Housing Jumps The Shark

Housing conditions are definitely “Jumping The Shark,” – a phrase that came from the TV show “Happy Days” when the writers ran out of ideas.

But I digress…

Manhattan Rents Show Signs Of Plateauing

I’ve been the author of an expanding series of market reports for Douglas Elliman since 1994. One of the most frenzied followings of the results has been the monthly Elliman Report: Manhattan, Brooklyn & Queens Rentals during the pendmic era because price trajectory has been a rollercoaster you don’t really want to get on.

The Manhattan rental market:

– 2020 saw a collapse in activity and prices
– 2021 soared to parity with pre-pandemic levels
– 2022 saw an extracurricular boom beyond breakeven

In this week’s report showed that for the first time in seven months, median rent did not set a new record. August saw only the second highest rent in history.

Elliman Report: August 2022 Manhattan, Brooklyn & Queens Rentals


“The record-setting median rent streak ended in August as prices began to plateau.”

– Median rent and median net effective rent were the second-highest on record, ending a record-setting streak that began in February
– The vacancy rate edged higher month over month for the fourth straight month
– New leases rose month over month for the six consecutive month
– The market share of one-year leases exceeds 50% for the first time since February 2021
– Landlord concession market share for new developments was more than twice that of existing rentals
– Non-doorman rentals, representing roughly half the market, did not reach a record rent, unlike the doorman rental market
– The market share of bidding wars accounted for one out of five new leases
– Luxury net effective median rent rose annually to a new high as concessions fell to the third-lowest level on record
– Luxury listing inventory was essentially unchanged from the prior year and well below pre-pandemic levels


“The record-setting median rent streak continued for the fourth consecutive quarter.”

– Net effective median rent and median rent rose to new highs
– Landlord concession market share continued to slide, reaching its lowest level in five and a half years
– The market share of bidding wars accounted for one out of five new leases


[Northwest Region] “Net effective median rent reached the third-highest on record as the pace of price gains eased.”

– Median and median net effective rent fell month over month from the prior month’s records
– Landlord concession market share continued to slide year over year
– The market share of bidding wars accounted for nearly one out of four new leases

King of iBuyers, Opendoor Stumbles

Mike DelPrete, a real estate tech market strategist, shared a fascinating analysis on Opendoor. I’ve long contended that most real estate fintech firms were developed and launched in rising markets which makes them more exposed to downturns. This market is going to separate the wheat from the chaff (only comparison I could think of).

Opendoor lost money in August for the first time and yet didn’t have Zillow Offers as a competitor.

In fact they lost money on 42% of their transactions in August.

From Bloomberg

The iBuying model relies on acquiring homes, making light repairs and reselling the properties — often within a few months of the initial purchase. When home prices were skyrocketing earlier in the year, Opendoor banked easy profits. Then dwindling affordability and mortgage rates soaring toward 6% this spring finally pushed would-be buyers to the sidelines.

New Signed Contracts For August Show Slowdown

During the pandemic, we developed a monthly new signed contract report for Douglas Elliman to show the most current intersection of supply and demand. These reports were developed for four regions in the U.S. will a number of submarkets within each.

The Elliman Report: New York August 2022 New Signed Contracts
The Elliman Report: Florida August 2022 New Signed Contracts
The Elliman Report: Colorado August 2022 New Signed Contracts
The Elliman Report: California August 2022 New Signed Contracts

The following is a selection of charts from each region. To see all charts in our library, go here.

The Compass Chronicles: September 2022 Edition

A continuing saga…

If anything I’ve been consistent with my criticism of the Compass business model from way back when they were a rental company known Urban Compass. It seems to be the gift that keeps on giving and I find it hard to stop since their late stage failure is happening right in front of us in real time.

Perhaps it was the corporate comments that they were making all along that sounded out of step with the times and reminded more about things that were said during the housing bubble. Or perhaps it was the feedback from dozens of colleagues that had either worked them or been pitched to work for them who marveled at how their tools were basically the same as the company they last worked at. With resounding consistency, their feedback was “the emperor wears no clothes” that the company took a la cart software and smothed the edges out to make it work well together.

I have many friends who are brokers at Compass and I greatly admire them and their ability to sell real estate. This criticism was never about them. I have friends there that love it. But I wonder if they will continue to feel that way as more and more perks and tools are pulled from the equation. Afterall, they are valuable to real estate brokerages for their skill set. My focus is on the business model and it never added up to me.

