Say this address number three times very quickly…
Classy yet incomprehensible way to slap an address on a house. pic.twitter.com/768SByfbps
— John Levenstein (@johnlevenstein) May 17, 2021
But I digress…
Making The Front Page of the WSJ Today: “There’s No Crying In Real Estate?”
My company and I finally made it onto the front page of the Wall Street Journal today in Candace Taylor’s Real-Estate Frenzy Overwhelms Small-Town America: ‘I Came Home Crying’ My reports had been mentioned on the front page once a long time ago but only with reference to Douglas Elliman – so this was a nice weekend send-off!
The collapse of inventory is playing havoc with housing markets around the U.S.
I channeled my inner Tom Hanks from the movie “A League Of Their Own” after seeing the article title.
— Jonathan Miller (@jonathanmiller) May 20, 2021
From My Matrix Blog: No Diversity: 96.5% Of U.S. Appraisers Are White
Here’s a post from my Matrix Blog:
Over the past year, beginning with this NY Times piece: Black Homeowners Face Discrimination in Appraisals that initiated a rising progression of news stories covering discrimination in the appraisal of houses. And most recently, this CNN piece: When a Black homeowner concealed her race, her home’s appraisal value doubled.
So I looked at U.S. labor force data from the U.S. Bureau of Labor Statistics [BLS], which ranked the top 400 occupations by sex, race, and Hispanic or Latino ethnicity. I’ve been an appraiser for 35 years and it’s been very clear that there is nominal diversity in my profession. For users of the industry’s services who have constantly complained about “appraisal shortages” (translated: a shortage of appraisers willing to work for 50% to 75% below the market rate) – here is your opportunity for action to expand our ranks.
The appraisal industry is aging out because it is hard to bring in youth. It is one of the only professions that require new entrants to have a mentor for their first two years and often without making a living, financially. One of the key reasons for this is because most financial institutions won’t accept a “trainee” until they are licensed or certified with two years of experience. A “trainee” is a derogatory term applied to an appraiser that is not licensed yet. While the GSEs like Fannie and Freddie are fine with “trainees” signing reports prior to their two-year experience threshold, most banks are not. Existing appraisers are all for the difficult entry because supply and demand are in their favor. Few other professions have this two-year mentorship period before an entrant can make a living.
Accountants don’t require a two year mentorship program before they can make a living. Free market conditions should let those with more experience make more money, but not zero.
As a result, entry into the appraiser profession via a mentor system essentially requires appraisers to have relatives that will hire and train them. Given the beginnings of the housing industry as explained next, you can see the problem with this approach.
…and racial covenants. No wonder why there is essentially no diversity in the appraisal profession.
These BLS numbers for 400 occupations show an incredible lack of diversity within the appraisal profession. In fact, U.S. appraisers were ranked dead last for diversity in the list of 400 occupations tracked by BLS with white appraisers comprising 96.5% of the industry. Here are some appraiser ratios from BLS.
And here are the 20 least diverse occupations. The appraisal industry is even less diverse than farmers & ranchers.
While The Appraisal Foundation [TAF] was created and enabled by Congress to maintain appraisal standards (ASB) and minimum qualifications (AQB) for entry into the appraisal profession, it was also created to protect the public trust. The Appraisal Foundation’s attempt to address diversity has largely been in the form of “checking a box” to be able to say they are working on it. Yet the only actions they have taken were the result of recent public pressure by people like myself and others to call them out. The most glaring tone-deaf situations at TAF demonstrate how inappropriate it would be to allow TAF to lead any diversity efforts in the profession:
– An African-American had never held a board seat on the Appraiser Qualifications Board (AQB) until 2021. In other words, for more than thirty years, the organization has existed in a racial bubble.
– There have only been three women who have served on the AQB in the past 30 years.
– The head of the just-formed “diversity commission” is white and male.
Since TAF has not been able to see the problem for more than three decades until outsiders pointed it out and they have continued to make decisions that demonstrate their disconnect, TAF leadership is essentially the starting point to resolve the lack of industry diversity problem. Top-down is how this gets fixed if the stakeholders in the industry actually want it fixed. We have no leadership on this issue within the industry and solving this problem has to be top-down or it won’t ever be resolved.
It’s time for Congress to step in.
