Discussing The Benefits Of Three Different Types Of Housing Construction

June 16, 2023

Wait for it…

Did you miss last week’s Housing Notes? June 9, 2023 – The Housing Market Is Nothing A Brick Couldn’t Fix

But I digress…

New Listings Entering The Market Are At Their Lowest Levels In Years

So prices are rising again. I did the math.

The Difference Between A “Pause” And A “Skip”

The Federal Reserve opted not to raise rates at this week’s FOMC meeting, to which some media outlets used the word “pause” to describe the action. “Pause” implies that the rate increases will not occur for a while. The word “skip” seems to be the proper description even though the Fed chair said “skip” is not correct.

“If you think of the two things as separate variables, then I think the skip — I shouldn’t call it a skip — the decision makes sense,” he told reporters, referring to the speed at which the Fed raises its benchmark rate versus the level to which it will raise it.

However, unemployment remains unusually low, suggesting further rate increases are imminent to tame inflation using their own rationale. To me, that’s a skip. Ten increases in a row at each FOMC meeting, then no increase for one meeting, and resume increases seem to be their indicated pattern. Fedspeak is a complex language to parse. The point I’m making is that it seems unlikely that meaningfully lower mortgage rates are likely over the summer based on our current understanding of things.

Which brings me to my actual point. Because rate increases have been so quick and extreme over the past year, I see it more as demand was suddenly interrupted and that demand is still high, but uncertainty is still higher. If moderate rate cuts enter the discussion in the first half of 2024, I suspect the uptick in demand will be oversized relative to what such a cut would typically represent. It’s just a gut feeling. I’d love to figure out if there is a way to explain it empirically to confirm whether I am entirely out of my mind.

Grand Millenium Tower In San Francisco Is Tilting 29 Inches At The Top

The plan to install pilings to reach bedrock seems to be having mixed results. If it ever sells, the recent listing of a penthouse in the tower would provide tangible market evidence of the damage.

US Inflation Is Coming Down, Especially In New England

Here’s a Bloomberg piece worth noting as it relates to future mortgage rate gains.

US Inflation Rate Drops to Just 2.4% in New England: Map

Wait, Rock Climbing Walls Aren’t What Brings People Back To The Office?

No. Its the commute.

In fact, most of the office buildings around Grand Central are doing well. At least, compared to the rest of Manhattan. (“Everywhere has a lot of vacancies right now,” says one broker with a sigh.) Since the start of 2022, Grand Central has leased the most space —225,000 square feet per month— of any submarket in Manhattan, according to commercial-real-estate firm CBRE.

Aside from location, another way to look at office leasing in the leasing brokerage language of Class A, B & C is this:

The upper half of class A may remain relatively unscathed. The rest is subject to share cuts in rents – the lower half of Class A and all of Class B & Class C.

In other words, the best and all the rest.

$11,990 In 1958 Is $126,176 In 2023 Based On CPI

According to Redfin, Levittown’s median sales price was $610,000 in 2023 or 384% more than the inflation-adjusted 1958 price in 2023 dollars alone. Translation: Build more housing.

The Unabomber’s Cabin Property Analyzed

When I think of the Unabomber tragedy that unfolded from 1978 to 1995, I think of the Unabomber’s cabin where he was captured. What I didn’t realize is that the cabin was moved to FBI HQ early on.

It became a land sale and has traded numerous times. Here’s an interesting read on Realtor.com: What Happened to ‘Unabomber’ Ted Kaczynski’s Infamous Cabin and Property?

Getting Graphic

My favorite charts of the week of our own making

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

Apollo’s Torsten Slok‘s amazingly clear charts.

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).

My favorite random charts of the week made by others

Appraiserville

NAREE Gives Two Awards For Coverage Of Appraisal Industry’s Lack Of Diversity Due To TAF’s Behavior

The National Association of Real Estate Editors awarded two journalists I know and highly respect well-deserved awards for their coverage of the appraisal industry and enabling the lack of diversity through TAF. For the uninitiated, TAF is the organization that wrote the bat-shit crazy letter, the chickenshit letter and is the subject of an active investigation by HUD on whether USPAP promotes a lack of diversity in the appraisal profession (400th out of 400 occupations according to BLS in 2021).

– Kyle Campbell

Kyle’s article in American Banker: HUD probe into valuation bias focuses on Appraisal Foundation

and while we’re at it, Kyle’s article this week: Dangers lurk in the details of policy response to home appraisal bias

– Emily Myers

Here is Emily’s Brick Underground podcast that won the award: Racism and the lack of diversity in the appraisal business

The ARCC Project: An Appraisal Industry Think Tank That Is Already Making An Impression

The ARCC Project had some great meetings already in Washington, DC. thanks to Mike Powers, David Samnick and Lori Noble. More details to follow.

Phil Crawford’s comments in response to “territorial concerns” about regulation:

I’ll have a special podcast next week breaking down ARCC. The ARCC Project will end most of the advocacy fractionalization moving forward. Appraisers know this is the time for complete unity in the profession.

A good day for the appraisal industry!

OFT (One Final Thought)

Having a pool in your backyard can bring significant additional entertainment that is never talked about…

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 be more apt to read murderous nursery rhymes;
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– And I’ll be part of a think tank.

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

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