That First One Was The “Greatest House Of All Time” (G.H.O.A.T.)
One of my sons and his wife have an accepted offer on their first house. It is the greatest house of all time in their eyes. I remember looking back at our first rental apartment, our first rental house and our first home purchase and how exciting it was. Today, I can’t imagine living in our first after having traded up over the years, but the memories are still warm. Do you remember that sense of irrational exuberance? It is an awesome feeling. Just perservere to get one as illustrated here:
— Goats (@goats_page) November 26, 2019
But I digress…
Build A Home As Solid As Sears
Check out the Sears Archives:
From the 1908 catalog
Interest Rates Are Near 670 Year Lows
When looking over back the last 670 years as I’m sure many of us do, it is clear that current interest rates are unusually low. That doesn’t make home purchases more affordable by the way. It ensures housing gets more expensive in the future. Think about the dutch and the tulip bubble in the 1400s and 1500s while you’re at it.
Housing Prices Have Risen More Than Turkey Prices In Past Three Years
Because its the day after Thanksgiving, I wanted to understand how poultry price trends relate to housing costs, because, well, just because.
Fed Beige Book for New York Shows Little To No Economic Growth In Region
Periodically, I mention to my Housing Note readers how helpful I find the Federal Reserve’s Beige Book (“Summary of Commentary on Current Economic Conditions.”) It’s a qualitative description of the economy, both nationally and within the footprint of its twelve member banks. I’ve been used as a resource for it for more than a decade and also refer to it regularly.
Formerly called the “Red Book” when it was an internal document, it became known as the “Beige Book” when it was made public in 1970 because of its…wait for it…tan cover.
National housing snippet:
Home sales were mostly flat to up, and residential construction experienced more widespread growth compared to the prior report. Construction and leasing activity of nonresidential real estate continued to increase at a modest pace.
New York Real Estate and Construction snippet:
Housing markets across the District have been mixed but, on balance, weaker in the latest reporting period. Prices of New York City condos and co-ops have continued to trend lower and are now running moderately below comparable 2018 levels, with steeper declines at the high end of the market and in Manhattan. A local real estate expert noted a precipitous drop in the share of cash purchases at the higher end of the market, which is seen as a signal that investors have largely left the market. The inventory of existing homes has continued to climb to a fairly high level in Manhattan but less so in the outer boroughs. Housing markets in the suburban areas around New York have been more stable, with prices still rising moderately in most areas and inventories generally stable. Similarly, in upstate New York, the sales market has remained strong, with inventories steady at very low levels, prices still rising, and bidding wars still fairly commonplace in the more sought-after areas.
The residential rental market has strengthened further. While Manhattan rents have leveled off, rents across much of the city and metro area have continued to rise at a moderate pace—and at a somewhat faster pace at the high end of the market, reflecting a shift in demand away from owning. Rental vacancy rates have edged up but remain quite low across New York City.
Commercial real estate markets across the District have generally weakened in the latest reporting period. Office rents have been mostly flat, while availability rates have climbed modestly in most areas, with leasing activity steady to slower. Industrial markets have been mixed: rents have continued to trend up, though the pace has slowed, and availability rates have been flat to up slightly. The market for retail space has weakened further, even as the holiday shopping season draws near, with rents flat and vacancy rates at multi-year highs.
New multi-family construction starts have held steady across the District, while the volume of ongoing multi-family construction has remained fairly brisk. New office and industrial construction has continued to weaken modestly.
OK, Boomer There’s Not Enough Gen Xers But Plenty of Millennials
There was an epic Wall Street Journal article of the coming down cycle of housing demand as Boomers die off and there aren’t enough Gen Xers to buy them. It looks like big homes in the suburbs built before 1970 are going to be a hard sell for a generation. My home was built in 1825 (gulp).
Recommendation: My sons constantly say “Ok, Boomer” when I pontificate too much (which is always too much) so the best retort I found is “Ok, Millennial” which locks up their brains.
Our favorite charts of the week of our own making
I share this chart often because it amazes me. The Greenwich, CT housing market showed us that the housing bubble pre-2008 was also a home renovation bubble!
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
Consider getting out of the bank appraiser rat race, and focus on clients who respect your services
Since I co-founded Miller Samuel in 1986, our mission was to work for clients who needed our services, not clients who were forced to use us through mortgage regulations. Over the years appraisers became our own worst enemies and didn’t work together to protect a profession designed to protect the public trust. Because we and our trade groups have been asleep and adversarial, we became marginalized, often disrespected and wholly blamed for anything that went wrong in a deal, even if it had nothing to do with us. Yet appraisers are the last stop in the mortgage process to protect the consumer and the taxpayer.
Our firm works for only those institutions that treat us professionally, pay us a market wage and enable us to complete assignments in the time needed to perform a credible analysis. You can only demand that by providing the best or one of the best appraisals in your market (reliability, not fast and cheap).
In 2005, near the peak of the housing bubble, we rejiggered our business from 75% bank/25% lawyer-consumer -> 25% bank/75% lawyer-consumer because it became apparent that most retail banks thought of us as “deal enablers” rather than independent arbiters of value to provide a neutral benchmark for informed lending decisions. After all, they could offload the risk to unsuspecting secondary market investors.
One thing to consider. If you are resolved to work with AMCs for the rest of your career, consider that most of them will be gone within a few years. Their time has passed and banks are on to what they really are.
