Squirreling Away Our Housing Data

May 17, 2019

This happens every…single…day.

But I digress…

Hamptons Sellers Are Starting To Get The Message

Michael Kolomatsky of the Calculator column in the New York Times real estate section crafted a cool infographic for this weekend using data from the Douglas Elliman‘s Hamptons Sales report that I author. The gist of it is that sellers are slowly pricing closer to market causing days on market and the listing discount to compress somewhat. This faster moving pattern is in sharp contrast to sliding price trends, declining sales, and rising inventory. The narrative in this market clearly reflects a slowdown, but with a vibrant regional economy, the buyers are here, but unwilling to pay at price levels of a few years ago.

And there’s more to the high-end Hamptons story – here are a few others from this week:

In the High-Flying Hamptons, Real Estate Is in a Rut [New York Times

Chinese-Inspired Hamptons Home Resurfaces for $20 Million Less [Wall Street Journal]

From the beginning of Kathy Clarke’s WSJ story:

Amid a slow market, a Hamptons home with lots of China-inspired features is returning to market for $7.9 million—less than a third of the $28 million it briefly sought six years ago.

To the end of this WSJ story (sorry for inserting one of my quotes):

“This is a classic aspirational pricing story,” said appraiser Jonathan Miller. “Certainly we’re seeing some softness in pricing, but no where near what that price cut represents. It shows you how wildly overpriced many properties were during that period of peak luxury.”

Inside Edition TV: The Fifth Avenue Retail Apocolypse?

Real estate brokerage firm Cushman & Wakefield wrote a research piece on the prime Fifth Avenue retail corridor from 49th Street to 60th Street that was covered in a widely read Wall Street Journal article called Fifth Avenue Losing Luster as Vacancies Climb, Rents Fall. The following chart was in the WSJ article. Luxury real estate here peaked at about the same time.

Inside Edition reached out and asked me to take a stroll with reporter Les Trent on Fifth Avenue to talk about the state of luxury retail. Les was great to speak with and like a true pro, he had access to sidewalk chalk (see video). I think I am in a lot of tourist pictures as they were snapping my picture as we strolled up and down Fifth Avenue.

If you’ll notice in the video and article, all the vacancies were related to the fashion/clothing industries. The 1 out of 4 storefront vacancies – essentially 1 empty storefront on every block – is not reflective of NYC retail employment patterns, but simply the pullback of clothing/fashion industries from high-end retail locations as they place more resources toward their online presence.


[click to play]

Lower Priced Ground Floor Apartments Come At A Cost

The always must-read “Ask Real Estate” New York Times column by Ronda Kaysen had a great Q&A about a ground floor apartment.

The 123 comments so far on the column say it all, especially this one:

What’s more important to the both of you? Your safety or ventilation? Get a security gate and he should pay for it or a new boyfriend who cares more about you.

In my experience confirmed using empirical evidence, ground floor Manhattan apartments usually go for 10% to 15% less than the identical apartment a few floors higher. Why?

UBS Bubble Index: New York and Boston Slightly Overpriced, Hong Kong Wildly Overpriced

I know this info is a tad dated, coming from an October 8, 2018 post on Visual Capitalist, but the UBS Global Real Estate Bubble Index still relevant and fascinating:

Wolf Bites: Rent Regulation and the Value of Townhouses

I’ve known and followed the writings of Manhattan real estate broker Wolf Jakubowski for years. There is a big movement in Albany towards additional rent regulations and this will have an impact on the Manhattan townhouse market. Here is his view from his “Wolf Bites” newsletter.

U.S. Economic Stats Seem Strong, But Why Doesn’t It Feel That Way?

My friend, author, appraiser-colleague and author-appraiser-colleague-friend Maureen Sweeney shared this thread:

Open and be sure to read this entire thread. Anecdotal takeaway: U.S. Companies, despite strong earnings and lots of cash, are unusally nervous.

Getting Graphic

Len Kiefer‘s Chart Handiwork and here.

Upcoming Speaking Events

Appraiserville

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

Maureen Sweeney Wrote A Book!

My friend and Chicagoland appraiser Maureen Sweeney, SRA, AI-RRS, IFA, CDEI wrote an essential book on valuation, outside of the single family realm. The Valuation of Condominiums, Cooperatives, and PUDs is available at the Appraisal Institute web site.

I purchased the PDF version so I can refer to it on my iPhone while inspecting a co-op or condo which comprises 98% of my residential market (Manhattan). Just kidding. Yes, I purchased it but I won’t refer to it during the interior inspection. I’ll read it while I’m walking to and from my inspections.

New York RICS Conference – Session on Big Data

My friend and Head of Valuation for Natixis CIB, Cate Agnew, CRE, FRICS, CCIM, MAI, spoke on a panel of U.S. valuation leaders on the topic of big data at the recent RICS conference in New York. It was a fascinating discussion about “Big Data” with a mixture of “gee whiz” and “wait a second.”

It became quite apparent that big data aggregators there were arguing that even if they don’t have access to private data essential for valuing income property reliably, they would simply get more data and would be able to achieve an accurate result. I find this line of thinking completely misleading and self-serving. More raw data is not always better. Remember that aggregators like Zillow, Costar and others have no economic incentive to be accurate. They solve any problem with simply providing more data. Think about what is happening now in the real estate space. The aggregators are enjoying higher valuations while the actual providers of the raw data are losing value. Wait until blockchain becomes a force. All the aggregators will become irrelevant.

Appraisers are also providers of raw data and aggregators like CoreLogic or AMCs like Servicelink will be irrelevant down the road when blockchain gains critical mass. Otherwise, the service providers will eventually go bankrupt and these aggregators won’t have a data source. The current big data model, by definition, is not sustainable.

OFT (One Final Thought)

Brilliant Idea #1

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– They’ll begin on the ground floor;
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– And I’ll text in the right lane.

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
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog
@jonathanmiller

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