[WNBC TV] The Manhattan Sales Market Saw Much Less Damage Than The Manhattan Rental Market
Here’s a post from my Matrix Blog:
Adam Kuperstein at WNBC reached out to do a story on the state of the Manhattan housing market for Douglas Elliman. He got all the nuances right and featured the results of our market research. It was my first tv interview back in my Manhattan office and afterwards I realized I need to warm up my background after using my home office for the past 14 months!
NPR: Bidding Wars Are Seemingly Everywhere
During a period with chronic shortages of listing inventory, the predominat marketing technique seems to be the eBay Auction Technique. List the rare product for sale and watch the price surge as bidders, many shot out in numerous prior attempts, go all in. Market value is now derived by bidding wars seemingly everywhere.
NYT Calculator Column: NYC Mayoral Cheat Sheet On Brooklyn Housing Prices
Last week I spoke at length about the NYC mayoral race and the bad guess by one of the candidates on the median sales price for a Brooklyn residential property. The NYT, Bloomberg and The Daily Mail had referenced our research in the Elliman Report: Q1 2021 Brooklyn Sales that provided a median sales price for the borough of $900,000. Bloomberg showed how I extrapolated mayoral candidate Donovan’s $100K estimate back to the early 1980s. In this Sunday’s NYT Real Estate Section, the Calculator Column topic was the median sales price trend for Brooklyn. I have compiled the data back to 2003, which is as far back as the NYC public record, known as ACRIS, goes. This is part of my monthly (or more often) contribution to the weekly Calculator Column.
Here are more Brooklyn price charts my team creates:
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
AARO Conference: PAREA And It’s Role In Resolving The Lack Of Industry Diversity
Here is the powerpoint (pdf) at theAARO Spring Conference 4-30-2021.
It’s a compelling presentation. Specifically Pete and Craig’s remarks.
No Diversity: 96.5% Of U.S. Appraisers Are White
See the full post earlier in these Housing Notes above.
Incidentally, all the appraisers out there that are making the argument on podcasts and blog posts that we are victims of this systemic racism narrative need to rethink this strategy because it is tone-deaf to the public optics. Real estate appraisers are 96.5% white – even less diverse than farmers and ranchers! Blowhardy speeches like I keep seeing only make us look worse by coming across as insulated from the real world and makes us more vulnerable to criticism and to elimination. For goodness sakes, the GSEs backed 70% of refinance mortgages with AVMs in 2020 – you’re just giving the mortgage industry and regulators a reason to eliminate us. I cringe every time I come across a podcast interview and blog post saying these press stories about white appraisers and African-American homeowners don’t represent reality. Remember that 96.5% of us are white. That is a fact.
As far as these denials made on podcasts and blog posts go, remember what Warren Buffet once said: “Never ask a barber if you need a haircut.” By espousing your insulated views, “you are only preaching to the choir.” It doesn’t create more awareness nor does it solve the problem.
The growing frequency of events chronicled in the media with growing frequency is because our profession (myself included) has been complacent about our industry leadership for decades. This is a “top-down” problem and speaking out this without addressing the systemic problem only makes it worse for all of us. We have long been sitting and waiting for the fax to arrive, the phone to ring or the email to arrive. It is time to think bigger and push for a change in leadership at organizations like The Appraisal Foundation.
And that should be right now, dammit.
Appraisal Buzz/Clear Capital Webinar: Does Your Appraisal Data Include Racial Bias?
I got a lot out of this webinar. Click on the image to replay it.
OFT (One Final Thought)
If you want to see pissed-off high school girls rant like the Ramones over injustice with cringy lyrics, then this band is for you. They just rock. Otherwise, move on.
This is the first band I will be RUNNING to see once I get my second shot: pic.twitter.com/FCBAE2TfvU
— Beck (@BeckTheGirl) May 20, 2021
Brilliant Idea #1
If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:
– They’ll have less bias;
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– And I’ll scream like a high school student.
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.
