Housing In Wizard of Oz Synced With Dark Side Of The Moon

July 28, 2023

Let’s talk urban legends for a moment:

Urban legend claims that if you play Pink Floyd’s Dark Side of the Moon while watching “The Wizard of Oz,” there’s an incredible synchronicity that could only come about had the band literally planned the entire album around the movie.

There is some debate over whether the sync should start with the first or third roar of the MGM lion, but you get the idea. Why do this? Because you can.

——————————————-

A Weekly Shout Out To My Columbia Grad Students

Our third class of the summer semester was held on the Columbia University campus this week, and my students continue to be one of the most engaged groups of students I’ve had.

To continue the Billionaires Row theme of last week, be sure to watch the essential “A Walking Tour and History Of Billionaires’ Row” for terrific context on how this submarket of development evolved.

——————————————-

Did you miss last Friday’s Housing Notes?

July 21, 2023: Housing Market Analogies As Strong As Glass

But I digress…

The Hamptons Market Saw A Record Share Of Luxury Bidding Wars

I’ve been the author of an expanding series of market reports for Douglas Elliman Real Estate since 1994.

This week Douglas Elliman published our reseach in Long Island and Southern California (the latter comes further down the page).

Bloomberg’s coverage included a cool chart which is always a kick:

________________________________________________
LONG ISLAND HIGHLIGHTS

Elliman Report: Q2-2023 Long Island Sales

“The median and average sales price trends showed annual stability with only minor changes.”

– Median sales price slipped year over year to the third-highest on record
– Sales declined year over year for the seventh straight quarter
– Listing inventory dropped annually for the first time in three quarters
– Luxury median and average sales prices slipped year over year but remained sharply above pre-pandemic levels
– More than one out of four luxury sales sold above the last asking price
– Luxury listing inventory dropped annually for the first time in three quarters

________________________________________________
HAMPTONS HIGHLIGHTS

Elliman Report: Q2-2023 Hamptons Sales

“Despite the expansion of luxury listings, they remained historically low, resulting in a record market share of bidding wars.”

– Listing inventory edged higher year over year but remained well below half of pre-pandemic levels
– Median sales price decreased annually for the third time but was nearly double pre-pandemic levels
– Sales for a second quarter were the lowest on record in more than sixteen years of tracking
– Luxury market bidding wars were nearly a third of all sales, a new record

________________________________________________
NORTH FORK HIGHLIGHTS

Elliman Report: Q2-2023 North Fork Sales

“Price trend indicators were at near record highs as listing inventory remained chronically low.”

– Median and average sales prices increased annually to the third-highest on record
– Listing inventory rose nominally year over year but was two-thirds below the pre-pandemic level
– Sales have fallen annually for the past two years
– One out of four sales in the quarter closed above the list price

National Rent Growth Is Declining

According to Apartment List, the year over year change in rents is beginning to decline via their national index. The article is chock full of charts. After rising to record levels three months in a row, Manhattan’s June rent slipped 2.2% month over month to the second highest level on record. We’re releasing our July report in less than two weeks.

Southern California Has A Chronic Listing Shortgage

Like much of the U.S. housing market, this region also suffers from the limited amount of listing inventory available to buyers.

_____________________________________________________________________________
GREATER LOS ANGELES, INCLUDING WESTSIDE AND DOWNTOWN SALES HIGHLIGHTS

Elliman Report: Q2-2023 Los Angeles Sales

“Listing inventory remained limited, restraining sales in addition to reduced affordability from higher mortgage rates.”

– Price trend indicators showed mixed annual results but remained well above pre-pandemic levels
– Listing inventory edged higher year over year for the third straight quarter and remained well below pre-pandemic levels
– The number of sales declined year over year for the sixth straight quarter
– Luxury average price per square foot for luxury single families reached a new high for the second straight quarter

LA SUBMARKETS

Elliman Report: Q2-2023 Malibu/Malibu Beach Sales

– Malibu price trend indicators of single families showed mixed annual trends, with results remaining well more than double pre-pandemic levels
– Malibu Beach price trend indicators surged annually to more than double pre-pandemic levels

_____________________________________________________________________________
ORANGE COUNTY SALES HIGHLIGHTS

Elliman Report: Q2-2023 Orange County Sales

“Both median and average sales prices slipped from the year-ago records to the second-highest we’ve tracked.”

