From Pink To Purple: Get Ready For The Housing Ride of Your Life

While I love rollercoasters, I am not of fan of anything that spins, plunges or inverts (translation: anything besides fast old school wood rollercoasters). I turn green very easily when sitting in a car anywhere but the driver’s seat or even answering/texting on my iPhone when I am a passenger.

I am already beginning to turn green: The Fed may cut rates by a half percent over the summer, economic and foreign policies including “tariff talk” out of Washington seem to get more random every day and the GSEs are looking to “modernize” the mortgage process by transitioning to Zestimate-like valuations.

But I digress…

Disclosing Non-Disclosure States

[WSJ/Mike Lemanski]

There are a dozen non-disclosure states in the U.S. with differing levels of restrictions. The idea behind the disclosure of real estate transactions is to promote a fair and open market in order to protect the consumer. I assume that the non-disclosure states were the result of a combination of concerns about the privacy of data and a powerful real estate lobby back when real estate brokers were the gatekeepers of housing data. Whatever the reason, today’s housing market demands more transparency whether the data is disclosed legally or not.

We are seeing a bunch of what looks like illegal disclosure activity in states where the MLS data is pumped out into the public domain by data aggregators (who will be doomed in the future anyway by the advent of blockchain). Institutional users of this aggregated data are often unaware of the illegality of it. A widely publicized case of this was when the Austin MLS accused CoreLogic of selling of illegally obtained data to tax appraisers. While I get the Realtor’s concerns with the basis of the illegality of the data it’s hard to wrap my mind around the higher valuations claim since there should be randomness in the data released.

The board is concerned that as a result, appraisals could rise significantly since Travis Central Appraisal District had access to the fresh sales data from the MLS.

This seems like an odd reason (aside from the illegality) to fight for i.e. “We Want Old Data for Tax Purposes!”

Yield To The Curve!

We’ve been discussing the flattening/inverted yield curve for months now so perhaps we can declare a downturn, possibly a recession, is imminent. With consensus building for drastic rate cuts this summer, it’s worth taking a look at the topic more closely.

My friend Hugh Kelly of Hugh F. Kelly Real Estate Economics who taught at NYU/Schack for more than three decades and now is the director of graduate programs & chair of the executive advisory council curriculum committee at the Fordham University Real Estate Institute among other things, wrote a compelling column in the latest issue of Commercial Property Executive: Economic View: Why You Should Watch the Yield Curve:

A couple of key insights

“If the unemployment rate is back to where it was in 1969, we should remember that this was the beginning of the Baby Boomers’ entry into the job market, and that we are now in the early years of the Boomers’ exit.”

“That interest rate wave—with many consumer credit rates and mortgages pegged to short-term benchmarks—is still an economic indicator worth attending to. As history tells us, inverted yield curves presage liquidity squeezes, and that’s why inversion is considered an advance indicator of recessions.”

“As of this writing, approximately 20 percent of the bonds being traded around the globe bear negative interest rates, according to World Bank data.”

Little Pink Houses: Downtown Single-Family Housing Is No Longer Sustainable

The common sense rationale here spoke to me and it’s gaining momentum. This was a fascinating listen (and read).

The New York Times presents a compelling visualization on the topic as well: Cities Start to Question an American Ideal: A House With a Yard on Every Lot

Single-family zoning is practically gospel in America, embraced by homeowners and local governments to protect neighborhoods of tidy houses from denser development nearby.

But a number of officials across the country are starting to make seemingly heretical moves. The Oregon legislature this month will consider a law that would end zoning exclusively for single-family homes in most of the state. California lawmakers have drafted a bill that would effectively do the same. In December, the Minneapolis City Council voted to end single-family zoning citywide.



Forget Pink Houses: Purple Rain Leads To A Purple Driveway

Think Minneapolis, the hometown of Prince and Purple Rain. Now, take a look at the driveway at his Turks & Caicos estate. In fact, the whole layout of the property is simply amazing.



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

OCAP Shows The Nation What An Appraiser Coalition Can Do

This week I flew to Ohio to speak at the Ohio Coalition of Appraiser Professionals (OCAP)‘ Conference that was smack in the middle of the Ohio State campus in Columbus Ohio. I interact with a lot of state coalitions and OCAP is one of the best. I was asked back despite last year’s proud mention of my Michigan State University pedigree amongst a sea of red and white clothing. I squeezed in a few Spartan mentions this time and aside from the boos and hisses, the attendees were true professionals. I really enjoyed interacting with everyone there and the organization is one of the strongest coalitions I’ve seen. I got to speak one on one quite a bit with industry legend Larry Disney, connected with Anne M. Petit, Superintendent Ohio Division of Real Estate & Professional, whose good work is heard all the way back in New York, my friend Phil Crawford of Voice of Appraisal who literally brought tinker toys to a whole new level via blockchain and my friend and fellow Relocation Appraisers & Consultants (RAC) member Ernie Durbin, the Chief Valuation Officer at Clarocity who walked attendees through regulatory, technology and scope changes. I got to spend some time with my friend Jamie Owen of the Clevland Appraisal Blog as well. The “sausage party” photo with Ernie and Phil was an inside joke from last fall’s Appraiserfest conference led by Phil that took place in San Antonio.

Kudos to the OCAP leadership for coordinating such an invaluable event.

Code For Appraisal Modernization: Changing Smart Lightbulbs

This video provides the perfect analogy for the misrepresentation of what appraisal “modernization” actually means. The image conveyed is a smooth simple process that involves a few buttons. Whenever the modernization topic is discussed, residential appraisers are not asked to the table yet they are the only valuation experts that have “on the ground” expertise.

I challenge you to listen to the entire 3-minute video without losing your mind.

