Choosy Housing Markets Choose GIF

March 25, 2022

Steve Wilhite, credited as the inventor of the GIF format, just passed away. How would we do memes, messages and humor without them? In the following video, he gives his acceptance speech as a GIF and tells us how it should be pronounced. Wait for it.

I was barraged with ads like this as a kid. “Jif” is embedded deeply in my brain so obviously “GIF” is pronounced “jiff”…

But I digress…

Redfin’s Conventional Wisdom Of Housing Market Conditions Versus Zelman’s

There was a widely watched 60 minutes segment last weekend on the state of the housing market:

And this Daily Show clip (NSFW) reiterates a lot of the same points. One talking point that comes up over and over is that buyers are flocking to the suburbs because of COVID, when in fact, that was already the trend pre-pandemic.

Now that you have firmly established your understanding of the housing shortage using conventional wisdom, here’s an evidence-based (and fascinating) discussion on the topic provided by Zelman & Associates on this Moody’s podcast and why there is already an oversupply of new residential development underway.

Soon To Be Released Book: New Kings of New York

Published by the Real Deal, Adam Piore pens what is promised to be an epic account of NYC real estate in the modern era. He called me early in the process to talk about the market from my perspective. Here are some snippets from other interviews for the book on its Instagram page: @thenewkingsofnewyork

Here are two recent promos. I’ve pre-ordered it already for the release on May 24th. Can’t wait to read it!

Newsday Project Bidding Wars By Community Are Off The Chart

Our firm crunched the numbers by town across Long Island for Newsday built a sortable table and map with the data. No surprise – bidding wars are everywhere.

These LI towns had the fiercest competition for homes in 2021 [Newsday]

Big Cities Lost Population At Highest Rate In History

2021 was not a good year for large U.S. cities which offset the jump in population change in nearly everywhere else.

Although I suspect next year’s data will show a rebound based on early impressions…

…sharp population decline through mid-2021 resulted largely from temporary patterns earlier in the pandemic, including an uptick in residents fleeing to the suburbs and exurbs, fewer immigrants, deaths from Covid and lower birthrates. They said these patterns had most likely lessened or reversed during the second half of 2021, which is not captured in the data.

Wall Street Bonuses Reach Records, Generally Favorable For Housing Demand

The NYS Comptroller published their annual report on the securities industry:

Listings Are Experiencing More Showings Than Last Year

ShowingTime, a Zillow Group affiliate, publishes a monthly index compiled using data from more than six million property showings scheduled across the country each month. It tracks the average number of appointments received on active listings during the month.

Another sign of inadequate listing inventory has been the increased frequency of showings of active listings. U.S. showings are up 14% year over year to almost 13 showings per property.

One Housing Note Reader In Ukraine?

For obvious reasons, I was surprised to see this in my Mail Chimp stats last week:

Getting Graphic

My favorite charts of the week made by others

Len Kiefer‘s Chart Handiwork

Appraiserville

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

PAVE Gets An Audience With The Senate

The Senate Banking Committee held a “Strengthening Oversight and Equity in the Appraisal Process” public hearing on Thursday with Melody Taylor and James Park as witnesses. You can watch it here:

Senator Brown
The committee chairman made some good points:

From 1934 to 1968, redlining was legal and 98% of borrowers for FHA mortgages were white.

Senator Toomey
It seems clear that Dave got to Senator Toomey. While he came across as measured, he presented some misleading talking points including:

“This is going to make appraisals more expensive for the consumer”

When in fact, PAVE will bring more appraisers into the profession and with that, more diversity. It’s ironic that within our industry, there are still those that don’t understand the laws of supply and demand. Solving diversity brings more appraisers into the profession. More appraisers mean more modest fees for consumers and reduce the flight to AVMs.

He also claimed that racial disparity was just supported anecdotally in the report, aside from two reports, but seemed to think that releasing GSE data was helpful to quantify empirically. He said that only the two reports cited by PAVE were not enough and had different conclusions? The reason these two GSE reports were cited in PAVE was that the data needed to further understand the lack of industry diversity and unconscious bias is controlled by the GSEs. I was glad he was open to getting that information out into the sunlight.

I wonder if he knew that TAF has no supervision and stresses in public their right to NOT have supervision as noted in this bat-shit crazy letter. TAF is two levels below Congress with ASC inbetween.

