Gravity for the Housing Market is Overrated

I can see the benefits of letting this loop for hours:

But I digress…

From My Matrix Blog: Contract Data Is Pending Data Is Lagging Data

In our post-Coronavirus world, it is clear that market conditions and our understanding of the future are subject to change every day. In my prior post Establishing the COVID-19 Demarcation Line: From ‘Hanks To Banks’, data that falls after the line represents a different market.

So how do we determine what data falls in after the demarcation line? It’s not as straightforward as it sounds.

Throughout my career, I have seen brokerage firms publish pending/contract reports, touting pending trends as more reliable than reports based on closings. I don’t look at them as better or worse, just a different way to look at the market. The simplistic, uninformed argument for pending sales is that contract dates occur before closing dates, so they are more current. Incidentally, contract prices are not readily shared. I get all of this. Yet I have seen the failure rate of contracts be as high as 40% – in other words, many contracts might not close whereas closing reports are solely based on successful transactions. Still, pending sale trends are useful as long as the reader understands their shortcomings. I plan to develop one someday.

Closing data and contract/pending data lags the “meeting of the minds.

Meeting of the minds (also referred to as mutual agreement, mutual assent, or consensus ad idem) is a phrase in contract law used to describe the intentions of the parties forming the contract. In particular, it refers to the situation where there is a common understanding in the formation of the contract.

While we know that closing dates lag the “meeting of the minds,” we also need to understand that signed contract dates are lagging indicators, often by 2-4 weeks. During this crisis, I’m speculating the failure rate will be high initially, and the time lag will be on the longer end rather than, the shorter end of this 2-4 week range.

Here’s why contract dates are a lagging indicator and not necessarily more insightful than closing data:

1) The “meeting of the minds” occurs when buyers and sellers negotiate price and terms, usually facilitated by a real estate agent or broker.

2) The price and terms are handed off to transaction attorneys who work together to craft language agreeable to both parties.

3) The contract is signed by both parties and often indicated as such in an MLS-type system.

4) In some markets or marketing periods, especially when a market is cooling, many contracts never close, so their initial inclusion makes pending trends reports suspect.

If there is a four week signed contract lag from the meeting of the minds, and considering the March 15 demarcation line for post-Coronavirus, that means that with us being six weeks into the crisis, we are only able to see two weeks worth of post-Coronavirus data. And even with that reality and current shelter in place rules, many current contracts might have been older deals that were facilitated by the buyer who had already inspected the home in January/February – we are seeing some of that now.

In other words, relevant data on the new market remains extremely limited.

Barron’s Live Interview: The Covid-19 Crisis Doesn’t Really Compare To 9/11

I’ll place my interview by Beckie and Lucy here as soon as I get a copy. DONE.


The recording of the interview was just placed on the Barron’s web site. You have to register if you haven’t already done so in order to listen to it (click the image):

[click to listen]

To thwart random outdoor noises, I attempted to get points for style when speaking for this event (I did hear a few kids in the background but I swear they weren’t mine):

The Land Angle In The Era of Social Distancing

This Mansion Global article For Investors Seeking Stability, Land Maintains its Classic Appeal makes the pitch for land as a favored investment, and not just for the asset value but for practical nature of inspection during this historic moment of social distancing.

While the angle is interesting, I’m much more interested in the concept of appreciation as it relates to land. In other words:

– land appreciates
– improvements depreciate

…if you want to be a purist about the concept.

I wrote about this when I was a Bloomberg Opinion Columnist from 20014-2015 called Housing Bust Wasn’t About the House.


What does “Back to Normal” Look Like?

Data Report with Jonathan Miller: So Cal, So Good

Douglas Elliman has a new podcast channel and this was a recent town hall meeting that I “Zoomed” to SoCal agents.

Getting Graphic

Len Kiefer‘s Chart Handiwork

Upcoming Speaking Events

Join us and guest speaker, Jonathan J. Miller, industry-leading commentator, appraiser, consultant, and author of real estate reports, for an in-depth discussion:
Valuations then, now and the day after tomorrow… Where are the bargains?
The banking industry. New Corona lending guidelines.
Re-opening the real estate industry – what, when, and how?

– Prepare for the event:
– Register Here to receive the Zoom link
Email us your questions in advance

Additional Q & A live opportunities during the session.

We look forward to “seeing you”.


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

John May Shows Us How We Can Convey The Crisis To Our Clients

John May of Louisville Appraisals reads these Housing Notes regularly and sent a cool chart. I love it because it showcases his local market knowledge and can be a great visual to educate is clients.

