Housing Balloons With Slow Leaks

Who needs post-season baseball when we have this?

But I digress…

The Zillow Offers Silly Shut Down Rationale As A McDonald’s Analogy

The iBuyer arm of Zillow shutdown all home purchases:

The company blamed its decision to stop new acquisitions for the rest of the year on the labor shortages roiling the U.S. economy. But two of its key competitors are pushing forward, raising questions about why Zillow is backing off its pivot into home-flipping.

I offered Bloomberg News this rationale:

“This feels like they bought way too many homes and they’re trying to work off that excess supply,” said Jonathan Miller, president of appraisal firm Miller Samuel. “It’s like McDonald’s saying, ‘we’re having a hard time filling positions so we’re going to close all of our restaurants down.’ No, you’re going to maybe limit your hours, or warn people that it’s going to take longer.”

My guess is that there was something significantly off with their forecasting and valuation tools as inventory grew faster than they expected and were trying to minimize further damage to their stock price.

While Quartz (The Atlantic) also liked my McDonald’s analogy, they noted how small Zillow Offers is in comparison to its competitors.

Corporate America has always used larger events to excuse cleaning house or hiding some breakdown in operations – it seems they have now pivoted from blaming COVID to blaming the difficulty in hiring (but not raising compensation).

Here’s an excellent recap on what happened with Zillow Offers:

The Real Estate Lexicon: Sales Dollar Volume & Percentage of the Asking Price

With marketing departments pushing out market reports in the brokerage industry that skirt dangerously close to marketing brochures, there are recurring things I observe that bother me, so here’s a couple of suggestions for those of you in marketing:

1) Sales Dollar Volume Is Not A Consumer Metric. Buyers and sellers don’t care that there were $1.5 billion in sales in the year-ago quarter and $3.5 billion in sales this quarter. I’m not saying it’s a useless metric because it can show a shift in the mix. But the consumer doesn’t think that way and it is a clear tell that the report producer, in my experience, isn’t experienced in market analytics and is real estate agent-centric. And therefore it’s just a hop, skip, and a jump to convey non-neutral bias in their presentation of conditions.

2) Percentage of the Asking Price Is Not A Consumer Metric. A home buyer doesn’t say to themselves when submitting an offer, “I hope we get this house for 95% of what the seller is asking!” They think, “I’m hoping to get as big of a discount as I can.” Arguably this default metric is geared towards the seller since this language is coming from a multiple listing system. I suspect it is still being used by many MLS systems because it has always has been presented this way. This seller orientation is anti-buyer and I don’t think the seller is loyal to this archaic calculation anyway. Sellers are buyers too and consumers don’t walk into a retail store and say, “there is a sale going on and I can get last year’s sweaters for only 80% of the suggested retail price!”

Fairfield County and Greenwich Connecticut Demand Overpowering Supply

I’ve been the author of the expanding Douglas Elliman report series since 1994. One of the most profound market turn-arounds has been observed in Fairfield County Connecticut. This market never saw the mid-aught housing boom the New York City enjoyed, but since the end of the lockdown, demand has overpowered supply to the point where sales are slowing.

The Real Deal does a nice overview: Few listings, sustained demand keeps Fairfield home prices near record highs


Elliman Report: Q3-2021 Fairfield County

“The lack of supply hobbled the second fastest-moving market on record as sales fell short of year-ago levels.”

– Median sales price rose annually to its second-highest on record and surged from the same period two years ago
– Days on market fell to their shortest amount in more than eighteen years
– Listing inventory remained at its third-lowest level in twenty-five years
– For the second straight quarter, single family bidding wars accounted for more than half of all single family sales
– All single family price trend indicators showed significant year over year gains and as compared to the same period in 2019
– Condo listing inventory fell to the third lowest on record in twenty-five years of tracking
– More than one-third of all luxury sales prices in the quarter were higher than the last asking price
– Luxury listing inventory fell to a record low for the fifth consecutive quarter


Elliman Report: Q3-2021 Greenwich

“Sales pressed higher as listing inventory continued to fall sharply.”

– Single family sales rose to their highest level in a decade for their second straight quarter
– Single family price trend indicators continued to rise year over year but also surged above the same period two years ago
– Condo sales rose to their third-highest level as the size of their average sale fell sharply
– Luxury median sales price rose to its highest level in nearly nine years
– Luxury listing inventory and months of supply continued to fall to their lowest levels on record

The Downtown Boston Boom Continues

The market intensity continued in Downtown Boston this quarter which skews luxury.


Elliman Report: Q3-2021 Downtown Boston

“Listing inventory fell sharply as bidding wars continued to be commonplace in the market.”

– Sales rose sharply year over year for the third straight quarter to the second highest level in three years
– Price trend indicators rose annually but fell short of the same period two years ago
– Largest annual decline of listing inventory in more than eight years

– Sales jumped annually for the third time in four quarters
– Price trend indicators rose above the prior year quarter and same period two years ago
– Listing inventory fell year over year at the largest rate in nearly seven years

Getting Graphic

My favorite charts of the week of our own making

My favorite charts of the week made by others

Len Kiefer‘s Chart Handiwork


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

Is There Discrimination In The Appraisal Industry? Of Course!