And there’s the more than a half billion in capital as a Softbank unicorn (category killer) that enabled them to become disruptors by capital, not by innovation or design. Heck, there is a lot of disruption to be had with no pressure to make a profit. The founders had an enviable Wall Street pedigree but zero real estate industry experience. Huh. And then silly proclamations made by a place holder executive real estate agent only to be a cheerleader and recruiter just made the animosity against the firm worse.

And the weird overstaffing of technology employees while all the company seems to show for it to outsiders is a little used mobile app. I assumed they over sold the “tech angle” to get a higher valuation, beyond what a traditional brokerage would achieve, and has been reflected in their plummeting stock price since the initial IPO.

How does this end? Perhaps we are seeing their demise in slow motion. Maybe they’ll hang on indefinitely? Who knows. The firm couldn’t make a profit in the biggest housing boom in the modern era. How can it profit with falling volumes and slowing price growth? Wall Street is cooling a bit to tech so what new capital they raise will be a lot more expensive, if they can find it.

Why do I continue to harp on this company that has no impact on my professional life at all? I don’t like BS. I see this as a cautionary tale about tech and the promises tech brings to us to make our personal or professional lives better. At this point for Compass investors, going back to pencil & paper probably looks pretty good.

Compass Eliminates More Jobs as Real Estate Brokerage Seeks to Cut Costs [Bloomberg]

High Profile Compass Brokers Are Leaving for Elliman [Curbed]

Layoffs, shutdowns hit mortgage industry as high rates crush lending [Axios]

This Week in Aspirational Pricing: $250 Million For A Penthouse

There was a great WSJ piece on this: Will Someone Pay $250 Million to Live Atop the World’s Tallest Condo Tower? The Developer Thinks So.

I’ve always seen these super luxury sales as a “circus sideshow” bearing limited linkage to the local market. I think this market will continue forward regardless of the pending housing market downturn.

Breaking down Extell’s sky-high ask at Central Park Tower [The Real Deal]

Getting Graphic

My favorite charts of the week of our own making

My favorite charts of the week made by others

Upcoming Speaking Event

Thursday 9-29-22 9:00am ET IN PERSON AREAA

AREAA East Meets West Connect Conference


UpcomingPast Speaking Events

FYI (Dad joke warning) – my crystal ball is held together with duct tape.

Here’s a fun and insightful discussion done this week.

No clips from my next two webinars but I gained some great insights from these presentations that I’ll share within my own content:


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


One of the solutions proposed to solve the barrier to entry in the profession has been PAREA. PAREA was a way for appraisers to get required experience by completing case studies from anywhere instead of committing to one supervisor. As recently as three weeks ago, Dave Bunton was dazzling unknowing audiences with the thrilling success that is PAREA.

TAF has firmly embraced this as an answer to the BLS’ appraisers are 98% white number after trying to kill it before lack of diversity came to a head in conversations about our profession. Since I forgot to mention it last week, breaking my streak, TAF is the same organization that wrote the bat-shit crazy letter and the chickenshit letter.

They hired their former archnemesis, The Appraisal Institute in what appears on paper to be a quid pro quo – TAF gave AI $500K to develop a PAREA course and in return, AI would re-join TAF as a sponsor. It looks like TAF did this because they were alone, twisting in the wind during their efforts to remove any semblance of oversight from the ASC in the push to have zero oversight and complete financial independence.

TAF has tied their entire reputation to PAREA – their whole reputation. Remember that their response to the shortage of appraisals a while back was to add college requirements. They quickly realized they raised the requirements too much and then backpedaled in subsequent editions to USPAP. They conflated raising standards with reducing the need for an experience requirement. WTF.

I’m for PAREA as a way to bypass the mentoring structure of the industry but mainly I’m against the mentoring structure and want the appraisal industry to act more like the legal and accounting industry. Those industries don’t have any issues attracting new members.

One of the ways to make PARIAH PAREA more palatable is NOT to have appraisers take all the education first before instead of taking it while taking PAREA and using the two sources of information to better understand. This is like taking classes when you are training under a mentor out in the field. You get more out of the class.

