Hip Hop Housing In The Dog House

April 24, 2020

Quarantine time has given us and our pets the opportunity to master some new skills. And not because I’m some sort of quoted source on pet-friendly real estate or track data on the topic of pets in housing.

But I digress…

Manhattan Listing Inventory Is Listing In The Spring

If you want to see empirical evidence that the market is not performing as we would expect in the spring, this is it. Listing inventory rises at the beginning of each year in anticipation of additional demand in the spring.

Not this year.

A Strong First Quarter In The Hamptons Until The ‘The Rona’ Paused It

I’ve been writing the expanding Elliman Report Series since 1994 and this week Douglas Elliman published our research for The Hamptons, The North Fork, and Long Island.

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HAMPTONS HIGHLIGHTS

Elliman Report: The Hamptons Q1-2020

“After noticeably stronger results in the first two and a half months, listing inventory growth slowed as market awareness of Coronavirus occurred in mid-March.”

– Listing inventory fell sharply year over year for the second straight quarter
– The number of sales rose sharply from the year ago quarter for the second straight time
– Median sales price rose annually for the second time in three quarters
– Largest listing discount in eight and a half years

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NORTH FORK HIGHLIGHTS

Elliman Report: The North Fork Q1-2020

“After noticeably stronger results in the first two and a half months, listing inventory growth slowed as market awareness of Coronavirus occurred in mid-March.”

– Listing inventory fell sharply year over year for the first time in six quarters
– The number of sales increased annually for the second straight quarter
– Median sales price increased year over year for the tenth time in twelve quarters
– Marketing time and negotiability compressed from year-ago levels

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LONG ISLAND HIGHLIGHTS

Elliman Report: Long Island

“After noticeably stronger results in the first two and a half months, listing inventory growth slowed as market awareness of Coronavirus occurred in mid-March.”

– List inventory fell to the second straight quarterly record low
– Number of sales increased annually for the sixth time in seven quarters
– The median sales price has not seen a year over year decline in seven years
– Condo listing inventory fell to a new record low in eleven years of tracking
– Single family listing inventory saw a record year over year decline in twelve years of tracking to a record low
– Luxury listing inventory declined year over year for the first time in nine quarters

Many Buyers, Sellers in Housing Holding Pattern

Here’s a clip from Bloomberg Radio on the state of the housing market:

Overemphasizing Population Density As The Cause Of The Covid-19 Crisis

This tweet got me thinking about this topic:

As cities will undoubtedly face renewed housing competition from their suburban counterparts when we get to the other side of the crisis, there seems to be a distorted assumption that the high rate of infection in cities is the exclusive purview of high population density (which is the secret sauce that makes a city so great).

Yet that’s not quite fair and will likely be rethought as we review this crisis in the rearview mirror down the road. As the great read in Vice describes:

If past actions predict future results, cities are in trouble. In terms of containing the virus to begin with, New York City was days late to shutting down schools and issuing stay-at-home orders compared to other American cities with better outcomes, days that researchers are increasingly identifying as critical in the virus’s spread. And, thanks in large part to profound failures on the federal level, Americans simply cannot access accurate coronavirus testing, dooming us to languid and troublesome returns to normalcy.

As Henry Grabar in his Slate piece said:

A cursory look at a map shows that New York City’s coronavirus cases aren’t correlated with neighborhood density at all. Staten Island, the city’s least crowded borough, has the highest positive test rate of the five boroughs. Manhattan, the city’s densest borough, has its lowest.

Nor are deaths correlated with public transit use. The epidemic began in the city’s northern suburbs. The city’s per capita fatalities are identical to those in neighboring Nassau County, home of Levittown, a typical suburban county with a household income twice that of New York City.

True, New York City apartments are crowded. The share of housing units with more than one occupant per room is almost 10 percent. But that number is 13 percent in the city of Los Angeles. As a metro area, New York isn’t even in the top 15 U.S. cities for overcrowding. It’s not even the American city with the most apartments per capita (Miami) or immigrants (also Miami), to take two other characteristics that critics say might be associated with coronavirus infections.


[click on image for supporting research]

Aren’t Banks Doing What They’re Supposed To?

More than a decade ago when the housing/credit bubble burst the focus on exiting the financial crisis was to bail out the banking industry. They were essentially insolvent and by not forcing them to “mark to market” their asset values to their new lows which would force them to declare insolvency, they survived. Banks had become reckless and in the eyes of the government and needed to be bailed out or the global economy would collapse and caveman days would return.

My friend and zen-goddess of the housing data vertical Ivy Zelman of Zelman & Associates paraphrased a quote by Howard Marks: “Capitalism without loss is like being Catholic without hell.”

However, my thinking here is that the federal government is expecting healthy banks to take a bullet for the economy and the banks show little appetite for suicide.

Going into this downturn, banks were in relatively good shape and the government is leaning on them to facilitate saving small businesses and independent contractors. But the banks are not being reckless as I would assume the federal government wanted them to be in order to save the economy. Yes, the $350 billion dollar stimulus showed how the payouts were skewed to larger businesses and existing customers of the banks, but that’s how the legislation was written. There is another batch of money for SBA that was just put into law that hopefully will fix and redirect emphasis towards small business.

But the banks are doing what they didn’t do in the prior crisis, focus on risk management.

