Can Housing Lightening Strike Twice?

But I digress…

Fall 2018 Elliman Magazine – Market Update

The Fall 2018 Issue of Elliman Magazine was just released and as usual, I provided a two-page spread showing interesting (my definition, lol) of what is going on in some of the markets under their national footprint. The magazine is well done and a fun aspirational read.

[click to expand]

Here’s the full online version of the magazine:

Ritholtz: Anatomy of a Crash

Since it has now been a decade since the financial crisis and the Lehman collapse, there has been a lot of retrospectives of that era – to which I contend we are still in the “hangover” phase, with unusually low-interest rates and distorted credit conditions. I call it the “Lehman Moment” not because Lehman caused the financial crisis, but because it marked the moment where the full scope of the crisis finally became very visceral to the consumer.

How so, you might ask? From that moment through the end of 2008, Manhattan sales contracts fell about 75%, that’s how.

When I saw my friend Barry’s insanely direct quip about this period in history…

$LEH was merely the first trailer in the trailer park to be destroyed by the tornado

…so I thought I’d share one of my favorite graphics from his must-read “The Big Picture Blog” in 2009: 7 Factors That Led to Crisis

Leaning Tower of San Francisco and that New (Cracked) Addition

It has been a while since I wrote about this unfortunate situation in San Francisco (h/t @sacappraiser)

New crack found at San Francisco’s sinking Millennium Tower

This 58-story building built in 2009 has settled 16 inches over the past two years and continues to tilt! And residents heard a loud creaking and popping noises on Tuesday as a crack appeared on the 36th floor. Unsettling and it sounds like it is going to be in litigation for years.

[San Francisco Magazine]

Here is the problem with price estimators like Redfin, Zillow, Trulia, and, is they are blind to things like whether a building has sunk 16 inches in the past year.

For example, Redfin says that unit 502 at 301 Mission Street (Millennium Tower) closed May 14, 2012, for $1,875,000. It came on the market in 2016 and then was removed after a few price changes.

But it is worth $907,000 more today than in 2012 (or whenever the contract was signed since 2009) even though the building has sunk 16 inches?

Something to consider if you misuse, and these companies misrepresent their accuracy of these valuation tools. At best case, they are macro looks but the consumer has no idea whether they are accurate or not.

Millennials Less Positive About Homeownership Than Gen Z But Both Have No Money

Baby Boomers>Gen X>Millenials>Gen Z…

Data research firm PropertyShark performed a survey which I thought provided some insightful results considering my wife and I raised 3 millennials and 1 Gen Z. They covered the biggest obstacles…

to the deciding factors beyond price…

Enjoy It While You Can: Chickenwire Embedded Glass Means You Can Lose Your View At Any Time

The New York Times had a great piece on lot line windows and the photo couldnt have been better:

In the city, it is the norm to have buildings constructed directly on the lot line, unlike a typical suburban single family home. If the adjacent lot is vacant on consists of a lowrise building, underutilizing the zoning envelope, lot line windows are often installed. These windows can be seen in walkups, lowrise, and highrise buildings.

As the saying goes, “in New York City, no views are guaranteed.” If a condo unit has lot line windows and view is enabled over a vacant lot and zoning allows the same height as your unit, then I’d say you’re “window” of enjoyment is very limited. If you look over a landmarked historic structure, then you may reap the benefits during your time of occupancy. But be careful, there is no guarantee.

Lot-Line Window? Keep Your Fingers Crossed [NY Times]

Dying To Get Into The Market, Grave (versus) Housing Price Trends

I’ve always been fascinated by the economics of cemeteries.

This quirky Bloomberg story: Think Chinese Home Prices Are High? Try Buying a Grave provides the spurious correlation.

“Supply is very limited,” said Hao Hong, a chief strategist at Bocom International Holdings Co. “We’ve heard about some people who bought flats in Shanghai to store cremains instead of expensive graves.”

So many puns…

Cash Dominates The Detroit Housing Market

In lower priced housing markets such as Detroit, cash often dominates as a mechanism for purchase. The Motor City saw 87% of its purchases come in the form of cash with a median sales price of $32,428 per ATTOM (U.S. median is $234,000).

In booming markets with a distressed real estate history, cash still rules. Our research for the Elliman Report in Miami Beach and the mainland showed a 42.6% cash share, down from 53.6% three years ago. Investors prefer cash and lenders are still burnt from the housing bubble era a decade ago, despite the market’s transformation to luxury.

In high priced markets like Manhattan, our research shows a 54% cash share in 2Q18 and about a 90% cash share for purchases above $5 million (top 8% of the market).


