With An Asteroid Hit And Housing End of Days, We're Still Going To Look and Feel Good At The End

With An Asteroid Hit And Housing End of Days, We’re Still Going To Look and Feel Good At The End

A few days ago, NASA reported that 3 asteroids could hit earth last Wednesday, and I thought to myself, what else could go wrong in my life right now? We are in the early stages of an economic meltdown, with massive layoffs expected and continued uncertainty with testing and the rate of growth of the coronavirus.

But here were are on Friday, and we have no sign of those asteroids actually hitting us. If that’s all we have for good news today, I’ll take it! Incidentally, it was good to know that while the asteroids were hurtling at us at 34,000 miles per hour, we could still get 25% off from Brooks Brothers, get Buffalo Wild Wings delivered while taking an online real estate appraisal course for our continuing education requirements. Ah, the power of multitasking!

But I digress…

Flattening The Curve And Seeing The Shift From Greed To Fear


Well, it has been an odd couple of weeks brought to you by the global pandemic known as COVID-19 or the Coronavirus. We’ve been self-quarantined in our house for 1.5 weeks with many more weeks to go. I might have to refer to this pandemic as “Cabin Fever” although there are many people that don’t have the benefit of working at home, including one of my sons, who is a police officer.

With falling mortgage rates of the past year or so, many in the real estate community thought:

“oh my goodness, refi’s and housing sales are going to boom with these low rates, and any Fed rate cuts will offset the damage of a plunging stock market and the economic damage of a pandemic.”

But please remember this:

Falling mortgage rates are not a gift.

Rates are cut to stimulate the economy, to offset something terrible that has happened.

Rates have been falling for the past year as the Federal Reserve likely increased rates in the recent past to be able to have something to cut when the inevitable recession arrives. Because of the damage to the U.S. economy from the trade war, the Fed has been forced to act earlier to keep the economy from dropping into a recession.

Since March began, the Federal Reserve brought the federal funds rate down to zero in the first half of March with two massive cuts. With the first cut of 0.5% on March 3, consumers became fully aware that something significant was wrong, and it was associated with the Coronavirus (and oil prices). And surprising to many, national 30-year mortgage rates rose.

Mortgage lenders continue to enjoy the large spread instead of lowering mortgage rates substantially because of layoff decisions made over the past year as refi volume cooled. Most banks cannot take full advantage of the rate cut opportunity because they do not have the capacity.

Since the 2020 DJIA peak of February 12, 2020, of 29,551.42, the market has fallen 28.13% to 21,237.88 as of the late afternoon, an insanely large decline.

However, all of these housing-related workers such as appraisers and agents, are starting to see that market conditions do not include the gift that it will be “business as usual.” They and their colleagues are becoming fearful of their own personal safety and the safety of their families.

In light of this slowdown, some real estate agents have suggested that market times be modified to cast a better light on listings that will languish due to the virus. This type of action is precisely what should not be done. In a global pandemic or worldwide catastrophic event, housing market stats will be internally adjusted by consumers to factor the event into the equation. Cherry-picking stat solutions will breed distrust between agents and consumers.

Open houses as a marketing tool fell 38% in Manhattan which is quite astounding but shows how quickly “personal safety” is becoming front and center with both agents and market participants. The outbreak is clearly expanding.

But now, those real estate agents are seeing home sellers and home buyers change their minds about letting strangers walk through their homes all day, and the “nexus between fear and greed” has shifted to fear.

Therefore the spring market will likely be underwhelming in NYC if downright bad and pushed forward into the future with a possible release of pent-up demand at some unknown future date. Perhaps the same will apply to many regions across the U.S. this spring.

Now wash your hands.

How Best Intentions By Real Estate Brokers Will Destroy Public Trust And Delay A Market Rebound

By now, housing market activity has slowed down significantly with calls for a national shutdown. Home sellers are pushing back against strangers walking through their homes; real estate appraisers resist pressure from banks to place themself in harm’s way, and real estate agents struggle to come up with alternatives such as face-timing an inspection for the buyers and now…hiding negative market trends from buyers.

