Housing Is Like Dogs Jumping From Trees

It’s a surreal housing market out there but someone always figures out how to get that ball.

But I digress…

Manhattan, Brooklyn and Northwest Queens Rents Rose Sharply

I’ve been the author of the expanding Douglas Elliman market report series for twenty-five years and the Manhattan, Brooklyn & Northwest Queens rental report is the only monthly report we produce. The bulk of our report series is released on a quarterly basis.

Elliman Report: 1-2020 Manhattan, Brooklyn and Queens Rentals

Mansion Global produced a clear summary table that shows that 96% of the market is seeing sharp gains in the median rental price. Robust rental conditions are being created by a weak sales market.

A Douglas Elliman infographic for the report:

Important note:

It is too soon to see the impact from last week’s New York Department of State guidance on the Statewide Security and Tenant Protection Act of 2019 and a subsequent temporary restraining order issued after real estate industry trade groups and firms filed a lawsuit to stop its execution.


“New leases continued to fall as landlords continued to be more successful at the time of lease renewal.”

– The market share of landlord concessions slipped for the twelfth time in thirteen months
– The number of new leases fell year over year for the sixth straight month
– The net effective median rent rose annually for the thirteenth consecutive month
– New development median rental price rose year over year for the ninth straight month
– Median rent for new development increased more year over year than existing rents in ten of the last twelve months
– Luxury median rent hasn’t seen a year over year decline since last March


“The market share of landlord concessions fell year over year for the thirteenth straight months.”

– The net effective median rent rose annually for the fourteenth straight month
– Thirteen consecutive declines in the market share of landlord concessions
– The fifth time in six months the number of new leases declined as landlords were better able to retain tenants at renewal


[Northwest Region] “Six straight months of year over year declines in new lease signings.”

– The market share of new development reached its lowest level since the summer of 2018
– Net effective median rent increased annually for the third time in four months
– Concession market remained above the fifty percent market share threshold for the third straight month

We Just Added Another $100M+ U.S. Sale to the List

With the proliferation of $100 million+ home sales, I’m starting to feel like a red carpet paparazzi. Jeff Bezos of Amazon just purchased an LA home for $165 million home, not including a nearby $90 million plot of land.

This home sale isn’t remotely connected to the local housing market in any way despite this broker quote:

“The Geffen sale will really help the high-end,” Hyland said.

If we are talking about this super-luxury market, perhaps but it has nothing to do with the “normal” high-end market.

The first known $100 million+ sale occurred in 2011 and by 2014, the market segment was formed. The 2019 market was the high water mark with contributors from LA, New York, and Palm Beach.

Manhattan’s Upper East Side Condo Market Performance Is Quite Bifurcated

I was speaking to a crowded room of real estate professionals on the Upper East Side – here’s a snippet.

Mortgage delinquencies correlate with unemployment and therefore remain low

MBA released its latest National Delinquency Survey – for the fourth quarter of 2019 – earlier this week. Mortgage delinquencies track closely to the U.S. unemployment rate, and with unemployment at historic lows, it’s no surprise to see so many households paying their mortgage on time.

The Mallpocolypse Is Real

When I was in DC this week, I listened to a presenter from the Atlanta Fed talk about retail real estate risks and malls were front and center. A few years ago this topic was seen as sensationalist as was the phrase “retail apocalypse,” but no longer. The scale of the problem is apparent in the following table, where the vast majority of mall properties are rated “B” or lower.

Here are several good reads on the topic. h/t @ritholtz

Never Mind the Internet. Here’s What’s Killing Malls. [NYT]

In short, the broad forces hitting retail are more a lesson in economics than in the power of disruptive technology. It’s a lesson all retailers will have to learn someday — even the mighty Amazon.

Retail Apocalypse Hits High End Malls, Leading to Landlord Deal [Bloomberg]

The fallout from the retail apocalypse is putting pressure even on high-end malls.

As bankruptcies and store closures pile up among brick-and-mortar retailers, investors are increasingly concerned about mall operators. For the most part, those worries have centered on the landlords who operate dying malls.

