Housing Walks The Walk With Or Without The Bubble Talk

This is the only bubble talk I want to address today. Whoever said you can’t see a bubble when you are in the middle of one was wrong (and probably needed a bath when they said it). Moms clearly don’t understand what Dads are all about.

But I digress…

The New York City Rental Market Is Showing The Damage Toll Before Opening

Real estate firm Douglas Elliman published our rental market research this week and the numbers were quite weak. This report is part of a growing Elliman Report series I’ve been the author of for 25 years. These report release generated a lot of good writing about the historic situation.

CNN focused on our report results to illustrate the move to the suburbs during the pandemic as well as how it was limited to only those that could afford it. The New York Times focused on how thousands of renters had left the city due to the pandemic and that rents were finally coming down after a long run of gains.

CNBC focused on the record vacancy rate and large drop in new leases signed during the pandemic.

In fact, there were a lot of interesting takes using the same data set this week. For more, you can read here.

The Bloomberg story on the rental market was the number 2 most emailed by the 350K Bloomberg Terminal subscribers and stayed in the top five all day, keeping ahead of the Brooks Brothers bankruptcy.

And because I insist on being shallow, that Bloomberg rental piece was the 13th most read of the week.

And I give props to Bloomberg for three different color versions of the same chart:

Black & White

Blue & Black

Yellow & Black


Elliman Report: June 2020 Manhattan, Brooklyn & Queens Rentals

“The state mandate to that prevented real estate brokers to physically show property was removed before the last week of the month, not enough time to have a material influence on market conditions for the month.”

– The highest vacancy rate in nearly fourteen years of tracking
– The lowest number of June new lease signings in a decade
– The fall in median rent reversed all gains seen in 2019 and 2020
– The market share of concessions in each price segment surged
– New development median rent increased as existing median rent declined annually


Elliman Report: June 2020 Manhattan, Brooklyn & Queens Rentals

“With the lifting of the lockdown that prevented real estate brokers from doing in-person showings in the last week of the month, there will be greater transparency in the market.”

– Listing inventory surged as new leases continued to decline
– New leases declined annually for the ninth straight month
– Net effective median rent rose at the lowest rate in 18 months


Elliman Report: June 2020 Manhattan, Brooklyn & Queens Rentals

[Northwest Region] “While the decline in new leasing activity remained well below last year, the removal of ‘shelter-in-place.’ restrictions in the final week of June that prevented in-person showings, is expected to expand activity.”

– New leases declined annually for the eleventh straight month
– The market share of landlord concessions rose annually for the third straight month
– Median rent declined year over year across all bedroom categories

Westchester On Lockdown: The Actual Meaning Of The Frenzy

Douglas Elliman published our research on Westchester County yesterday, the residential suburban community north of New York City. The public narrative has been people are flying out of the city and brokers are busier than they ever have.

Except that’s not quite what is happening. Yes, there is outbound migration and a lot of it, it seems. And yes, the market is in a frenzy, except those two factors are being a bit conflated to explain it. Here is why. Looking at county-wide new contract data by month showed us that activity bottomed in May. And what would you expect given the state-mandated shutdown that prevented in-house showings by brokers? The New York Times broke down the contract logic for you. As the re-opening enabled by phase 2 in early June occurred, the month of June enjoyed a 53% month over month surge and you get this general narrative:

That 53% feels like a frenzy or a boom to those that have been sitting under lockdown for over 100 days. But new signed contracts are down in June 2020 from the prior June by 13%. That 53% surge is being explained as coming from the outbound migration generated by the city. I have no doubt that this is part of it. There was no actual spring market during COVID in Westchester by state mandate. With the spring being moved on top of the summer season, it will feel like a housing boom. And comparisons against the previous summer will make this summer look like a boom, but this is really a comparison of Spring 2002 versus Summer 2019.

The real market will be presented when the pent-up demand and supply from the spring market gets fully satiated. That moment should be in early September. The federal election, a damaged economy, a possible second wave (although New Yorkers seem to have their sh*t together with mask-wearing and social distancing.)

The actual quarterly Westchester, Putnam, and Dutchess Elliman report that we released shows us what a housing market looks like that was closed under state mandate for three months.


Elliman Report: Westchester Sales Q2-2020

“State-mandated ‘shelter-in-place’ rules prevented in-person property showings for much of the quarter, distorting sales and inventory trends.”

