Housing Goes To The Emergency Room

Yesterday I spent most of the day in the emergency room, so today I am one-handed, typing painfully slowly so let’s keep this short.

November 2018 Elliman Report: Manhattan, Brooklyn & Queens Rentals

Real estate firm Douglas Elliman published our research this week on the Manhattan, Brooklyn & Queens rental market for November. I’ve been the author of their expanding Elliman market report series since 1994.

Here are my summary points:

– The Manhattan rental market continued to be characterized by rising concessions, falling vacancy rates and price trends skewed higher by the influx of new development rentals

– Would-be buyers are beginning to “camp out” in the rental market until some of the uncertainty facing the sales market eases.
– Median net effective rent slid year over year for the fourth time in six months
– The vacancy rate fell year over year for the sixth consecutive month as concessions keep buildings full
– Market share of concessions rose year over year for the 42nd consecutive month
– 3+ bedroom net effective median rent fell annually for the fifth consecutive month
– Luxury rent threshold moved to the highest level in 2018 as new development continued to skew overall prices higher

– Landlord concessions continued to dominate the Brooklyn rental market as incoming new development skewed face rents higher, despite weakening conditions.

– Median net effective rent slipped year over year for the third time in four months
– Eight out of ten new development rentals had a landlord concession
– Market share of concessions increased year over year for the 34th consecutive month

[Northwest Region] – The recent decision by Amazon to locate their “HQ2” in Long Island City has not had any apparent impact on the local rental market yet

– Heavy new development market share continued to skew face rents higher
– Fifth consecutive month with large year over year gain in new leases
– Rising leasing levels prodded by rising concession market share

And A Chart!

Our Own Rental Chart Favorites

NYC Metro Housing Slump Proclamation Has Been Made

As I’ve been saying for more than the past year, the NYC metro area has seen a continued deterioration in sales volume as it struggles to recalibrate home values while grappling with the new federal tax law, higher mortgage rates, and lower affordability. Depending on the specific location, sales levels have been falling year over year for 3-5 quarters. Falling sales leads to rising inventory which eventually leads to lower price levels.

Here’s a chart based on our data that really tells the story, plus, they throw in a chart!

Notice where the highest property taxes by county are located in the U.S.? These counties are most vulnerable to the new federal tax law that severely limits property tax and SALT deductions.


Macklowe Divorce Case Decision Comes In After A Year

Last year at about this time, I testified as an expert in the Macklowe divorce. The couple is known for their real estate development and exceptional art collection activities, and of course a long history of gossip column content. There were reporters in the courtroom during the trial so the public was given a near daily dose of drama. The details of the resolution are here.

While the new development market has slowed considerably, I never get tired of floating through new development renderings. Here is a current Macklowe offering:

Building Supplies Versus Falling Demand

There is some clear evidence by NAHB of cooling housing market conditions as the prices for lumber and drywall ebb from recent highs.


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

Since I’m writing these notes with one hand this week, I’m going to keep this short. As a result, I wanted to focus on the single most important thing you can do as an appraiser – provide commentary on the proposed regulatory rules.

Call To Action

If you don’t speak for yourself, few others will. It’s the first thing I plan to do once I have two hands to type.

VACAP lays it all for you here.

Join RESO and Vote!!!

One more thing – consider joining RESO and vote for my friend and colleague Craig Gilbert, SRA, CRP, SCREA. This is how we have a voice in all aspects of our industry! Like setting Standards! Lots of RAC members have joined – Its only $50 per year!

I hope to be back to normal by next week – you know, the ranting and raving you are accustomed to – so be sure to check in next week.

OFT (One Final Thought)

Although George Carlin was clear in his claim that there was no blue food and I wholeheartedly agreed, my four sons have toiled for years to prove me wrong:

Here is a deep dive that one of them shared with me on a related “blue” topic – and I’ll spare you a repeat telling of my midlife crisis about switching my favorite color from blue to orange:

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 bluer;
– You’ll be more rental market-oriented;
– And I’ll try not to go to the ER anymore this year.

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
Miller Samuel Inc.
Real Estate Appraisers & Consultants
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