Friday The Thirteenth And Coronavirus Pandemic Makes Housing Take A Backseat

Honestly, with this extreme global pandemic and the helplessness I feel, I could care less about analyzing the housing market at this point. But I will soldier on in limited capacity as I self-quarantine at home.

During a global public health crisis like we are experiencing now with the coronavirus, having proper context and removal of political bile is essential to keep all of us from evolving into a panic.

What are you doing right now?

This is a fundamental way to look at the pandemic:

But I digress…

Peak Uncertainty Got Marginalized With Covid-19

Over the past few weeks, I’ve been writing about something I call “Peak Uncertainty” as it pertains to the NYC housing market. For the past two years, buyers and sellers of housing have been grappling with and trying to process all the uncertainty that has come their way.

2018 The Federal SALT Tax had a significant impact on high-cost, high-tax housing markets in the northeastern U.S. and California, causing a slowdown in activity until the tax became priced into the market.
2019 The New York State political zeitgeist went on a tear against homebuilders and wealthy property owners by introducing a mansion tax, a higher transfer tax and a new rent law that punished landlords. A pied-a-terre tax was introduced that would have been like a Mansion tax but annualized and would have essentially ended new development activity in NYC but it was not passed.
2020 The Department of State issued guidance of the June 2019 rent law that created havoc by banning broker commissions on rentals and prompted an industry lawsuit and court stay that will keep things on hold until June when it will be litigated. A new version of the pied-a-terre tax is now floating the halls of Albany right now as is another bill to place a cap on rents for open market rentals.

All of this policy chaos represented “peak uncertainty” to me for housing consumers in NYC.

Now we have the coronavirus outbreak that was promulgated by a do-nothing federal response that should have begun in late December instead of repeated denials. The 80% cut at the CDC in 2018 may have set the stage for the outbreak we are seeing now in real-time in addition to removing the White House position to handle pandemics in 2018. Now it is too late. After the just fresh 0.5% rate cut we can expect to see federal rate more cuts until we reach zero but banks don’t have the capacity to handle the mortgage volume after laying off back-office staff last year so it is unlikely that the rate cuts will translate into any significant economic upgrade, let alone save the housing market.

As a friend of mine said to me yesterday:

Give us back peak uncertainty! So much better!!

I completely agree.

New York City Rents Continued to Move Higher As Sales Market Softens

I’ve been writing the expanding Douglas Elliman market report series since 1994 and yesterday they published our research on the February 2020 rental market in Manhattan, Brooklyn, and Queens. At this point, it is too soon to see the impact from the New York Department of State guidance on the Statewide Security and Tenant Protection Act of 2019 and a subsequent temporary restraining order issued after real estate industry trade groups and firms filed a lawsuit to stop its execution. I do think that the coronavirus outbreak will have more of an impact on the future trajectory of the sales market than the rental market.

Elliman Report: Manhattan, Brooklyn & Queens Rentals 2-2020

NYC Rental Market Coverage
-Rental concessions are on the decline, but the size of incentives is growing [The Real Deal] -Rents in Brooklyn and Queens hit new highs in February—and continued to climb in Manhattan too [Brick Underground] -Luxury Rental Prices and Transactions in Manhattan Fell in February [Mansion Global]


“Rental prices pressed higher as the use of concessions declined but remained elevated.”

– Despite the eleventh year over year decline in concession market share, free rent reached its highest level in nearly two years
– The ninth straight month where all three overall price trend indicators rose year over year
– The number of new leases fell year over year for the seventh straight month as landlords were more successful at the time of renewal
– The new development median rental price fell year over year for the first time in ten months
– The net effective median rent rose annually for the fourteenth straight month
– Luxury median rent declined annually for the first time in eleven months


“Median rental price reached a new high as concession market share declined.”

– New leases have fallen sharply year over year for the fifth straight month as landlords improved tenant retention at renewal
– The net effective median rent rose annually for the fifteenth consecutive month
– The luxury median rose year over year for the sixteenth straight month

[Northwest Region]

“Average rental price rose to a new record despite the expansion of landlord concession market share.”

– The market share of landlord concessions rose year over year for the second time in three months
– All three overall price trend indicators rose year over year for the second straight month
– The highest free rent equivalent in more than four years

We’re Building More Rental Housing Than For Sale Housing

Housing prices are rising partly because we are building more rental housing these days. There was a great piece in The Wall Street Journal on this phenomenon: Plunging Mortgage Rates Might Not End U.S. Housing Doldrums – Hangovers from financial crisis limit new construction and keep prices high, weighing on economy

Here are some graphics from the WSJ piece. Quite compelling.

Getting Graphic

Len Kiefer‘s Chart Handiwork

FOMO Versus Virus, It’s A Toss-up So Far

There was a great summary piece in Bloomberg on conflicted homebuyers and exposure to the potential virus. However, I’m highly confident that within a few days, personal safety will win the day (or the next few months). The spring market might be a shadow of its past self.

Our listing data seemed to support this:

This year through early March, a time when inventory always rises ahead of the spring buying season, Manhattan listings climbed only 2.4%. That’s down from the 8.9% average increase for the same period over the past decade, according to appraiser Miller Samuel Inc.

For NYC Homebuyers, Virus Angst Clashes With Fear of Missing Out [Bloomberg]

Upcoming Speaking Events

At this point, who cares?


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

The Appraisal Foundation Issues a Coronavirus FAQ

Coronavirus and Appraisers: Your Questions Answered [TAF]

I hate to state the obvious here, but since appraisers are walking into potential Petri dishes of viral contamination every day or might be a carrier of the virus themselves and not know it, and you have appraisers that work for you, it is your responsibility to keep them as safe as possible as well as the borrowers or clients they interact with.

This is not a test…!

OFT (One Two Final Thoughts)


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Everyone reacts differently to stressful situations. And the fear and anxiety resulting from the recent outbreak of COVID-19 can be extremely overwhelming. Through the game of basketball, we've been able to address major issues and stand together as a progressive league that cares about the players, the fans, and the communities where we work. I'm concerned about the level of anxiety that everyone is feeling and that is why I'm committing $100,000 through the @KevinLoveFund in support of the @Cavs arena and support staff that had a sudden life shift due to the suspension of the NBA season. I hope that during this time of crisis, others will join me in supporting our communities. Pandemics are not just a medical phenomenon. They affect individuals and society on so many levels, with stigma and xenophobia being just two aspects of the impact of a pandemic outbreak. It's important to know that those with a mental illness may be vulnerable to the effects of widespread panic and threat. Be kind to one another. Be understanding of their fears, regardless if you don't feel the same. Be safe and make informed decisions during this time. And I encourage everyone to take care of themselves and to reach out to others in need — whether that means supporting your local charities that are canceling events, or checking in on your colleagues and family.

A post shared by Kevin Love (@kevinlove) on


Watching this interview on Covid-19. It is quite eye-opening.

Michael Osterholm is an internationally recognized expert in infectious disease epidemiology. He is Regents Professor, McKnight Presidential Endowed Chair in Public Health, the director of the Center for Infectious Disease Research and Policy (CIDRAP), Distinguished Teaching Professor in the Division of Environmental Health Sciences, School of Public Health, a professor in the Technological Leadership Institute, College of Science and Engineering, and an adjunct professor in the Medical School, all at the University of Minnesota.

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 do more social distancing;
– You’ll have cleaner hands;
– And I’ll try not to panic.

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.
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