Not just dogs…I’m told this is actually how humans interact.
If humans acted like dogs… pic.twitter.com/UGu9lydgv4
— Rex Chapman???????? (@RexChapman) June 14, 2021
But I digress…
No, We’re Not Going To Become A Nation Of Renters
I remember the “we will become a nation of renters schtick during the great financial crisis. Pundits back then were all over this point. The part that is missing with from this Bloomberg Opinion: America Should Become a Nation of Renters piece is the missing context about financial engineering that enabled the homeownership rise so much from the late 1990s to the mid-2000s. In the recent uptick, there has been a notable absence of financial engineering. Of course, as a homeowner and a real estate appraiser, I clearly am biased towards homeownership.
The numbers paint a stark picture.
After peaking at 69% in 2004, the homeownership rate fell every year until 2016, when it was 64.3%. The rate rebounded in Trump’s presidency, hitting 66% in 2020, but that trend may be short-lived (???? via @stlouisfed) https://t.co/J4Q4b3JYvI pic.twitter.com/QcH3oyY7K2
— Bloomberg Opinion (@bopinion) June 17, 2021
Global Housing Bubble Signs Stoked By Low-Interest Rates And Remote Workers
The segment concludes that this is likely to end with “cooling” and not a “crash” presumably because of the absence of financial engineering. Without “liar loans” we’ll see a slow down in sales as buyers can’t finance their purchase – remember that lender underwriting is historically tight.
— Bloomberg Quicktake (@Quicktake) June 15, 2021
TV: Newsday Live: Hot Tips For a Hot Market: For Sellers
I had a fun conversation with Faith Jessie, journalist and anchor at Newsday, Maura McDermott, the real estate writer at Newsday, and Monica Balsan at Daniel Gale Sotheby’s International Realty. My housing data came from our Elliman Report: Long Island Sales series I author for Douglas Elliman.
The interview was placed on Newsday’s home page, which was pretty cool.
Newsday is the largest news publication for Long Island, New York.
We’ve Been Reading A Lot About Inflation Concerns – Here’s How It Was Handled in 1952
I clipped this inflation propaganda ad from a Dragnet radio show episode from January 1952. Apparently, it was a simpler time. The message, just to work harder and more efficiently.
Remember… “It’s the one enemy that can lick America…”
And now…apparently older people are more worried about inflation….including those that listen to old radio shows…
Residence of Note: Buyers Are Not Swayed By Aspirational Pricing In The Current Market
This apartment remains on my bucket list of penthouse apartments I want to inspect – the dome on the former Manhattan police headquarters building at 240 Centre Street that was converted to a co-op in 1988 is one of them. My firm and I have appraised many apartments in the Police Building, including the former gym and the muster room (the former police radio room which is a circular space that was lined with police radio switchboards.
The penthouse apartment with the “dome” just sold for $10 million ($1,818 psf), which is consistent with the building price structure. It was originally priced for sale at $40 million in 2015, consistent with the “aspirational pricing” frenzy of the time. The monthly maintenance charges (HOA fees including property taxes) is $12,600 per month or $2.29 per square foot.
If you’re an appraiser, here’s a fun apartment to measure. LOL.
And the broker tour from a few years ago. Gotta love that living room…
Selling A ‘Slice of Hell’
There is an interesting interview of a real estate agent trying to sell a severely damaged house that has sat vacant for a year and a half and severely vandalized by a former tenant.
In a housing market absent of much inventory, this is actually quite saleable.
Take the tour:
Don’t Miss the Unveiling of the 2021-22 Top Ten Issues Affecting Real Estate® 6-23
I’m a Counselor of Real Estate (CRE) and wanted to share this….
Join The Counselors of Real Estate on June 23 for the unveiling of the 2021-22 Top Ten Issues Affecting Real Estate®. Now in its 10th year, this signature thought leadership initiative identifies the current and emerging issues expected to have the most significant impact on all sectors of real estate. The Top Ten is developed through broad discussion, polling, and debate among 1,000 Counselors of Real Estate® and is an invaluable resource to clients of Counselors worldwide and to the real estate industry at large.
Don’t miss the countdown on June 23. Register for free here.
My favorite charts of the week made by others
— Liz Ann Sonders (@LizAnnSonders) June 17, 2021
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
To all my Appraiserville readers who may have skipped over the fascinating housing market content above including an announcement by The Counselors of Real Estate (CRE) of which I am a proud member, check out next week’s announcement by clicking on the image.
