The outcome of a current trend is not always obvious, but by using a refrigerator, it can be cool.
I saw this ending much differently. pic.twitter.com/usBuiCEEGM
— Jamie Gnuman197… (@Jamie24272184) November 25, 2021
But I digress…
The Drop In New Signed Contracts Is All About The Bigger Drop In New Inventory
I’ve been the author of the expanding Douglas Elliman market report series since 1994. We are releasing a bunch of new markets in the coming months. Our newest addition – the monthly new signed contract series was born out of the pandemic – continues to be helpful in understanding sudden changes in housing conditions.
One of the biggest disconnects in the current market has been the observation that because newly signed contracts are coming down from the distortion highs of a year ago, demand is cooling. The reality is that within most housing markets we track, the slowdown in contracts is largely attributable to the larger decline in new inventory entering the market.
This is well illustrated by this Bloomberg story Suburban NYC Home Sales Plunge Because There’s Nothing to Buy
Wall Street cares as evidenced by the article being the 9th most read on the 350K Bloomberg Terminals yesterday, just ahead of COVID Omicron Variant coverage!
Perhaps the heavy interest wasn’t just because of the collapse in new listings but the use of a multi-colored chart?
New York New Signed Contracts Report
– The New York report attached covers Manhattan, Brooklyn, Long Island, Hamptons, North Fork, Westchester County, Fairfield County, and Greenwich, CT.
Elliman Report: November 2021 New York New Signed Contracts
Other related charts:
Long Island Listing Inventory Is Being Sold Off Faster Than It Can Be Replaced
Newsday did a deep dive on the months of supply for the region with their article: Fast-paced Long Island housing market depletes inventory of homes for sale. Long Island has been and continues to be one of the most consistently active markets in the region over the past decade.
Elliman Report: November 2021 New York New Signed Contracts
These charts really illustrate it:
U.S. Listing Inventory Trends In The Time Of COVID Varied Significantly
The Winter 2022 issue of Elliman Magazine was published this week and it is quite a beautiful publication. I created a chart for the publication which compares monthly new listing inventory trends across a number of the markets we cover for Douglas Elliman.
New Signed Contracts Are Being Restrained In Many U.S. Housing Markets As New Inventory Collapses
In addition to the NYC metro area, we provide research for Douglas Elliman Real Estate on newly signed contracts in specific luxury markets in Florida, Colorado, and California.
Elliman Report: November 2021 Florida New Signed Contracts
Elliman Report: November 2021 Colorado New Signed Contracts
Elliman Report: November 2021 California New Signed Contracts
Rental Price Trends Continue Upward
Is Housing Seasonality Over? (No)
Seasonality was thrown out with the bathwater in 2020 as the pandemic and mortgage rates disrupted housing patterns.
My favorite charts of the week made by others
Chicken wing prices are thankfully coming down. pic.twitter.com/kKmKjPqEWV
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) December 2, 2021
— Barry Ritholtz (@ritholtz) November 30, 2021
Len Kiefer‘s Chart Handiwork
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
ALOFT: Getting Funding To Solve A Problem That Isn’t Being Addressed By The Funding
When I read the announcement that Fifth Wall funded a relatively new startup called ALOFT, I and many of my peers were confused on what the value proposition actually is. Backed by a VC, including some of the biggest…
In addition to Fifth Wall, Aloft’s backers include VC firms Andreessen Horowitz and MetaProp, Zillow and Pacaso co-founder Spencer Rascoff, Built CEO Chase Gilbert and Doordash executive Gokul Rajaram.
…means that this funding is very expensive for ALOFT but they are trying to disrupt a very low-margin industry. I thought of the following acronym translation, not aimed at the management team, but befitting of the staffing problem they will face:
ALOFT = “A Lack of F***ing Talent”
“A shortage of home appraisers is bottlenecking the housing market, delaying closings and putting buyers at risk of missing out on low interest rates.”
They are getting funding to hire more appraisers (there is a chronic supply problem of competent appraisers that will work for less than the market rate) and it’s important because we are aging out. Appraisers won’t work for them unless they pay more than what appraisers are making during this boom.
In other words, ALOFT’s reason for being doesn’t solve the stated problem of not enough appraisers. They are sort of inferring they will solve the problem. How? By creating a crappy AVM like everyone else and trying to bypass appraisers? By training younger appraisers for and offering very high wages to pull them in? The main reason the industry is aging out is that the fees are too low and work too sparse for trainees.
I see this as further evidence the tech sector has no idea what the appraisal industry does and that there is way too much capital sloshing around looking for a home. The fintech world has wildly overhyped the valuation space – think Bowery Valuation and BBG in commercial valuation when you look closer and speak with ex-employees.
More Progress In West Virginia After Dean Dawson’s Power Grab Was Thwarted
West Virginia is diligently moving forward to fix the situation caused by the self-dealing legacy of Dean Dawson’s Real Estate Appraisal Board and his predecessor.
This just in from a trusted source:
The governor has appointed four new members to the WVREALCB. The Board is comprised of nine members (four appraisers, two bankers, two members of the public, and one AMC representative) who serve a maximum of three consecutive 3-year terms. The governor recently appointed two appraisers and two members of the public to seats on the board. One of the public seats was empty and the terms of the three who are being replaced had expired.