On June 20, 2019, in front of the Subcommittee on Housing, Community Development and Insurance, at a panel called “What’s Your Home Worth? A Review of the Appraisal Industry” all the appraisal industry representatives, who are all white, answered this question posited by Representative Green – which I am paraphrasing: Does discrimination play a role in the devaluation of the property value in neighborhoods that are predominantly occupied by minorities?

Here’s an aside after watching the clip: I’ve always wondered about the representation of our profession when engaging with Congress. It is often represented by non-appraisers – nothing personal here – just want to understand why?

– How does Joan Trice continue to get on these House panels? She is not an active appraiser, incorrectly presented the nomenclature of the approaches to value, and gets her income from staging AMC conferences, which are often adversarial to on-the-ground appraisers.
– Dave Bunton/Kelly Davids lead the institution that is most responsible for the industry’s current problems that PAVE was created to solve: lack of diversity, lack of support to the appraisal industry by bogging us down with unending bureaucracy to generate revenue and do little but hurt the profession long-term and damage the public trust.

For context, the Bureau of Labor Statistics tracks 400 occupations for various things including diversity. Guess who is dead last in 400th place? Appraisers & Assessors!

So how on earth can this white panel answer be “no?” No racism exists…at all…? Remember, those panelists were under oath and for the rest of their careers, they can’t backpedal. I wrote about this last spring.

Hands down if you believe there is no racism in the appraisal industry:

Look I get it. Most of us assume we don’t reflect racism but the industry clearly shows bias by being 96.5% white. How do we justify that? The Brookings Institute paper by Dr. Perry: The Devaluation of Assets in Black Neighborhoods demonstrated clearly that he has little idea what appraisers actually do and conflated minority housing markets’ lower prices by the actions of appraisers and literally never connected the dots. I call this a severe credibility leap.

Dr. Perry, while I’m sure is being earnest for the greater good as an activist for change, doesn’t grasp in his writings that appraisers ‘observe’ the market, not ‘determine’ the market. Yet for our industry to say there is no racial bias when our industry is 96.5% white is dishonest. We can say there is discrimination in nearly every profession out there because it is an inherent human condition. How can minorities continue to be so severely underrepresented in our profession?

More diversity in the appraisal profession will reduce bias.

TAF Says They Need NINE YEARS to Diversify!

TAF seems clueless about the importance of resolving the lack of diversity in housing at this very moment:

On The Virtual Fall Meeting of the Board of Trustees yesterday, the Chairman said they needed until 2030 to be fully diversified. Wow. They could accomplish that in a few years without any real effort. I could not find specific mentions of the development of a “bias and diversity program” in their vision statement.

Yet they do understand the importance of financial diversity so that no one can provide oversight. If you want to understand Dave and Kelly’s obsession with money and lack of oversight, they show it very clearly in the TAF vision statement:

Incidentally, why does the institution that has arguably been most responsible for the lack of diversity get to have Dave and Kelly able to provide self-serving input to PAVE?

TAF’s Top Priority of their Strategic Plan Is Literally To Make Money

These are salad days for TAF. They just added $800,000 this year to a $12±? million in reserves. And it makes sense because financial independence is their top priority in their “Key Drivers of Change”

Remember that the ASC would be delighted to fund USPAP to make it free to all appraisers and those trying to enter the profession. TAF can’t allow that because they won’t be able to generate millions of dollars to add to their reserves for reasons that remain unclear. Remember that ASC is currently undergoing a complete review of the process that makes changes to USPAP.

TAF’s response was, “if you fund it, you’ll own it.” This once again shows that this bureaucracy is solely focused on money and not the profession they were authorized to serve.

Shouldn’t the IRS look into TAF’s outlier behavior as a not-for-profit? They have strayed from their mission. How can this go unnoticed by Congress, who intended TAF’s oversight to be enabled by the “strings attached” to the grants?

[click on image to see the full draft of their plan]

TAF confuses what needs to be emphasized in the profession – they are emphasizing using the term diversity differently than what is the issue at hand in the industry: proper minority representation on their boards that they are delaying until 2030 versus diversity of their revenue streams to make more money and avoid any oversight.

And one more on TAF’s confusion of terminology: They are trying to market “independence” as a strength, when in fact their “independence” is disrespectful to appraisers in the profession. USPAP should be free and is an available option being offered by the ASC. But because TAF has never been about the industry, and always about money, they desperately need USPAP to remove any real oversight because free USPAP means grant money, and grant money requires accountability.

TAF’s congressional authorization is to set standards and qualifications, not to be financially independent. And remember’s TAF’s interpretation of financial independence means NO OVERSIGHT.

Notice to the ASC: Consider what I have presented here and TAF’s bat-shit crazy letter to ASC – We are now at the point where TAF Is Openly Touting Going Rogue.

