Housing Patterns Fool Ya

This essential math clip “Patterns Fool Ya” reminded me of that old chestnut from 2007 but for math instead of economics.

Did you miss last week’s Housing Notes?

June 23, 2023: It’s Too Soon To Count Coffins For Housing

But I digress…

Marketplace: When moving means a higher mortgage rate, why sell?


However, on another issue within this topic, the idea that rates will fall and cause housing demand to surge seems absurd at the moment. The Fed has already signaled more rate increases ahead. The economy is too strong, which in and of itself is a good thing for housing demand. Decoupling from housing’s record-low rate mentality will take more time. And to restate the obvious, of course, demand would surge if rates fall to 5%. Can you imagine if rates fall to 2%? Or rise to 10%? LOL. Can you imagine?

Why Do News Outlets Still Cover The S&P/Case-Shiller Indices Every Month?

I’ve been on stage with Robert Shiller at Lincoln Center, and he’s been in my office, on my former podcast, and I’ve chatted with him in the green room on CNBC. I’ve run into him twice in the great room of Grand Central Station, where he sees me as “that appraiser guy.” I was a competitor at another housing index start-up 15 years ago, so I know how the sausage is made. He’s a Nobel Laureate, a legend, and a lovely person.

Yet I have been critical of his (and Karl Case‘s) housing index since 2005ish. I’ve seen this index as a thoughtful academic work that tracks U.S. single-family trends. But to this day, I can’t understand why the business media consistently covers it each month as a representative of the current housing market. People who speak to it have to twist like pretzels to link what’s happening in the index to what is happening right now, referencing things they don’t cover, like inventory and sales.

The reason it shouldn’t be covered? It lags the sales contract date by 5-7 months. As I’ve questioned, “Do you look for the median temperature 5-7 months ago to decide what to wear today?” (a great Dad joke, I know). There are many other ways to get a more recent sense of the U.S. housing market. The monthly FHFA index is almost as bad. Similar methodology as a repeat-sale index, but it only includes GSE purchase mortgage sales data, so anyone that purchased with a jumbo mortgage or by cash is not included. Welp, much of NYC would be excluded.

In some recent coverage based on this week’s S&P latest release:

– U.S. Home Prices Posted First Annual Decline Since 2012 in April: S&P CoreLogic Case-Shiller National Home Price Index fell 0.2% [WSJ]

– US Home Prices Recover Further as Buyers Battle for Tight Supply of Listings [Bloomberg]

The S&P/Case-Shiller Index talks about the first year over year decline in years, which sounds like a newsworthy story, right?

S&P is the king of indices and acquired this as its “crown jewel” for tracking housing. Still, the derivatives market set up around it 15ish years ago doesn’t see much trading activity because it is so late, and real estate portals (Zillow, etc.) can predict its outcome fairly accurately (not good for trading). So if it doesn’t work for creating a way to hedge housing, someone must have rationalized that to get value from it, throw it into the news cycle as an authoritative source.

The reality is that the June Report just released that shows the first annual price decline in years reflects the contracts that were signed as long ago as Thanksgiving. Here’s a timeline for the recent release:

– June 2023 Report Release
– February 2023, March 2023, and April 2023 Average of Closed Sales
– If we assume 60 days from the contract to close, it is based on December 2022, January 2023, and February 2023 Contract Signings
– If we get super detailed and say there is a two-week lag between the “meeting of the minds” (where the negotiation between parties occurs) and contract signing, the early contracts in the June 2023 report were before Thanksgiving

Do we understand the lag now? S&P/Case-Shiller is an academic exercise at best.

New Home Sales Surged Because Existing Inventory Is Nowhere To Be Found

New home sales surged in May, as housing market bounces back [AXIOS]

Real Estate Brokers’ Scary Future Moment Looms Large

As if the sharp slowdown in sales activity due to the mortgage rate spike over the past year wasn’t enough to grapple with, two class actions loom large over the real estate brokerage industry.

Dual agency is the problem being addressed in these two class action law suits.

UPDATE – Here’s another one: Judge certifies class action in Houlihan Lawrence dual agency lawsuit [Westchester & Fairfield Business Journals]

According to the plaintiffs of two massive class-action lawsuits, this circuitous method of paying real-estate agents is all part of a far-reaching scheme that is bilking home sellers out of billions of dollars every year.

