Wait for it…
But I digress…
NYC Rents Aren’t Falling Or Cooperating With U.S. Trends
I’ve been the author of an expanding series of reports covering the market footprint of Douglas Elliman Real Estate‘s U.S. operations. During the pandemic era, our rental report series has been widely covered because rental leasing trends are generally much faster to respond to changes in economic conditions than sales trends.
Here’s a CNBC clip on our research for the Douglas Elliman report:
Elliman Report: January 2023 Manhattan, Brooklyn & Queens Rentals
MANHATTAN RENTAL MARKET HIGHLIGHTS
“Median rent rose to the third-highest on record as the vacancy rate slipped for the first time in nine months.”
– The median rent was the highest on record for the month of January and the third-highest overall
– The number of new leases expanded annually for the first time in three months
– The vacancy rate slipped monthly for the first time in nine months
– Non-doorman price trend indicators expanded annually at a higher rate than doorman price trend indicators
– New development new leases rose year over year at five times the rate of non-doorman rents
– Luxury median rent remained at the third highest on record
– Luxury bidding wars accounted for nearly one in five rentals
– Luxury listing inventory is expanding but remains below pre-pandemic levels
BROOKLYN RENTAL MARKET HIGHLIGHTS
“Average rent soared above the August peak as median rent rose to the second-highest on record.”
– Average rent and average rent per square foot rose to a new high as the median rent was the second highest in history
– New lease signings rose month over month for the first time in four months
– Concessions paid by the landlord were at their highest level since the fall of 2021
QUEENS RENTAL MARKET HIGHLIGHTS
– Net effective average and median rents rose to the highest on record
– New lease signings slipped annually but were sharply higher than pre-pandemic levels
– Market share of two-year leases was at its highest level in two years
The January Sales Lift
We saw a month over month uptick in home sales activity across many of our markets, and the housing narrative began to pivot from wildly negative to a bit more realistic, perhaps because there was less emphasis on YOY comparisons against a 2021 rocket ship and more analysis comparing against pre-pandemic market conditions.
Really puts the January lift into perspective. Strongest month for new home sales since Apr-21 (when rates were ~5%).
Also stronger than any pre-COVID January. pic.twitter.com/GOOa9XXqJz
— Alex Thomas (@housing_alex) February 7, 2023
Junk Housing Stats: Here’s An Example
Several people shared this Washington Post piece with me: See how many all-cash buyers snagged houses in your neighborhood
In the drive to get PR awareness, the rush to push out this stuff can mislead. This research overlapped markets I covered and saw similar numbers but I knew why there were many more cash buyers. The answer wasn’t simply because mortgage rates are much higher, so people opted to pay cash. That’s not real world.
I saw this phenomenon in the 20+ markets I covered in Florida for Q4 and developed this understanding:
Cash as a market share is higher because sales are way down, and purchase mortgages are way down because of high mortgage rates. And because cash transactions aren’t as volatile, the results of this study show that cash buyers are much higher as a share of the market, but that’s because there are fewer purchase mortgage sales, not that there are more cash sales.
From WeWork To Flow: Crypto To Unclog The Toilet
Adam Neumann of WeWork fame is back, well-funded, and he is in the housing space this time. This is an amazing example of what venture capital thinks about failure. Failure is merely proof of being in the game.
Adam Neumann finally explains what his new @a16z-backed company Flow does.
— Liron Shapira (@liron) February 7, 2023
HGAR – Be Your Best: Crunching the Numbers: Buy, Hold, or Sell? 2/9/2023
I’ve been on these panels with HGAR for these events a number of times, and I’ve always found the chemistry of the panels to be good – their leadership genuinely wants to get useful information out to their members to navigate the current market better. This one: HGAR – Be Your Best: Crunching the Numbers: Buy, Hold, or Sell? 2/9/2023
The Curbed v. The Real Deal State of New York City Migration SMACKDOWN
A viral Curbed story framed the idea that: New Yorkers Never Came ‘Flooding Back.’ Why Did Rents Go Up So Much?. News executives from several media outlets were so jazzed about the story idea that they wanted more stories of this type, except that the article, which was well written, was based on nothing. I love the Curbed platform, and they’ve been killing it on the real estate market front, but this one. Oof.
And then we get the powerful retort from The Real Deal: No, really, New Yorkers came back: Unraveling Curbed’s rent conspiracy: Article theorized landlords faked demand to inflate rents. This was a well-thought-out rebuttal that everyone should focus on (except for correcting the spelling of the Curbed author’s name. Oof.)
