We're Not Even Thinking About Thinking About Higher Rates As We Race Downhill To The Other Side Of This Crisis

We’re Not Even Thinking About Thinking About Higher Rates As We Race Downhill To The Other Side Of This Crisis

The following video is an excellent analogy for the current state of housing and the economy – the title of this week’s Housing Notes is a take off on the Fed chair’s comments shared this week in a video further down. The uncertainty illustrated here is quite stressful.

But I digress…

Manhattan, Brooklyn & Queens Rentals Continue To See A Plunge In New Leasing Activity As Brokers Are Still Not Allowed To Physically Show Property

I’ve been the 25-year author of an expanding series of market reports for Douglas Elliman Real Estate, now covering more than 35 U.S. Housing Markets. This monthly rental report series covers three of the five boroughs of New York City: Manhattan, Brooklyn, and Queens.

Since the COVID-19 lockdown in NYC, real estate agents/brokers have not been allowed to physically show properties and as a result, new leasing activity has plummeted and most of the price action has occurred on the renewal side of the market which is estimated to be about 2/3 of all transactions and is not shared with the public.

Elliman Report: May 2020 Manhattan, Brooklyn & Queens Rentals


“With the inability of real estate agents to physically show property per state’ shelter in place’ rules, there has been a sharp drop in new lease signings and limited price discovery during the Coronavirus crisis.”

– The lowest total of new leases recorded for the month of May in a decade
– The second-largest year over year decline in new leases in a decade
– The largest year over year increase of listing inventory in forty-five months
– The first year over year decline in median rent for non-doorman apartments in seventeen months
– New development median rental price declined year over year
– Luxury market rents retreated from their year-long price growth
– The starter (bottom 10%) reached a new median rental price record


“The challenge of a near-record decline in new leasing activity and the recent gain in market share of landlord concessions have been amplified due to COVID-19′ shelter in place’ rules for real estate agents.”

– The number of new leases fell annually for the eighth straight month
– Listing inventory expanded for the first time in eleven months
– The market share of landlord concessions rose annually for the first time in seventeen months


[Northwest Region] “New leasing activity continued to see significant year over year declines as state “shelter in place” rules during the COVID-19 crisis have limited new rental transactions and price discovery.”

– Median rent fell year over year for the first time in eight months
– The market share of landlord concessions set a new record over four and a half years of tracking
– Nearly two-thirds of 1-bedroom rentals had some form of landlord concession, a new record

VIDEO State of the City II: Navigating Through COVID-19

Reuveni Real Estate’s President and CEO, Shlomi Reuveni moderated a panel discussion on COVID-19’s effects on market conditions in NYC and Miami. The panel consisted of:

– Hall Willkie, President at Brown Harris Stevens
– David Von Spreckelsen, Group President at Tolls Brothers City Living
– Edgardo Defortuna, President and CEO at Fortune International Group
– Jonathan J. Miller, CRE, CRP, Member of RAC, President and CEO at Miller Samuel Inc.

You can watch it here:

Existing Home Sales Don’t Reflect COVID-19 Yet

It is almost the middle of June so why am I charting the NAR Existing Home Sales Data (EHS) published a few weeks ago (at the end of May)?

Because in a crisis that is changing on a daily basis, the report doesn’t really reflect the COVID-19 crisis yet which technically began in mid-March when it was declared a global pandemic. I wanted to make that point.

The NAR May EHS Report reflects closings from April which generally reflect contracts signed from February and March. Therefore the June Report, which reflects closings in May, which will generally reflect contracts from March and April. Even then, the first half of March was not within the confines of COVID-19. Also, remember, this: While existing home sales currently account for 90% of all home sales, the NAR sample size only reflects 40% of all MLS data.

In creating the following charts, I avoided seasonally adjusted data and only looked at the actual data. I gotta tell you, the housing market has been incredibly consistent for years:

– Seasonality has been maintained
– Listing inventory has fallen
– Prices have risen

And mortgage rate trends have sort of drifted lower…

And it looks like fluctuations in mortgage rates have had no impact on seasonal price trends.

Inflation-adjusted wage growth didn’t start rising until halfway through the 2007-2020 period which correlated with price trends.

It looks to me that wage growth drove prices higher but the lack of inventory intensified the consistency and steepness of price growth. Mortgage rates don’t seem to be the direct driver of price trends.

MiB Podcast: Jonathan Litt on Real Estate Investments – How To Create Value In Real Estate

My friend Barry Ritholtz is a prolific provider of high-quality, all over the place content and his Bloomberg ‘Masters in Business‘ podcast stream is no exception.

This week he speaks with Jonathan Litt, who is the founder and chief investment officer of Land & Buildings. I highly recommend listening to this interview if you are in the business of real estate.

[click on image to play]

VIDEO Interest Rates Don’t Seem To Be Going Anywhere

This week the Federal Reserve provided some insights on how they see the world for the next two years in this WSJ piece: Fed Officials Project No Rate Increases Through 2022:

Watch this clip.

Getting Graphic

My favorite chart of the week of my own making

Len Kiefer‘s Chart Handiwork

Upcoming Speaking Events

June 16, 2020 – Curbed/Streeteasy ‘The Neighborhood’ Virtual Panel “Don’t Call It a Comeback: Patterns in NY Housing Market Recovery

Since the pandemic necessitates a virtual event, notice the menu item for breakfast on the upper right corner of the event landing page. It looks like we self-serve, self-bake in this virtual world.

[click on image to register]


June 18, 2020 – Urban Land Institute (ULI) New York Webinar Series: Assessing NYC’s Residential Real Estate Market

[click on image to register]


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

Inspection Stories: Vertical Air Conditioning

How do you present this in your appraisal report?

OFT (One Final Thought)

The AppleWatch can’t do all that.

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 virus-free;
– You’ll buy an old watch;
– And I’ll think about thinking about skateboarding again.

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

Reads, Listens and Visuals I Enjoyed

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