Housing Mobility Is Limited (To Six Blocks)

The lack of listing inventory is one of the reasons homeowners can be limited in their mobility. The existence of hills is another reason…

But I digress…

Altos Research Research Shows The Severe Descent In Listing Inventory

My friend Michael Simonsen, the C.E.O. of Altos Research who loves my new housing word “coprimary,” provides some eye-popping data for the New York Times Upshot.

“The supply side is really tricky,” said Benjamin Keys, an economist at the Wharton Business School at the University of Pennsylvania. “Who wants to sell a house in the middle of a pandemic? That’s what I keep coming back to. Is this a time you want to open your house up to people walking through it? No, of course not.”

A majority of homeowners in America are baby boomers — a group at heightened risk from the coronavirus. If many of them have been reluctant to move out and downsize over the past year, that makes it hard for other families behind them to move in and upgrade.

Zillow Has Started To Use Their “Starting Point” Zestimate For Cash Offers

Zillow Starts Making Cash Offers For the Zestimate [Zillow]

For years, Zillow has described the Zestimate as a place to start but it is not an appraisal (to limit their legal exposure). Yet now they are going to use it as a basis for cash offers? Given the Zestimates inaccuracy…what a 5% median accuracy rate means: The Zestimate is within 5% of the actual value 50% of the time and 50% it is not. This seems quite reckless, no? What am I missing?

Chicagoland brokers skeptical of Zillow Purchase of Showingtime

The Showingtime feature on most MLS web sites is pretty cool, but real estate brokers are wary after their acquisition by Zillow. When Zillow was launched more than a decade ago it assured the brokerage community it would not become a competitor – until it was. This began a few years ago with their iBuyer initiative was launched after it saw the progress OpenDoor was making.

Chicagoland brokers skeptical of Zillow deal [Chicago Agent Magazine]

Wall Street Bonuses Won’t Be Stellar Despite High Profits

Wall Street compensation continues to have less and less impact on New York City real estate activity, even with higher profits.

South Korea Continues To Be Obsessed With New York City Real Estate

KBS, the 60 Minutes equivalent on the largest TV network in South Korea interviewed me for segment to be aired sometime next week. This was a shortened version and I’m on for only about 10 seconds. I’m sharing this because I’ve never spoken with a sign translator adjacent to me on screen. Fun!

[click to play]

Getting Graphic

Len Kiefer‘s Chart Handiwork

Barrons Live

Beckie Strum, Mansion Global managing editor, and Jonathan Miller, president and CEO of New York-based appraisal firm Miller Samuel, discuss the nuts and bolts of home value and how appraisers are navigating a fast-moving home market.

During my interview recording today during the writing of these Housing Notes, my brand new installed Gigabit internet cut out and we had to switch to audio only. I’ll publish the link here in. few hours and in next week’s Housing Notes, but to listen to it you have to register.


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

[Amateur Hour] TAF Used COVID As An Excuse To ‘Expand’ USPAP For One More Year
[This is a teaser to a much larger thought piece for next week, so stay tuned!] So many questions about this FUBAR decision… While I’m happy about the longer USPAP cycle’s general concept, that’s not what this action really is. This move was purely political, and worst of all, there was no research done on them impact on the stakeholders downstream and the 55 jurisdictions. At the ASB public event last week, David said that this doesn’t mean the three-year cycle is permanent, or that it won’t just revert to two years again, or that it might go to a subscription service or done “as needed” update system. NOTHING IS KNOWN AT THIS POINT. The fact is that TAF has been under tremendous pressure to expand USPAP beyond two years for a long time but has chosen to keep it at two years so that the money keeps rolling into the nonprofit. TAF used COVID as a convenient reason to extend another year, but instead of using this moment to fix the longstanding problem, they’ve created a regulatory monster. Where’s TAF’s leadership on this – wow, this is amateur hour. I’d argue that COVID has had no impact on TAF’s ability to function. I’d argue that COVID made TAF more efficient without all the meetings to exotic places to talk about the same things that don’t change over and over again.

One has to wonder if TAF’s recent love affair with the Appraisal Institute, especially after sending that bat-shit crazy letter to ASC, isn’t the real reason for Dave’s extension of another year. The Appraisal Institute has been hellbent on expanding the USPAP cycle for years, and I’m speculating if that was the actual reason for this ‘out of nowhere’ decision.

Plus, I keep wondering about all that saved TAF travel money along with the $8M to $10M estimated in reserves and their refusal to accept grant money from the ASC as Congress intended. Hence, they aren’t subject to oversight makes their motives for this change incredibly suspect. If TAF cannot project trustworthy behavior to the appraisal industry they provide standards to, how do they expect the appraisal industry to protect the public trust?