PAVE/PAREA Is Now Front And Center In The Appraisal Industry With Potential Conflicts For TAF

From Dave Bunton’s presentation, it sounded like the Appraisal Institute is receiving a no-bid $500,000 grant from TAF to develop a PAREA module – I don’t believe other applications were considered. They are partnering with the National Society of REA and I hear AI is expecting a have a product by 2023.

Remember that TAF resisted PAREA despite creating the concept – they thought it would cost too much money.

This creates a challenge for AQB since there are no specific PAREA criteria developed that the public is aware of. There is certainly a general outline developed to which AI’s application complied with conceptually, but compliance with that outline is not a requirement.

I am aware of a number of other PAREA modules under development out there right now that are expected to be finalized in early 2022, a year before AI. With AI’s favored nation status with TAF in the no-bid award, it will be incumbent on the AQB to apply the same standards for approval as they ultimately will for AI.

It’s quite a confusing PAREA landscape. Despite Bunton’s comments, there is a massive void in understanding PAREA by the states. Developers of PAREA modules have had to educate the states on PAREA.

This is how the states break out:

– 12 states are “by reference” in that they automatically approve whatever TAF approves.
– 8 additional states have approved PAREA
– 1 state (PA) is approving it but giving it less credit than mentoring – this is quite dumb because PA is therefore not solving the actual problem with the entry process into the profession.
– The remainder of the states have either no idea what PAREA is or haven’t looked at it.

If TAF had been a “traveling roadshow” early on to educate the states, PAREA would likely be widely adopted already.

Ask yourself this question. How does TAF serve the appraisal community?

The USPAP Exposure Draft Process Continues To Step Outside Their Purpose With Her/Him as the new ‘Misleading’ Debacle

The general idea of definitions added to USPAP was supposed to be industry-specific nomenclature. Because ASB doesn’t have policy writers nor does legal counsel review their work, we get a lot of garbage embedded into the document. And then it often gets removed because it was never correct, to begin with. This garbage in/out process is by design. There is no incentive for the technical boards (AQB, ASB) to get it right. This way USPAP can continue to be arbitrarily updated every two years so that TAF can be “financially independent” by charging appraisers for USPAP when it could be free.

And now we get another exposure draft with another one close behind.

Those process missteps to create ridiculous definitions should be looked at closely. It’s a disservice to appraisers nationwide. “Misleading” was particularly egregious.

Unbelievably, does the definition of ‘Appraiser’ really need to be modified?

And now USPAP is wading into definitions of ‘His’ and ‘Her’ which begs the question, what does this have to do with USPAP?

Good grief.

Again, this silly exposure draft process is being maintained to keep the cash flowing into TAF from the hard-working appraisers they are supposed to represent. It’s all about money and avoiding accountability.

The 1,500: TAF’s Total Dereliction of Duty on PAREA

TAF tried to kill PAREA when they thought the cost would be too high for them to lead, and now they continue to tout that there are 1,500 on the waiting list to use the first PAREA module developed. Dave has mentioned the 1,500 in the last two webinars I’ve listened to and the Chairman of BOT mentioned it yesterday.

They seem to be bragging about the 1,500 like it’s a sign of strength and enthusiasm when all it shows is a lack of self-awareness and extreme dereliction of duty.

They’ve been slow-walking PAREA, trying to kill it or let it die a slow death for the past year or so. This list – if real – shows the pent-up demand of wanna-be appraisers that want to get into the profession, stopped by the mentor system. Here’s a reminder for anti-PAREA advocates which include some of my friends – lawyers don’t have a two-year mentoring system and don’t suffer the same extreme lack of diversity that the appraisal profession does. PAREA doesn’t replace mentoring, it’s just an alternative path into the profession.

The TAF Monarchy Under Dave Bunton

This TAF BOT meeting yesterday really made it painfully clear that TAF is a monarchy run by Dave Bunton. That meeting made it painfully obvious that TAF is broken and is the reason why I have devoted an unusually large amount of writing about TAF in this week’s Appraiserville.

– It seems clear to me that TAF leadership is now being coached by someone in PR to be happy and upbeat in their public appearances after being destroyed by industry opinion in the past two years. It feels like we’re watching ‘Romper Room.’
– The technical board members (AQB, ASB) are FOD’s (Friends of Dave Bunton), and can’t wait to modify USPAP even more, now matter how silly or wrong the changes are. They are there to perpetuate the USPAP two year changes come hell or high water for an industry that actually changes at glacial speeds.
– The silence of the BOT members was overwhelming on the call – no one felt free to speak up because if they do, they are likely stripped of new potential opportunities. This overlord state of board management is blatantly obvious.
– Every single vote was unanimous (excluding those abstaining) which seems impossible to me unless likeminded people are being selected or board members are afraid to contrarian to Dave’s views.

Every vote result looked just like this:

OFT (One Final Thought)

An incredibly fun and upbeat 2 minutes to send you to your weekend.

Brilliant Idea #1

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Brilliant Idea #2

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Jonathan J. Miller, CRE®, CRP, Member of RAC
Miller Samuel Inc.
Real Estate Appraisers & Consultants
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