[click to expand]

Housing Wire Interviews Phil Crawford (VOA) on Appraising During COVID-19

Good stuff- a great listen:

In this episode, the host of the Voice of Appraisal Radio podcast also touches on whether or not the business is an essential service. Crawford also shares his perspective on why appraisers need a bigger voice in policymaking and touches on the potential impact of some recent announcements from federal banking regulators that allow appraisal postponements up to 120 days after a mortgage.

Dave Towne Opines On How We Can Become Unglued If We’re Not Careful

It’s a wonderful write-up:



This essay was tough to write, but it’s important. (Yes, that’s my opinion!)

The current state of affairs in this country, and globally, is the worst we humans have seen in generations. Most of us were not alive during the last major pandemic in the early 1900’s, or even during WWII, when living situations were very trying for many people.

In later years, pandemics have occurred, but governments’ reactions and actions to those were much more mild as compared to this one. You can read more about those here:

The pandemic we are in now is unprecedented in modern history. Due to governmental inactions, and actions, the devastation to humans and world-wide economies will last many more years.

This pandemic, and the way it is being managed, is affecting people and relationships in profound ways. Many very adversely.

I write this because for about the last decade or so, I’ve had a very nice, respectful, even joyful relationship with another appraiser. I learn from that appraiser and appreciate the dialogue and experiences we’ve shared.

Not long ago, I wrote an essay concerning appraiser conduct involving an aspect of our work. Over the course of several days, the appraiser acquaintance has ‘come unglued’ as the expression goes about my opinion and choice of words, and I’m very concerned. The desire to just not be able to move on appears obsessive to me.

In that essay I used one strong word, based on my opinion, which does not appear in any of the requirements or guidelines appraisers must follow. I used that word to make a point because too many appraisers want to make excuses why the written requirements and guidelines can’t or won’t be followed. That bothers me, from an ethical standpoint. My point was to encourage appraisers to pay attention to the assignment SoW, additional assignment conditions that go beyond USPAP, and other expectations clients want to see in our reports. My other point was to say that ‘new technology’ being promoted by several companies is not appropriate to use in all assignments.

I enjoy respectful discussions. Dialogue helps greatly. I learn from it. But sometimes responders and I will just have to ‘respectfully disagree.’ However, when verbiage turns to name calling due to frustration because of a single word disagreement, it causes me to really ponder the circumstance. I believe our current pandemic situation may be exacerbating the underlying causation of the glue-pot explosion the appraiser has exhibited.

Medical professionals who understand human psyche have been sounding alarms about personal actions relating to how this pandemic is being managed….or not managed well, depending on your point of view. People are becoming more and more frustrated, spouse/partner and child abuse is on the rise. Burglaries, robberies, thefts and other crimes are beginning to increase. Incomes have been destroyed. Businesses have been upended. Relationships have suffered. People have become more desperate as governments have turned normal society nearly into martial law, restricting normal freedoms. If things don’t change, and we don’t get back to ‘normal’ relatively quickly, attempts or actual suicides will also rise. Chaos amongst the population will manifest itself.

Appraisers, as a general statement, tend to be loners in our profession. Few appraisers take time to associate with peers in formal or informal settings. Which is a shame, because some of the nicest people you’ll meet are your peers. They are not your enemy. Make an effort NOW to meet and get to know appraisers in your area. You won’t regret it.

(On a related personal note, I have a “sista from anotha motha” because I made an effort to be helpful to another appraiser 1,300 miles away when we ‘met’ on a web forum. That turned into meeting in person to attend a live CE class together, and has evolved into a wonderful brother/sister relationship over the past dozen or so years.)

I was moved to write this because I really do care about the appraiser whose glue-pot is boiling. And I’m concerned about other appraisers who may not really understand how their moods, emotions and expressions may be manifesting adverse behavior within themselves, and with others around them…..due to the exterior pressures we are enduring.

One word of disagreement, or some other basically silly issue, should not be the catalyst to blow a hole in an otherwise healthy and enjoyable relationship.

It’s important that all of us pay close attention to our activity and mental state on all levels. The ‘perceived normal’ at the moment actually may not be. Anxiety, irritability, obsessiveness and depression are devastating to humans.

Please be careful, talk to appropriate professionals if things are tilting, and stay well.

OFT (One Final Thought)

An old chestnut tweaked for the crisis. I forgot how much I loved this commercial.

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
Matrix Blog

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