The Housing Market Is Like [Insert Analogy]

Over the past month, mortgage rates have slowly risen as the economy remains stubbornly like a rocket ship. As a baseline, low unemployment and higher wages are like a good foundation for a new house except for rising mortgage rates, which is the opposite of the smaller size trend of new homes to enable buyers to grapple with falling affordability since finding a listing is like finding a needle in a haystack while waiting for Fed rate cuts will be like finding a pot of gold (home sales) at the end of the rainbow. [cough]

We’re learning that it’s a higher-for-longer world for rates, and that’s OK. That’s why we can’t take analogies for granted; they can turn into pop-tarts.

Did you miss last Friday’s Housing Notes?

March 8, 2024: Like The Housing Market, No One Should Put Ketchup On A Hot Dog

NYC Rental Market Didn’t Get The Memo As Price Trends Press Higher

You’ve probably heard this saying before…three data points make a trend…until it ends.

I’ve been the author of the Elliman Report series for Douglas Elliman Real Estate since 1994. Our NYC monthly rental report series has received a lot of attention, beginning in the pandemic era and continuing today, since the results are so quick to respond to pivots in economic conditions.

Bloomberg covered the report’s results; Manhattan Apartment Rents Climb During Busy February for Leasing, made even more clear with a chart:

But there was a lot of additional solid coverage worth checking out:

Elliman Report: February 2024 Manhattan, Brooklyn & Queens Rentals


“Median rent and rental price per square foot unexpectedly increased to the highest for a February on record.”

  • – Median rent rose annually to the highest February on record
  • – New lease signings surged year over year to the third-highest February on record
  • – Listing inventory expanded annually for the sixth straight month
  • – Doorman median rent continued to expand annually as non-doorman median rent fell
  • – Median rent for new development increased year over year for the third time in four months
  • – Luxury price per square foot year slipped annually for the first time in four months
  • – Luxury listing inventory rose year over year for the sixth time
  • – Luxury entry threshold declined year over year for the fifth time


“Median rent and rental price per square foot unexpectedly increased to the highest for a February on record.”

  • – Median rent rose annually for the third time in four months
  • – New lease signings increased year over year to the second-highest on record
  • – Listing inventory increased annually for the fifth time in six months


“Median rent unexpectedly increased to the highest for a February on record as new lease signings set an all-time high.”

  • – Median rent was unchanged annually and rose monthly for the second time in three months
  • – New lease signings increased year over year to the highest level on record
  • – Listing inventory increased annually for the fifth time in six months

NYC Comptroller Report On Apartment Vacancies – Not As Many As You Think

Accurately Assessing and Effectively Addressing Vacancies in NYC’s Rent Stabilized Housing Stock [NYC Comptroller]

Here are some of the key findings:

  • The COVID-19 pandemic caused a significant one-year bump in rental vacancies from 2020 to 2021. However, vacancies have now plunged to their lowest rate ever.
  • The vacancy rate among rent stabilized apartments in NYC is even lower than the vacancy rate for all rental units, declining from 4.57% in the 2021 HVS to 0.98% in the 2023 HVS.
  • Between 2021 and 2023, there was a significant decline in the number of units that are vacant but not available to rent for any reason (e.g. held for occasional use, awaiting or undergoing renovation, legal dispute). This universe is much smaller for rent stabilized units than for all rentals:
  • The number of rent stabilized units in NYC that are vacant but not available for rent for any reason declined from 42,860 in 2021 to 26,310 in 2023.
  • The number of rent stabilized units deemed dilapidated or otherwise uninhabitable declined from 11,500 in 2021 to just over 3,000 units in 2023.
  • For rent-stabilized buildings, the rate of sales and the value per unit have recovered from the pandemic dip in 2020, and both have returned to levels similar to before the passage of the HSTPA in 2019.
  • This report finds no evidence that the HSTPA led to an increase in vacancies, or distress on the city’s rent stabilized housing. The proposal for the re-introduction of vacancy decontrol is a dramatic overreaction.
  • There are likely fewer than 2,000 vacant apartments that rent for less than $1,500 each month and have been held off the market due to an owners’ inability to make repairs. For this small universe of units, a targeted approach is warranted to return them stable occupancy.

New Signed Contracts In Hamptons Surge in February

The return of new inventory is enhancing the sales market out east on Long Island.

