Rapid Unscheduled Disassembly Of Housing By The $41,824,850 Man to Get Happy

It’s been a busy week for technology and housing. A rocketship (that’s what I called the 2021-2Q2022 housing boom) blew up, the Patridge Family House was demolished, and it was the 50th anniversary of the television show Six Million Dollar Man (CPI-adjusted to $41,824,850), both staples of my early teenage television time.

Pardon the tweet’s language, but I think the Lee Majors video still holds up:

And if you want to see the SpaceX Starship blow up (who doesn’t?)

Oh, and and back to the subject of houses, the Patridge Family house was just demolished (remember their song Come On Get Happy?). As I said earlier, it was a busy week.

Did you miss last week’s Housing Notes? April 21 – Tripping Housing Drama Without Dropping The Pizza

But I digress…

The Hamptons and North Fork Markets Show Near-Record Sales Lows and Record High Prices

I’ve been the author of an expanding series of market studies for U.S. real estate firm Douglas Elliman since 1994. It is a small luxury second-home market that became a little less than a second-home market and more of a “co-primary” market during the acceleration of “work from home” during the pandemic-era housing boom.

Bloomberg, among others did a nice job covering the report Hamptons Luxury-Home Prices Soar to Records Even as Sales Slow and, most importantly, created two charts! In its first 8 hours, it ranked as the 17th most-read worldwide on the 325K Bloomberg Terminals – apparently, the sharp drop in sales on the East End with record prices wasn’t as interesting as I thought it would be their readers.


Elliman Report: Q1-2023 Hamptons Sales

“Luxury market prices reached record highs as market-wide sales fell to long-term lows, constrained by lack of listing inventory.”

– The average sales price rose to the highest on record as the median sales price slipped year over year
– Listing inventory increased annually for the second consecutive quarter but remained sharply below long-term averages
– Sales fell to their lowest level in fourteen years, restrained by a severe lack of listing inventory and higher mortgage rates
– Luxury average and median sales prices reached new highs

For more, view the chart library.


Elliman Report: Q1-2023 Hamptons Sales

“Price trend indicators rose to near-record highs as sales fell to near-record lows, constrained largely by a lack of listing inventory.”

– Median and average sales prices rose to the third-highest on record
– Listing inventory increased annually for the third consecutive quarter but remained half of the pre-pandemic total
– Sales fell to their lowest level in fourteen years, restrained by a severe lack of listing inventory and higher mortgage rates
– Luxury average and median sales prices reached their second-highest levels on record

For more, view the chart library.

Hamptons Prices Outpaced Manhattan Prices During The Pandemic Housing Boom

When I was being interviewed by Robert Frank of CNBC about the findings of our latest research for Douglas Elliman on the Hamptons market when he asked about the relationship in price between the two markets, for the past several decades, the market has been “joined at the hip” by Wall Street. Still, because of “Work From Home (WFH)” the Hamptons took off during the pandemic housing boom. We created a chart using the average sales price and median price.

Long Island Housing Prices Seemed To Have Peaked

Newsday had epic coverage of our research in our Douglas Elliman report on Long Island. The coverage included a chart and placement on their front page.

The coverage of our Long Island housing market findings got knocked off the primary cover due to breaking news about a $4 billion Casino. Ugh. Still our ninth time on the cover of Newsday and I’ll take it.


Elliman Report: Q1-2023 Long Island Sales

“The median and average sales price trends showed annual stability with only minor changes.”

– Median and average sales prices showed annual stability with only nominal changes
– Listing inventory edged higher annually to the third-lowest level in nearly twenty years of tracking
– Sales remained below long-term norms, to the lowest first quarter total in eight years
– Luxury median and average sales prices showed modest annual growth
– Luxury listing inventory rose annually but remained less than half of pre-pandemic levels
– The luxury market share of bidding wars accounted for nearly one in five sales

For more, view the chart library.

