Sometimes Leaving The Housing Nest Can Be Painful

For those of you that haven’t been following the implosion of Twitter, I’ll spare you, but I thought it would be entertaining to watch this well-done fake video. Given the antics of Elon Musk over the past week, it’s quite believable.

But I digress…

The NYC Rental Market Has Peaked, Aided By A Strong Luxury Market

I’ve been the author of an expanding series of U.S. market reports since 1994 for Douglas Elliman Real Estate. We introduced the rental market series about a decade ago, first as a quarterly and then in a pivot to a monthly.

Elliman Report: October 2022 Manhattan, Brooklyn & Queens Rentals

Here are a couple of NYC borough comparison charts:


“Overall rental price trends showed stability as the high-end pressed to new records.”

– Net effective median rent slipped month over month for the third straight month
– Net effective average rent rose to a new record for the eighth time in ten months
– Listing inventory fell annually for the sixteenth consecutive month
– Doorman net effective average rent increased to a new high for the sixth consecutive month
– Median rent for new development rose to its highest level on record
– Luxury net effective median rent increased to a new high for the third straight month
– Luxury average and median rents collectively rose to new highs for the second consecutive month
– The entry threshold for the luxury market expanded to a new record


“After peaking in August, median rent continued to flirt with new records for the past two months.”

– Net effective median rent rose annually to the second-highest on record
– The market share of bidding wars has accounted for one out of five new leases over the past two years
– Listing inventory declined year over year for the eleventh time in twelve months


[Northwest Region] “Prices peaked from the prior month but continued to rise on a year over year basis.”

– Net effective median rent fell month over month for the second time in three months
– The number of new lease signings rose monthly for the first time in seven months
– Landlord concession market share declined year over year for the fifteenth consecutive month

The Macro Housing Take Versus Local Conditions Are Mismatched

The problem with this type of take is the rigidity of reliance on the 30-year fixed when consumers are moving to adjustable – and not the 1% teaser rate adjustable of the housing bubble. It’s like tracking hotel rates based on the advertised rack rates or using face rents instead of viewing the ebb and flow of landlord concessions and their impact on the net effective rent. The macro story is overstating the conditions on the ground. While the market demand is far weaker than a year ago, the larger picture is overstated. This is a continuation of my discussion last week on how year over year analysis, when compared to the 2021 sales rocketship, is misleading. I’m not down on a year over year as a benchmark in the future, but right now, it needs an asterisk, and comparisons should be made to the same period before the pandemic to better understand current conditions in the proper context.

I say this after watching two of my sons sell their homes over the past month in CT and Boston. Bidding wars were common, and financing at 7/1 rates was as well.

Here’s an example:

iBuying Is Coming Back To Reality

When I saw this headline, I knew it meant a reset in the iBuyer market: Redfin shutters iBuying business, cuts 13% of staff.

Zillow Offers imploded last year. Redfin shut it down after joining the race reluctantly. And now Opendoor lost much more money than Zillow Offers did.

What the hell is happening in residential real estate?

– These efforts occurred during rising market conditions and were untested in down markets.
– News coverage has always been wildly obsessed with tech in real estate, and while iBuying is a legitimate segment of the homebuying segment, it is far smaller than originally envisioned. Something about massive VC dollars looking for a home has something to do with the hype.
– Pricing homes is tough to automate, especially without the brokerage industry’s help, as proven by the Zillow Offers implosion and the need for the Zestimate to use the listing price to be close to what properties actually sell for.

The Compass Chronicles: November 2022 Edition

A continuing saga…

Starting over $20 at IPO, their stock fell below $2 this week but rebounded after an effective earnings call yesterday. One thing their C-Suite knows well is how Wall Street works. Essentially, they are cutting costs and working harder while competitors also suffer in this down market. I’d love to understand how they will adapt their business model to be profitable when the market improves.

I Was Always Wary About Freakonomics Messaging, And Now I Know Why

It first started with their analysis of real estate agents since I interact with them quite a bit as an appraiser. It started with this observation in the New York Times announcement of the book THAT looks like an incredibly broad generalization and is not well-supported.

Of course, price is just one factor motivating sellers to accept offers. Many are in a hurry, maybe because they are relocating for new jobs, or want to be in their new city by the time the next school year starts. So they may feel compelled to accept the first offer. Most agents who sell their own homes, by contrast, aren’t leaving the area.

It’s a super simplistic logic often used by the Freakonomics authors, that when a reader looks closer, they will see it’s nearly how they approach everything. I got that sense in my failed attempts to read more than a few chapters in the first and second Freakonomics books. I couldn’t get through either of them.

And then I recently tripped into this super engaging new podcast – they started with Freakonomics, and wow, it was eye-opening. This podcast focuses on the books you see in airports that are largely self-help orientated or provide catchy ways to look at the world. Please listen to the entire podcast – I promise it’s well worth it.

Getting Graphic

My favorite charts of the week made by others

Len Kiefer‘s Chart Handiwork

Upcoming Speaking Events

Monday, November 14, 2022 RICS in partnership with NYU – Real Estate Trends & NYC’s Economic Outlook [SOLD OUT]

New York University Rosenthal Pavilion 60 Washington Square South New York, NY 10012

1:20pm – 2:15pm Residential real estate in NYC – is it really back, and why does it matter? A conversation on the trends in residential real estate and the impact on value, development, and neighborhoods.

Panelists: Cate Agnew, FRICS, and Jonathan Miller, President & CEO Miller Samuel, Inc


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

The Public Trust That TAF Is Responsible For Is Nearly Gone

Because of the Dave Bunton monarchy and how he has structured TAF, it has failed to protect the public trust. Incidentally, please count all the persons of color on their Board of Trustees, many of whom are my friends.