Elliman Report: February 2024 New York New Signed Contracts

Owners brought 116 single-family homes to the market last month, 51% more than in the previous February, data from Elliman and appraiser Miller Samuel Inc. show. 


New signed contracts and new listings grew significantly in the luxury enclave in February after months of only marginal gains, according to Miller Samuel’s monthly report for Douglas Elliman. 

The Real Deal

Elliman Report: Q4-2023 Hamptons Sales

“Most people that are selling are staying out here,” Bourgard said. “They want to upgrade or to downsize. But when inventory was low, they’d say ‘I want to sell but we have nowhere to go.’ Now, they’re beginning to see inventory to move into.”

Todd Bourgard, Douglas Elliman

Expect To See Plunge In NAR Membership Now That It’s No Longer “Required”

Here’s a real estate trade rag I just discovered, and I’m really enjoying it – Real Estate News. They saw my shrinking NAR comments in a prior edition of Housing Notes and interviewed me: Will NAR ‘become a shadow of its current self’ in 2 years? 

Yes, I think so, but perhaps it may take a little longer than that. And think about the lack of services that could be cut, like research and lobbying power that may be lost (although they haven’t had a good lobbying record in at least seven years despite the size of their war chest, second only to the Better Business Borough!)

NAR’s Chief Economist, Lawrence Yun, was surprised to only see a 2% YOY drop in membership – he was expecting 10%.

1000WATT Tells Us What A Buyer Service Menu Will Look Like Post-“Buyers Agent” Class Actions

I was permitted to share 1000WATT Brian Boero’s take about a new Fed research study and the buyers-broker situation when the dust settles on all the buy-side commission litigation that began in Missouri last fall. And litigation risk for brokerage firms continues to expand.

Commissions: Case closed – March 11. 2024 – Brian Boero, 1000WATT

The Federal Reserve Bank of Richmond issued a research paper claiming that real estate commissions are too high and that the prevalent compensation structure “…may lead to elevated home prices, overused agent services, and prolonged home searches.”   

If you want proof, here you go:

See? Case closed. 

The authors conclude that a menu of services would be a better model because it would “…allow buyers to shop for each service they need and bargain for the price.” 

We thought we’d get ahead of this and put together the menu:


  • Give me the confidence to do something scary and life-changing.
  • Ask and find answers for the things I don’t know to ask.
  • Tell me what is and is not a problem with the house I want to buy. 
  • Use data and knowledge born from experience to help me know what is enough to offer, and what is too much.
  • Protect my money from a listing agent obligated to get as much of it for their client as they can. 
  • Leverage your relationships with everyone from house cleaners to loan officers to make sure I get everything I need. 
  • Help me not screw it up and end up bankrupt, divorced, or consumed with regret. 

Surely, homebuyers will want the cheapest-as-possible version of these things. But to be totally honest, most should probably just use the listing agent anyway. Because that’s how they do it in Denmark.


Miami Leads Nation In Equity Gains As Borrowers Netted $63,200 YOY In Q4-2023.

According to Corelogic, the number of homes with underwater mortgages fell 15% annually. Texas was the only state to go negative, and Miami led the country in home equity gains.

The Perfect Housing Era

I need that green sports coat.

Here’s An Office To Residential Conversion – Let’s Understand How It Worked

This is great for the city! How did they defy financial gravity to make the numbers pencil in?

Getting Graphic

Favorite housing market charts of the week of our OWN making

Favorite housing market/economic charts of the week made by OTHERS

Apollo’s Torsten Slok‘s amazingly clear charts

Kastle card swipe data

Remember that Kastle charts are overstating occupancy* because their pre-pandemic occupancy benchmark was 100%, which is incorrect (*measures card swipe activity as a proxy for occupancy). Still, they’ve become the standard benchmark for occupancy rates.

Legal leasing trends

Favorite RANDOM charts of the week made by others


A New ‘Voice Of Appraisal’ Podcast Will Be Out Monday Covering What TAF’s Lyin’ Dave Does…Often

For the uninitiated, TAF is the organization that wrote the bat-shit crazy letter, the chickenshit letter, and is the subject of an active investigation by HUD on whether USPAP promotes a lack of diversity in the appraisal profession (400th out of 400 occupations, according to BLS in 2021). As a reminder, TAF president Dave Bunton called me a liar in a public forum in Washington, D.C., as he was lying (luckily, not under oath) – hence his new nickname “Lyin’ Dave,” a.k.a. “LD.”