Much like the Appraisal Institute, The Appraisal Foundation is collapsing in credibility right before our eyes.

The Academia versus AVM Smackdown Over Value

The best appraisers and appraisal models will
often conclude market value is above or below
the sale price.
– Dr. Norman G. Miller, PhD

There was a total appraisal nerd debate in the Appraisal Journal between Dr. Norman G. Miller, PhD and Isakson, Ecker and Kennedy of Lee Kennedy of AVMetrics, the firm that rates the accuracy of AVM in use today. The only person I know of in the group is Lee Kennedy whom I’ve met at various events in D.C. and elsewhere.

If you can get a copy of the Fall 2020 Appraisal Journal [subscription] you can partake in the “price does not equal value” debate on page 275 – Miller (no relation) makes the point that when AVMs are compared against the results of appraisals, AVMs speak to price and appraisers speak to value. They are not the same.

The fact that selling price is not always market
value is the primary assumption in the testing
and validation of appraisal valuation models.
Experienced appraisers know that sometimes you
must adjust a selling price and not take price as a
given. My point here is that sale price is not
always representative of market value or most
probable price. Assuming it is the best representation of market value automatically induces
appraisal error, according to Isakson, Ecker, and
Kennedy, which then is overstated. Reality suggests that some people pay more than average
and some pay less. An appraisal that does not
match selling price is not necessarily an error.


These conditions are sometimes not known or
not met. Buyers and sellers may not be typically
motivated or equally informed. Sometimes sellers
are motivated for a quicker sale and intentionally
underprice the property to attract more buyers.
This can result in a bidding war on occasion or a
below-market sale price on other occasions.


They go on to describe
several metrics, including the forecast standard
deviation (FSD) of the error, again based on sale
price not based on most probable price, which
they do not know. They suggest that the FSD of
appraisal error is likely underreported and that is
why we all need someone like a third-party vendor to calculate them for us. They also suggest
buckets of “error” to look for extreme errors or
compare buckets to price tiers or geography, but
none of this is relevant unless you assume that
sale price is the only possible correct value conclusion. It ignores inherent price dispersion
within the market and the real purpose behind
most home appraisals, which is to support financing risk analysis.

AVMetrics counters with this smackdown of the position of academia:

The use of selling prices to calculate sales
errors, from which nearly all AVM performance
metrics are derived, is ubiquitous in the AVM
industry, in spite of Dr. Miller’s concern that
these metrics ignore price dispersion within the
market. The discussion of price dispersion is an
academic exercise that has not been established
to provide any real-world usefulness to today’s
valuation practitioner. In addition, the proposed
foreclosure-based metric for measuring the accuracy of valuations lacks a coherent definition
and is unproven in practical application.

It seems to me that while the academic point made between price and value dispersion is spot on, AVMetrics justify the use of AVMs because there is no alternative and the whole world uses price because, well, they just do.

Please feel free to share your wonkiness on this topic with me.

Epic Fail: The Appraisal Institute IRS 990s Show They Need To Do A 180

The following was posted on February 24th over on my Matrix Blog.

As I’ve chronicled in the Appraiserville section of my Housing Notes newsletter since 2016, the scale of Appraisal Institute bureaucratic self-dealing of the executive committee and some members of the AI Board of Directors is breathtaking. Over the past decade or more, AI National has been able to keep a lid on the membership backlash by threatening to remove a member’s credentials for speaking out. Membership has been reluctant to risk losing something they worked hard for in both time and money that they have remained quiet – until the past few years. With the significant devaluation of the SRA designation and growing signs of the MAI designation’s devaluation, more are coming forward.

The FOJs (Friends of Jim Amorin) have been using that freedom from oversight to act with impunity. They are more openly corrupt now than ever because that’s the only institutional memory they possess. However, we are seeing some signs that more AI Board of Directors aren’t interested in rubber stamping FOJ efforts, as illustrated in the previous board meeting results.

The next board meeting is coming up tomorrow and Friday, and it is a seminal moment for the Appraisal Institute. It is where the BOD gets to vote on Jim Amorin’s new contract that the entire board has not seen. As a reminder to board members: your job is to represent your membership, not the executive committee. You can’t vote in favor in good conscience, if you haven’t seen it or been exposed to the key terms. Your role as a member of the AI Board of Directors is critical to the Appraisal Institute’s future and your responsibility is real.

The Appraisal Institute has an IRS nonprofit tax code designation: 501(c)(6) “Defined as Business leagues, chambers of commerce, real estate boards, etc., created for the improvement of business conditions.”