I reached out to a bunch of colleagues in economics over the past few weeks, and a few of the key takeaways I learned is that migration trends mined from USPS change of address requests are problematic. Only some people file them, and it doesn’t measure household formation, which was a big part of the post-lockdown boom narrative, i.e., two people split and moved to separate residences, for example. And Census data is also relatively unreliable for migration analysis, especially for its massive lag.
We all see a lot of junk stat references like the North American Van Lines Study and others, which are ripe for the blogosphere but are based on the client base of a particular company.
Hey, I’m a Bekins guy.
The bottom line here? As much as we really want to measure it, migration data sucks. Perhaps a few years ago, when we don’t really care, we’ll have better insights.
Best Hallway Paint Job Ever
27 Speaks Podcast: Making Sense of Hamptons Real Estate Data
What Is New York?
From making do with space constraints to…
Super pragmatic insights…
My favorite housing market charts of the week made by us
My favorite housing market/economic charts of the week made by others
We need more family oriented apartments. pic.twitter.com/ujzdSWJOeG
— Bobby Fijan (@bobbyfijan) February 5, 2023
Len Kiefer‘s Chart Handiwork
My favorite random charts of the week made by others
Becoming a pro athlete is REALLY hard.
Highest to lowest probability: 📊
🏀 .009% pic.twitter.com/0mVMyKC1Q0
— Andrew Petcash (@AndrewPetcash) February 9, 2023
— English Grammar (@GrammarUpdates) November 16, 2022
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
Brutal Rejection Letter From Civil Rights And Consumer Advocacy Groups Shows TAF Doesn’t Really CARE
A while back, I was critical of The Appraisal Foundation‘s creation of the Council to Advance Residential Equity (CARE). For those of you that need a TAF primer, 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 (BLS: 97.7% of appraisers are white). I wonder if EY is aware that one of its partners is the current Chairman of TAF’s Board of Trustees?
CARE is another TAF effort that shows how much they’ve strayed from their mission to protect the public trust by dabbling in things that were more of an effort to say, “hey everyone, we’re doing something about diversity!” Good grief. When I saw Dave’s announcement, I saw it as a line item for his growing list of bureaucratic efforts to show they are super focused on diversity despite having only one person of color on their technical boards. And that occurred only after widespread external pressure, which came about three years ago after a three-decade absence of POC. Again, more evidence of the do-thing culture of TAF leadership.
Set up a council. Check off the list. Claim TAF is proactive. Seek out a new item for the list. Rinse. Lather. Repeat.
So it wasn’t a surprise to see TAF invite a group of civil rights and consumer advocacy organizations to join CARE rejected. Notice the list of organizations that rejected this blatant chess move by TAF in the letter:
Having these organizations publicly share their rejection letter to TAF’s invite showed just how ridiculous the invite was and that such a letter would only see the light of day if the group shared it.
Why? Because they recognize TAF’s CARE as bureaucratic, a do-nothing effort to claim it on a checklist as a proactive move in one of Dave’s appearances. This group of leading organizations in the fight for racial equality knew it was counter-productive to allow an organization wildly out of touch with the actual problem to spin CARE membership as a proactive foot forward when, in fact, it’s just an obvious bureaucratic political maneuver. The rejection letter, my friends, is a textbook response to a bureaucratic stunt in Washington, DC.
TAF hasn’t shown any tangible solutions to the industry’s 98% (dead last per BLS) white appraiser and lack of diversity issues. They need to be made aware that it is a real problem in the context of public trust. Dave has called it a “nothing burger” internally. TAF only attempts bureaucratic publicity stunts because they reside within a bubble. It was soundly rejected by serious organizations trying to resolve these issues because they recognized how disconnected and ungenuine the offer was.
If TAF truly wanted to develop solutions, they would make an all-out effort to be involved in all these groups rather than sit on the same couch for 30 years and invite everyone over for tea. Please take a look at all of their initiatives…nothing is ever done after the announcement or entry onto Dave’s presentation list at conferences.
OneTwo Final Thought(s))
The Fed trying to fix the economy pic.twitter.com/vWbTUGNHT8
— Not Jerome Powell (@alifarhat79) February 6, 2023
Take a second and think about something today that is mainstream thinking but was a controversial idea decades ago.