We are in the middle of a combined global pandemic and economic catastrophe and a group of real estate agents in New York (NYRAC), again with best intentions, proposed that Streeteasy/Zillow, arguably the Darth Vader of the NYC real estate industry, hide days on market stats from consumers. Thankfully Streeteasy did not acquiesce to the proposal, but rather, cut the cost of rental listings.

For NYC Listings, Time Is an Enemy. Brokers Want It Stopped [Bloomberg]

But then, REBNY, New York’s quasi-MLS capitulated to the request and opted to hide days on market from consumers on their RLS system (listings).

REBNY orders days on market calculation to stop for resi listings [The Real Deal]

This key points in their listing management page (RLS) are now questionable. If there was ever a moment the REBNY RLS will no longer have a chance to upstage Streeteasy, this is it. I hope REBNY backpedals on this decision.

The longer marketing times are a phenomenon of the conditions today, just like 9/11 and the Lehman collapse. The existence of the pandemic is widely understood by consumers, and the longer days on market will be factored in by participants when the market reawakens like human beings always do. I think this action will make the consumers ask, “what are the brokers hiding from us?”

I am speculating that the brokerage community enacted this to protect their position under the guise of helping the sellers – keep homeowners from taking their listing off the market and then placing it back on the market with another broker. “Hide the Days on Market to keep the listing.” Yet manipulating market stats to make one of the parties feel better creates more uncertainty for the overall market – something we have plenty of already. Consumers will think: this time its Days on Market, next time will it be the Price? When will they stop hiding this? Etc. There will be zero benefits to the health and recovery of the market by doing this.

Yes, there are a couple of U.S. MLS systems considering or enacting rules but just a handful and stuff like this happens at every downturn on the fringe. The optics on this gives more fodder for the N.Y. state legislature to punish the RE industry further.

This shows a lack of REBNY leadership in a crisis and history will judge this decision as a mistake.

The iBuyer Phenomenon As It Currently Exists, Is OVER

Two firms recently closed their iBuyer efforts, Redfin and Realogy.

While this “thinning the heard is good news to Softbank unicorn OpenDoor and Zillow, the closing of the former’s efforts represents two companies that were late to the party anyway. However, with the razor-thin margins or losses of the existing players, I would think they will pare back with the anticipated drop in housing prices during this crisis.

The problem I have always had with the iBuyer concept is that it was created in a period of rising sales and prices. The concept has never been tested in adverse market conditions.

Well, now is their chance.

UPDATE Softbank unicorn Opendoor temporarily suspends homebuying, citing safety concerns [Inman news]

Compass CEO asks for a bailout of real estate agents

This is a bit of a tragedy.

Compass CEO asks Congress to include agents in stimulus [TRDNY]

Real estate agents (and appraisers) are generally freelance/gig/independent contractors who will be devastated from the inability to show or inspect properties for months.

But to have the head of a startup that got $450 million from Softbank, without any apparent due diligence as came out in the WeWork debacle, is tone-deaf at best and opportunistic public relations fodder at worst. If this was a serious effort, someone else should take the helm to represent this economic sector.

Cheddar TV – Looking Back In History (8 Days Ago) To Talk Falling Rates

Cheddar TV reached out to me on March 11th as I was 4 days into my self-quarantine and my voice sounded quite scary. Aside from bad lighting and a red face, the discussion was long-form in nature covering low mortgage rates, which is why I so appreciate Cheddar’s format.

March 11 was soooo long ago!

Using Skype (which has been improved since Microsoft acquired it to be less of a horror show) I am able to blur out the background so you don’t get distracted by my prized autographed drum head from Lynyrd Skynrd, my 2002 March Madness pool victory plaque and my certificate for passing a 1978 Italian Cooking class in my Dad’s former cooking school in the DMV.

Upcoming Speaking Events

I am participating in 4 webinars next week, but only one will be for general consumption though.


