinking. I know many who have been trying for years to join the BOT/ASB/AQB who come from highly respected places in the industry but are always denied because they will ask too many questions and disrupt the status quo at TAF. Think about the loss to the industry from this behavior. I saw this in the person that tried to set me up for the chickenshit letter this year with the hope of getting on the ASB, but instead, it became a badge of honor for me. C’mon on HUD!

Jim Amorin On a parallel path, I harbored the same feelings about Jim Amorin, the CEO of the Appraisal Institute and his sycophants who had focused on self-dealing through doling out positions via choice teaching assignments, strategic committee assignments to garner control to keep the votes of members out of the process, weaponizing the sham petition process for self-gain, insanely high executive compensation using industry comps (wildly ironic), a steady decline in membership, maximum disrespect by inaction to residential members, first-class tickets all over the world with leadership’s support spouses, and more.

And then suddenly Jim resigned! He is leaving on Valentine’s Day next year. Hope is restored. That guy was unmatched when it came to corporate takings. His FOJ sycophants suddenly found themselves neutered and facing long-deserved punishment of irrelevance after years of living on the gravy train. They forgot the CEO reports to the board, which is beholden to the members, and it had been the other way around.

The exit of this one person may set the Appraisal Institute off in the right direction and on the way to restoring the credibility of this once-respected institution. Fingers crossed. I’m glad to help them in any way I can. That’s what my efforts to bring transparency to this corruption were all about. It’s been a long time since I saw the bulsh*t video by Leslie Sellers explaining why they were leaving the TAF and proceeded to lose 10,000 members over the next decade which helped tarnish the industry and make us vulnerable.

Thanks To All My Appraiser Colleagues/Friends

To the many, many, many appraisers I have spoken with or interacted with over the year: Thank you for your friendship and professionalism. I’ve learned a lot and feel very fortunate to know you.

OFT (One Final Thought)

Fonts are powerful.

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 be more uplifting holiday stories;
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– And I’ll find a better font.

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 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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