Here’s a recent story to illustrate TAF’s damage to the public trust:

An employee of our firm left us about 15+ years ago and moved back to the midwest. She was part of the research team at our firm, not an appraiser. She recently dropped by to see us while visiting NYC, and we all went down memory lane – it was really fun. We started talking about the spike in mortgage rates. She mentioned that her African-American friend back in her hometown was refinancing and worried about all the appraiser bias she had been reading about. I never brought up the topic, but our friend and former employee said that the owner removed all personal photos and replaced them with her white next-door neighbor’s photos, who also pretended to be the owner when the appraiser came. This was done in anticipation of the first appraisal, not a second attempt. It’s very sad.

Discussing “Barriers To Entry” On The AQB Is Not Allowed

TAF, the proud author of the bat-shit crazy letter, the chickenshit letter and subject of an active investigation by HUD on whether USPAP promotes a lack of diversity in the appraisal profession (BLS: 98% of appraisers are white) continues to be a cesspool of self-dealing.

Back in May of 2022, John Ryan was removed as Chairman of the Appraiser Qualifications Board (AQB) because he wanted to discuss “barriers to entry” in the profession, the burning issue today. Remember that the Bureau of Labor Statistics ranks appraisers 400th of the 400 professions they track for diversity. Appraisers are 98% white. John is still on the board but no longer the chairman. The “barriers to entry” item was magically removed from the agenda. I would love to understand why Dave and Kelly didn’t want anyone discussing a key issue TAF is grappling with (technically, avoiding).

AQB Visit To Boston Board Meeting Not Reimbursed, Yet All TAF Staff Was Paid To Attend

After TAF banned the AQB from discussing “barriers to entry” at their board meeting, their attendance at the Boston Board meeting – that included discussions about diversity and inclusion and an important part of Boston’s content – was made optional. TAF brought in all their staff but wouldn’t pay for the AQB to attend at $75/hour. Weird, right? At least let them camp out in TAF’s fully renovated but hardly used DC offices until 2025.

From the grapevine…

– I hear Dave’s wife, a high-power DC lawyer, is now representing him, presumably with the encroaching HUD investigation. That’s gotta be weird for Kelly. Speaking of Kelly, she had to fill in for Dave at the recent AARO conference and opened with a tone-death joke that was met with stone-cold silence. It went like this: “Dave is under so much pressure these days that he’s probably off “slitting his wrists.” Here we have a deputy director of the entity that manages USPAP making jokes about suicide.

– I also heard that TAF’s law firm (I previously dubbed “Preeminent Relman & Colfax” because Dave overused “preeminent” to describe them in his monthly newsletter, which I no longer receive because I’m fairly certain they banned me from receiving it.) has accumulated over $800K in billing for writing and approving the USPAP supplement, which has not been released – as well as potentially a new 2-4 hour course on diversity and inclusion (let’s be real: it’s going to be 4 hours to generate more revenue). Total billing from Preeminent is expected to exceed $1 million on this matter alone.

Get it? TAF doesn’t want to talk about “barriers to entry” but has no problem creating another course, making the entry barrier even more costly.

– Supposedly, Diversity & Inclusion as a topic won’t be part of the exposure draft that Kelly might be spearheading.

– I hear McKissock is getting ready for the new class by Preeminent, giving TAF a piece of the action. Still, there continues to be a concern that Michelle Czekalski Bradley, Chairperson of ASB, has a massive conflict of interest since her husband is the Appraisal Curriculum and Content Director at McKissock. In addition, it appears that her relative Wally Czekalski is a business partner or employee and a McKissock Instructor unless “Czekalski” is much more common than I think. Hey, my last name is “Miller,” which I hear is quite common.

How is this conflict of interest allowed? What governance does TAF have? Answer: In a monarchy, there is no need for one.

How The TAF Board Sausage Is Made

The BOT members and the leadership of the two technical boards are FODs (Friends of Dave Bunton) and agree to the literal scripting of board meetings and what they will agree to say. No questions are allowed. Dave does this by dangling the chairmanship in front of them. The people that don’t roll off the board when their time expires are the people that wouldn’t agree to “perform” the scripts. An offer of a vice chairmanship is a technical loophole that allows FODs to remain on the board past the expiration of their term. Guess which types of BOT members get that offer?

The next Chairman of the TAF Board of Trustees is Dayton Nordin of Ernst & Young. I’m sure he is very good at what he does at EY to be a partner. However, I wonder if his firm understands that TAF has fostered a work environment completely absent of diversity that places the appraisal industry dead last in diversity – 400th of 400 industries tracked by the Bureau of Labor Statistics.

USPAP Instructors Have Not Been Given Any New USPAP Materials

To illustrate the boondoggle money grab that TAF has over appraisers, the required 7-hour USPAP class that appraisers have to take every two years to maintain their license consider this:

– There are no new materials distributed for the class as of this week, and some classes began this week
– The fair housing section added last year put appraisers in legal jeopardy, according to the NFHA and their report early in 2022, but TAF kept it live because it’s all about the money.
– USPAP changes were paused for a total of two years, so there are no changes to USPAP except for the addition of the fair housing section that reportedly exposes appraisers to legal liability.

Why are appraisers being forced to take this course in 2022?

OFT (One Final Thought)

Please watch this entirety while imagining portable cameras, with what your inputs would have been in 1944. A mind-boggling visionary.

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 tweet less;
– You’ll be less of a twit;
– And I won’t pay for that blue checkmark (for such a smart guy, how dumb is Elon to think they are a vanity play?)

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 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

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads