The Physical Graffiti Of Housing

When I was a teenager growing up in the DMV – before I had a driver’s license – my mom took me to the mall to buy my first new record album. It was my birthday and I wanted Led Zeppelin’s double album Physical Graffiti. Half the reason I wanted the 6th Zeppelin album was for the cover art. A decade letter when I found my way to Manhattan, little did I know that the cover photo was of 96 – 98 St. Mark’s Place in Manhattan’s East Village neighborhood and was the reason the album release was delayed.

But I digress…

Just When I Thought We Were At ‘Peak Uncertainty’ There’s A Virus To Worry About

Recently I dubbed 2020 as ‘Peak Uncertainty’ – a state of mind where the entire world around us seems to be imploding and each issue sticks out like a sore thumb. The combination of all concerns creates anxiety:

– Falling mortgage rates despite a booming economy
– A trade war without logic that costs U.S. consumers (forcing rates to fall)
– An unusually polarized electorate
– Federal SALT tax fall out in high cost, high taxed housing markets
– Anti-real estate/landlord/development political zeitgeist in New York State
– Housing price trends outpacing wage growth, reducing affordability
– Odds of a recession in 2020 hovering between 25% and 60% depending on the source.

Despite that, I have been seeing a slight (anecdotal) uptick in activity in NYC metro since the New Year – more offers being made. Why? Perhaps because enough time has passed for consumers to acclimate to all the challenges of the past two years.

but now…

– a 42-day old global virus outbreak…

I’ve got a few dashboards on the Coronavirus later on in these Housing Notes, but the question remains. What will be the impact to the U.S. housing market?

ONE An extreme scenario, suitable for TV except that its real-life:

– The shut down of the Chinese economy triggers a global recession
– Central bank rates across the globe fall back to zero or go negative
– After many initial errors by the resource-gutted CDC and the feds, there is a domestic expansion of the virus
– U.S. mortgage rates fall even further driving up more refinance activity
– A realization that common surgical masks are useless against the virus and only incite panic
– Negative mortgage rates begin to appear
– A U.S. recession begins as international exports and domestic consumption falls sharply
– Low mortgage rates trigger some uptick in sales but the uncertainty of a recession restrains much of the uptick in demand.
The Walking Dead TV series gets picked up with a three-season deal

TWO Another extreme scenario might be that none of the above happens anywhere close to the degree that prognosticators suggest.

The thing is, consumers will likely tend to pause until they have wrapped their minds around the chaos they are reading about. And that’s why we are further entrenched in “Peak Uncertainty” with the virus addition to the list.

Time has to pass before normalization occurs. And no I don’t watch The Walking Dead.

In This Market Correction, Who Do You Call First?

CNBC’s long time stalwart of financial news asks this question:

Well, who do you call? Pick one.

image polls

The Fast Growing Rents Are NOT in New York or San Francisco

Infographic: Where U.S. Apartment Rents Are Rising Fastest | Statista You will find more infographics at Statista

The New York Investment Sales Market Keeps Falling, But Optimism Growing As Sellers Get Real

Bob Knakal of JLL lays it out clearly. Click “Watch on Vimeo” when you see the prompt.

KNN 155: 2019 Year-End New York City Investment Sales Market from Bob Knakal on Vimeo.

Getting Graphic

Our favorite charts of the week of our own making

Upcoming Speaking Events

May 1, 2020 Stony Brook, NY – John Kominicki Symposium 2020 More info coming!

May 14, 2020 Teaneck, NJ – Spring Conference for The Northeast NJ Chapter of the Appraisal Institute More info coming!


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

We’re helping my son and his wife move into his first home today and over the weekend so I’m not going to get into appraisal issues this week (their appraisal came into value, lol). The mortgage rate drop has made homeowners of my three oldest sons in the past 18 months!

OFT (One Final Thought)

Because we never seem to have enough data to overwhelm us, here is a dashboard by Andrzej Leszkiewicz on the Coronavirus COVID-19 (click image to open):

Here’s another great dashboard of the Coronavirus COVID-19 by Johns Hopkins CSSE (click image to open):

h/t @ritholtz

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
Matrix Blog

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