Phil Crawford of Voice of Appraisal is dropping a new show this Monday, so get ready. Here’s the intro with key snippets from CFPB Head, Chopra, and Lyin’ Dave of TAF: “Often.”

Cosmic Cobra Guy Gives Kudos To Phil Crawford For Identifying GSE Appraisal Waivers As Data Cancer

Let’s make the term “data cancer” commonplace, especially how it is created with GSE data waivers.

Contact: Jeremy Bagott, MAI, AI-GRS
Tel: 805-794-0555




VENTURA, Calif. (March 8, 2024) – From March 2020 through 2023, mortgage giants Fannie Mae and Freddie Mac caused massive housing inflation. So contends Cincinnati-based appraiser and podcaster Phil Crawford. A March report by the credit-ratings firm Fitch now seems to back him up.

Ninety-one percent of homes in America are overvalued, reported Fitch, which estimates national home prices were 11.1% overvalued on average as of the close of the third quarter. Most distorted, reports the agency, is housing in Winston-Salem, North Carolina; Memphis, Tennessee; and the Rio Grande Valley in Texas.

Crawford lays the mess at the feet of Freddie and Fannie. Both have been in federal conservatorship since the 2007-2008 financial crisis. He believes he has pinpointed the start of the housing inflation to the day – March 5, 2020 – when the government-sponsored twins began allowing appraisal waivers for purchase transactions on a massive scale. They later replaced the term “appraisal waiver” with something more palatable to the investors who purchase the twins’ mortgage-backed securities: “Value Acceptance.”

In 2022, the public got a small glimpse into what Fannie and Freddie were promoting when dozens of loan officers at Wells Fargo were found to have altered values in the bank’s database, so loans would qualify for appraisal waivers, according to reporting from Business Insider. The mortgages, based on the chicanery, were then able to be sold to the twins.

Months earlier, the American Enterprise Institute had warned of potential manipulation of appraisal waivers. Researchers Edward Pinto and Tobias Peter believed commissioned loan officers would rely on Zillow and Redfin and then play Freddie and Fannie against one another. Their warning proved prescient.

“Housing affordability is out of control,” said Crawford, who worries about the systemic risk the twins are quietly loading into the wider U.S. economy. “All of these bonds, all of these structured investment vehicles, back up the American currency.”

First-time homebuyers made up an all-time high 47% of all purchase mortgages backed by the government-sponsored enterprises in 2023, Intercontinental Exchange reported. With downpayment assistance programs and appraisal-free contract prices, many of these first-time home buyers went underwater immediately in 2023.

“Appraisers are the natural speed bump in the lending ecosphere,” said Crawford. “They took [them] away and they caused massive, massive housing inflation.”

For each appraisal-free purchase, a potentially inflated comparable is generated. That sale, along with millions like it, are then used to support new, ever-more inflated derivative sales as new transactions – now based on inflated comparables – occur again without an appraisal, says Crawford. This derivative data is repeatedly recycled through algorithms at Fannie and Freddie, something Crawford calls “data cancer.”

While it’s true each transaction is negotiated by a buyer and seller, invisible business partners in the room are Freddie and Fannie, and the mortgage lenders who sell mortgages to them. By scrapping appraisal requirements, the mortgage giants signal to the parties they are willing to entertain inflated values of the collateral that secures the mortgages they purchase or guarantee, and, thus, higher sale prices.

Waived appraisals have also allowed predatory closing costs to be hidden in inflated contract prices as sellers try to recoup concessions paid on behalf of cash-strapped buyers. Appraisers are required to adjust out atypical concessions in their valuations.

“Often, agents attempt to have the seller pay for the buyer’s closing costs, which inflates the true market value of the property being appraised,” said appraiser Richard Hagar, who has taught classes on real estate, mortgage, and appraisal fraud to law enforcement officials since 2004.

While at Fannie in 2015, Brian Jarrard, a former subject-matter expert in collateral valuations, was involved in a special project to examine a sample of closing statements and determine the degree to which fraudulent fees were being amortized into 30-year mortgages bought or backstopped by Fannie. He described the closing costs he analyzed as “all over the place.” One can only conclude that junk costs being incurred – and amortized – by inexperienced borrowers with the twins’ blessing has only gotten worse with appraisals being waived.

