First, there are supertalls and then there are supertalls with or without cats.
This marketing rendering of 111 West 57th Street looking north over Central Park gives you context as to how much it stands out and how expansive the views are. The project to the left (west) known as One57 was the first supertall on West 57th Street. The two buildings directly behind (south/below) One57 were considered among the tallest new developments when I moved to Manhattan in the mid-1980s. Open this rendering to appreciate the height of West 111 West 57th Street.
The next rendering looks south from Central Park. The first rendering is labeled “4” in the image below. While building number 2 has been canceled/suspended, you can see how much the skyline has changed over the past decade.
Speaking of highrise living, my friend Nathan Pyle is spot on once again and I’m not a big cat fan (I inherited two from my kids).
Mad Money Trounces Quicken Loans
I’m not in the demo that watches Jim Cramer’s MAD Money on CNBC very regularly but cracks in the mortgage market are beginning to show. Think of the crazy Rocket Mortgage advertising blitz that pines for the old days (2005) of the housing bubble. So Jim Cramer’s clip (and revisiting this) is worth a listen.
Every Housing Notes Subscriber Should Sign Our Petition NOW
Here is the FDIC announcement on real estate appraisals.
And my take on the matter in REALTOR Magazine. All real estate agents are exposed to significant risk if this rule change is adopted. The same people in power during the era of liar loans are pushing for this rule change.
Real Estate is NYC
I was looking in the Real Estate Board of New York (REBNY)’s 2017 annual report and came across a table of the industry’s contribution to annual city revenue. The scale is unreal. And I’m not even talking about my pictures in the publication!
New in the Real Estate Lexicon: PIW
PIW is the acronym for “property inspection waivers” which in practice means “appraisal inspection waivers.” Some appraisers say it stands for “Pissing in Wind” because the waiver of an appraisal means that no one independent of the transaction looked at what the GSEs are using for collateral. Right now waivers account for 12% of Fannie and Freddie loans and are likely to expand.
To all you real estate brokers that read these Housing Notes: you’re getting a fresh bulls-eye painted on your back right now. You might want to contact your local association or board and get more info. And you can sign my petition to send a message to regulators.
Houses That Grow With Us, Not Our Stuff
Adventures in Real Estate Marketing
Perhaps sex sells, but let’s give the buyers credit for understanding when a home is overpriced. Looks like HAR.com was the adult in the kitchen.
Reckless Behavior Returns To Housing Market At Precisely The Wrong Time
There has been a deluge of coverage of the U.S. national housing slowdown and the introduction of requirements that remove appraisers from most mortgage valuations.
First American: Home prices point to trouble ahead [Housingwire]
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
Remember liar loans of a decade ago? Those same people want to do away with appraisers.
There’s a proposal from the FDIC, Federal Reserve, and Treasury Department not to require appraisals for some mortgages under $400,000.
As we say in the petition, this change can impact several groups in particular: consumers, the taxpayers, the housing market and appraisers.
One group not explicitly mentioned in the petition but impacted down the road are real estate agents and brokers. Currently, 12% of mortgages that flow through the GSE (Fannie Mae and Freddie Mac account for 78% of residential mortgages right now) will have their appraisals waived. Those are “PiW” loans or have a “Property Inspection Waiver.” My good friend and appraiser colleague Phil Crawford says on his radio show “Voice of Appraisal” says the acronym stands for “Pissing In Wind” which is more accurate. If the buyer realizes they overpaid for the property, the agents are now the professionals with the bullseye on their back. Liability insurers are already talking about a new target when things go south.
Years ago and again this morning, I heard a real estate agent say – what do we need you (appraisers) for? “The seller and the buyer determined the market value by agreeing on the price.” The problem with this logic is the buyer may not be fully informed (i.e., from an out of market area) and will also mortgage fraud supercharged. Ever heard of straw buyers? Agents must remember that they perceived as biased even with the best intentions and the best ethics because they are paid only if the deal closes. When something goes wrong, they are completely exposed.
The direction that was taken by regulators relies heavily on AVMs (Think Zillow’s Zestimate which is not within 4.3% of the actual value 50% of the time) and “hybrid appraisers” (which removes the appraiser from the actual inspection of properties) to develop a value opinion. The inspection of the property, when done, will rely on non-licensed individuals to fill out a checklist and give an appraiser at a desk the information without any standardization, direct contact or assurance the inspector knows what they are doing. I’ve heard of fees as low as $8 to do the inspection and $78 for the appraiser. As far as I can tell, a full appraisal (inspection and analysis) cost can represent as little as a hundredth of a percent of a purchase transaction.
This petition is for everyone to sign, not just appraisers. Please sign and help bring attention to a pattern we just lived through in the financial crisis. It’s happening again.
Please make your voice known, read about and hopefully sign the petition below:
There are lots of issues facing appraisers right now, so let’s focus on the big rocks first and sign the petition!