That’s because the banks are concerned about self-preservation and likely do not trust the word of the federal government in the execution of new rules to enable trillions of funds to be distributed to individuals and small businesses. Here’s a great summary by the Urban Institute.

In other words, the credit box is shrinking.

– Mortgage rates are low but higher than pre-covid-19 despite the 1.5% fed funds rate drop
– Credit score requirements are higher
– Loan-to-value ratios are lower
– Forbearance periods are followed up by immediate repayment
– 20% down on jumbos is commonplace

These institutions are demonstrating that they are fully aware of the risk and won’t be the backstop on the crisis – the federal government will be forced to take the lead. So much for hell.

Noble Black on NBC: “last-minute discounts becoming more common”

Here’s a clear, logical depiction of the current state of high-end real estate from my friend and top broker Noble Black.

The Rubin Special: Josh Rubin Interviews Jonathan Miller

About 6 months ago, my Facebook account switched to require double authentication somehow but didn’t text by code for access. I tried for months to work with Facebook to regain access and they were remarkably unresponsive so I gave up and feel better about life in general as a result.

When my friend Josh Rubin reached out, one of the top-producers at Douglas Elliman Real Estate, he said we can do his Facebook Live event as a Zoom call into Facebook. I’m not sure how all of this works, but at least both of us confirmed we were at wearing pants for the discussion.

Check it out:


[click on image for the interview or play on YouTube link below]

The Los Angeles area and Aspen/Snowmass Village Markets Were Looking Good Before Covid-19

The story on these market reports tell us that the first 2.5 months were relatively robust and the last two weeks of the quarter were not.

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GREATER LOS ANGELES INCLUDING WESTSIDE AND DOWNTOWN SALES HIGHLIGHTS

Elliman Report: Los Angeles Q1-2020

“After noticeably stronger results in the first two and a half months, listing inventory growth slowed as market awareness of Coronavirus occurred in mid-March.”

– Listing inventory declined year over year for the second straight quarter by the largest amount in five years
– All price trend indicators rose year over year for the fourth consecutive quarter
– The number of sales rose year over year for the second consecutive quarter after six quarters of declines
– More than one-third of all listings sold within a month
– Luxury listing inventory for condos and single-families fell year over year in three of the past four quarters

MALIBU/MALIBU BEACH

Elliman Report: Malibu/Malibu Beach Q1-2020

– Single-family sales rose sharply year over year as condo sales declined

VENICE/MAR VISTA

Elliman Report: Venice/Mar Vista Q1-2020

– Venice sales surged across property types as Mar Vista sales fell short of prior year totals

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ASPEN SALES HIGHLIGHTS

Elliman Report: Aspen/Snowmass Village Q1-2020

“After noticeably stronger results in the first two and a half months, listing inventory growth slowed as market awareness of Coronavirus occurred in mid-March.”

– Listing inventory declined year over year for the fourth consecutive quarter
– All price trend indicators surged over year-ago levels
– Sales fell sharply year over year to the lowest quarterly total in a decade
– The listing discount rose to its highest level since 2011 as sellers had to travel farther on price to meet the buyer
– Both condo and single-family listing inventory declined annually for the fourth straight quarter
– Luxury price trends surged while luxury inventory fell sharply year over year for the second straight quarter

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SNOWMASS VILLAGE SALES HIGHLIGHTS

Elliman Report: Aspen/Snowmass Village Q1-2020

“After noticeably stronger results in the first two and a half months, listing inventory growth slowed as market awareness of Coronavirus occurred in mid-March.”

– Listing inventory declined year over year for the fifth consecutive quarter
– Average price per square foot declined while the number of sales surged year over year
– The 3-bedroom market showed the most annual growth in price and sales trends
– Luxury price trends and listing inventory declined from year-ago levels

Getting Graphic

Len Kiefer‘s Chart Handiwork

This week, his charts are all about Fed Beige Book terminology:

Appraiserville

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

COVID-19 Line of Demarcation Is From Hanks To Banks

In order to understand what is happening now, we need to ween ourselves off of what happened before this crisis and focus on finding data exclusive to the post-COVID-19 era. In Manhattan, that data set is not yet apparent because we are in nearly a total market shut down but it is evident elsewhere to a limited degree. From my perspective, the demarcation line for the onset of the crisis is where market participants would have to be living in a cave on a desert island to be unaware of the sharp pivot in market sentiment.

For me, that date is March 15th which was the date of the Federal Reserve rate cut to zero and the second cut in less than two weeks.

My friend and California appraiser Ryan Lundquist proclaimed March 11th which was the date Tom Hanks announced he and his wife had contracted COVID-19.

I was talking about this difference in these dates with a friend, Chicagoan, and RAC appraiser Michael Hobbs who brilliantly dubbed this four-day window from March 11 to March 15 as: “From Hanks To Banks.”

Whatever your specific local demarcation line is, use it to keep the data for these two market periods separate.

OFT (One Final Thought)

I’m hopeful that society is able to get back into other’s personal spaces when we get to the other side of the Coronavirus crisis. There is a lot of inspiration coming from our first responders, and workers on the front line that have no choice. This cover says it all.

Brilliant Idea #1

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– They’ll rap;
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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 next week’s Housing Note.

See you next week.

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

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