– Median sales price slipped year over year to the second-highest on record
– Listing inventory fell annually by nearly half, significantly restraining sales
– Bidding war market share accounted for roughly half of all closings

_____________________________________________________________________________
SAN DIEGO COUNTY SALES HIGHLIGHTS

Elliman Report: Q2-2023 San Diego Sales

“Both median and average sales prices slipped from the year-ago records to the second-highest we’ve tracked.”

– Median sales price slipped year over year to the second-highest on record
– Listing inventory fell annually by nearly half, significantly restraining sales
– Bidding war market share accounted for roughly half of all closings

Diminished Borrowing Power Of Higher Rates

Len Kiefer, Deputy Chief Economist at Freddie Mac, and chart building maven, created this cool chart which illustrates the cost of higher interest rates and why homeowners aren’t selling. The average homeowner has $50,000 in additional house value because of the rise in mortgage rates. Len explains:

The way the formula works is this. A borrower currently has a mortgage with monthly (P&I) payments of P with N remaining months. We take the difference between what the borrower currently owes and the amount they could borrow with payments P over N periods given current market rates. Because rates are higher now the borrower would be able to borrow a lot less ($55k on avg).

According to the Federal Reserve, the average sales price of a U.S. home was $495,100 in Q2-2003 – if we call it $500,000 and the locked-in value $50,000, homeowners are enjoying a 10% premium just by the spike in mortgage rates. That’s my interpretation.

A Walking Tour and History Of Billionaires’ Row

This is such a well-done video that is going viral by architect Nicholas Potts and Architectural Digest. It conveys the logic of how what and why. I promise, it’s worth watching in its entirety.

Today architect Nick Potts joins AD in New York City for an in-depth walking tour of Billionaires’ Row in Midtown Manhattan. West 57th Street has been attracting Manhattan’s wealthiest residents for centuries–a former amalgamation of brownstone and gothic mansions in the 1800s, the street has evolved into a hotspot for supertall luxury skyscrapers boasting the three tallest residential buildings in the world. Join Nick as he deep-dives into the area’s rich history and explains why Billionaires’ Row could only be built on 57th Street.

Falling Construction Cranes Are An Infrequent Fact Of Life In NYC

So is the weather…

Pocket Listing Market Share In LA Has Collapsed

We compare MLS listings against public records in Los Angeles every quarter, and their use as a marketing strategy has collapsed. A pocket listing is a listing that doesn’t enter the MLS, and the world doesn’t see what your 17 bathrooms look like. It’s usually an effort to maintain privacy and exclusivity for the property.

Getting Graphic

My favorite housing market charts of the week of our own making

My favorite housing market/economic charts of the week made by others

Kastle card swipe data charts

Remember that Kastle charts are overstating occupancy* because their pre-pandemic occupancy benchmark was 100% which is simply incorrect (*measures card swipe activity as a proxy for occupancy).

Len Kiefer‘s chart handiwork

My favorite random charts of the week made by others

Appraiserville

Beware Of Bifurcated Appraisals

The entire concept of bifurcated appraisals represents a fundamental misunderstanding of the appraisal process. To have an individual inspect a property and then convey that information to an appraiser to complete the valuation is tragically flawed because:

– Inspections and qualifications of an inspector are not standardized, not insured, not licensed (a convicted felon was caught doing one of these)
– An immense part of understanding the value of property occurs while walking through it (like observing the occupancy of 50 feral cats)
– It is generally more expensive (but I think its cheaper) to parse the functions out
– Places the consumer at risk unnecessarily

Phil Crawford of Voice of Appraisal breaks it down with perfect clarity (and his smooth velvety radio voice) as a guest on The Rock & Roll Real Estate Hour in Cincinnati.

OFT (One Final Thought)

Because every good Dad loves to brag about their kids, and I’ve got four sons of which my wife and I are eternally proud of, one of them had a big moment recently that I wanted to share.

He’s a police officer and helped rescue a woman with problems off the roof of a home. My son is the rescuer on the right side of the cherry picker – the story made national news.

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons at 2 p.m.) 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 see the dark side of the moon;
– You’ll follow the yellow brick road;
– And I’ll be on the roof with my son.

Brilliant Idea #2

You’re clearly full of insights and ideas as a reader of these Housing Notes. Please share them with me early and often. I appreciate every email I receive, as it helps me craft the following week’s Housing Note.

See you next week!

Jonathan J. Miller, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog
@jonathanmiller

Reads, Listens and Visuals I Enjoyed

My New Content, Research and Mentions

Recently Published Elliman Market Reports

Appraisal Related Reads

Extra Curricular Reads