Is Housing Still All About The Hard To Open Pistachios?

February 24, 2023

Such a life lesson. Wait for it…

But I digress…

Marry The House, Date The Rate

Blecch, I can’t stand old-timey housing market sayings like this. This Bloomberg piece chronicles the woes of the lending industry – how they need to be creative to talk borrowers back into the market now that rates have more than doubled in one year.

The Home Lenders Hunt for Ways to Make 6% Mortgages More Attractive [Bloomberg]

This Len Kiefer mortgage rate illustration shows what lenders are up against. It’s been more than a decade of much lower mortgage rates.

Housing Analytics: How the Sausage is Made 2-23-23

I enjoyed this conversation with my friends Noah Rosenblatt of Urban Digs and Kael Goodman of Marketproof, a down-in-the-trenches discussion on housing data challenges we see in the NYC metro area. It was well-attended (and really fun to kibitz with people I highly respect), so we plan to do these talks on an ongoing basis.

Pricing Climate Risk Into The Housing Market

Appraisers and brokers adjust for measurable amenity differences to arrive at a value opinion. How do you adjust for something expected to happen 30 years out?

Unpriced climate risk and the potential consequences of overvaluation in US housing markets: February 16, 2023

Climate change impacts threaten the stability of the US housing market. In response to growing concerns that increasing costs of flooding are not fully captured in property values, we quantify the magnitude of unpriced flood risk in the housing market by comparing the empirical and economically efficient prices for properties at risk.

Turkey’s Construction Corruption Proves The Absolute Necessity Of Enforced Building Codes

As it turns out – exemptions from following building codes were a way of life for builders and public officials in Turkey, and the earthquake aftermath shows us how cavalier these practices were with peoples’ lives. This is a fascinating story via the Vox podcast, Today Explained. Here’s a good NYT piece on it: Turkish Builders Come Under Intense Scrutiny Over Shoddy Construction

Searching For The Perfect Oven Hood

Wow, the 60s interior design trends gave off a counterculture vibe that disagreed sharply with the more staid standards of prior decades. Now, this…is a hood.

Kastle Data Shows Us The Moat Around The Office Market

A pandemic metric has become a stalwart of feedback for the commercial office industry to understand the pace of recovery. Kastle data came out of nowhere by measuring card swipes (usage) in the buildings they manage. I have many private discussions in which those in the industry can’t say with certainty whether they belive the market will return to its former glory or it won’t. It all seems up in the air.

Last summer, a grad student in my Columbia MRED class pointed out that Kastle occupancy results probably weren’t as high as assumed. I agree that 100% occupancy on March 20 makes no sense in any market. Look ar a market with a ~10% vacancy rate. I assume that the 100% number for March 2020 was simply the baseline for the index. So if we say the actual occupancy baseline was 90% in a market with 10% vacancy, a 50% occupancy on their chart is really 45% (50% of 90%).

Also, Kastle seems to be using card swipes as a direct proxy for occupancy. So when people look at the following chart, the chart conveys that occupancy is 50% in the Dallas metro area, when it’s probably really less than that when you ask this question: “What was the occupancy in March 2020 that was made into the 100% level for this chart?” In my scenario, the index is not a direct translation for occupancy, right?

And I don’t have a firm understanding of the types of buildings that are being tracked in each market and their relationship to the overall market. Still, it’s an incredibly useful tool to get some sense of the change in trends given all the issues I have pointed out – plus, we have nothing else to gauge occupancy at this level and shared at this frequency.

And the usual weekly stats…

Getting Graphic

My favorite charts of the week of our own making

I shared this last week. I really love this chart.

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

My favorite random charts of the week made by others

Upcoming Speaking Events

Appraiserville

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

TAF Writes A Brilliant Bureaucratic Letter Of Nothingness

Take a few minutes and read through this recent letter by TAF to PAVE. As a reminder, 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 (BLS: 97.7% of appraisers are white). I wonder if EY is aware that one of its partners is the current Chairman of TAF’s Board of Trustees?

The letter says nothing, but it includes words that sound like action. This is a bureaucratic masterclass in oozing nothingness. They continue to take no tangible action to promote real change in the Bunton monarchy’s operations. Highly frustrating and an embarrassment to our appraisal profession.

The Righteous Indignation By Outspoken Appraisers Denying Racial Bias Are Missing The Point

One thing appraisers are widely known for is righteous indignation. I’m certainly known for that on occasion.

In my view, about 99% of the appraiser’s hot takes on the battle between ASC and TAF over racial bias are about exclaiming, “we’re not biased!” Their emotional effort is to defend themselves and the industry, to provide evidence and logic that all appraisers aren’t racists. I get it. Government officials have made insensitive comments with racist inferences against appraisers. And I don’t like being swept into the same group as that Appraisal Institute member in South Carolina that hurled racist tropes at a researcher/author via email a while back.

I think all professions have embedded racial bias, but that’s no reason not to try to eradicate it.

How can anyone look at our industry’s dead last, 400th out of 400 occupations BLS ranking with a 97.7% white metric, and not think there isn’t some racial issue within the industry? It’s tangible. It’s empirical.

It is critical to protect public trust. That’s the greater economic force behind the valuation occupation. If we get to the point where no one trusts us, we will be replaced somehow; like it or not, no amount of righteous indignation will change that 97.7% metric. We should all think about improving that 97.7% ratio. It’s tangible and damaging to our industry’s brand in the eyes of the public.

It starts with reforming The Appraisal Foundation by ousting the problematic leadership, whose bureaucratic ineptness has fostered that 97.7%. As a reminder, only one person of color has been on the two technical boards in more than three decades of existence. And that glass ceiling was only broken in 2020 because of significant external pressure. And nothing further has been done since 2020. Incredible.

How do we get more people of color into the least diverse industry in the United States? Keeping the status quo isn’t something we can lean into. Not being able to solve that problem will prove the critics right. Do we want that as an industry?

OFT (One Final Thought)

Once you get this stripped-down ’85 Minutemen tune in your head, it’s hard to shake.

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 eat more pistachios;
– You’ll get more pistachios;
– And I’ll focus on the hard-to-open pistachios.”

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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