TAF’s BOT Called A Last Minute Board Meeting Next Week
In an unusual move, The Board of Trustees of the Appraisal Foundation is holding a last-minute meeting. They haven’t posted the agenda but you can register for the Virtual BOT End-of-Year General Session on Wednesday, December 15th from 1 pm to 3 pm ET.
The meeting will be held to discuss the Foundation budget, the Vision 2030 Strategic Plan and other miscellaneous items.
In other words, we can assume this meeting is about their financial independence since that’s essentially the top priority of their Vision 2030 Strategic Plan.
When I was looking for the meeting agenda, I noticed that the last two of Dave Bunton’s monthly newsletters haven’t been posted. The last posted newsletter, from October, was about how excited they were to regurgitate a “new” USPAP course that wasn’t. Perhaps I am being a bit paranoid but this is the same organization led by Dave Bunton who sent that bat-shit crazy letter last year.
OFT (One Final Thought)
Finally, the impact of stupidity is clearly explained.
“Non-stupid people always underestimate the damaging power of stupid individuals. In particular non-stupid people constantly forget that at all times and places and under any circumstances to deal and/or associate with stupid people always turns out to be a costly mistake.”
Brilliant Idea #1
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Brilliant Idea #2
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See you next week.
Reads, Listens and Visuals I Enjoyed
- Record Resignations [Econ70]
- Billionaire Pays Record $70 Million for Credit Card Processor’s Laguna Beach Mansion [Dirt]
- Rents Still Increasing Sharply [Calculated Risk]
- U.S. House Price Index Report 2021 Q3 [Federal Housing Finance Agency]
- Is real estate seasonality a thing of the past? [YouTube]
- Metaverse Real Estate Piles Up Record Sales in Sandbox and Other Virtual Realms [Wall Street Journal]
- Refinance Trends in the First Half of 2021 [Freddie Mac]
- Amazon Has More Than Doubled Real Estate During Pandemic [The Real Deal]
- San Francisco Is Sinking Into the Earth, Scientists Say [Futurism]
- Economic Structural Change – Top Ten in 10 (with Hugh Kelly, Ph.D., CRE) [Counselors of Real Estate]
My New Content, Research and Mentions
- Suburban NYC Home Sales Plunge Because There’s Nothing to Buy [Bloomberg Quint]
- Local buyers push up prices for premium ski properties [Financial Times]
- Cellar’s market: Record-high rents push New Yorkers into basement homes [NY Post]
- Bahamas Private Island Ups Its Price to $100 Million [Mansion Global]
- LI home sales: 'Demand has overpowered inventory' [Newsday]
- Changes by Fannie Mae to prevent another Surfside tragedy mean some NYC buyers will lose access to loans [Brick Underground]
- Manhattan Trophy Condo Sales Tripled in November [Mansion Global]
- Suburban NYC Home Sales Plunge Because There’s Nothing to Buy [Bloomberg]
- Bahamas Private Island Ups its Price to $100 Million [Wall Street Journal]
- Contract Activity Flourishes for NYC’s Priciest Homes [The Real Deal]
- This Hamptons Home Has Been in the Same Family for Over 100 Years. Now It’s for Sale. [Mansion Global]
- Hamptons House That Appeared on HBO’s ‘Succession’ Sells for $45 Million [Mansion Global]
- Hamptons House That Appeared on HBO’s ‘Succession’ Sells for $45 Million [Wall Street Journal]
- A Billionaires’ Row Lawsuit Could Give Manhattan Condo Buyers Pause [Commercial Observer]
- Miami's mini condos offer investors a small slice of a hot market [Business Times]
- Miami Mini-Condos Offer Investors a Small Slice of a Hot Market [Bloomberg]
Recently Published Elliman Market Reports
- Elliman Report: Normandy Isles/Normandy Shores New Signed Contracts 11-2021 [Miller Samuel]
- Elliman Report: California New Signed Contracts 11-2021 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 11-2021 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 11-2021 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 11-2021 [Miller Samuel]
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 10-2021 [Miller Samuel]
- Elliman Report: Normandy Isles/Normandy Shores New Signed Contracts 10-2021 [Miller Samuel]
- Elliman Report: California New Signed Contracts 10-2021 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 10-2021 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 10-2021 [Miller Samuel]
Appraisal Related Reads
- The Square Footage Problem – Is ANSI for Appraisers Really the Answer? [Appraisers Blogs]
- HUD Dismisses Claims Alleging Racism Against Black & Minority People [Mike Ford/Appraisers Blogs]
- What’s The Size of Your Driveway? [Cleveland Appraisal Blog]
- Buckle up for next year’s housing market [Ryan Lundquist/Sacramento Appraisal Blog]
- Opinion: The path to modernizing the appraisal process [HousingWire]
Extra Curricular Reads
- What I learned eating at 8,000 Chinese restaurants [BBC]
- Squares, blocks, cubes — what is happening in Silicon Valley? [NY Times]
- First fully electric Dodge due in 2024 as muscle car brand ends ICE models [The Driven]
- Reliving the New York Subway Map Debate [Bloomberg]
- Margo Guryan, Whose Album Drew Belated Acclaim, Dies at 84 [NY Times]
- The Long History of the Espresso Machine [Smithsonian]