Predicting The End Of NYC & Its Housing Market Was A Cheap Stunt
The crap New Yorkers read early in the pandemic got lots of SEO points but was a disservice to the public. There is nothing wrong with being critical, but proclamations about a dire dystopian hellscape future became its own misleading narrative. This CNBC tweet comparison uses our data from the recent rental report discussed later on in these notes.
I can’t. pic.twitter.com/afSH5uYPk5
— Carl Quintanilla (@carlquintanilla) May 14, 2021
But I digress…
The NYC Rental Market Saw Record New Lease Signings And Significant Price Declines
This week Douglas Elliman published our April rental market research for Manhattan, Brooklyn, and Queens. This is part of a growing Elliman Report series I’ve been authoring since 1994.
Over the four months, prior to April, it was beginning to look like rental prices were beginning to stabilize. After all, net effective median rental price did not see a decline for four straight months and the rate of annual declines, while still huge, at 16%, were down significantly from 20%+ in the fall.
But despite record lease signings, rental prices are still falling hard. Or should I say, because rental prices are still falling hard, new lease signings are rising sharply.
Elliman Report: April 2021 Manhattan, Brooklyn and Queens Rentals
MANHATTAN RENTAL MARKET HIGHLIGHTS
“The highest number of new lease signings on record spurred on by continued price declines.”
– The highest number total number of new lease signings and the highest annual rate of growth since monthly tracking began in 2008
– Month over month net effective median rent declined annually for the first time in five months and at the highest rate in a decade
– The second-largest year over year decline in median net effective rent in more than a decade
– Landlord concessions rose to their second-highest level, falling just short of the record set back in January
– Both doorman and non-doorman rentals saw their largest year over year declines in nearly a decade of tracking
– Existing rentals saw their largest annual decline in six and a half years and were twice the rate of new development rentals
– The market share of luxury market concessions continued to be less than the remainder of the market
BROOKLYN RENTAL MARKET HIGHLIGHTS
“The market was characterized by record new lease signings combined with a record decline in net effective median rent.”
– The highest number total number of new lease signings and since monthly tracking began in 2009
– Landlord concessions rose to their second-highest level, falling just short of the record set back in January
– While median rent for all apartment sizes fell year over year, 1-bedrooms and 2-bedrooms fell at record rates
QUEENS RENTAL MARKET HIGHLIGHTS
[Northwest Region] “The numbers of leases surged to a new record as net effective median rent fell month over month for the twelfth time.”
– Landlord concessions jumped to their second-highest level, falling short of the record set back in January
– The highest number total number of new lease signings and since monthly tracking began in 2011
– Highest market share of new development listings in eighteen months
The Hamptons and Greenwich Boomed Post-Lock Down Because Housing Has Turned Upsidedown
My NY Times Sunday Real Estate Calculator Column monthly feature came a little early this month: How Real Estate Blew Up in the Hamptons and Greenwich.
I thought it would be interesting to understand see how these markets were showing very robust conditions yet represented two different types of markets – Greenwich, CT as a primary market and the Hamptons as a “coprimary” aka luxury second home market.
With the U.S. and regional economic damage focused on lower-wage earners, higher-end homes, and specifically luxury submarkets have thrived since last summer after languishing for the past several years.
The recalibration of these markets continues.
The NYC Mayoral Candidates Whiff On Our Brooklyn Housing Market Obsession
If you live in and around NYC, you know have a sense of what housing prices are. You should. Everybody talks about it all the time and we are flooded with information about it. It’s a regional obsession.
Earlier this week, my phone, text, and Twitter feed lit up after NYC mayoral candidate Shaun Donovan was asked what the median price of a Brooklyn home was. He guessed $100,000. For those that don’t know, Shaun is a policy wonk with a lot of affordable housing policy proposals. After all, he was the U.S. Secretary of Housing and Urban Development (HUD) from 2009 to 2014, and the Commissioner of the New York City Department of Housing Preservation and Development (HPD) from 2004 to 2009.
The problem with his answer was that he was $800,000 off and Brooklyn housing prices haven’t been that low in 40 years. That was troubling to many who are looking to the next mayor to provide policy solutions to create more affordable housing. It’s one of the key issues facing the city. Donovan punted and claimed he thought the question was about “assessed value” which is not a believable pivot.
My favorite Twitter question was this and be sure to read the thread:
— Ali Elkin (@AliElkin) May 11, 2021
And this thread…
I can't fall down this rabbit hole today, but I'd really like to know the last time the median home price in Brooklyn was $100K. When I moved here in 2005, my first beat was real estate/development, and the median price had to have been quadruple that, at least. @jonathanmiller? https://t.co/I3y1gbar5v
— Sarah Ryley (@MissRyley) May 11, 2021
The New York Times shared his error in their piece Shaun Donovan Mayoral Endorsement Interview and started the firestorm also linked out to my firm as the source of the $900,000 Brooklyn median sales price, a reference to our Elliman Report: Q1-2021 Brooklyn Sales.