The FHA Attack On Appraisers Was Timed To Make Way For Getting Rid of Them
Federal Housing Administration says it expects to lose $14.4 billion in coming years, potentially raising premiums on mortgages insured by the FHA
FHA seems to be rewriting history. When the GSEs were bailed out in 2008, FHA became a “last resort” program for many home buyers that couldn’s afford a 20% downpayment and lending was rampant and reckless. Now that they are having problems, they seem to be singling out the appraiser’s role a few days before major appraisal rule changes are being proposed.
In my opinion, there are no coincidences when it comes to proposed regulations. See OFT below.
Voice of Appraiser: Person of the Year!!! Brian Coester?
OFT (One Final Thought)
Brilliant Idea #1
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Brilliant Idea #2
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See you next week.
Reads, Listens and Visuals I Enjoyed
- Sorry, home appraisers, bots are coming for your jobs [The Real Deal]
- Non-bank lenders like Quicken Loans are 'the biggest risk to the system' right now, Jim Cramer warns [CNBC]
- OK, Computer: How Much Is My House Worth?
- What Black Friday Reveals About America's Parking Lot Problem [Citylab]
- Secret luxury homes: how the ultra-rich hide their properties [Financial Times]
- What’s the Average Age of a Repeat Buyer? The Impact of Longevity Emerges – WAV Group Consulting [WAVGroup]
- Ghost Towns Still Haunt Spain in Property Rebound a Decade After [Bloomberg]
- Government-backed mortgage lenders are awful — and essential [The Washington Post]
- Home-Price Gains Continue to Slow in September [The Wall Street Journal]
- In New York, $35 Million Will Buy an Apartment. Or Grand Central [Bloomberg]
- First American: Home prices point to trouble ahead [Housingwire]
- More than 150,000 loans potentially violate FHA claims lawsuit [Mortgage Professional America]
- The U.S. Housing Boom Is Coming to an End, Starting in Dallas [The Wall Street Journal]
- The house wouldn’t sell. So a Texas Realtor turned to semi-nude models. [The Washington Post]
- Bloom and Bust [Washington Monthly]
- Which Cities Will Lower Property Tax in 2019? [Mansion Global]
- Building houses that grow with us [Curbed]
- Is a Recession Coming? [The Atlantic]
My New Content, Research and Mentions
- The Hamptons Home Market Falters [The Wall Street Journal]
- New York’s Wealthiest Cut Losses as Manhattan Real Estate Falters [The Wall Street Journal]
- The average size of an apartment in America is shrinking [Daily Mail UK]
- Analysis: These resi brokerages are primed to cash in on Amazon's LIC move [The Real Deal]
- Proposed Plan Would Decrease Requirements for In-Person Appraisals [Professional Builder]
- Why do two identical apartments in the same building have different maintenance fees? [Brick Underground]
- Plan to Reduce Human Appraisals May Lead to ‘Wildly Inaccurate’ Estimates [Realtor Magazine]
- Westchester & Fairfield Cheat Sheet: Wells Fargo calls Fairfield County 'distressed,' Mamaroneck yacht club sells … & more [The Real Deal]
- Fewer Homes May Require Human Appraisals, but That May Not Be a Good Thing [Realtor.com]
- How Amazon's arrival in LIC will affect real estate [AM New York]
- Are the Hamptons having a late "surge" in sales? [The Real Deal]
- Market Report Q3 2018: Prices at an all-time record high [Yolanda's Little Black Book]
- One of America's Richest Suburbs Just Lost Its AAA Rating [Bloomberg]
- Silverstein: Amazon can save Midtown’s luxury condo market [The Real Deal]
Real Estate Blockchain Reads
Appraisal Related Reads
- Get rid of appraisers while nobody’s looking [Sacramento Appraisal Blog]
- What is Functional Obsolescence? [Birmingham Appraisal Blog]
- The Real Cost of an Appraisal [APPRAISALUSA]
- Brian Coester claims We are not out of business, as AMC runs into financial difficulty [Housingwire]
- Valuation Expertise Viewed as a Commodity [Jonathan Miller/Appraisers Blogs]
- What will happen in other transactions if appraisals aren't required? [Sacappraiser on Twitter]
- Alaska Real Estate Appraisers Required to Be Bonded as of 2019 [National Mortage Professional]
- What Makes an Appraisal Supportable? [Cleveland Appraisal Blog]
- Inflated Home Appraisals Drain Billions From Government Insurance Fund [The Wall Street Journal]
Extra Curricular Reads
- View RICHARD WALLGREN's Obituary on NYTimes.com and share memories [Legacy]
- Niyo: The myth of Woody Hayes' infamous 'three'-point try
- Neighborhood leaders may ask D.C. officials to name Saudi embassy street after Khashoggi [Curbed]
- Lessons from posting a fake map about pies [Flowingdata]
- Remember when we bought groceries at supermarkets? [Supermarket News]
- US capital expenditure boom fails to live up to promises [Financial Times]