– County overall price trend indicators were skewed higher by the rise in single-family market share
– Largest year over year decline in countywide sales in eleven years
– Listing inventory declined by the largest amount in fourteen years
– Sixth straight year over year rise in median sales price
– Single-family sales fell by the largest percentage in more than eleven years
– Condo listing inventory fell annually by the largest amount in a decade of tracking
– Luxury listing inventory fell year over year at the second-largest rate in eight years


Elliman Report: Putnam & Dutchess Sales Q2-2020

“Price trend indicators and sales slipped from year-ago levels. ‘Shelter-in-place rules were modified in early June to allow in-person showings by real estate brokers, but this transparency came too late to be reflected in the results.”

– The number of sales declined annually for the second time in five quarters
– Listing inventory fell sharply year over year and was the first decline in six months
– All price trend indicators slid from year-ago levels


Elliman Report: Putnam & Dutchess Sales Q2-2020

“The number of sales and listing inventory fell sharply. ‘Shelter-in-place rules were modified in early June to allow in-person showings by real estate brokers, but this transparency came too late to be reflected in the results.”

– The number of sales declined year over year by the most significant amount in six years
– Listing inventory fell sharply, the third straight annual decline
– All price trend indicators pressed higher from the same period last year

I ran out of time to include Brooklyn, Queens and Riverdale reports released this week – they are on the web site though.

[Bloomberg TV] Bloomberg Markets 7-6-20: A Busy Housing Market This Summer

Had a wonderful, nearly 7.5-minute conversation with Vonnie Quinn on Bloomberg Television’s Markets this week discussing how the housing market will likely look over the summer. The interview touched on the analysis in the Douglas Elliman Report series I author.

Some ‘inside baseball’ fun. I was connected to Bloomberg via Zoom from my home for this. If you look closely at the 5:15 mark, you can see my garage door open as my wife drives in. My wife panicked when watching this clip, thinking she would be on TV as she walked out of the garage, but she randomly ended up using the other door.

[Spectrum TV/NY1] Stuy Town Vacancies Surge 7/6/20

Michael Herzenberg of NY1 did a great story on the exodus from Stuy Town after the landlord provided terms for people to break their leases. The story was inspired by a press release from CHIP (I haven’t seen) which talked about the pandemic exodus as the reason for the rising vacancies. I thought that was a bit of hyperbole since the other key factor has been the inability of the real estate brokerage industry to do in-house showings by state mandate until June 22nd. The lack of mobility has also been a key factor in driving vacancy higher.

Ivy Zelman On The State Of The U.S. Housing Market (It’s Pretty Strong)

My friend and Superstar housing analyst Ivy Zelman talks with TD Ameritrade. If you love numbers, you can go deep into the national story. Love the nuance here.

She also referenced the Pew study on why people moved because of Covid-19

Click on the image below to play the segment.

When The Alphabet No Longer Explains The Economy And Car Tumbling Does

I enjoyed this basic WSJ tutorial on Alphabet Economics. I’ve long used U, V, and W as labels for future periods. Now it’s about shapes.

…or something else. I think the following GIF best describes our economic cycle over the next 6 months.


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

The Appraisal Institute Has Missed The Opportunity To Come Clean With Its Members

UPDATE JULY 13, 2020

The Appraisal Institute felt it was necessary to write a letter to respond to my original July 3rd post: The Appraisal Institute Ignores Its Membership For Third Time In Sham Election Maneuver. Their response letter was surprisingly amateur and showed how little they respect their membership. Read on.


UPDATE JULY 16, 2020

I have just been told that Michael Tankersley did NOT serve on this year’s Nominating Committee. He was a candidate for the Vice President position. The note below has been updated to reflect that.


Although Steinley was the – SOLE – duly vetted and selected candidate of the nominating committee, somehow the board had to go through a secret, 6-out-of-24 “process” to place Tankersley back onto the ballot after not being the selection of the nominating committee. Why?

The Appraisal Institute at a crossroads. To all those who have nothing to hide, hide nothing. The sham petition process was hidden from the Appraisal Institute’s membership. In response to my initial call out of this sham election process last week, the Appraisal Institute attempted slip this by membership using a highly disrespectful “fogging” letter from the current president. It insultingly omits all the critical issues that have roiled membership while rambling on and on about process and assuming the membership isn’t very smart. No matter how much they try, AI leadership behavior in this sham election process is unethical and does not serve the membership whatsoever.

