Housing Enters Its “Bad Movie” Era
Please define “bad movie” for me because the following is great – a precursor to Sharknado.
Despite looking suspiciously like a can of deodorant the ever reliable ‘Bat Spray’ sees off this savage attack from a highly dangerous killer ‘Shark’.
— Michael Warburton (@MichaelWarbur17) June 29, 2022
But I digress…
Bloomberg’s Masters In Business Podcast: Jonathan Miller on Urban Real Estate
My Bloomberg Radio interview with Barry Ritholtz came out shortly after last week’s issue of Housing Notes. Apparently I am tied with Scott Galloway for most appearances (5) on this show. Master in Business is always a great show to listen to and Barry does a lot of reasearch on his guests.
Here’s the transcript.
Rising NYC Wages Seem To Support NYC Rent Growth
One of the problems with looking too narrowly at a housing market record, such as record rental price growth in NYC, is that you can miss the reason why and the understanding there is more room for more records.
Last month Douglas Elliman published our rental price research for The Elliman Report: May 2022 Manhattan, Brooklyn & Queens Rentals. It showed that the median rental price reached the $4,000 threshold for the first time, an all-time record. And I suggested there was more room for gains since new leasing doesn’t peak until August and therefore more opportunities for upward pressure exist.
But what about wages? Going to FRED, I compared NYC annual wages over the past decade against median rent and indexed Manhattan and Brooklyn to January 2008. For NW Queens I indexed to December 2011 because that was the extent of our data.
The following charts by borough show that there is more room for gains since wage gains remain higher than rent gains with Brooklyn seeing the least wiggle room. This doesn’t mean that rents are “affordable” but provides an argument that the market can probably absorb more rental increases. Any thoughts on this would be appreciated.
Visual Capitalist: Mapping Price Growth By State
Visual Capitalist always puts out some amazing infographics. Click to expand:
MARKET PROOF PODCAST WITH ARPIT GUPTA “Work From Home and the Office Real Estate Apocalypse”
Kael Goodman, founder/CEO of Marketproof interviews NYU Professor Arpit Gupta over his white paper: Work From Home and the Office Real Estate Apocalypse
Arpit’s white paper is a must-read for all real estate appraisers and brokers, especially those focused on commercial valuation. Kael does a great job on the interview.
EXPLAINER Rent Guidelines Board Increases
Natalie Sachmechi, a real estate reporter for Crain’s New York, is always good to follow on Instagram for bringing clarity to complex New York City real estate issues.
I meant to post this last week but was not very organized when we were away on vacation!
Sean Osher of Core Real Estate On Measuring Trends (Why I Was Right)
Recently I was a panelist for a REBNY virtual event with a bunch of other people I respect who track the state of the housing market and I remember thinking to myself: “real estate agents will get it but this conversation has to be very confusing to the consumer.” One of the items that always comes up by authors of contract reports is that closing data lags contracts therefore contract trends are the gold standard. The problem with this presumption is that there are many market periods where as many as 40% of contracts fall apart before they can close. That’s a tough sell as a full-proof market benchmark.
Former top-producing Douglas Elliman agent Sean Osher publishes Padkos: Food for Thought in Real Estate and Life, a weekly newsletter that was recently shared with me so I of course, subcribed. Sean left Douglas Elliman in 2005 to form Core Real Estate.
At that time, the company I was with had the only legitimate market report in the business, which was created by Jonathan Miller. Jonathan was the only legitimate analyst in the city and was (and still is) rightfully well respected and revered.
Of course, he’s obviously brilliant for saying that about me (ok, ok), but he also has a lot of thoughts about market analysis in his post “Data Dump!” specifically why “tracking transactions in real-time is impossible:”
A real estate trade is impossible to track in real-time because of the way deals happen. First, a home has an asking price, then there is a negotiation between the buyer and the seller, then there is a meeting of the minds, then a contract is signed, and then there is a closing. Months later, the transaction is made public on ACRIS.
