Housing A River Of Listings Are A Dog's Life

April 29, 2022

Housing A River Of Listings Are A Dog’s Life

But I digress…

Hamptons Listing Inventory Has Collapsed, Restraining Sales And Pushing Up Prices

I’ve been the author of an independent and expanding series of market reports for real estate brokerage firm Douglas Elliman since 1994. My initial coverage began in Manhattan and has expanded from there. I’ve always marveled at how The Hamptons, on the eastern end of Long Island, was “joined at the hip” with Manhattan as a housing market, largely because the housing market out there seemed to be a luxury second home market for Wall Street. Yet in this pandemic era housing boom, it has behaved more like the suburbs than the city with a post-lockdown sales surge that burned off all excess supply built up in the preceding several years in short order. Enabled by “remote,” it became a “co-primary” rather than a second home market with Manhattanites looking at the potential of living out east or at least having the flexibility to do so as COVID closed in.

And so the market report results in this quarter continued to reflect that disparity in performance with record prices, collapsing inventory, and a high amount of bidding war activity, all metrics that are currently much more muted in Manhattan as that market plays catch up with the region.

Bloomberg and Newsday captured the Hamptons boom with some super cool charts that capture the continued insanity.

Bloomberg

Newsday

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HAMPTONS HIGHLIGHTS

Elliman Report: Hamptons Sales 1Q 2022

“Heavy bidding war activity confirmed high demand despite sale declines, largely due to the collapse in listing inventory.”

– Since the pandemic era began, median sales price has been in one of the top three highest levels each quarter
– Bidding wars were incurred in more than one out of four sales for the third straight quarter
– Listing inventory fell to a new low for the second straight quarter
– Severely restrained by lack of supply, sales declined annually for the past three quarters
– The market share of sales above the $5 million threshold was the third highest in history
– With listing inventory falling faster than sales, the months of supply created the third-fastest moving market on record

________________________________________________
NORTH FORK HIGHLIGHTS

Elliman Report: North Fork Sales 1Q 2022

“The collapse in listing inventory held back sales and caused bidding wars to surge.”

– Since the pandemic era began, median sales price has reached the top two highest levels each quarter
– Bidding wars were incurred in more than four out of ten sales in two of the past three quarters
– Listing inventory fell to the second-lowest on record after nine quarters of annual declines
– With the collapse in supply, the number of sales saw significant annual declines for the past three quarters

Thinking About Living In Urban Markets For Reasons Beside Work

Here’s the pretty Instagram imaging version to set the mood:

And then a picture I took when seeing a Broadway show to set the mood:

With remote, I think we overweighted the importance of working versus what living in the city has to offer (aside from crime, noise, dirt, etc.)

I suspect there are a lot of people who have the flexibility of remote work, are affluent and want to be in the city for reasons other than work. In many ways, we assumed people were in the city first and foremost because of work but now with remote and outbound migration of workers, booming sales and rentals suggest they are here for other reasons and probably always were to a certain degree. The difference now in the pandemic era is that they skew toward the more affluent (who by definition are more mobile).

Here’s a Bloomberg Radio interview I did in Boston with Denise Pellegrini where I attempted to kind of sorta explain this (starts at 42:45):


[click to play]

Long Island Listing Inventory Has Collapsed

I know the old college drinking rule “only amateurs count” usually applies but I think a seventh appearance on the cover of Long Island’s biggest newspaper, Newsday, is worth pointing out! Their cover story noted the market’s insatiable demand and collapse of listing inventory through our research for Douglas Elliman’s Long Island market report for Q1. To make it even more memorable, they provided four charts which made the numbers sing. Two of which I shared for the Hamptons post above and these two for each county:

________________________________________________
LONG ISLAND HIGHLIGHTS

Elliman Report: Long Island Sales 1Q 2022

“Listing inventory continued to collapse, placing upward pressure on price trends but restraining sales below their potential.”

– Median sales price rose year over year over the past twelve quarters to record and near-record highs
– Listing inventory declined annually for the tenth straight quarter to the second-lowest level on record
– The market share of bidding wars accounted for roughly half of all closing for the past four quarters
– Sales declined annually for the past two quarters, held back by falling supply, after having surged over the previous four quarters
– Luxury median sales price rose year over year for the past seven quarters to the third-highest on record
– Luxury listing inventory declined annually for the ninth time in ten quarters to the second-lowest level on record
– Approximately one in four luxury sales went to bidding wars for the third consecutive quarter

More And More Florida Markets Are Booming As Housing Markets In The State Restructure

We have seven more Florida market reports to publish in the coming weeks as the housing boom moves from south to north on the oceanside. With Zoom and the idea of remote work enabled overnight in the early days of the pandemic, homebuyers are doing the math, and the results are staggering in the context of housing market change. We are going to be grappling with these changes for the next several years or more.

I did a data dive for this cool CNBC piece on luxury real estate and the numbers were startling, reflective of the restructuring of the Florida housing market.

Regarding the listing inventory collapse:

That’s not hyperbole, according to the numbers. In the first quarter of this year, South Florida inventory stood at a record low of 7,906 units, according to Miller’s data. That’s down from an average of 27,000 units from 2017 to 2019.