As the industry changes, it is more important than ever for appraisers to have a longer term plan…from my friend Nathan Pyle.

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

Prophet, Not Profit

Ryan Lundquist at the must-read Sacramento Appraisal Blog served up this ditty. Be sure to read the post comments.

To conclude, there are no actual prophets. Only shills that claim to be.

A New MAI Acronym Making the Rounds For Good Reason

When I was taking an appraisal class in NYC by the Appraisal Institute back in the day, the 2 MAIs teaching the class sort of bragged that the “MAI” designation stood for:

“More Annual Income” but someone in the audience quipped: “Made as Instructed”

Those two definitions still remain in the appraiser-verse.

With the pre-determined anointment of 2x president Jim Amorin after 12 months of a bogus replacement search by the senior executive team to get their guy in to fill the vacated CEO position of the MAI (gasp), a new definition has appeared:

“More Amorin Influence”

Sadly, this move probably symbolizes the point of no return for the Appraisal Institute and there is at least anecdotal evidence that many members are looking to renew one more year and then think about leaving the organization.

Confusion about acronyms

As quoted by an MAI in Florida

MAI is not an acronym (i.e. it is not Member of Appraisal Institute). The MAI designation represents the designee is affiliated with the Appraisal Institute. The Appraisal Institute is a global organization for real estate appraisers.

I suspect most of the membership is unaware of this differentiation.

During my career, I have been told on several occasions that after the merger between American Institute of Real Estate Appraisers (AIREA) and the Society of Real Estate Appraisers (Society) in 1991, the newly formed Appraisal Institute somehow lost the ability to define “MAI” as “Member, Appraisal Institute.” I haven’t been able to cite this but I do find it strange that most older members seem to think that’s what it stands for when the Appraisal Institute web site makes no mention of it.

UPDATE Friday 9/7/18

This AI National position was just shared with me from a regular reader of Appraiserville:

The acronyms no longer worked after the merger between the American Institute and the Society back in 1991. Previously MAI meant “Member Appraisal Institute” and the SRA meant “Senior Residential Appraiser.” The board at that time decided that in the new organization those words were no longer relevant. However, they did not want to change the letters as the letters are widely recognized around the world.

The designations therefore are collective service marks, similar to IBM. (IBM faced a similar problem when the words behind the letters lost relevancy but the company did not want to give up the widely recognized IBM name.)

It doesn’t correlate with what I’ve been told, but at least AI National seems to have an official position. They might want to weave this into their website somewhere so their own membership knows this.

Here Is Why The MAI Designation Keeps Members From Criticizing The Executive Leadership

In a direct violation of FIRREA, there are local laws that require the MAI designation. With the advent of appraiser licensing, private organizations do not outweigh a licensed appraiser if all qualifications are equal. Membership has been reluctant to criticize the Appraisal Institute’s behavior because they can suspend or cancel your designation. If that economic leverage over membership did not exist, the organization would collapse. And that is a shame when it could be a leader in these uncertain valuation-related times.

Here are two examples in California:

– The City and County of San Francisco []

“Qualified Appraiser” shall mean a person who is expected to perform valuation services competently and in a manner that is independent, impartial, and objective, holds a certified general license issued by the California Bureau of Real Estate Appraisers and the designation of MAI from the Appraisal Institute, and has five or more years of recent experience appraising real estate of the same type and in the same city, county, or wider area, as applicable, as the subject Real Property.

– Port of Los Angeles (RFP for Appraisals dated 12/29/16) []

Proposed Appraiser must have a current MAI or SRPA designation from the Appraisal Institute or ASA designation from the American Society of Appraisers.

Biting The Hand That Fed You

I think many appraisers aspire to sell their firm to a larger company if they don’t have a family succession plan. But beware. The appraiser will find themselves forced to adjust the new rules and culture and some may do things they shouldn’t. The following litigation reveals the inside of a deal what looks to have some mind-blowing numbers in the valuation industry and some questionable behavior.

A well-known commercial appraiser in NYC metro, Joel Leitner, that ran a “high volume” shop, was acquired by BBG, a national firm in 2014.

This is the 2018 lawsuit.

The high dollars and actions are compelling. I can only assume that this firm needed NYC coverage very badly to legitimize their growth strategy, and based on the lawsuit result, it didn’t seem like enough for the appraiser after the fact.

If you want the short story, the judge found in favor of BBG so Leitner has to pay them $187,577.50 in claims and honor the 2 year non-compete from his April 2018 termination date. Wow.

Supreme Court of the State of New York, New York County


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