How chain stores are rightsizing New York City retail [Retail Dive]

An analysis of stores in New York City last year revealed that the number of national chain stores operating in the retail destination had dropped a notable amount. That the entire retail industry is in flux is not a secret, but the drop in one of the countries top retail destinations sparks a larger question: Is the decline of national retail brands in New York City a regional problem, or endemic of a larger retail shift?

Getting Graphic

Our favorite charts of the week

Len Kiefer‘s Chart Handiwork


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

GAO to Study The Dilution of Intent of Title XI

In December, The Appraisal Foundation requested the House Financial Services Committee take a look at the dilution of the intent of Title XI. This week the Financial Services Committee directed the Government Accounting Office (GAO) to provide a study on the dilution of the 1989 intent of Title XI.

From the House Financial Services Committee:

“The Appraisal Subcommittee (ASC), the entity created and charged under Title XI to
monitor the appraisal related actions of the Federal financial institutions regulatory
agencies (Agencies), estimated in its 2018 report to Congress that ‘at least 90 percent of
residential mortgage loan originations are not subject to the Title XI appraisal
regulations,’” the lawmakers wrote. “Over the past few decades, however, the federal
agencies charged with implementing Title XI of FIRREA have taken steps to limit the
number of transactions for which an appraisal is required….We request that you conduct
a review of the impact of these changes, including the potential risks that they pose to
homeowners and the safety and soundness of our financial system.”

As a reminder, the original de minimus in Title XI was $15,000. It is now $400,000. That is a $2,567% increase over 30 years (1989-2020). Using the FHFA Home Price Index, home prices have grown 182% from 1991-2019, a similar period.

In other words, the de minimus has risen 14 times higher than housing prices. I’d say Congress’ original intent has not been followed.

Phil Crawford Interviews The Cosmic Cobra Guy

The author of “Dispatches From The Cosmic Cobra Breeding Farm” lays out his case against The Appraisal Foundation on Phil Crawford’s Voice of Appraisal. It is quite compelling reasoning and a good read. I got a lot out of it.

However, I am troubled by the author’s bias in rationale. Where he falls short is trying to explain why he doesn’t hold AI, IRWA, and ASFMRA to the same standard as TAF. The logic Jeremy uses is that he can quit those trade groups and he can’t quit the foundation and still be an appraiser. That’s quite a disingenuous argument.

In the real world, if I didn’t have an MAI as a partner in our commercial practice (I’m a CRE), we wouldn’t get commercial work from most, if not all financial institutions no matter what the regulations are. That’s a fact. The MAI designation is embedded in many state laws and CMBS regulations. That’s a fact. I’ve written about how AI scared designation holders who might speak out against them because their designation is a building block of the designation holder’s livelihood. That’s a fact. Although for my latter point, admittedly I’m getting a better feeling about AI with some of their new leadership and board members. Fingers crossed.

We All Use A Periodic Table of Data Elements

Earlier this week I represented RAC (Relocation Appraisers & Consultants) at the Appraisal Subcommittee (ASC) Roundtable held at the OCC. The ASC is the financial link between congress and The Appraisal Foundation. Over 50 agency representatives that connect to the mortgage process were there to discuss data.

Lee Kennedy of AVMetrics, a firm that tests AVMs moderated a panel on the topic of data. Lee’s presentation included a terrific slide that was shared with the attendees.

Setting The Standard For Telling The Story Of The Market

As the mortgage industry pushes to wigdetize appraisers, the cream of the crop are straying from mortgage work and not looking back. Many of us (appraisers) possess an invaluable level of knowledge that agents and consumers are hungry for but are unable, unwilling or afraid to share it.

My friend and appraiser colleague Ryan Lundquist in Sacramento shows all of us how to give a presentation (that he was generous enough to share). Please watch and take notes.

OFT (One Final Thought)

I’m begging you to watch the whole clip. You just never know when it will be your last conversation with someone.

Brilliant Idea #1

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Brilliant Idea #2

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See you next week.

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