A Personal Property Appraiser Comments About The Appraisal Foundation Boondoggle
I just received a note from a personal property appraiser that agreed with last week’s post on restructuring TAF. It’s quite telling (bold my emphasis):
Reading your note from Friday, I wanted to let you know that as a personal property appraiser, I couldn’t agree more re: your proposal to restructure TAF. Their advisory opinions are frequently irrelevant for PP appraisers (and most of the USPAP book doesn’t even apply to PP). It is frustrating and it devalues TAF authority because they don’t recognize the differences between each area of specialization. We are in completely different industries and governed by different laws! I also think PP should be regulated, but that’s a different can of worms…
The only reason personal property appraisers are part of the Appraisal Foundation efforts is to generate revenue. There is no logical reason why a different profession can sit on technical committees and determine rules that impact the livelihoods of tens of thousands of real estate appraisers. Remember that real estate appraisers have a bullseye painted on their back in the form of state laws. Personal property appraisers are not exposed to those same laws.
It’s all about generating revenue by a not-for-profit for reasons no one seems to understand.
With 70% of GSE Residential Mortgages Done With AVMs, Recent Policy Changes Make Room For Bifurcated Appraisals
An appraiser shared these modifications with me:
It now looks like Fannie and Freddie no longer require original comp photos. This appears to be paving the way for greater reliance on bifurcated/hybrid reports which don’t require original comp photos already.
This change makes sense since 70% of refi mortgages used AVMs instead of appraisals. This reduction in resistance will be applied for hybrids despite being more expensive, slower and less reliable but more easily automated.
But since we know retail mortgage lenders, they will demand appraisers take their own photos but accept MLS or no photos in bifurcated “appraisals.”
This is also the same logic we have observed since the financial crisis – GSEs are fine with trainees for appraisal inspections but lenders are not fine with trainees.
Home Appraisal Bias Event – Discussions On Housing Policy With Civil Rights Organizations
Jim Park at the Appraisal Subcommittee (ASC) lays out how the system works. The Appraisal Foundation (TAF) is subject to oversight by ASC as they state on the TAF website but over the past couple of years, TAF has been strongly pushing back against any oversight amassing a large financial war chest. This behavior is best demonstrated by their infamous bat-shit crazy letter.
Jim gets to the point about the current issues that brought about this meeting:
– Racial Bias In Appraisal
– Lack of Diversity (dead last out of 400 occupations by BLS).
Part of the confusion within the appraisal profession itself is that these 2 points are being conflated into one topic. By having a lack of diversity in the primary organizations such as the Appraisal Foundation, it is easy for the public to conclude, along with the recent series of media articles on the topic. That’s because TAF has damaged the “public trust.”
And Jim outlined in the video below, the actions the ASC is taking right now include a significant audit of the mortgage appraisal process, options to proactively provide input and leadership and ASC roundtables to better understand “Diversity Equity Inclusion Issues (DE&I) and solutions.
And actually said he finds the allegations “deeply disturbing” as a “human being.” Wow.
Here’s the entire event including Jim Park’s portion. It is clear that that most civil rights organizations that presented don’t quite understand what an appraiser actually does, but I am hopeful that this will be resolved over the next year as the mortgage appraisal process is closely analyzed.
Dave Towne Again Makes The Point About The Role Of Appraisers And Disconnect By That Infamous Brookings Report
While the appraisal industry is devoid of diversity and needs to be fixed at the top, the proof for taking action is based on a research paper that doesn’t demonstrate an understanding of what appraisers actually do. The 2018 paper, Brookings Inst – Devaluation of assets in Black neighborhoods – 2018 Report by A. Perry, et al never empirically connected the dots between low housing prices and appraisers actions.
A number of appraisers continue to belt out position pieces on why the finger-pointing is misdirected. Take Dave Towne’s latest, Independent Fee Appraisers Under Attack the appraiser who has a gift for providing clarity to current industry challenges.
I get the point being made by Dave but the actual focus needs to be on solving the problem effectively which involves resets in the middle-aged white guy leadership and mentality at The Appraisal Foundation and The Appraisal Institute, two organizations that should have seen this coming decades ago. Instead, they remain silent and ineffective, afraid of venturing out to take a leadership role. This has allowed independent fee appraisers to be the focus of blame, and left twisting in the wind.
OFT (One Final Thought)
Riveting and succinct testimony the Sackler/OxyContin situation and a lesson in compelling public speaking.
But because I can’t leave Housing Notes on a negative note, here’s a poem:
He's no fan of music
Not even the bluesiest
He cares not for museums
He thinks they're the snooziest
He can't make smalltalk
He's just not the shmooziest
He’s awful with women
Even the flooziest
He loves only one thing
And of that he's the choosiest
— Uncle Duke (@UncleDuke1969) January 16, 2019
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 inflationary;
– You’ll feel more inflated;
– And I’ll remain full of hot air.
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.