So to those of you who are thankful to have enjoyed a lengthy career or those who want to have one, there are plenty of clients out there that are not banks or AMCs. One of the ways to build a thriving appraisal practice if you are a talented appraiser is to market and brand your services. As an industry we are woefully inadequate and have been trained to “wait for the the fax to ring.” LOL. I’m involved in one of efforts that addresses this smart business focus: FindMyAppraiser.com
If I’ve learned anything about the appraisal profession since 1986 is that residential mortgage appraisers are seen as “pain-points” by most lending institutions, appraisal management companies, as well as most banking regulators. Why waste your years of hard-earned expertise working for clients that don’t appreciate it or want to pay for it? Spend your productive time focusing on appraisal assignments that rely on your professional expertise. Consumers are being ill-served in the current regulatory environment. Why not work for them directly and have someone help you market to them?
I’ve spent my appraisal career looking for clients outside of the banking industry and FindMyAppraiser.com aligns with that mission. Disclaimer: I am part of Find My Appraiser because its mission aligns with mine.
Check out FindMyAppraiser.com
OFT TFT ( One TWO Final Thought(s))
????Give this guy the manager of the year! pic.twitter.com/xeIzkqyORB
— Larry Kim (@larrykim) November 25, 2019
Brilliant Idea #1
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Brilliant Idea #2
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See you next week.
Reads, Listens and Visuals I Enjoyed
- 7 Critical Things Realtors Wish Sellers Knew [Consumer Home Value]
- Hong Kong home prices fall for fifth straight month in October [Reuters]
- Exclusive ‘pocket listings’ are nothing new. Now, the real estate industry is fighting over their future. [Philadelphia Inquirer]
- Palm Beach homes: 59 owners billed at least $500,000 in local property taxes, a new record [Palm Beach Daily News]
- The Fed – Beige Book – November 27, 2019 [Federal Reserve Bank]
- This top-producing Baird broker jumped to Compass. She just jumped back [The Real Deal]
- Is Mohamed Hadid ‘Too Broke’ to Tear Down Bel Air Mansion? [Variety]
- The crackdown on secret real estate listings [CNN/Business]
- OK Boomer, Who’s Going to Buy Your 21 Million Homes? [Wall Street Journal]
- State Limits on Property Taxes Hamstring Local Services and Should Be Relaxed or Repealed [CBPP]
- Londoners Are Taking to Canal Boats to Beat High Property Costs [Bloomberg]
- For the first time on record, fewer than 10% of Americans moved in a year [Brookings]
- SoftBank Looks to Reduce WeWork’s $9.5 billion Rescue Package [The Real Deal]
- Residential sales sluggish as Hong Kong homebuyers ‘stay on the sidelines’ [SCMP]
My New Content, Research and Mentions
- 年終租屋市場冷 曼哈頓租金成長趨緩 – 世界新聞網 [World Journal]
- Mexican Hotelier Carlos Gosselin Maurel Lists Miami Beach Mansion For $30 Million [Forbes]
- O άνθρωπος που αγόρασε το ακριβότερο σπίτι της Αμερικής όλων των εποχών [Palo]
- No Welcome Mat for Wealthy Condo Buyers in New York [Habitat Magazine]
- Los Angeles Condo Sales Plunge as Chinese Capital Stays at Home [Bloomberg]
Recently Published Elliman Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 10-2019 [Miller Samuel]
- Elliman Report: Los Angeles Sales 3Q 2019 [Miller Samuel]
- Elliman Report: Malibu + Malibu Beach Sales 3Q 2019 [Miller Samuel]
- Elliman Report: Venice + Mar Vista Sales 3Q 2019 [Miller Samuel]
- Elliman Report: Aspen + Snowmass Village Sales 3Q 2019 [Miller Samuel]
- Elliman Report: North Fork Sales 3Q 2019 [Miller Samuel]
- Elliman Report: Hamptons Sales 3Q 2019 [Miller Samuel]
- Elliman Report: Long Island Sales 3Q 2019 [Miller Samuel]
- Elliman Report: Manalapan, Hypoluxo Island & Ocean Ridge Sales 3Q 2019 [Miller Samuel]
- Elliman Report: St. Petersburg Sales 3Q 2019 [Miller Samuel]
Appraisal Related Reads
- Hard Fixed Appraisal Fee in TRID – Possible Changes by CFPB [Dave Towne/Appraisersblogs]
- Pros and Cons Of A Pre-Listing Appraisal [Birmingham Appraisal Blog]
- AMC Reviewers Should Not Request Changes & Withhold Payment [John Pratt/Appraisersblogs]
- What’s the Shelf Life of An Appraisal? [Cleveland Appraisal Blog]
Extra Curricular Reads
- Apple Maps' Crimea change has upset a Ukranian politician [Cult of Mac]
- Russian cows get VR headsets 'to reduce anxiety' [BBC]
- 'Biggest honor of my career' – Greg LeMond on U.S. Congressional Gold Medal [VeloNews.com]
- Lo-fi beats [Quartz Obsession]
- Remnants of Colonial New York Preserved Under a Glass Sidewalk [Atlas Obscura]
- Carmelo Anthony’s Melancholy NBA Return [The Atlantic]
- Building David Byrne’s ‘Utopia,’ One Gray Suit at a Time [NY Times]
- The five universal laws of human stupidity [qz.com]
- The iOS 13 Privacy and Security Features You Should Know [Wired]