Fishing For Housing Trouble

There remains large dose of uncertainty in the housing market, despite having the terms of the new tax law readily available. This week I explore this and conclude that the impact is probably not as bad as it seems. But we are driven to fish (admittedly I hate fishing but hey, this is a metaphor) and seem to be looking and expecting to reel in more bad news these days. Admittedly after I watched this clip, I felt the urge to put on a life vest.

Let’s cast our lures and snare some information in these Housing Notes now (sorry).

Market Report Gauntlet Q4-2017 Week 3: South Florida & Connecticut

It’s week 4 of our quarterly market report gauntlet with Douglas Elliman Real Estate. I’ve been authoring this expanding report series for 23 years and it’s been a fascinating process.

Greenwich, CT
One of my favorite markets to cover over the past year has been Greenwich, Connecticut. It’s not because I live nearby, have relatives who live there or love the beautiful parks and nice downtown it contains. No. It has been my observation of the disconnect between high-end sellers and actual market conditions. A small contingency of brokers there took a defensive posture a little over a year ago with a comment by resident Barry Sternlicht, CEO of Starwood who said: “You can’t give away a house in Greenwich.” This brought outrage from a small group of high-end brokers that didn’t seem to understand the rules of housing supply and demand. They interpreted Sternlicht’s comments as a personal attack.

I found the whole thing bizarre after I learned that the brokers and community leaders hired a PR firm to tell the world how amazing the town is. The thing is, Greenwich is amazing and that fact had nothing to do with why these huge homes weren’t selling. The high-end homes, especially in Backcountry weren’t selling because they were highly overpriced “because that’s the price the seller wanted.” I thought that the Sternlicht comments did the market a favor by enabling a conversation about accurate pricing.

Fast forward to today, our research showed that those homes are selling because sellers are willing to meet the buyer at market value rather than demand the seller climb up to the price the seller wants. Here’s the proof – listing discount (percentage difference between the asking price at the time of contract and the contract price) were at their widest level since Lehman. Yet days on market remained very high, indicating that buyers have held firm – to force the proper pricing issue to daylight and so a lot of older listings were either cleared by selling at market value or letting the listing expire.

The forces of supply and demand set prices. Not sellers in a vacuum or certain brokers that continue to enable sellers to be disconnected from the market in order to get the listing (then they’ll not be able to sell). Sternlicht was one of those sellers in a vaccuum and felt forced to blame the market instead of taking responsibility for his pricing.

This evolution in the market has helped make the market stronger and this clearly resonated with Wall Street, a key driver of the Greenwich market. The article that featured our findings was the number 1 emailed story world wide across the 350,000± Bloomberg Terminal subscribers. And this improving luxury market condition as a result of more realistic sellers was seen across Fairfield County where Greenwich is located.

Here are a couple of Greenwich charts from our gallery:

South Florida
For nearly all the South Florida markets in the Elliman Report series, the final quarter of 2017 proved to be the best performing of the year. The Palm Beach single-family market was a standout in particular. You can see all the results for Miami Beach/Barrier Island, Miami Mainland, Fort Lauderdale, Boca Raton, Palm Beach, Wellington, Jupiter and Palm Beach Gardens as well as submarkets such as Juno Beach, Tequesta, and Summit Island at

Here are a couple of charts from our South Florida gallery:

Brooklyn Rents: Cooling Faster Than Green Matcha on a Winter Morning

The Wall Street Journal ran a piece this week using the Elliman Report: Manhattan, Brooklyn & Queens Rentals 12-2017 delving into the Brooklyn rental market but admittedly, as a wanna be hipster, I had to look up what “Matcha” was in the opening quote:

Brooklyn’s apartment market is cooling faster than a cup of green matcha on a winter morning.

Heavy rental development skewed to luxury is the key reason.