when the government made DUIs illegal pic.twitter.com/mgTWP3LSnQ
— Bay area nostalgia (@professorbay) February 6, 2023
Brilliant Idea #1
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Brilliant Idea #2
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Reads, Listens and Visuals I Enjoyed
- Greenwich Estate That Held Title of America’s Priciest Home Lists for $150 Million [Wall Street Journal]
- How Florida Beat New York [The Atlantic]
- Comeback in Factory Jobs Appears to Be for Real [Bloomberg]
- EXCLUSIVE: Hines To Exit $2.3B Russia Business As Real Estate Works Through Post-War Breakup [Bisnow]
- The Prophet of Urban Doom Says New York Still Has a Chance [NY Times]
- Manhattan’s First Public Beach Is Coming in 2023 [Architectural Digest]
- As Climate Money Pours In, Some Urban Freeways May Disappear [Reasons to Be Cheerful]
- Elevated Mortgage Rates and Home Prices Are Dampening Consumer Opinion of Home Purchase Conditions [Fannie Mae]
- The housing shortage is the root of all of America's problems [Business Insider]
- Register of Overseas Entities: What three luxury homes reveal about who owns UK property [BBC]
- WSJ News Exclusive | They Loved Italy So Much, They Brought It to the Backyard of Their $6.5 Million Las Vegas House [Wall Street Journal]
- America’s Labor Shortages Are Good, Actually [NY Magazine]
- It Now Takes Roughly 13 Years to Save for a Down Payment in New York [Bloomberg]
- Elderly Upper West Side couple finally rid of ‘roommate from hell’ [NY Post]
- WSJ News Exclusive | Jim Carrey Lists L.A. Home of Nearly 30 Years for $28.9 Million [Wall Street Journal]
My New Content, Research and Mentions
- Brooklyn, Queens Rents Top Records as Manhattan Sits on Plateau [GlobeSt]
- Manhattan Investment Sales Hit 6-Year High in 2022 [The Real Deal]
- NYC rents hit record January levels, with Brooklyn and Manhattan costs soaring: report [NY Daily News]
- Unhappy Valentine's Day! Covid couples are splitting up and moving out [Brick Underground]
- Manhattan Rents are Way Up There, Report Says [The Motley Fool]
- Manhattan Apartment Rent Rises To New Record for January [CoStar]
- Manhattan Rents Hit an All-Time High in January [NBC Chicago]
- Rent for a Manhattan apartment remains mind-bogglingly high [KXLY]
- New York Rents Climb Again, Defying National Trend [The Real Deal]
- Manhattan Rents Went Up Instead of Down [Curbed]
- Rent in NYC is really high [Gothamist]
- Makes Sense of Hamptons Real Estate Data [27Speaks Podcast]
- Rent for a Manhattan apartment remains mind-bogglingly high [CNN Business]
- Manhattan rents hit an all-time high in January [CNBC]
- New York City Rents Flirt With Record Highs in January [Investopedia]
- City kicks off 2023 with rents at or near record highs [Crain's New York]
- Single and looking for a house on Long Island? Brace yourself for the real estate 'wringer.' [Newsday]
- Curbed’s Conspiracy Theory on New York City Rent Falls Short [The Real Deal]
- WSJ News Exclusive | Oceanfront Hamptons Home Sells for Close to $35 Million [Wall Street Journal]
- Oceanfront Hamptons Home Sells for Close to $35 Million [Mansion Global]
- Housing Market Shows Signs of Thawing [Wall Street Journal]
- Housing Market Shows Signs of Thawing [Mansion Global]
- As Miami’s Booming Real Estate Market Spills Over, Fort Lauderdale Sees Luxury Listings Spike [MSN]
- Will more units actually reduce housing costs? [Crain's New York]
- As Miami’s Booming Real Estate Market Spills Over, Fort Lauderdale Sees Luxury Listings Spike [Yahoo]
- Manhattan apartment sales fall by 50%: report [NY Post]
Recently Published Elliman Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 1-2023 [Miller Samuel]
- Elliman Report: Hamptons/North Fork Decade 2013-2022 [Miller Samuel]
- Elliman Report: Long Island Decade 2013-2022 [Miller Samuel]
- Elliman Report: Manhattan Townhouse 2013-2022 [Miller Samuel]
- Elliman Report: Manhattan Decade 2013-2022 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 1-2023 [Miller Samuel]
- Elliman Report: California New Signed Contracts 1-2023 [Miller Samuel]
- Elliman Report: Normandy Isles/Normandy Shores New Signed Contracts 1-2023 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 1-2023 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 1-2023 [Miller Samuel]
Appraisal Related Reads
- In Nearly Every State, People of Color Are Less Likely to Own Homes Compared to White Households [JCHS Harvard]
- Fed's Barr aims to 'eradicate' racial discrimination in banking [American Banker]
- Joan Trice Passes the Torch: Sells Val Expo and Appraisal Buzz to AEL [Working RE]
- Was This Home Overimproved or Underimproved? [Cleveland Appraisal Blog]
- How Agents Can Adjust For Square Footage [Birmingham Appraisal Blog]
- Sellers have been sitting out of the housing market too [Sacramento Appraisal Blog]
- "Valuable" Advice From an AMC – Valuation Connect [Appraisers Blogs]