At this point, it is hard to see this organization as “created for the improvement of business conditions.” Given the long-time failure of organizational leadership as measured by the empirical data extracted from the 990s tax filings in public record shared below, this organization needs a complete makeover immediately. It starts with the current CEO.

I hope some in AI membership will use the information shared below to bring an inquiry to the U.S. Attorney’s Office for the Northern District of Illinois.

Over the past few days, a detailed analysis of the Appraisal Institute’s performance from 2006-2019 has gone viral within the industry. The anonymous author(s) analyzed AI National’s 990 tax filings in a series of charts and tables by “Concerned Members,” and you can download it here: The Appraisal Institute as Told by the 990s [click on each to expand].

The results should send an alarm to membership and the AI Board of Directors on the organization’s future. The FOJs have poisoned the leadership culture, which has damaged the value of the designation brands and the organization’s credibility to the business world. None of this would have been possible if designated members weren’t vulnerable to the threat of losing their designations if they chose to speak out. But with the perceived value of membership declining, the fear of the threats by the organization has been diminished.

Here is my favorite chart of the 990s presentation. Current CEO Jim Amorin was made president (for the second time) in 2017. Now, look at the chart.

The following pages are the same found in the full pdf document.

Here are what the numbers tell me, as an outsider to the organization:

– To offset the steady long-term membership decline (-29.2% from 2008-2019), membership dues as a percentage of total revenue rose steadily over the same period. This action kept revenue coming in. With all that newfound revenue, the FOJ AI executives and AI Board of Directors viewed this as an opportunity to lavish high salaries on all.
– The data table on page 10 shows that expenses are remarkably flat, yet membership has fallen sharply over the same period. If membership falls another 7,500 over the decade, will expenses continue to remain the same?
– Jim Amorin has made $1,725,003 from 2007 to 2019, yet membership has fallen 22.7% over that period. Why would his compensation increase, and why is he paid about 50% more than his peers in other organizations? I’ve presented these numbers in past Housing Notes. So many questions.
– Revenue emphasis is shifting to rely more on dues while education programs, once a promising and prestigious revenue stream (and a cash cow for a handful of instructors that were FOJs), are losing their importance because of virtual continuing education programs. Who has been in charge during this erosion in education revenue, once a key branding strength of the Appraisal Institute?
– In 2016, I got quite upset with the proposed “taking” of chapter funds, and I became an activist, yet I’m not even a member of AI. Jim Amorin made it happen in 2017 when he became president. Now given all the big salaries and excessive travel, etc., where did all that money come from? I keep thinking about all the chapters who had saved money over decades to the tune of hundreds of thousands of dollars, even more. We should be asking AI National: Since the 2017 “taking,” how many times did AI National dip into chapter funds to plug the deficit? What is the current status of their reserves compared to before the taking? The AI Board of Directors must have the answers to these questions. Membership should demand it.

There has not been a publicly shared strategy to stem the decline in membership. Announcements of committees (like residential appraisers) were faked to quell the discord among residential members, and FOJs had no intention of taking action.

Marketing and branding have been the same old, same old, every year blah, blah, blah, which means that the organizational leadership has filtered out nearly everyone that is not a like-minded FOJ. Look at the last election debacle where the sham petition process was overtly used again by Jim Amorin to get his FOJ “Tank” installed instead of the duly nominated candidate Craig Steinley. Yet, membership pressure on the board stopped it. There is great danger to membership who are here for their designations within an organization with everyone in power being subservient to one person – a monarchy. Any new and creative thinking is not just discouraged; it is impossible.

I hope that ALL on the AI Board of Directors remember that their responsibility is to the membership and to sustain the organization’s future, not the FOJs. I can only assume there may be future legal action on this overt institutional taking, and each current and past board member is exposed. If you want the Appraisal Institute to pivot in the right direction and stop the executive committee’s self-dealing, please do the right thing and DO NOT extend Jim Amorin’s contract. It’s time to hire a CEO to lead the organization in the right direction, responsibly, ethically, and properly. If you do nothing as a board member, this will be your professional legacy as viewed your peers.

Here is a snapshot to memorialize the 2021 Appraisal Institute Board of Directors:

These are the individual pages of the full pdf document.

OFT (One Final Thought)

I’m sure many of you have seen the original version of this before – San Fransisco just before the big fire and shortly after – this updated version is colorized and the frame rate was accelerated using artificial intelligence. I really enjoyed it.

Brilliant Idea #1

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– They’ll be more mobile;
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– And I’ll wish for a Wall Street bonus.

Brilliant Idea #2

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See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog

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