How Greenspace Continues to Expand in Detroit

I’ve shared this @DetroitStreetVu Twitter account before but I continue to be obsessed with it. Since the Detroit bankruptcy, the deterioration of the outlying housing stock continues. These google pics illustrate just how much. Click to expand each for full the impact.

Tax Law Talk With A 2-4 Year Federal Extraction

I have provided is a round-up of some old and new reads on the implications of the new federal tax law on the real estate market (and other assets). As I’ve said many times, the impact ranges from neutral to modestly negative, but not catastrophic. And I am very comfortable with my belief that the new tax law will in no way help the cause of homeownership as a general concept. I believe the first impact will be a modest slow down in sales as buyers and sellers look to find the new equilibrium on price. But its all relative. The law’s impact may be felt as a slow down in the rate of rising sales or may cause sales to go negative. The impact towards pricing should result in varying degrees of downward pressure depending on the tightness of existing supply.

I believe one of the more important ways to look at this is federal government extraction from supporting homeownership is that it is probably a 2-4 year process. In other words, once price discovery has been completed between buyers and sellers, that’s probably it. I don’t think it is reasonable to project out this new market condition as an unending process and I don’t see the impact as severe.

– Tax Overhaul Is a Blow to Affordable Housing Efforts [NYT] – How the Tax Code Rewrite Favors Real Estate Over Art [NYT] – The Tax Cuts and Jobs Act – What it Means for Homeowners and Real Estate Professionals [NAR] – How the New U.S. Tax Law Impacts Property Owners [Mansion Global] – Realtors, Licking Their Wounds, Get Ready for Their Next Battle [WSJ] – Opinion: Owning a home can give you a place to hide from a bear market for stocks [Marketwatch]

Daniel Gershburg Podcast: Hey, what’s the market like John?

I’ve been following Dan’s Twitter handle and found it to be a great resource for pretty much everything. He’s a real estate attorney and we got to know each other a little bit over the ultraweb and he then invited me to join him on his podcast. I got to talk with Dan about a few things outside my usual discourse: my concept of “neutrality” and how I got started (and who doesn’t want to wax on poetic about themselves for 45 minutes?) I enjoyed the discussion and I think you will too.

This Week in Aspirational Pricing

Here’s a rental apartment for you. It’s asking a $100,000 per month but here’s the obvious clincher- It’s got three outdoor showers.

The Fed Beige Book is Actually Gold

The Beige Book is a resource produced by the 12 member banks of the Federal Reserve is invaluable because it provides a real time collection of anectodal feedback on the economy. There is no data. It comes out 8 times a year and is worth a regular read.

Planet Money’s new podcast know as “The Indicator” is a new regular listen to me. This episode briefly explains the Beige Book.


I should change the name of Appraiserville this week to Announcementville. Here are two big announcements so break out your calendars right now and write this down.

RAC 2018 Conference Announced, Frisco, TX September 13, 14

As the president of RAC and am excited to announce our 2018 conference will be held in Frisco on September 13th and 14th. It promises to be a productive, relevant and fun event.

Founded in 1990, RAC continues to be the premier appraisal organization whose members focus on complex residential properties for relocation, litigation support, testimony and reviews.

Appraiserfest, San Antonio, TX November 1, 2, 3

Well my friends, there is a new appraiser-centric conference in town, and it’s called AppraiserFest. Why would you want to attend AMC-centric conferences that selfishly predict your demise based on the advertisers that have paid to play. Lead by Phil Crawford and Mark Skapinetz, Appraiserfest is going to be a happening, not just a conference. More details to come.

I’ll be joining other thought leaders in our industry to talk about our part of the mortgage process that has been under seige since the financial crisis. We haven’t been speaking on our behalf until the past year and our influence is only going to scale higher.

Give Phil Crawford a video editor and he’s soon competing for page views with the new Star Wars trailer. Here’s the Crawfordized announcement:

Brilliant Idea #1

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– They’ll go fishing;
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– And I’ll write more market reports.

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 Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog

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