Here’s a reminder to the Board of Directors: you serve the membership, no matter who you pledged your allegiance to when you signed up for this gig. Please honor your commitment to them and your commitment to honor and integrity as leaders of the industry. For at least the last decade, this once-proud organization is a shadow of its past because of self-dealing from the same people we are witnessing now. It is up to you to do the right thing and act like the leaders you can be.


Original Post

Today, all (I assume) members of the Appraisal Insitute received a letter from current AI president Jeff Sherman, with whom I’ve met and spoken with on several occasions during his tenure and liked him and what he represented. MAI members from around the country have forwarded it to me and expressed their profound disappointment in this organization that they used to love.

Here is the consensus feedback by members who received this letter.

It just makes me sad that this is the way it is. I think many of us are a bit dumbstruck by this.

I found the letter mind-boggling and a simply attempt to fog the issue at hand. I have to assume that this was written by AI counsel because it reads like a lawyer’s writing with a little softening from other parties. I will also assume this response was directed by the current CEO in an attempt to stop the viral membership backlash of the sham election process that has rattled the organization so he can continue to control who future presidents are. So I am very confused as to why Jeff signed off on this letter since its contents contradict what I have been told by past presidents, past board members, and current members. It hurt to read it.

For now, I am going to chalk this up to “fogging” so that the actual logic gets buried in the debris. This is how lawyers do this. By the way, has anyone ever considering sending the details of this action and the past ten years of self-dealing to federal prosecutors in the Northern District of Illinois? If this is how their executives run the organization, and all the perks I keep hearing about, it makes me wonder about the state of their finances. The handling of the FMC debacle comes to mind.

But I digress.

Here is my running commentary on the letter that is presented below:

– This sham election maneuver has not been in place since 1991 – Ask the former president who made this happen (I have the name) under oath to get Sellers on the ladder in the first place and ruin the career of a star female nominee.
– An 11 member nominating committee gets to vet candidates recommended by the membership to review and they are charged with picking the best one and then announce it. They vetted 3 this year and picked one. It’s literally that simple.
– The winning candidate’s name was announced by the nominating committee.

And then magically…

– The sham maneuver was made to get the CEO’s pick inserted which should never happen.
– Tell the membership right now why there is a second candidate.
– I’ve been told repeatedly that a board member can vote for themselves in the petition process and as of today, some current board members are fighting like hell to keep any such votes hidden from membership, presumably so potential self-dealing will not be exposed.
– To repeat, one person was selected by the nominating committee and two weren’t. There is no disagreement on this. Why does the CEO get to pick a candidate that was not selected to run against the person who was selected?

Why are there suddenly two nominees without any transparency? This letter does not address this point at all yet it is the entire point. The rest of the letter is faux transparency. Give the membership the actual reason there are suddenly two candidates, one picked by the nominating committee and one picked by the CEO (and that CEO-blessed candidate should be ashamed of themselves).

– As many as 3,000 members will get to watch the 10-minute presentations of two candidates – one vetted by the nominating committee and one hand-picked by Jim Amorin. The act of showing this on video isn’t transparency at all. It’s a charade. The most deceitful part of the petition process has already occurred before the camera was turned on. There is no explanation of how the second candidate was selected.

The fogging part that is most distasteful in this letter is that it is laden with process gobblygook but contains zero transparency, something the membership is demanding right now.

Here is the closing paragraph of the letter.

I now offer to you, and to each Board member, this is not about style or personality; it must be about the best interests of the Appraisal Institute. I have supreme confidence that the trust you have placed in your elected representatives will be confirmed, regardless of the person chosen.

The problem with this closing statement is this sham election process is not being done in the best interests of the membership, but rather it is being done in the best interests of the operational executives running the show.

This is truly a sad day for the Appraisal Institute. If the board does not fight for the rights of the membership and respect the selection process, then the organization as we know it is just a monarchy, largely like when it began to be a decade ago with the same cast of characters.

Appraiser Talk Is Fascinating

Here’s a conversation I had with my good friend from Australia!

OFT (One Final Thought)

Although I argue that pie beats cake every time, this is madness.

Brilliant Idea #1

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– They’ll be more outbound;
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– And chronicle a sham election.

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
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