The Real Deal did a nice recap on the flurry of Elliman report releases that were published (the reports can be found in the links below and their theme is this:

____________________________________________________________________________
FLORIDA REGIONAL HIGHLIGHTS

“The Florida housing market continued to see booming sales in the first quarter, enabled by the remote work phenomenon and tax policy, resulting in one of the fastest-paced markets on record. There are signs sales volume is now restrained by the continued collapse in listing inventory. In most of the housing markets tracked, listing inventory has fallen by well more than half in the past two years and bidding war market share is rising to new records. The recent rise in mortgage rates is expected to take some of the edge off the sales frenzy allowing some additional listing inventory to enter the market but it is expected to be inadequate to satiate demand.”

– Listing inventory continued to collapse, down by two-thirds of pre-pandemic levels in most markets, continuing to restrain potential sales growth
– Bidding wars market share continues to rise to new records, accounting for up to half the sales in many markets
– Single family and condo price trend indicators continued to rise to new records or remained well-above pre-pandemic levels
– The market pace across the region continued to set records for the fastest on record.

Since there are so many markets and I don’t want to visually overwhelm these Housing Notes, but you can view our sea (get it?) of charts organized by county here.

Here are some of my faves:

NY Post Compares Prices Of Neighborhoods And Tests The Limits Of Statistics

Our research powered a NY Post stats piece intended to be fun by comparing Manhattan and Brooklyn rental and sales markets. Brooklyn neighborhoods higher than the median price of overall Manhattan median were identified. It was basically tongue in cheek exercise in understanding just how expensive Brooklyn has become.

Dialing Down The Zillow (And All Other) Housing Forecasts

There was a good Fortune Magazine piece looking at the changing forecasts now that mortgage rates are rising quickly.

Now, real estate researchers are dialing down their home price forecasts. On Wednesday, Zillow researchers released a revised forecast, predicting that U.S. home prices would rise 14.9% between March 2022 and March 2023. That’s down 2.9 percentage points from last month when Zillow said home prices would shoot up 17.8% over the coming year.

Given my decade+ takedowns of the Zestimate (my favorite catch-phrase is “The ‘A’ in ‘Zillow’ Stands for ‘Accuracy’“, so it is important to pre-empt this piece with this meme:

Here’s the forecast:

I’m On A Boat And So Are Multi-Million Dollar Home Buyers

Given all the Oligarch Yacht bot talk on Twitter and the fact that I can’t I can’t get “I’m On A Boat” out of my mind after more than a decade, and despite the fact that we sold our (much smaller) boat a few years ago which was the second happiest day of our life (to borrow from an old saying about boat ownership), this WSJ article: Why Buy a Multimillion-Dollar Home When You Can Live Aboard a Yacht? resonated with me.


[click image to open

The proof is in the numbers, which show three years of consistent order-book growth in the yacht sector, according to Boat International. The yachting trade publishing company found that, at the end of December 2021, there were 1,024 boats on order and in production for the following year, up almost 25% from the tally at the end of the 2020. The surging numbers of new and would-be yacht owners have left marinas packed and global shipyards with lengthy order backlogs, compounded by supply-chain issues brought on by Covid and the war in Ukraine.

I’m on a boat, yeah.

Getting Graphic

My favorite charts of the week made by others

Len Kiefer‘s Chart Handiwork

Upcoming Speaking Events

Appraiserville

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

USPAP Absurdity

From one of my appraiser colleagues in NYC on a McKissock class, taught by Dan Bradley, husband of Michelle Bradley who is chair of the Appraisal Standards Board of The Appraisal Foundation (this is COMPLETELY UNETHICAL). TAF BOT (the leadership that brought us the bat-shit crazy letter is meeting in sunny Palm Springs San Diego right at this moment (probably to determine meanings of words like “The” and “This” and “That” and perhaps considering a new take on “misleading” that is still on the books!!! – of course, I realize that’s for the ASB to decide but please allow me some comic license here) so appraisers can do a better job at their craft. Don’t get me wrong, most of the BOT and who volunteer, are good people and mean well and some are trying to change from within, but it is a Bunton/Davids monarchy, period, and because of the lack of allowed new thinking, the organization lost its way long ago.

But I digress

Back to what my colleague recently said:

I started the CT course and realized I’ve taken in the past. It’s absolutely ridiculous that we have to take this, let alone every two years. And it’s all videos so you have to let it play and keep moving to the next one. It’s best to listen in the background while you work on something else and then take the quizzes. The fact that this is mandatory is nothing more than a money grab. There is no new information at all.

Taking repetitive classes that do not either refresh memories or teach something new provides zero value to appraisers or the public. C’mon, this is not that hard to fix.

Combine this outrageous waste of time with the indoctrinated mantra of taking USPAP every two years when the updates (most are clerical and useless that we now know are only done to sell books and classes) could be taught in 15 minutes rather than seven hours. This is EXACTLY why I have been so critical of TAF over the past several years. I’ve had it. They are just doing this for the money to maintain financial independence (a stated and bizarre goal) and have lost their way. In actuality, appraisers have been abandoned by TAF and so has any concern about the public trust.

OFT (One Final Thought)

Life’s Been Good is a fun song by Joe Walsh that came out as I graduated high school. I always thought of the song as representing the excitement that was headed my way as the summer approached. I listened to it over and over on a cassette player that summer and then later, when I met my wife, saw Joe Walsh perform it live at a concert in Pine Knob, Michigan during that period when he was constantly running for president. I recently ran across his spoken word version which reminded me of the fun as a version he recorded a decade ago. The song is not sophisticated or pretentious, it’s just fun. I think many of us need a good dose of fun every so often.

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 dogged;
– You’ll be flooded with listings;
– And I’ll play “Life’s Been Good” (so far).

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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