FHFA Raises Fees, Insights Outrage

This reaction was the typical feedback on the FHFA decision to raise fees:

Inman News drilled a little deeper: Fannie and Freddie’s fees going up Monday despite lender objections which included their counter to the outrage that was generated from the decision:

The Federal Housing Finance Agency says risk-based fee increases are aimed at ensuring the mortgage giants’ safety and soundness, not to subsidize fee waivers for buyers of limited means

In fact, FHFA head Sandra Thompson said:

“​Higher-credit-score borrowers are not being charged more so that lower-credit-score borrowers can pay less”

FHFA seems to be saying that this is just a rise in fees, yet

Critics have also pointed out that some homebuyers putting 20 percent down when purchasing a home will pay more upfront fees than buyers making smaller down payments.

Whatever the case, this decision was made as home sales are down sharply, and mortgage costs are substantially higher than last year, place more cost burden on home buyers.

Think of this move in the context of Fannie Mae’s Lyle Radke’s inferred goal of getting rid of appraisers all together, against the stability of the mortgage system. Sure, Lyle, lets convert trained appraisers, the only neutral party in a mortgage transaction, to work for $10-$25 per mortgage as a data collector. What could go wrong?

Southern California’s Sales Fall Down To A Trickle, Constrained By Low Supply And Higher Rates

Much like the market results discussed early on the East End of Long Island, this region now sees fewer sales than just before the pandemic, but with unusually high pricing due to the chronic lack of supply.


Elliman Report: Q1-2023 Los Angeles Sales

“Low listing inventory and sales levels, as well as record or near-record pricing, characterized the market.”

– All price trend indicators rose to new highs and remained sharply above pre-pandemic levels
– Listing inventory expanded year over year for the second time and was below pre-pandemic levels
– The number of sales declined year over year for the fifth consecutive time
– Luxury price trend indicators for luxury condos surged to new highs


Elliman Report: Q1-2023 Malibu/Malibu Beach

– Malibu single family price trend indicators showed mixed annual trends, with results remaining well more than double pre-pandemic levels
– Malibu Beach single family listing inventory increased year over year for the third straight quarter but remained below pre-pandemic levels


Elliman Report: Q1-2023 Orange County Sales

“Price trend indicators slid annually along with average sales size, as more than one in four sales went to bidding wars.”

– Median sales price slipped year over year for the first time in fourteen quarters but was third-highest on record
– Sales fell annually for the seventh consecutive quarter and sharply below the first quarter decade average
– While listing inventory rose annually, it has been sliding quarterly since last spring


Elliman Report: Q1-2023 San Diego Sales

“Nearly one in three sales went to bidding wars despite overall price trend indicators slipping year over year.”

– Median sales price slipped year over year for the first time in fourteen quarters
– Sales fell annually for the seventh straight quarter and sharply below the first quarter decade average
– While listing inventory rose annually, it has been sliding quarterly since last spring

For more, view the chart library.

Getting A Better Sense Of Banking Right Now via First Republic

There is a straightforward, short take on the state of First Republic Bank today on The Journal Podcast. First Republic was one of the largest regional banks catering to the wealthy for their home mortgages (Discloser: I’ve got a First Republic mortgage). Speaking as an appraiser, they were the most professional banking client we’ve ever had.

Banking Troubles Are Not Over

[click on the image to play podcast)

Mortgage Rates in 1981

The Central Business District Commercial Office Building Narrative Is Going To Be Full Of Distress

It looks like only landlords that can negotiate market level leases are not overencumbered by debt. The market rate nationwide for CBD office leases is probably 30% to 70% lower in most markets compared to pre-pandemic levels. That’s WFH, baby.

San Francisco, once one of the most expense office markets in the country, looks dire in this WSJ piece: Fire Sale: $300 Million San Francisco Office Tower, Mostly Empty. Open to Offers.

Nearly 30% of San Francisco’s office space is vacant, which is more than seven times the rate before the pandemic hit, and the biggest increase of any major U.S. city, according to commercial real estate services firm CBRE Group Inc.

This Week in Aspirational Pricing: $170M As The New Normal

The Priciest in Palm Beach: Oceanfront Home Fetches Around $170 Million in Record Sale [WSJ]

For nearly a decade, I have counted U.S. home sales at or above the $50 million threshold. The numbers to date in 2023 seem relatively light on a total and per-month basis. What is clear in the data so far, consistent with what we observed in the high-end regional markets we cover, is that the super luxury space is seeing fewer units but is comprised of higher-priced transactions.