My take: Ultimately closing price trends contain both sales levels and price levels because they represent a “successful” transaction.
Data Dump! [Padkos]
Rural Housing Markets Are Booming
The Wall Street put out a fascinating piece on the rural boom and wonders whether it will last:
Such rural gains are in their early stages and could be vulnerable to a national economic downturn. They also depend on how far the back-to-the-office movement goes. In recent months, office reopenings and waning pandemic disruptions have drawn some workers back to urban life, a trend that is manifested in the rising rental prices of places such as New York City.
There’s a good piece by FreddieMac on the related urban phenomenon:
Please study this chart:
CoreLogic’s 2022 Hurricane Report
CoreLogic just published a 2022 Hurrican report that correlates housing stock to storm damage. Its a free download and its full of charts and maps. Of special note, Corelogic’s Chief Economist Frank Nothaft, whose work I respect, unexpectedly passed away this weekend.
JP Morgan on the Fed: One More Big One, Then A Bunch Of Small Ones To 3.5%
The Fed has chosen to front-end load rate increases in order to better clobber the economy with a baseball bat. This is probably better for the housing market than a tortuous slog of 25 basis point increases from day 1.
This JP Morgan research piece Market Outlook: Stocks, Inflation And Commodities In Focus At Mid-Year was insightful on rates.
NTD TV Interview (From My Hotel Room) On Weakening Market Conditions
I’ve been doing interviews for NTD for quite a while. This time I was in a hotel room on vacation and got an interview request – I grabbed a collared shirt while still in my shorts and tennis shoes and sat in my poorly lit hotel room. Still, it was a good interview.
My favorite charts of the week made by others
— Rick Palacios Jr. (@RickPalaciosJr) June 28, 2022
Tech layoffs keep stacking up pic.twitter.com/qCUDDvooPF
— The Long View ✪ (@HayekAndKeynes) June 28, 2022
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
I’m still not ready to dive back into appraisal commentary – too much going on right now as proud owner of two homes and two mortgage payments for the next 30 days (2x the American Dream!) and moving our office two blocks in Manhattan.
OFT (One Final Thought)
— Jonathan Miller (@jonathanmiller) June 29, 2022
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 in the bat cave;
– You’ll buy shark repellent;
– And I’ll continue to skip most good movies.
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.
Reads, Listens and Visuals I Enjoyed
- Mapped: The Growth in U.S. House Prices by State [Visual Capitalist]
- Remembering Dr. Frank Nothaft [Core Logic]
- Residents of Billionaires’ Row co-op told to pony up $280M or get lost [NY Post]
- New Suburbanism [New Geography]
- Why the plummeting homebuying market could spell disaster for renters [SFGATE]
- The Flight of New York City’s Wealthy Was a Once-in-a-Century Shock [NY Times]
- NYC man sues mom for being a terrible landlord [NY Post]
- Rural Counties Are Booming, but Can It Last? [Wall Street Journal]
- Massive deal for mini-golf below NYC’s new Virigin Hotel is a hole-in-one [NY Post]
- Biden’s housing chief calls Miami the ‘epicenter of the housing crisis in this country’ [Miami Herald]
- A New York Mansion Built for the Vanderbilt Family Sells for $52.2 Million [Wall Street Journal]
- The final vote is in: Darien will buy Great Island for $103M [Darien Times]
- NYC, Miami, Tampa, New Orleans Tops Among Storm-Surge Exposed Cities [Insurance Journal]
- Bidding Wars Overheated the Home-Buyer Market, Now They’re Coming for Renters [Wall Street Journal]
- ‘Rent, Forever’: The Price of Living in New York City [NY Times]
- Looking for Affordable Housing in New York? Here’s Where to Find It. [NY Times]