Reads, Listens and Visuals I Enjoyed
- Really big real estate deals: 9 residential sales topped $40M this season in Palm Beach [Palm Beach Daily News]
- Beachfront mansion brings $95 million on Palm Beach’s Billionaires Row: deed [Palm Beach Daily News]
- The Opulent, Futuristic Megamansion of Bill and Melinda Gates Could Be a Hard Sell [Mansion Global]
- Investors Bet on Commercial Real Estate, Undeterred by Empty Offices and Hotel Rooms [Wall Street Journal]
- The Strongest Sign Yet That Inflation Is Transitory [Bloomberg]
- The Housing Market Has a Bottleneck That’s Even Bigger Than Lumber [Bloomberg]
- New York City Capital Markets Update – First Quarter.pdf [Powered by Box]
- Buying a home? Skip the 'love letter' to the seller [CNN]
- 29% of U.S. Sellers Plan to List for More Than They Think Their Homes Are Worth [Mansion Global]
- It's Harder Than Ever To Buy A House, And Bidding Wars Keep Breaking Out [NPR]
- Skyscrapers Rising Next to Vacant Towers Mark New City of London [Bloomberg]
- Plunge in Lumber Contracts Signals Turning Point for Wood Rally [Bloomberg]
- Biden targets housing rules that hurt low-income earners. Will the suburbs buy in? [LA Times]
- How to Navigate a Hot Housing Market [NY Times]
- Los Angeles Has a Plan to Disarm the NIMBYs [Slate]
- Knakal_2021_05_How much can New York squeeze out of someone.pdf [Powered by Box]
- Stimulating the housing market is psychotic [The Reformed Broker]
- Douglas Elliman's Scott Durkin on His Life, Career and Resi Brokerage [The Real Deal]
- California Home Prices Shoot Past $800,000 for the First Time [Bloomberg]
- This see-through wood could replace glass windows [Fast Company]
- Visualizing the Recent Explosion in Lumber Prices [Visual Capitalist]
- The Gilded Age 5th Avenue Mansions of Millionaire's Row [Untapped New York]
My New Content, Research and Mentions
- Real-Estate Frenzy Overwhelms Small-Town America: ‘I Came Home Crying’ [Wall Street Journal]
- Inside New York City Co-op Discrimination [The Real Deal]
- A Lesson in Brooklyn Home Prices [NY Times]
- Manhattan’s Apartment-Vacancy Rate Is Stubbornly High [Wall Street Journal]
- Residential Sales In Los Angeles Above $10m Soar Despite COVID-19 Pandemic [Money Control]
- Pandemic or not, the Hamptons boom continues as moneyed settle in [Economic Times]
- New England vacation homes are the ultra-seller's market [Boston.com]
- NYC mayor candidates claim median cost of Brooklyn home is below $100k [Daily Mail]
- The Daily Dirt: Mayoral candidates say the darndest things [The Real Deal]
Recently Published Elliman Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 4-2021 [Miller Samuel]
- Elliman Report: California New Signed Contracts 4-2021 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 4-2021 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 4-2021 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 4-2021 [Miller Samuel]
- Elliman Report: Venice + Mar Vista Sales 1Q 2021 [Miller Samuel]
- Elliman Report: Malibu + Malibu Beach Sales 1Q 2021 [Miller Samuel]
- Elliman Report: Los Angeles Sales 1Q 2021 [Miller Samuel]
- Elliman Report: Long Island Sales 1Q 2021 [Miller Samuel]
- Elliman Report: North Fork Sales 1Q 2021 [Miller Samuel]
Appraisal Related Reads
- Homeowner's appraisal more than doubles after she hides her race [CNBC]
- Will AI solve the problem of appraisal bias? [HousingWire]
- When a Black homeowner concealed her race, her home's appraisal value doubled [CNN]
- Black homeowner says her appraisal doubled after she didn’t declare her race [The Guardian]
- When selling way above anything else (Q&A) [Ryan Lundquist/Sacramento Appraisal Blog]
- How appraisers value homes in a hot housing market [HousingWire]
- The Similarities Between 2007 and Today [Appraisal Buzz]
- A Black homeowner had her white friend represent her during an appraisal. The value of her home shot up by $149,000. [Business Insider]
Extra Curricular Reads
- A New $260 Million Park Floats on the Hudson. It’s a Charmer. [NY Times]
- First Look at Little Island, Opening Tomorrow! [Untapped New York]
- The "Participation Trophies" Argument Has Always Been a Myth [Inside Hook]
- Sex, Deceit, and Scandal: The Ugly War Over Bob Ross’ Ghost [Yahoo News]
- Motivated Reasoning of Rock Stars – The Big Picture [Ritholtz]