Housing Is Out In Left Field

We really are tribal by nature. Whether it is politics, your favorite sports teams, alma maters, Mac versus PC, iPhone versus Android or most importantly, pie versus cake. We cheer for stuff we don’t fully understand or we have so much confirmation bias we can’t see for the forest for the trees. Like a home seller who is stuck on an asking price from a previous market or a market analyst who can’t see change occurring in a housing market.

After sitting in seats near the right field in Yankee stadium for 15-years, I’m more of a right field bleacher seat fan.

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Here’s a shout out to my Columbia grad students who used critical thinking to arrive at answer “C” in the quiz of life.

Market Report Gauntlet Q2-2018 Week 4: Hamptons, North Fork and Long Island

This was the final week of our Q2-2018 market report gauntlet for Douglas Elliman Real Estate. I’ve been authoring this expanding real estate report series since 1994. There is more in the works. Be sure to check out the newly published Elliman Reports in the link section at the bottom of these Housing Notes or at Elliman.com/marketreports.

Douglas Elliman published our Long Island and the East End research this week. As regular readers of these Housing Notes have learned over the years is that there is nothing better than a good chart or a good ranking. Bloomberg’s story on the Hamptons had both with the fifth most read ranking and a great chart on the 350k± Bloomberg Terminals world wide.

But that wasn’t all. Newsday published a great analysis of our three regional reports (Long Island, Hamptons and Long Island).

The federal tax overhaul is having an impact on the luxury market, she said. The measure imposes a $10,000 cap on deductions for state income and local property taxes, among other changes. For buyers, “it plays into the price they’ll pay for a home,” Conroy said.

Long Island metrics show tight conditions on closed sales but easing conditions with more current metrics: total pending sales (contracts) for Long Island, excluding Hamptons and North Fork, are down 14.1% year over year and new pending sales (signed in Q2) are down 12.7%. The Long Island market tends to behave a lot like the U.S. existing home sale market for closed sales but Long Island has been outperforming the U.S. aggregate existing trends as U.S. existing home sales have been falling for 5 consecutive months. Rising price trends for 5 years combined with higher mortgage rates and uncertainty with the new federal tax law has begun to slow activity in the housing market nationwide and more recently in Long Island.

Here are some charts on these three markets.

Market Report Gauntlet Q2-2018 Week 4: Aspen/Snowmass Village, Los Angeles and related submarkets

Los Angeles

The Los Angeles market saw some weakness in price and sales trends this quarter – the market went from “white hot” to “hot” or something along those lines. CNBC published a story about the slowdown in sales for the entire Southern California region so that seems consistent with our LA findings.

Aspen/Snowmass Village

At first glance, the Aspen market looked weaker than last quarter, but upon closer inspection, it really wasn’t. While sales fell sharply, they fell to the historical norm and from year-ago levels that enjoyed the released of pent-up demand from 2016. The average price per square foot is the most reliable price metric in a market where the average square footage for a condo sale surged 24% and the average square footage for a single family sales dropped 21.1%.

Q: Is California A Leading Indicator For Housing? A: Nah

Click on the tweet and explore the commentary. Plus, what does leading indicator refer too? i.e. canary, canary in a coal mine

– Is California is a canary that lets us see downturns coming?
– Is California a canary because it tells us all trends in housing?

We Have Officially Arrived At A Moment In Housing Nationwide

Two different markets show the same trend for somewhat different reasons:

High-cost markets seeing a slowdown in sales due to the uncertainty of the impact of the December 22, 2018, federal tax law as it relates to the housing market.

< - The balance of the U.S. market has crossed an affordability threshold after years of rising housing prices, years of chronically short inventory levels, years of nominal wage growth and now…rising mortgage rates. There is buyer fatigue out there and more are starting to take a break from the merry-go-round until more certainty returns. Here’s the relevant news feed on this:

— Southern California home sales crash, a warning sign to the nation [CNBC] — U.S. New-Home Sales Dropped in June [WSJ] — Existing-Home Sales Slide, Thanks to Soaring Prices [Realtor.com]


Terminator: AI National Is Still Vigorously Fighting For Evaluations Against Residential Appraiser Interests For Reasons That Can’t Be Explained

One of my favorite lines from the original Terminator movie from the Kyle Reese character that can apply to the unknown driver of AI National’s obsession to force evaluations on residential appraisers because they can count on the designation handcuffs that keep many from speaking out and continue to damage the public trust and continue to damage the livelihoods of its own members in slow motion without bothering to reach out and explain what is behind it (gasping for air sound). Remember that it took 10-years of screaming by AI membership to get AI National to disclose their dealings with FNC with an admission inserted into their email newsletter in the middle of other generic announcements.

Listen, and understand. That terminator is out there. It can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead.

The Florida Real Estate Appraiser Board is having a meeting on August 6, 2018, concerning the FREAB’s February action (by a 7-1 vote) to require appraisers to comply with USPAP when performing appraisal and evaluation assignments.

The Appraisal Foundation will be there as well as AI National’s well-traveled evaluation-advocate-in-chief Scott DiBiasio.

Be sure to read three attached documents, especially the written comments on pages 13-15 of the “Discussion Documents”. A shout out to my friend and appraiser colleague Frank Gregoire from Florida who is working hard behind the scenes for all residential appraisers on this issue – you can see his emails and his professional discourse (unlike me).

Documents from Public Record:

Discussion Documents
AI National Discussion
Appraisal Institute Documents for 08062018 FREAB Rules Discussion 61J1-9…

Remember that AI National, aside from doing battle with The Appraisal Foundation, is beginning to focus on befriending the state coalitions. I have a feeling that will be impossible and they will remain alone in the wilderness continuing to damage the public trust and our livelihoods.

The only way to stop AI National from further damaging our livelihoods AND THE PUBLIC TRUST is to demand the removal of the old guard that has been able to personally insulate themselves from removal – the arrogance of current leadership while flying first class to valuation conferences around the world is an abomination. Residential appraisers will have to do a lot of $25 evaluations to pay for 1-4 of their first class round trip tickets to China, Singapore, Portugal, Canada, Germany, Serbia, Brazil, etc.

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 tribal;
– You’ll be out in right field;
– And I’ll go to California and will not think it leads U.S. housing trends.

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 next week’s Housing Note.

See you next week.

Jonathan Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants
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