Higher Mortgage Rates' Impact On Housing Are Like "Fresh-ish" Clams

May 6, 2022

Higher Mortgage Rates’ Impact On Housing Are Like “Fresh-ish” Clams

…you’re not quite sure what you’re getting. The first 3:40 seconds of this Daily Show clip explains the rise in interest rates in the best way I’ve seen recently.

Along those lines, here’s a video from Westchester real estate broker that I’ve always admired for his candor. Philip shouted out “Pre-covery” when I was speaking at an event in 2013 based on what I was saying and I adopted it into my terminology immediately. In this clip, he tries to temper seller expectations to what the recent spike in mortgage rates means to them.

But I digress…

New Signed Contracts In New York, Florida, And SoCal Show Slight Ease In Growth

I’ve been the author of an expanding market report series for real estate firm Douglas Elliman since 1994. One of the newest additions has been New Signed Contracts Reports for New York Metro, Florida, Colorado, and Southern California during the pandemic lockdown.

We are now two years out and 2022 has been a story of the collapse in listing inventory and the resulting restraint in sales.

Using my listing stats in my suburban hometown in Connecticut to illustrate the collapse (I see in most of the U.S. markets we cover for Douglas Elliman). Here’s how it goes:

200 (2017-2020)
50 (2021)
12 (2022)

That’s not a supply “decline.” It’s a “collapse.”

I’ve shared the four reports below and a sampling of charts – the continuing theme except for New York City itself is falling new signed contracts, with some sign that the spike in mortgage rates, combined with low supply, is providing additional restraint on new signed contracts.

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New York New Signed Contracts Report
– The New York report attached covers Manhattan, Brooklyn, Long Island, Hamptons, North Fork, Westchester County, Fairfield County, and Greenwich, CT.

The Elliman Report: New York April 2022 New Signed Contracts

Here’s a sampling of charts – you can find more in our chart gallery.

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Florida New Signed Contracts Report
– The Florida report includes the counties of Duval (New), St. Johns (New), Miami-Dade, Broward, Palm Beach, Pinellas, Hillsborough, and Collier (New).

The Elliman Report: Florida April 2022 New Signed Contracts

Here’s a sampling of charts – you can find more in our chart gallery.

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Colorado New Signed Contracts Report
– The Colorado report covers Aspen and Snowmass Village.

The Elliman Report: Colorado April 2022 New Signed Contracts

Here’s a sampling of charts – you can find more in our chart gallery.

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California New Signed Contracts Report
– The California report contains the counties of Los Angeles, Orange, and San Diego.

The Elliman Report: California April 2022 New Signed Contracts

Boroughs & Burbs 50: “Can Housing Keep Rising” A Conversation with Jonathan Miller on Rising Rates

I joined John Engel of Douglas Elliman and Roberto Cabrera of Brown Harris Stevens again on their 50th episode of the “Boroughs & Burbs” podcast along with custom home developer Scott Hobbs of Hobbs, Inc.

It was a fun and engaging conversation just like I experienced 6 months ago on a previous episode. Here’s the promo text:

The news is very confusing these days. There are many contradictions. We hear talk of a bubble and runaway housing costs are met with Fed tightening and the end of the stimulus. We know Millenials are starting families, experiencing record low unemployment and rising wages. And yet record inflation, supply chain problems, rising energy prices and rising commodity prices seem to add a level of uncertainty not seen in our lifetime. Oh, and robots will take our jobs, and we could experience world war. So, we are trying to separate the signal from the noise. This week we talk to a man who has been studying housing prices since founding his firm in 1986. We’ll ask him which of those headlines matter most to the real estate market, and which of those factors we can largely ignore.

CBS News New York: Federal Reserve raises interest rates to try to tame soaring inflation

I did a quick interview for CBS New York this week on the housing topic everyone is obsessing over right now.

The Federal Reserve raised interest rates Wednesday in an effort to tame inflation that’s soaring at a 40-year high. Short-term borrowing was nudged up a half a point, and as CBS2’s Carolyn Gusoff reports, consumers are going to feel it in their bank accounts. Rising interest rates mean it will cost more for a car loan, to pay off a credit card and pay a mortgage.

Long Island Homebuyers Are Shifting Towards ARMs


[Newsday]

There’s a good Newsday piece: More borrowers pay mortgage points, choose adjustable-rate mortgages that illustrates what consumers are doing to defray the rising costs of borrowing.

Mortgage rates have risen during a period of high inflation. The Federal Reserve on Wednesday took its most aggressive action since 2000 to tame inflation, increasing its benchmark interest rate by a half-percentage point and indicating it would authorize several more increases this year. Mortgage rates are not tied directly to the Fed’s benchmark rate; they are more connected to the 10-year Treasury yield.

From A Window To A Balcony

Ugh, no thanks and I’m not even getting to the part about washing the window everytime you close it.

Rich Barton, Zillow Offers and BHAG

There is a terrific Businessweek piece on Rich Barton and the Zillow Offers collapse. Its fascinating to try to understand people that think bigger than what seems possible.

How Managing by Moonshot Doomed Zillow’s Home Flipping

My favorite quote from the piece and an acronym now embedded in my head: BHAG

In the 1994 book Built to Last: Successful Habits of Visionary Companies, the management guru Jim Collins introduced the concept of the Big Hairy Audacious Goal. The BHAG (pronounced “bee-hag”) describes a method of stimulating progress by setting a clear, possibly unreasonable objective and chasing it relentlessly.

Getting Graphic

My favorite charts of the week of our own making

My favorite charts of the week made by others

Len Kiefer‘s Chart Handiwork

Upcoming Speaking Events

Appraiserville

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

The Appraisal Foundation Makes Personnel Moves

– Jillian White, SRA, Head of Collateral, Better Mortgage, and one of the rising stars of the housing industry was finally appointed to the Board of Trustees. This is a great move.

– John F. Ryan seems to have been removed as Chairman of the AQB after only four months of service and replaced with an acting chair?

Here is a May 6, 2022 screenshot of the AQB page of ‘Current Board Members’:

And here is the March 5, 2022 screenshot of the same AQB of ‘Current Board Members’ using the Wayback Machine:

Why the sudden change of the AQB chairmanship and when will Dave (who signed the bat-shit crazy letter) share the reason with the public?

AQB is an especially critical TAF technical board right now during this period of heightened scrutiny on the appraisal industry. A sudden bout of musical chairs deserves an explanation if TAF’s mission is to protect the public trust. I look forward to TAF sharing the reason soon.

OFT (One Final Thought)

We needed this years ago before we became empty-nesters!

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 clam up;
– You’ll be at a higher rate;
– And I’ll throw my clothes in the laundry.

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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