Bloomberg wrote about it NYC Mayoral Candidates Whiff on Brooklyn Home Question and made a cool chart…
And a Slate piece New York’s Mayoral Candidates Fail the “Price of Housing” Question contained the best quote of the day:
In relative terms, then, Donovan’s appraisal of the Brooklyn housing market is wrong in the same way it would be wrong to guess that a Big Mac meal costs $1, a can of Coke costs 12 cents, or a gallon of gas costs 40 cents.
My favorite charts of the week of our own making
My favorite charts of the week made by others
— Barry Ritholtz (@ritholtz) May 14, 2021
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
Who Knew? Solar Energy Is More Important To Appraisers Than USPAP Politics?
Based on the view count at Appraisal Buzzcast, it sure looks like appraisers want to know more about solar energy than any other recent topic.
Cosmic Cobra Guy says USPAP may now not be enforceable in Texas
I think Jeremy’s concern is even more serious for Texas because of the recent TAF decision to extend the current edition of USPAP for another year due to COVID without any advanced notice to the 55 states and territories. It is clear that TAF is feeling public pressure to expand beyond the two-year cycle and using COVID as an excuse was simply a way to save face.
May 11, 2021 Release From Appraiser Jeremy Bagott
SCOFFLAW ACTIVITY AT TEXAS APPRAISER BOARD SPREADS TO CENTRAL APPRAISAL DISTRICTS
– In his column last year in the Austin American-Statesman, appraiser Jeremy Bagott warned that the Texas Appraiser Licensing & Certification Board was in open violation of Texas state law.
In a column this month in the Lubbock Avalanche-Journal, Bagott warns that the horse has bolted – all 254 central appraisal districts, which function as county assessors in the Lone Star State, have repeated the defect in their biennial reappraisal plans. The state’s Department of Banking, Department of Housing and Community Affairs, Credit Union Department and Public Utility Commission are similarly in violation of Texas administrative law.
After his column ran in the Statesman, a number of appraisers asked Bagott for suggested wording that cautions clients and intended users that the “2020-2021 Uniform Standards of Professional Appraisal Practice” have not been adopted into Texas law. He suggested the following:
The client and any intended users should be aware that the Texas Appraiser Licensing & Certification Board Commissioner has not submitted the “2020-2021 Uniform Standards of Professional Appraisal Practice” to a required notice-and-comment rulemaking pursuant to the procedures and standards set forth in the Texas Administrative Procedure Act (Texas Government Code § 2001.021). In addition, Title 1 of the Texas Administrative Code § 91.40 requires any state agency adopting by reference (ABR) a document into law to “note the revision date of the ABR information” and to “amend the rule to adopt a newer version of the ABR information.” This requirement has not been met either. Absent a required rulemaking, the “2020-2021 Uniform Standards of Professional Appraisal Practice” is not recognized by the State of Texas and would not likely be enforceable if challenged.
The scofflaw activity is linked to the two-year change cycle of the standards. Some states cannot reliably complete a required rulemaking in a two-year period, so they bluff.
“I think it’s been an article of faith among the state’s mortgagors, underwriters, investors and bank depositors that USPAP is enforceable in Texas,” said Bagott. “Sadly, it’s likely not the case, because of the deficient rulemaking.”
Appraisers may now need to disclose this in their reports, so as not to risk inadvertently misleading their clients.
“I think people would be very surprised to learn of this,” said Bagott. “It’s regrettable.”
# # #
Hoisting the flag of waste and abuse, Jeremy Bagott, a licensed appraiser and former newspaperman, issues a clarion call in his 2019 book “Dispatches from the Cosmic Cobra Breeding Farm.” He takes the reader deep inside a tiny Washington, D.C., foundation that has managed to have its copyrighted code of conduct enshrined in federal and state law. All 50 states, even the U.S. territories of Guam and the Northern Mariana Islands, now enforce it. The 14-employee nonprofit, known as the Appraisal Foundation, has parlayed the arrangement into a lucrative publishing cartel with top officers and favored trustees jet-setting to Europe and Asia. In the process, the author uncovers a troubling trend deep in the plumbing of government.
OFT (One Final Thought)
A spellbinding extract from The Art of the Marbler – 1970 – by the Bedfordshire Record Office of Cockerell marbling. pic.twitter.com/Zn47bRF0vt
— Flashbak.com (@aflashbak) May 13, 2021
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 know the median sales price in Brooklyn now;
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– And I’ll know the Brooklyn median sales price in 1981.