Reads, Listens and Visuals I Enjoyed
- Why Online Home Valuations Are Often Wrong
- America Should Become a Nation of Renters [Bloomberg Opinion]
- Zillow: This HUGE patent grab has us asking, what’s left? [The American Genius]
- Home Flipping Rate and Gross Profits Decline Across U.S. [ATTOM]
- NYC Rental Market Heats Up as In-Person School Returns [The Real Deal]
- Fannie Mae, and the housing market's inflation problem [HousingWire]
- WSJ News Exclusive | U.S. Housing Market Needs 5.5 Million More Units, Says New Report [Wall Street Journal]
- Historic Police Building Penthouse Sells for $10M [The Real Deal]
- An Interview With the Colorado Realtor Who’s Trying to Sell a Vandalized “Slice of Hell” [Slate]
- Mortgage Rates Spiked Today. Will That Derail Homebuyers In An… [The Basis Point]
- Average U.S. Rental Price Hits a Two-Year High [Mansion Global]
- BlackRock Is Not Ruining the U.S. Housing Market [The Atlantic]
- EXCLUSIVE: Sale of sea-to-lake estate hits $109 million in Palm Beach: deed [Palm Beach Daily News]
- The Commodities Boom Is Luring Criminals to Make Bigger and Bolder Scores [Bloomberg]
- The town of Florida mistakenly sells a water tower for $ 55,000 [Texas News Today]
- Millions of Americans Are About to Lose Their Homes [Slate]
- Zillow Taps AI to Improve Its Home Value Estimates [Wired]
- Homebuilder sentiment drops to 10-month low, as construction costs drive prices higher [CNBC]
- World’s Second Bubbliest Housing Market Starts to Look Fatigued [Bloomberg]
- IT LITERALLY GROWS ON TREES [The Reformed Broker]
- A Centuries Old Idea That's Making Cities More Affordable Today [Reasons to Be Cheerful]
- BlackRock isn’t to blame for the dumpster fire housing market [VOX]
- The Inflation Red Herring | by Joseph E. Stiglitz [Project Syndicate]
- Visualizing the 200-Year History of U.S. Interest Rates [Visual Capitalist]
- Visualizing the History of U.S. Inflation Over 100 Years [Visual Capitalist]
- Winners and Losers of the Work-From-Home Revolution [The Atlantic]
- A Little More Remote Work Could Change Rush Hour a Lot [NY Times]
My New Content, Research and Mentions
- How home sellers can navigate their side of the hot market [Newsday]
- Hot Tips For a Hot Market: For Sellers [Newsday]
- Matthew Perry Sells Los Angeles Penthouse for $21.6 Million After Years on the Market [Mansion Global]
- Miami is the first city in the world with a chief heat officer [Fast Company]
- Top Hamptons Home Sales and Listings from May 2021 [The Real Deal]
- Aspen Mansion Sells for $72.5 Million, Setting Record for the Tony Colorado Town [Wall Street Journal}
- Luxury condo building success crucial to Manhattan FiDi [NY Post]
- NYC rent is still pretty cheap, and it's luring New Yorkers back to the city [Business Insider]
- Manhattan Is Cheap Again, and Brooklyn Isn't [Brownstoner]
- Steve Cohen’s city condo sells above asking price after big cut [Crain's New York]
Recently Published Elliman Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 5-2021 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 5-2021 [Miller Samuel]
- Elliman Report: California New Signed Contracts 5-2021 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 5-2021 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 5-2021 [Miller Samuel]
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 4-2021 [Miller Samuel]
- Elliman Report: California New Signed Contracts 4-2021 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 4-2021 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 4-2021 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 4-2021 [Miller Samuel]
Appraisal Related Reads
- Biden Kicks Off Effort to End Discrimination in Home Appraisals
- Vacations & normalcy in the housing market [Sacramento Appraisal Blog]
- 7 Tips To Avoid Appraisal Problems In Today's Crazy Real Estate Market [Birmingham Appraisal Blog]
- Is the housing market starting to slow? [Sacramento Appraisal Blog]
- Appraiser Capacity During the Pandemic [Appraisal Today]
- Independent Fee Appraisers Under Attack [Dave Towne/Appraisers Blogs]
- The red-hot housing market is leaving people of color behind. JPMorgan is pushing for new rules to fight 'appraisal bias' in real estate [Business Insider]
- Single father in Oakland fights home appraisal he considered low, new appraisal came in $150K higher [ABC 7 News]
- Housing market simmers down, but pending sales are still up [Chicago Agent Magazine]
Extra Curricular Reads
- This "secret" avenue is home to one of NYC's most gorgeous outdoor dining set-ups [Timeout]
- Jimmy Kimmel Lands Naming Rights to Inaugural LA Bowl Game [Adweek]
- New research shows Google serves almost half of all ad traffic on fake news sites [Search Engineland]
- Six definitive songs: The ultimate beginner's guide to Dead Kennedys [Farout Magazine]
- Covid-19 Disrupts Years of Health Progress in U.S. [Wall Street Journal]
- ‘You can’t get rid of the smell because they die in the walls’ [Washington Post]
- Yellow Cabs and Subways: Everything Old Is New Again [NY Times]
- The First Woman to Thru-Hike the Appalachian Trail Alone Did It as a 'Lark' [Atlas Obscura]
- The Recession Isn’t Over Till They Say It’s Over. (But Who Are They?) [NY Times]