More Thoughts On Past AI President Schley’s New Venture

The culture of the Appraisal Institute has gone off the rails under the leadership of Jim Amorin and his FOJs. The past 15 years are chock full of self-dealing that has been well-chronicled here. There is so much of it that it hides some of the good things that have been accomplished.

Schley has done good things for the organization and I maintain he is a good guy, but he has probably been caught up in the insider culture that has made optics of his new venture seem like the norm. A key characteristic of FOJs are that they are unaware of their optics to the outside world. In addition, they can’t speak their mind or risk losing the plum teaching assignments that Jim doles out exclusively to FOJs. This has long been an organizational takeover of a not-for-profit. For a blogger trying to right the wrong, AI provides the gift that keeps on giving because they can’t see their bad behavior. And my point to Schley is this: Even if this action is legal, it indicates a failure in understanding the necessary leadership optics of a national trade organization and that really matters during a time of intense industry upheaval.

Hence my issue with this SEC filing and the backlash by non-FOJ appraisers.

Take the SEC filing for EVOLVEX. This attempt to monetize the relationship with the valuation industry’s largest and most well-known trade group without compensating the trade group.

They are borrowing the AI brand by prominently displaying three senior executives of AI which infers AI’s endorsement. How can Schley not be aware of that? This is a reputational risk for the organization if it fails. The EVOLVEX advisory board has the two people that essentially run AI. The other issue is that Schley is the chair of the compensation committee and ultimately determines Amorin’s already bloated salary. The committee obviously doesn’t using comps of similar organizations by a “paired sales analysis” as any appraiser would or it would be a lot lower. I have dug into this in previous editions of Appraiserville within these Housing Notes.

When is an insider going to feed all this sordid history to the Illinois U.S. Attorney General so we can save the Appraisal Insitute from itself?

My Direct Apology to Aloft

Last week I made a mistake in Appraiserville and need to own up to it. I conflated two companies that share “ALOFT” in their titles. I got a call from CEO Travis Soukup of Aloft, who pointed this out, and I proposed I would set the record straight here. I mixed up AppraiserLOFT (bad) with Aloft (good).

Here is something Travis said to me in a prior email a few months ago:

We’re not an AMC and we’re not looking to replace appraisers with technology. We’re instead working hard to build an appraisal firm that empowers the appraiser to do their jobs better than ever before. We do this by giving them the support of a community of appraisers, technology that keeps them in the driver’s seat, and in-house learning and development and appraisal quality programs that are second to none. These programs have enabled us to develop the next generation of appraisers (trainees) and give them a well-rounded appraisal education paired with supervising appraisers who cares about their development.

With this vision, we’ve built an incredible team of nearly 200 people who believe in where we’re going. We’re growing rapidly even while the economy and industry decline and it’s because of the talented people from this industry and elsewhere who have joined our cause. To name just a few of the appraisers we have on our team: Heather Sullivan, Jillian White, Hansel Dobbs, Bethann DeFoe.

Travis is earnest about helping appraisers and has an impressive array of appraisers/advisors on their team. I won’t make that mistake again and I look forward to learning more!


Interesting sidebar but nothing to do with Aloft directly – last year I got an ALL CAPS disparaging diatribe on my blog post from someone I know well, an appraiser who now clearly needs counseling. I mistakenly deleted it instead of preserving it in case they do that again. This same person dropped me a note on my ALOFT mix up this week. Admittedly it is hard to take advice from a person who ironically committed telecommunication harassment (the technical term) and has a restraining order filed against them in another state. They will be arrested if they go there and would lose their license in the state they currently work in. Like I’ve always said, some of our own industry members our industry’s biggest problem. To that person directly: please seek counseling. I’m pulling for them.

Cosmic Cobra Guy Outs Fannie Mae’s Automated System Sending Unsigned Boilerplate Complaints To Boards

It has long been obvious to the appraisal world that Fannie Mae is hell bent on replacing appraisers with AVMs because apparently, they already know the “value.” Here is a thoughtful and quite damming piece by appraiser and author Jeremy Baggott (a.k.a The Cosmic Cobra Guy):




VENTURA, Calif. (Sept. 23, 2022) – “Even amidst tragedy there is sometimes farce,” wrote author Daniel Prokop.

Unleashing tragedy and farce in equal measure, mortgage giant Fannie Mae is using its muscle to coerce lenders to repurchase early Covid-era loans. Fannie apparently deems them now too risky for its portfolio. As a ploy, say observers, Fannie is generating automated appraisals similar to Zillow’s “Zestimates” and using them to undermine appraised values in loans it wants to offload.