The average price per U.S. home sale at/above $50 million:

2022 $69,364,679
2023 $98,166,667

After one-third of the year has passed, the number of sales and the rate per month are lagging behind the pandemic era (2020-2022):

The Housing Market Isn’t Frozen

I’ve long been a fan of Peter Coy who has a great New York Times Opinion column. This week he writes: Higher interest rates slow the housing market, but they’re not the only factor

People who like cheap mortgage debt aren’t putting their homes on the market at the rate they usually do. The inventory of existing homes for sale is equivalent to just 2.6 months’ worth of sales at the current pace of sales, about half its level a decade ago.

Getting Graphic

My favorite housing market/economic charts of the week made by others

Apollo’s Torsten Slok‘s amazingly clear charts.

Kastle card swipe data charts

Remember that Kastle charts are overstating occupancy* because their pre-pandemic occupancy benchmark was 100% which is simply incorrect (*measures card swipe activity as a proxy for occupancy).

My favorite random charts of the week made by others


I’m a Witness: The Appraisal Subcommittee to Host Public Hearing on May 19

AI Members: Please Vote for Byron Miller Who Is Running For 2024 Vice President

He’d have my vote if I was a member of AI.

When I mentioned his VP candidacy announcement two weeks ago, I got some feedback on my hazy FOJ mention of two of the candidates and I wanted to provide additional insight.

For those new to Appraiserville, an FOJ (Friend of Jim Amorin) is someone who sold their professional soul to serve at the whims of former CEO Jim Amorin for quid pro quos like lucrative teaching assignments, first-class trips all over the world with their service spouses, enabling JA to cut off membership from providing input or holding executives accountable, playing petty corrupt games against the non-FOJ current president Craig Steinley (ask the past president “Super Duper” about it). JA was forced out late last year when he realized he could no longer hold corrupted power over the organization. The good guys won.

These are the candidates running for VP:

– Byron Miller, SRA, AI-RRS [resume] [questionnaire], is NOT an FOJ. Here’s an interview with Working RE on his vision for AI.

– Michael J. Acquaro-Mignogna, MAI, SRA, AI-GRS [resume] [questionnaire] is NOT an FOJ (apologies that this may have been inferred).

– Claire M. Aufrance, MAI, SRA [resume] [questionnaire] – is a hardcore FOJ You can see her campaign pitch that literally show she has accomplished NOTHING for AI members. Good grief.

– Steve Noble, MAI, SRA, AI-GRS, AI-RRS [resume] [questionnaire] is an FOJ. While I have the receipts on Steve’s FOJ-dom, he was always nice to me, and my criticism is nothing personal.

Here’s an interesting massive conflict of interest for Past President Super Duper. I’m told the “fix is in” for Claire by FOJs, and evidence of that was bestowed the President’s Award to Claire. Super Duper is the chair of the nominating committee! That’s a massive conflict of interest. Wow. What used to be an award of honor has been reduced to partisan FOJ politics to ensure quid pro quo. I also hear the past, past president, lover of first-class plane tickets for him and his wife, FOJ Jeff Sherman is Claire’s campaign manager.

And while we are on the subject, AI has difficulty filling nominating committee vacancies. Why? Because the sham petition process usually erases months of work for the committee, which has been well chronicled here for the past three years. There is no way the sham petition process should be part of the election process and should be removed from the bylaws. It was enacted many years ago to get FOJs into office. The good people are likely going to use it too. Please get rid of it.

Throughout my career, I’ve observed that people who rely heavily on quotes from others have no ideas of their own. Then read Claire’s questionnaire. Although “the fix is in for her” by FOJs, there is no original thought in that document. Does the Appraisal Institute want that quality in its leaders, especially now that the iron-clad grip of JA is gone?

I’m not part of AI, but I’d vote for Byron if I were in favor of keeping the organization moving in the right direction, away from a two-decade era of blatant self-dealing. Fingers crossed.

The Interest in Joining TAF Boards is Waning Because it’s Just a Monarchy

What has once primarily been considered a resume builder is what TAF is.

Tracking The Number of Appraisers in Washington State

OFT (One Final Thought)

My 5th-grade teacher had a paddle named “Benjamin Dover” in the classroom. I never saw him use it but it was a simpler time in Delaware in the 1970s.

Brilliant Idea #1

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Brilliant Idea #2

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See you next week!

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

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