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

Curbside Appraisals With Phil Crawford

The appraiser with THE smooth syrupy, voice has a great video version of his show today. Please watch this edition of Voice of Appraisal:

Let’s focus on the big rocks, not the small rocks in this time of crisis

I shared my firm’s disclaimer for the Coronavirus to a group of appraiser colleagues of mine:

• Extraordinary Assumption – COVID-19 was identified in China in December 2019 and quickly spread across the globe, including the U.S., evolving into a pandemic. As a result, the Federal Reserve cut the federal funds rate on March 3, 2020, by 0.5%, making the threat of the virus tangible to most housing market consumers. The Fed cut the federal funds rate by another 1% on March 15, 2020, to offset the expected severe economic impact as consumers began to pull back. While it is too early to extract the empirical implications for the housing market as a result of the Coronavirus, the client is aware that this valuation assignment relied on most if not all market data generated before conscious consumer awareness occurred on March 3. We will continue to monitor the market for potential impact on trends.

While it is great that the Appraisal Institute came out with recommendations as well, I took issue with their point that we should not call it an “extraordinary” assumption. An AI member who has been shunned by AI that was in this group sent me a private email, savagely attacking me and got very personal. I assumed he was just drunk and angry at the world. I thought to myself, this person represents the worst of our industry under the guise of being a professional, and represents why many of our challenges as an industry are brought about by not being able to see the forest for the trees. Yes, appraisers like this can be our industry’s own worst enemy.

In this case, extraordinary or not, the point is to get the message out to the reader of the report RIGHT NOW.

In the meantime, I have had many appraisers, and even banks, send me disclaimers they are seeing. Here are a few more:

Coronavirus (Covid-19) Pandemic Appraisal Ramification Alert
The country and much of the world is currently in the midst of navigating the impacts of coronavirus. Valuing real estate as of a current date presents unique challenges since appraisers primarily rely on recent historical data as well as trends and forecasts (which are particularly tenuous in the current environment) in ascertaining value. In these unprecedented times, it is conjectural to project what sustained effect there may be on the economy and the market value of the real estate in the coming weeks and months. That being said, re-engagement of an appraisal in the near future may be very prudent.

The date of value in this assignment is subsequent to emergency declarations regarding the Coronavirus (COVID-19) in March 2020. The scope of this appraisal assignment does not include the measurement of any effect of these events on the real estate market or on the value of the subject property. Therefore, the value opinion and other conclusions expressed in this report are subject to the extraordinary assumption that these events have had no effect on the marketability or market value of the subject property. The client and intended users of this appraisal are cautioned that if this extraordinary assumption is incorrect, the value opinion and other conclusions expressed in this report could be significantly different.

NOTE: This appraisal is dated as of 03/16/2020. On 03/11/2020, a Utah Jazz basketball player tested positive for the COVID-19 illness, the game was cancelled and on the same evening the NBA season was suspended. On the same night, Tom Hanks and his wife announced that they had also tested positive for the SARS-CoV-2 virus. These three events are credited for bringing this illness to the attention of the American people. Within hours, schools of all levels were dismissed. In the following days, Americans were advised to remain at home and businesses were shuttered. The news and developments around the illness are constant daily and the US Government is announcing monetary aid to citizens to offset the economic downturn. This illness is unprecedented in modern times and as a result, it could have far reaching effects on economic and market conditions or trends but since the time from public recognition to the appraisal date is only 5 days, changes in the current market have not been measured to date and cannot be determined for this appraisal.

Some Financial Institutions Care About The Safety Of Appraisers, While Most Do Not

[Johns Hopkins University]

As co-owner of an appraisal firm for 34 years, while based in Manhattan, we generally don’t drive to appraisal inspections. Our staff relies on public transportation to get around including buses, subways, and commuter rail. I’d been following the coronavirus in the news since early this year, and became quite alarmed by mid-February and soon suggested my staff work remotely. By the time the first Fed rate cut was made in response to the coronavirus on March 3, we adopted a screening process for appraisal inspections. When our team made an appointment for the inspection, we inquired about the health of the occupant, and then on the day of the inspection, the appraiser called again to confirm that conditions had not changed.

Soon after we learned that we could be carriers of the virus without knowing and infect someone vulnerable, we stop performing interior inspections.

My appraiser colleagues around the country have become very concerned, if not plain scared.

Here are two scenarios shared by appraiser colleagues in another part of the country. Imagine if the appraiser was a carrier?