Besides waiving appraisals, in 2022, the Biden administration ordered Freddie and Fannie to develop housing “equity” plans. The twins are now permitted to give borrowers money for down payments, provide lower interest rates for buyers with bad credit and hand out free money to homeowners for home repairs and to substitute for “disruptions to income.” This, too, has had an inflationary effect on home prices.

Under the Biden administration, Fannie and Freddie have been pushing to eliminate critical checks and balances in a radical experiment with U.S. taxpayers’ money and the U.S. economy. The twins began scrapping or weakening long-accepted underwriting safeguards like standard FICO scoring, title insurancemortgage insurance, downpayments and appraisals. In 2008, Americans bailed out the mortgage giants to the tune of nearly $200 billion.
 # # #
Jeremy Bagott is a real estate appraiser and former newspaperman. His most recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its essence. This pithy guide to the upheaval includes essays, chronologies, roundups and key lists, weaving together the stories of the politics-infused Freddie and Fannie; the doomed Wall Street investment banks Lehman and Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the mayhem caused by the shadowy nonbank lenders; and the massive government bailouts. It provides a rapid-fire succession of “ah-hah” moments as it lays out the meltdown, convulsion by convulsion.
 # # #
If you’d like to be on this mailing list but at a different email address, please go to the sign-up page here.-END-

White Paper To Combat Appraisal Bias Just Updated

Before we get into Craig’s white paper, let’s look at a January blog post by FHFA, the regulatory body of the GSEs, on time adjustments. It must be interpreted that banks prevent appraisers from making time adjustments as much as needed. More on that later.

During much of the analysis period, appraisers time adjusted fewer than 10 percent of comparable sales. Even during the rapid price increases of 2021, time adjustment frequency rose only to about 25 percent. While adjustments are not necessarily expected in every case, these rates seem to be considerably lower than local price growth would warrant, as discussed in the next section.

FHFA Blog Post

In February, my friend and colleague Craig Gilbert endeavored to author a white paper on reducing appraisal bias, which sourced a blog post by FHFA: Underutilization of Appraisal Time Adjustments. This FHFA post seems like the inspiration for Craig’s white paper. His effort provides a possible technical solution to value disparity, a key source of appraisal bias complaints. I’d also like to see this use of time adjustments help limit borrowers’ ability to assume that the “high” appraisal is always right, etc.

One of my observations is that the GSEs tend to think they can automate their way out of conscious and unconscious appraisal bias because they believe technology (made by humans) does not contain bias. So, they also believe automating the appraisal industry will remove bias. This is why Lyle Radke, the chief appraiser for Fannie Mae, wants to convert appraisers to property data collectors and for the appraisal industry to leave the analysis to the GSEs automation. But that’s a silly assumption and will be part of the story about their creating data cancer. Humans carry bias with them and humans build technology, therefore technology is embedded with bias. Just look at this Bloomberg bias analysis of resumes by ChatGPT, a popular generative artificial intelligence tool.

The reality of the appraisal world is that most lenders I have dealt with in my career are massively resistant to appraisers making time adjustments. Suppose an appraiser frequently includes time adjustments in their reports. When they do, the lender often overwhelms the appraiser with addendum requests, phone calls, policy reminders, or the sudden disappearance of future work (the latter is most common). However, even with Craig’s solution, the GSEs must enforce the practice of using time adjustments to ensure that the appraiser will not be punished. I don’t think we can confirm that this proposed GSE enforcement would eliminate all bias cases, but it looks like low-hanging fruit and a sane place to start.

OFT (One Final Thought)

Since yesterday was National Pie Day (3.14), and I have a hard time remembering people’s names, I thought it was important to share this.

Brilliant Idea #1

If you need something rock solid in your life – particularly on Friday afternoons at 2:00 PM, Eastern Time (ET) – and someone forwarded this to you, you can 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 use an analogy;
– You’ll use a metaphor;
– And I’ll memorize the first 12 digits of pie is like having a slice of pie.

Brilliant Idea #2

As a reader of Housing Notes, you’re full of insights and ideas. Consider sharing them with me early and often. I appreciate every email I receive, as it helps me craft future Housing Notes.

See you next week!

Jonathan J. Miller, CRE®, Member of RAC
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller

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