NEW NORTH DAKOTA WAIVER REQUEST The Most Important Issue Facing The Appraisal Industry RIGHT NOW

If you thought the answer was the House “modernization” panel discussion that occurred in front of the House Financial Services Committee this week you were wrong.

The state of North Dakota is attempting to obtain another waiver request, not the laughably written request of last summer. Now North Dakota is requesting a waiver for five years!

From the Federal Register

The request seeks a waiver of appraiser credentialing requirements for appraisals for federally related transactions under $500,000 for 1-to-4 family residential real estate transactions and under $1,000,000 for agricultural and commercial real estate transactions throughout the State of North Dakota for a period of not less than five years.


Lenders don’t want to pay market rate fees so why not have bank employees make the numbers up. What could go wrong? Here is the anti-appraiser propaganda web site CSBS that somehow ignores this point. Perhaps next time the North Dakota governor will sign off waiving licenses for doctors because there aren’t enough? This is an economic issue plain and simple.

This request was filed on May 30th with a 30-day notice for comment. Time is running out! ASA has a landing page for appraisers (and anyone else) to provide comments. There is a public hearing on July 9th (I wish I could attend but I am providing expert witness testimony that day) so please try to attend. It will make a difference when the regulators see our industry’s concern.

ASC Notice for Comment – North Dakota Temporary Waiver Request

This places the taxpayers on the hook for the aftermath and is an insanely irresponsible request to make given the global financial crisis we just went through. History is repeating itself. Appraisers need to get the word out!

Hearing: What’s Your Home Worth? A Review of the Appraisal Industry

Last week I mentioned that I didn’t make the cut to represent independent boots-on-the-ground appraisers but was appreciative of being acknowledged by the committee for reasons I’ll discuss at a later date.

The feedback from the appraisal industry after the session was how large the misunderstanding of what appraisers actually do. Perhaps that’s why the current conditions and perceptions exist – on-the-ground residential appraisers are never invited to the table to clarify what’s really happening. I hope the committee now feels the same way after viewing the remaining self-serving testimony. While it was good to have a discussion, the idea that appraisers make the market is simply detached. As I’ve said many times: The Market Doesn’t Care What You Think.

Here’s a breakdown of the five invited panel members,

Dave Bunton, The President of The Appraisal Foundation spoke about the importance of independent valuation and the reasons why professional appraisers protect the public trust and the consumer. The Appraisal Foundation is a non-profit organization with congressional authority (Title XI of the Financial Institutions Reform, Recovery and Enforcement Act, of 1989) (Title XI) to establish minimum qualifications for licensed and certified appraisers and promulgate the Uniform Standards of Professional Appraisal Practice (USPAP).

Stephen S. Wagner, Commercial Appraiser, on behalf of The Appraisal Institute. Sadly, he represented an organization that doesn’t care about residential appraisers or consumers as noted by their faster rate of membership decline than credentialed appraisers. The Appraisal Institute is a private trade organization which grants the MAI designation. AI has no legal authority at any level except over its membership. As an example of their anti-consumer stance, AI was instrumental in aggressive lobbying to pass California SB-70 which states: (C) States that there may be assumptions that the appraiser has not verified that may significantly impact the appraised value of the subject of the report. NOTE: With the wording of this bill, any appraiser could take any point of view and not back it up with verifiable data. For example, an appraiser could take a seller’s word on potential uses of their property and the appraiser can simply restate them and not provide any support to verify the claims. Stephen was on the residential committee that was thrown together by current director Jim Amorin in hopes assuaging the masses after I spoke early and often for their members who were outraged at the national organization’s efforts to seize local chapter funds. Two years later, they didn’t do anything for their residential members showing what an effort of misdirection it truly was. In fact, the appraiser outrage of the past 2.5 years directed towards the Appraisal Institute was triggered by the prior version of this committee in the fall of 2016 when the GOP controlled the house. Appraisal Institute is very much in favor of appraisal management companies and has former top executives installed in AMC companies.

Jeff Dickstein, Chief Compliance Office, Pro Teck Valuation Services, on behalf of The Real Estate Valuation Advocacy Association (REVAA). He represents the organization of appraisal management companies (AMCs) that is literally the reason why we have problems with the appraisal system today. REVAA is the advocacy group for the Appraisal Management Company (“AMC”) industry. They fight transparency and advocate for dropping licensing and certification requirements They represent a system that has decimated appraisers by leaching off their fees, created scope creep to justify their existence and pushed the completely false “appraiser shortage.” They represent problem number 1 to the valuation industry.

Andre Perry, David M. Rubenstein Fellow, Metropolitan Policy Program, The Brookings Institute whose work I am not familiar with but his research comprised half of the panel testimony time.

Joan N. Trice, Founder, Collateral Risk Network. Joan was a last minute addition as a previous panelist had a scheduling conflict. Joan attempts to speak for appraisers but makes her living by holding conferences for appraisal management companies so she is not neutral. She can’t have it both ways. She was the only panelist not to read her statement which was pro-appraiser and instead talked about other things almost as a time-killer. It was weird to have a panelist not read their statement. Any thoughts on why? Someone pointed out to me that she referred to the three approaches to value as “income, cost and market” then later called that last one the “sales price approach.”

Thoughts on future panel hearings:

The best source of any of this information is the various state coalitions, which rose out of the leadership void in the appraisal field. Given that the Appraisal Subcommittee and the Appraisal Foundation cannot lobby, State Coalitions are the best and most grass-roots organizations out there.

OFT (One Final Thought)

Please remember this when taking at face value the long term predictions of prognosticators.

Brilliant Idea #1

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– They’ll be wrong about the future;
– You’ll sell your pink house;
– And I’ll purple my driveway.

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

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