The plaintiffs

primary goal is to “decouple” the commissions paid to the buyer’s agent and the seller’s agent. If each party just pays for their own agent directly, the theory goes, there will be more transparency and more incentives for clients to negotiate with their brokers.

NAR, defending the current arrangement, is under siege because of how agents get paid. The seller pays the commission to the seller’s agent AND the buyer’s agent.

The first case to reach trial will be Sitzer et al. v. NAR et al., which was filed in Missouri and is scheduled for an October trial. Total damages in the case could reach nearly $4 billion. In the larger of the two cases, Moehrl et al. v. NAR et al., damages could total more than $40 billion. That case, which was filed in Illinois, would likely reach a trial in the first half of 2024.

The multibillion-dollar lawsuits that could radically reshape how we buy and sell homes forever [Business Insider]

WCBS Radio – State Of Commercial Office, City v. Suburbs

I had a nice conversation with Joe Connolly and Neil A. Carousso on WCBS Newsradio 880 on the state of the NYC commercial office market. It was a macro-level conversation that I thought you might find helpful.

Falling Airbnb Rents Could Create A Future Source Of For-Sale Listing Inventory

From RE: Venture Consulting:

Sears Catalog Houses: 30K Pieces Weighing 25 Tons

I’ve shared stories about these houses before. Its going to take me four weekends to build four lounge chairs for our pool. I wonder how many years it would take me to build one of these domain puzzles?

Manhattan’s Soho Gets More Affordable Housing

Getting Graphic

My favorite housing market/economic charts of the week made by us

My favorite housing market/economic charts of the week made by others

But first, let’s solve the economic crisis.

Apollo’s Torsten Slok‘s amazingly clear charts.

He used our Manhattan rent data!

Kastle card swipe data charts

Remember that Kastle charts are overstating occupancy* because their pre-pandemic occupancy benchmark was 100% which is simply incorrect (*measures card swipe activity as a proxy for occupancy).

My favorite random charts of the week made by others


Market Place: Whitewashing

TAF is now soliciting for two BOT seats. This is highly unusual since this is the time of the year for ASB/AQB recruiting and is probably a sign that alignment with the organization is becoming more reputationally damaging. For the uninitiated, TAF is the organization that wrote the bat-shit crazy letter, the chickenshit letter and is the subject of an active investigation by HUD on whether USPAP promotes a lack of diversity in the appraisal profession (400th out of 400 occupations according to BLS in 2021).

I recently spoke with Jillian White who resigned from BOT because they were all talk and no real action (surprise, surprise). Jillian was a residential appraiser who later became part of the management team at ALOFT and Better.com.

Here’s an APM Marketplace piece on her from a few days ago.

Nearly Half Of Texas Appraiser Complaints Come From The GSEs!

In the continuing effort to marginalize residential appraisers to data collectors and pivot to AVMs, the GSEs are auto-generating complaints to the states without notifying appraisers, nor are they providing a specific person to appeal to.

What’s so interesting about Texas besides the record heat wave is that:

49% of complaints come from the GSEs – 95% are dismissed. Harassment, yes?
64% of complaints are towards residential appraisers – targeted by GSEs for replacement by automation
72% of complaints are USPAP – shows how ineffective the USPAP teachings set up by TAF are

State Of The Appraisal Industry Per The Cosmic Cobra Guy

Jeremy Bagott pens a brilliant description of the peril appraisers find themselves in.

Unaccountable regulators, duplicitous interest groups, a Gordian Knot of fractious state and federal regulations, the demonization of honest people trying to make a living, a dying industry. The nation’s long-suffering real property appraisers will recognize all the elements.

OFT (Three Final Thoughts)

Since the holiday weekend is upon us, here are a few things to leave you with…



I’ve heard this 1995 song a million times and absolutely love it, but only recently I learned who sang it. It’s a terrible name but who cares.

And now that you’ve loosened up and hopefully happy, here’s a great piece of advice. I use my Metro-North commute to noodle around endlessly on market data so I feel validated.


Brilliant Idea #1

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Brilliant Idea #2

You’re clearly full of insights and ideas as a reader of these Housing Notes. Please share them with me early and often. I appreciate every email I receive, as it helps me craft the following week’s Housing Note.

See you next week!

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

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