Fannie’s automated system then sends unsigned boilerplate complaints to state appraiser licensing boards – a scorched-earth tactic that requires appraisers to sometimes spend years clearing their names in the often baseless complaints. Fannie reportedly then cites the ongoing investigations, which Fannie itself triggered, as further evidence of the need for the lender buybacks.

The complaints are said to be arriving at such velocity that some state appraiser boards are in fight-or-flight mode, having to decide whether to ignore the complaints outright or staff up to deal with them. A regulator in Ohio told one appraiser that the Ohio state board alone was receiving about 40 new complaints monthly from the mortgage giant, each one requiring a separate investigation that can last up to one year. In some cases, state officials have reportedly exploited the influx of complaints from Fannie as a pretext to featherbed.

The upshot: Appraisers are now having to spend hundreds of hours and tens of thousands of dollars apiece dealing with the fallout of these nuisance complaints, which Fannie Mae, now in federal conservatorship, is able to churn out at little cost in money and time.

Cincinnati appraiser Kristine Bertrand received a letter from her state informing her she was under investigation after Fannie Mae had sent a computer-generated complaint to her state board. It was based on her selection of comparables in an early pandemic-era desktop appraisal.

“Fannie didn’t like any of my comparable choices,” she said. “[The complaint] was very vague. It didn’t provide an alternate value. The letter contained no contact information. I wasn’t able to face my accuser.”

The state investigation into Bertrand’s appraisal began in the beginning of this year. She has since had to hire a lawyer.

One former Florida appraiser, who asked to remain anonymous as his case is ongoing, cites the sales comparables Fannie’s computerized tool asked him to consider.

“Fannie wanted me to use three comparables that were geographically closer but had different bedroom counts, different ownership structures – one was a condominium – and two were clearly inferior in condition. One backed to a strip mall and was on a busy bypass road. Also, the appraised property had a pool. None of Fannie’s comparables had pools.

“I did a complete rebuttal showing them how inappropriate the comparables were. I sent it in and thought it was the end of it. A few months later, I got a call from the Florida state board.”

The investigator with the state told him that the state had received a substantial number of these complaints but unfortunately had to investigate each one individually, he said.

Another appraiser, who also asked his name be withheld, is currently dealing with a similar complaint. He believes something more nuanced is at play. He believes Fannie Mae’s aggressive push for lenders to buy back loans is a result of lax Covid-era underwriting. Fannie, he believes, wants to rid itself of as many of these loans as possible, since they may contain legal blocks on foreclosures if they were purchased during the pandemic. By strong-arming lenders to buy back the loans, Fannie will reduce future legal and financial liabilities, said the appraiser.

To aid with this buyback push, he believes Fannie has reduced the threshold inputs in its Collateral Underwriting system – Its Zillow-like valuation algorithm – so that now there is basically a 50-50 chance an appraisal will score “low.”

Appraiser Danielle Marie Evans, who was targeted by a similarly unsigned boilerplate complaint from Fannie to her state’s licensing board, agrees. “This is a way for Fannie to secure its portfolio,” said the Tampa, Fla.-based appraiser. “After guaranteeing or buying the loan, Fannie is trying to offload risk. If there is any pretext – a grammatical error, a typo, a subjective element that its computer model disagrees with – a letter will be generated.

“This is causing massive devastation to appraisers across the country,” said Phil Crawford, an Ohio appraiser and host of the “Voice of Appraisal,” a podcast popular with appraisers. This situation with Fannie Mae is really serious. This has a very good chance to disrupt [the appraisal industry] as a whole in ways never seen before. These complaints are coming from some sort of weird internal email service within Fannie Mae and there are no signatures on them. In this country, I think you have the right to confront your accuser.”

Because many of the loans are still performing, and many of the homes collateralized in the mortgages rose in value in the housing boom of 2021 and much of 2022, Crawford believes appraisers are being convicted of a “pre-crime” – reminding him of the 2002 film “Minority Report.”

Computer modeling in valuation has proven unreliable. Last year, Zillow reported it would be shuttering its iBuying business because it had bought homes, aided by its valuation algorithms, for prices higher than it believed it could sell them. It told investors it would be writing down $304 million in value in the third quarter from its Homes segment.