Senator Tester
He wants the VA added to the ASC which Jim Park thought was a great idea. The VA is unique since they directly engage appraisers and probably understand the industry better than most federal agencies.

What I especially appreciated was his criticism of the two-year mentor system:

Training people to be in competition with them doesn’t make sense.”

Senator Smith
Asked – do desktop appraisals work to remove unconscious bias? The witness Melody Taylor noted that there were 28,000 fair housing complaints last year

Senator Hollen
Asked whether education will help consumers understand that they have a path to take when there is a fair housing issue.

Senator Warren
She noted that there have been decades and decades of racist federal policies. The problem with AVMs aside from being created by human beings is that they are based on the data created from “past racial disparities.”

Senator Cortez Masto
Commented that AVMs are not reliable in rural or non-homogenous markets and thought the inclusion of manufactured housing in the data was important, especially in rural markets. Jim Park noted that manufactured housing wasn’t currently included in PAVE.

Another big takeaway for us to better understand diversity is for the GSEs to release the physical characteristics of properties. Fannie Mae has always fought back hard against this, likely because they envision getting rid of appraisers in the future. Both the chairman and the ranking member expressed interest in getting the data released.

The House Finance Committee’s Message To TAF on PAVE “The Asphalt Is Coming”

I’d hate to be either SuperDuper or Dave at next week’s House Financial Services Committee next week after seeing the title: Devalued, Denied, and Disrespected: How Home Appraisal Bias and Discrimination Are Hurting Homeowners and Communities of Color. This is a much more adversarial tone than we saw in the Senate.

The current TAF structure is broken and I think both of them are going to find it awkward as witnesses. Here is how I describe TAF:

The Appraisal Foundation as structured is the worst form of federal overreach possible: TAF is a private entity with no financial or legal accountability (nor offers transparency) yet it can pre-empt state law whenever it chooses for their financial gain.

That’s a shockingly bad existing structure that I am sure Congress did not intend and Senator Toomey and others don’t realize because they are listening to the wrong lobbyists who want to preserve the status quo.

TAF represents the biggest threat to the appraisal industry there is because its actions are pushing potential appraisal services users towards AVMs. And who can blame users of our services when they have deal with the insane bureaucracy we are embedded with that was created to generate revenue for a not-for-profit without any oversight?

Another key issue is that a bunch of appraisers including personal property and business appraisers (who are not subject to states’ licensing so they are’t actually bound by USPAP) are making rules that are embedded in state law without legal review by TAF. This is a clear overreach by TAF because it implies that those professions will be regulated (by TAF).

We’ve already had the NFHA and the CFPB take positions that some of the ASB and AQB provisions were illegal or elements in the USPAP course are factually false. Yet because of the structure, the ASC has to force states to accept these incorrect statements, policies, or rules that are illegal and flawed. How screwed up is that? Appraisers are forced by law to take a USPAP class that is flawed? Where does the liability go when that appraiser is sued for violating fair housing laws?

Keeping Up With The Kardashians Appraisal Foundation

Like the Kardashians, who are celebrities for being celebrities, the Appraisal Foundation uses their “Congress” branding on everything they pump out yet they are a private company and not a government agency. They come across as wanting the illusion out there that their ongoing actions are blessed by Congress.

TAF is two levels below Congress with ASC inbetween.

I know a thing or two about branding and PR but TAF has always leaned heavily on their Congressional connection to boost their credibility. The problem with this approach is they have been coasting on solving the real problems of the industry, no diversity and initially letting PAREA die and then coming back in to take credit for moving it forward. PAREA still doesn’t exist and yet it’s a viable alternative to the current 2-year mentoring system that has essentially allowed the industry to become 97% white.

The Appraisal Foundation is congressionally-authorized to set
standards and qualifications for real estate appraisers. It is governed by a Board of
Trustees which oversees two additional boards, the Appraisal Standards Board and the
Appraiser Qualifications Board, responsible for writing the standards and qualifications
respectively.

Incidentally, in more than three decades of existence, there has only been one person of color on one of the TAF boards. But yet, here is the press release by TAF on the PAVE plan which, when read, suggests that they are very much on top of things.

OFT (One Final Thought)

Because we need this.

Brilliant Idea #1

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See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog
@jonathanmiller

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