Scenario 1 Conversation
Sounds good 10 am is better
Kids are home
With no school
If your sic with a cold or similar please reset appointment

Scenario 2 Recap
Borrower is elderly and on a respirator
Says the appraiser can walk through the house by himself
And reminds the appraiser to keep their distance

Appraisers should not be placed in harm’s way or be in a position to be forced to unintentionally harm another.

So let’s look at some industry actions of the past few days:

These lenders have shown how much they respect the appraiser’s role in the mortgage process and their concern for the appraiser’s health and welfare as well as the borrower.

First Republic Bank
I submitted a temporary driveby appraisal solution to First Republic Bank, a large CA/NYC+ lender we have worked with since 1999. I feared for the safety of our appraisal staff and didn’t want to risk infecting others. Plus we were starting to get pushback from homeowners who were getting uncomfortable. They embedded this solution within days. I challenge any appraiser to name any other bank that is more professional, more appraiser-centric than they are. Here is the note they sent out to their panel.

We’ve been working for Citibank since 1986 and have enjoyed a great relationship. This policy treats appraisers as human beings. I’m not sure how closely this policy will be observed by the AMCs they engage to manage their appraisal orders (read-on).


To combat the COVID-19 outbreak in the appraisal industry, Appraisal Management Companies (third-party institutional middlemen that account for as much as 90% of residential assignments) have essentially provided a lethal magnanimous gesture by simply telling appraisers to wash their hands often and stay away from people that are sick and that they must go inside the property. While I anticipate that many AMCs would defend their position of placing appraisers in harm’s way because their bank clients require it, I say that indicates selective morality or incredible ignorance. They could push back and make a strong case for public safety.

We are in the early stages of a global pandemic that may infect 100 million Americans (1 out of 3, conservatively) with a 3% death rate (that’s 1 million people if you do the math). The appraiser population has an average age in the high-50s, and we have been told that the older populous is the most vulnerable.

In reality, these AMC policies show disdain not only to appraisers but to their own (bank client’s) borrowers by letting a fee appraiser, who is paid only for the assignments they accept, determine whether or not the appraisers themselves are carriers of this pandemic and whether they can assess the safety of the property they inspect. Here’s a key point.


The following AMCs opted to treat appraisers as a widget instead of a human being requiring them to physically inspect a property when they now know that it is not safe to do so. Today I was told that one federal agency lost 20% of their appraisers because they have refused to continue doing interior inspections. Different cities and states have different rates of infection. Because we don’t have full testing in place as a country, the number of infections might be significantly higher than we might anticipate. My particular location in Manhattan is highly problematic because of the reliance on public transportation – buses, subways, commuter rail, and just walking down a crowded street – no social-distancing here. And based on the comments the NYC Mayor made yesterday, it is possible that tomorrow could see NYC restricted to “shelter in place” like San Francisco.

If you’ll note in this pattern of negligent behavior, great efforts were made to plan for the safety of order staff, but no regard for the safety of the appraiser, who is providing the service – telling appraisers to wash their hands and practice social-distancing when they know that it is not enough. When you get right down to it, these companies sent similar silly instructions so they can check off a box to be compliant. Yet they must know that appraisers could be carriers, and occupants in the property could be carriers. This is not business as usual.

When we pushed back the appointment on a few of our AMC clients for safety concerns, they simply took away the assignment and rescheduled with another appraiser. No human contact to assess the risk. In good conscience, even if the new appraiser doesn’t have symptoms or doesn;t think the occupant does, that AMC or lender is placing the public at risk, going directly against CDC guidelines. This is what robots would do.

Here is a sampling of AMCs that provided COVID-19 instructions in the past few days shared by my appraisal colleagues – this is clear evidence that they see appraisers as widgets instead of human beings. To save you the trouble of reading all of these INSTRUCTIONS, here’s the translation: WASH YOUR HANDS A LOT

UPDATE 4:38PM 3/20/2020 – Here are some additional announcements sent my way:

LRES sent another notice, but this time they stepped up with a solution much like Phil Crawford offered as I presented above.

And a few more notices that basically told appraisers to wash their hands when it is already known that a solution like that doesn’t protect the appraiser or the property occupant.

OFT (One Final Thought)

Something upbeat is needed.

Brilliant Idea #1

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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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