One of the frequently cited causes of the 2007-2008 financial crisis was faulty automated valuation models used by S&P, Fitch and Moody’s. Their computer models assigned investment-grade ratings to junk-quality mortgage-backed securities and collateralized debt obligations. The investment-grade ratings allowed the securities to be purchased by pension funds.

“This trend is not going away,” said Evans. “The experience with Fannie Mae took two years of my life. My health was affected. The emotional toll that it took – it’s about your livelihood, your business, your license is being threatened. I had to focus on my defense. It was never a value-related issue. None of my math was wrong. A boilerplate letter generated by a computer at Fannie Mae in less than 30 seconds resulted in a two-year odyssey of financial pain and loss for me.”

She described her experience dealing with Fannie Mae as Kafkaesque.

“There’s nobody on the other end, nobody to defend yourself to, nobody to answer your questions – it’s the dead hand of a massive bureaucracy. Also, they don’t have certified appraisers review your work. That is one of the most terrifying aspects of this.”

Underscoring the nameless, faceless nature of the nuisance complaints, Bertrand has received computer-generated surveys from Fannie Mae inquiring about her customer experience. “You can’t make this up,” she said.

Said another appraiser from the Rustbelt who has been targeted by an unsigned complaint: “You feel like Fannie Mae is simply trying to get rid of appraisers. A lot of appraisers feel that way. There is a lot of value in a human that is going to the property, looking at the overall condition, the upgrades and updates to the property, providing photos of every room; a computer is not going to pick up on whether a property is next to a park or next to a landfill. It’s not going to pick up smells from a nearby steel mill or chicken poultry farm.

“[As a result of the complaints] your insurance goes up,” said the appraiser. “You have to hire an attorney, and you have to now disclose that you’re under investigation. I can’t get on panels. It’s very, very stressful and it’s very scary.”

Evans predicts that as interest rates climb, the costs to lenders to buy back loans will increase dramatically, making Fannie’s complaints more pernicious.

“I don’t think the states should be even accepting these as complaints against appraisers if there’s no signature,” said Crawford in a recent podcast. “In this case, you’re just dealing with this gigantic corporation out there saying [you] didn’t do it right and the next thing you know, you have to defend yourself against the Fannie Mae version of a ‘Zestimate.’”

# # #

Here is something you can do to push back on this scorched-earth tactic designed to offload risk at all cost, potentially ruining many appraisers and overwhelming state boards with nonsensical complaints. Fannie’s federal regulator is the Federal Housing Finance Authority. Contact its Inspector General’s Office here. Suggested responses:

Who: Unknown
What: (Paste the contents of this press release into this field or your own story if this has happened to you.)
When: See “What”
Where: Fannie Mae
How: See “What”
Why: To shed risk, gain a competitive advantage and destabilize state appraiser regulatory agencies

If you are contacted by investigators, refer them to appraiser-author Jeremy Bagott (contact information is in the press release).

Next, find your elected representative in the U.S. Congress online and copy and paste the contents of this press release into the comment field.

Finally, find your state’s appraiser regulatory agency here. Call them and press them on whether they are investigating these unsigned computer-generated complaints by Fannie Mae. If you sense they are, please forward this email to your governor’s office, your state’s attorney general’s office and your state elected representatives. Some state legislatures have occupational licensing subcommittees. If your state legislature does, this would be an ideal recipient for the press release with a note about what your state regulator is doing with these automated complaints.

# # #

Jeremy Bagott, a licensed appraiser and former newspaperman, sends up a warning flare in his 2019 book “Dispatches from the Cosmic Cobra Breeding Farm.” He takes the reader deep inside a tiny Washington, D.C., foundation that has managed to have its copyrighted code of conduct enshrined in federal and state law. All 50 states, even the U.S. territories of Guam and the Northern Mariana Islands, now enforce it. The nonprofit, known as the Appraisal Foundation, has parlayed the arrangement into a lucrative publishing cartel. In his journey, the author uncovers a troubling trend deep in the plumbing of government.

# # #

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OFT (One Final Thought)

What a song title!!! ‘Expert In A Dying Field’ by the Beths. All I could think about was “Appraising.”

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 be more shark-like;
– You’ll be more shark-like;
– And I’ll be an expert in a dying field.

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, CRP, CRE, Member of RAC
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog

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