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
- A Day in the Life of Wall Street Shows NYC at Cusp of Comeback [Bloomberg]
- People are panic buying homes as prices skyrocket around the world [CNN]
- Opinion | What Does Big City 2021 Look Like After Covid-19? [NY Times]
- A Fairly Exhaustive Oral History of the Still-Wild McKibbin Lofts [Curbed]
- Compass Reports First Quarterly Earnings [The Real Deal]
- Americans Up and Moved During the Pandemic. Here’s Where They Went. [Wall Street Journal]
- Housing-Market Surge Is Making the Cheapest Homes the Hottest [Wall Street Journal]
- Miami as a Tech Hub? It’s Lacking One Critical Subculture [Bloomberg]
- America’s economy added far fewer jobs than expected in April [Economist]
- Supply of homes for sale around Philly is predicted to stay low for a while [Inquirer]
- When Is the Revolution in Architecture Coming? [Current Affairs]
- We Need to Build More Houses [A Wealth of Common Sense]
- The Breakout Cities on the Forefront of America’s Economic Recovery [Wall Street Journal]
- The Mortgage Boom Is Fading [Wall Street Journal]
- America’s Post-Pandemic Geography [City Journal]
- Old Buildings, New Views [NY Times]
- Housing Boom For Whom? Plus, 'Ziwe' Premieres : It's Been a Minute with Sam Sanders [NPR]
My New Content, Research and Mentions
- The North Fork Has Its Own Market Moment [NY Times]
- NYC Apartment Rents Plunge 21%, Even as New Leases Hit Record Highs [NBC New York]
- The Hamptons’ Priciest Sales [The Real Deal]
- Renters and buyers come to NYC for pandemic price breaks [CNBC]
- The Hamptons Boom Continues [NY Times]
- Leasing Activity And Concessions up in NYC in April [The Real Deal]
- New York City renters grabbing apartment deals as they plot office returns [Business Times]
- Mayoral Candidates Clueless on What Homes Cost in Brooklyn [The Real Deal]
- Price drops add fuel to Manhattan’s fiery rental market [Crain's New York]
- A spring market on ‘steroids’: Lower NYC rents fueled record demand in April [Brick Underground]
- The End of New York City? The Latest Rental Data Says Otherwise [Mansion Global]
- How appraisers value homes in a hot housing market [HousingWire]
- How Real Estate Blew Up in the Hamptons and Greenwich [NY Times]
- NYC Renters Grab Apartment Deals Now as They Plot Office Returns [Bloomberg]
- It’s One House in Brooklyn, Shaun Donovan. What Could It Cost? [Slate]
- 2 NYC Mayoral Candidates Stumble During Quiz About Housing Prices In The City [Huff Post]
- Manhattan rents just hit an all-time low. But even if we're at the bottom, there's still time to score a cheap apartment. [Business Insider]
- NYC Mayoral Candidates Whiff on Brooklyn Home Price Question [Bloomberg]
- Condo Sales See April Increases in Manhattan, Brooklyn and Beyond [ConnectCRE]
- Podcast: Jonathan Miller Discussed – Housing's "Roaring Twenties" to Continue for a While [Bloomberg]
- Serious buyers only: The 10 priciest new Hamptons listings [The Real Deal]
- The luxury rental market in New York City is booming, while that in London is declining [What's New 2 Day]
- New York City's luxury rental market is booming while London's sags [Daily Mail]
- Ever inventive, New Yorkers move into RVs to avoid high city rents [New York Daily News]
- Did the Suburbs Kill the City Real Estate Market? Maybe Not. [NY Times]
Recently Published Elliman Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 4-2021 [Miller Samuel]
- Elliman Report: California New Signed Contracts 4-2021 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 4-2021 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 4-2021 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 4-2021 [Miller Samuel]
Appraisal Related Reads
- What’s Your View? [Cleveland Appraisal Blog]
- What to Wear? [DW Slater]
- It's The Market It's Not You [Tom Horn/Birmingham Appraisal Blog]
- Home prices are insane (so is the rental market) [Ryan Lundquist/Sacramento Appraisal Blog]
- Video: Woman Sues After Her Home was Appraised for More Money Once She Removed Black Identifiers [eurweb.com]
- Bagott: Rogue rules add plot twist in property tax pushback [Lubbock Online]
- Build This House: Real Estate Opportunities in The U.S. Under Biden [Counselors of Real Estate]
Extra Curricular Reads
- Opinion | Don’t freak out about inflation yet [Washington Post]
- Fed Officials Have Six Reasons to Bet Inflation Spike Will Pass [Bloomberg]
- Column: If California is such an 'anti-business' state, why is its economy booming? [LA Times]
- Finding it Hard to Hire? Try Raising Your Wages – The Big Picture [Ritholtz]
- Summer Is Coming. So Are Trillions of Brood X Cicadas. [The Ringer]
- Computer World at 40: How Kraftwerk Predicted Our Techno-Utopian Fate [Consequence]
- They moved for in-person school during the pandemic. Now they must decide: Stay or go? [Washington Post]
- Bike Boulevards Are Coming [Bklyner]
- I.P.A. Signing Bonuses and Free Subs: Luring Labor as a Beach Economy Booms [NY Times]
- The Man in the MTA’s Money Room [Curbed]
- Ranked: The Most Popular Paid Subscription News Websites [Visual Capitalist]
- A Misleading C.D.C. Number [NY Times]
- Opinion | Shaun Donovan Mayoral Endorsement Interview [NY Times]
- Robinhood’s Big Gamble [New Yorker]
- The Flying Burrito Brothers: The Gilded Palace of Sin [Pitchfork]
- Washingtonian staff goes on publishing strike after CEO’s op-ed about remote work [Washington Post]
- After update, only 4 percent of iOS users in U.S. let apps track them [Mashable]
- You're Vaccinated. Congrats! Now What Can You Do Safely? [NPR]