- No Loud Music. No Smoking. No Guns. Can NYC Landlords Ban Firearms? [City Limits]
- Can Adams’ citywide affordable housing plan finally tear down the NIMBY wall? [City and State NY]
- Jumbo Loans, Jumbo Problems [Paper Economy]
- Inside Olympic Tower, Where Foreign Billionaires Have Long Flocked [Curbed]
- Singapore’s Surging Rents Shock Expats and Encourage Scammers [Bloomberg]
- In Pursuit of Affordable Housing: The Migration of Homebuyers within the U.S.—Before and After the Pandemic [FreddieMac]
- Mid-Year Investment Outlook [J.P. Morgan]
- What Is The Stock Market Outlook At Mid-year? [J.P. Morgan]
- NYC Has the Most Heavily Taxed Office Buildings in America, Report Finds [Commercial Observer]
- Last Orange Grove In the San Fernando Valley Slated For luxury homes [The Real Deal]
- The Wild History of the Real ‘Only Murders’ Building [NY Times]
- Last Howard Johnson’s Restaurant Closes In Lake George [The Real Deal]
My New Content, Research and Mentions
- The Hamptons Covid-Era Buying Frenzy Is Officially Over [Bloomberg]
- The Hamptons Covid-Era Buying Frenzy Is Officially Over [BNN Bloomberg]
- Searching for a Summer Rental? ‘You Are Late to the Game.’ [Wall Street Journal]
- New York City Apartment Buildings to Sell for $1.75 Billion in Record Pandemic Deal [Wall Street Journal]
- The question everyone's asking: When will NYC rents go down? [Brick Underground]
- Black Spruce, Orbach Buying UES Apartments for $1.75B [The Real Deal]
- The Storied History of the Belnord [NY Times]
- Fashion Entrepreneurs Want $42 Million for Their Beverly Hills Home [Wall Street Journal]
- Malibu now only a billionaires’ club after Larry Ellison laid the groundwork [NY Post]
- MiB: Jonathan Miller on Residential Real Estate – The Big Picture [Ritholtz]
- Transcript: Jonathan Miller – The Big Picture [Ritholtz]
- How to Survive a Rental Bidding War [NY Times]
- Home Sales Go Up in Month of May [NTD]
- Tribeca Triplex Penthouse On Market For $30 Million [The Real Deal]
- Is Anything Going Down? Yes, Luxury Co-op and Condo Sales. [Habitat Magazine]
- Podcast: Jonathan Miller discusses Urban Real Estate [Bloomberg]
Recently Published Elliman Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 5-2022 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 5-2022 [Miller Samuel]
- Elliman Report: California New Signed Contracts 5-2022 [Miller Samuel]
- Elliman Report: Normandy Isles/Normandy Shores New Signed Contracts 5-2022 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 5-2022 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 5-2022 [Miller Samuel]
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 4-2022 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 4-2022 [Miller Samuel]
- Elliman Report: California New Signed Contracts 4-2022 [Miller Samuel]
- Elliman Report: Normandy Isles/Normandy Shores New Signed Contracts 4-2022 [Miller Samuel]
Appraisal Related Reads
- 7 Home Security Tips for Spring & Summer [Cleveland Appraisal Blog]
- Is The Real Estate Market Shifting? [Tom Horn/Birmingham Appraisal Blog]
- Ten things to know about price reductions in today’s market [Ryan Lundquist/Sacramento Appraisal Blog]
Extra Curricular Reads
- Mystery as Canadian radio station plays Rage Against the Machine song nonstop [The Guardian]
- 24 charts that show we’re (mostly) living better than our parents [Full Stack Economics]
- The Sleep Debt Collector Is Here [NY Times]
- What’s a Landau Roof? A History of the Luxury Car Vinyl Roof Treatment [Motor Trend]
- The Lost Glamour of the Department-Store Restaurant [Atlas Obscura]
- Perspective | Photos of derelict U.S. landscapes rooted in sense of isolation, poverty [Washington Post]
- The Mars Express Spacecraft Is Finally Getting a Windows 98 Upgrade [Slashdot]