The Housing Market Can't Defeat The Laws Of Physics

The Housing Market Can’t Defeat The Laws Of Physics


Did you miss last Friday’s Housing Notes?

October 27, 2023: Sometimes Housing Feels Like It’s Going Off A Cliff

But I digress…

New York Metro Is Moving Beyond The One Year Mark Of Pandemic Data Distortion

We began this monthly series for Douglas Elliman that tracks newly signed contracts by price tranche during the pandemic. With the Fed pivot on rates, its also been helpful in better understanding the performance of different segments based on recent activity.

Elliman Report: October 2023 New York New signed Contracts

Here are the results of the Manhattan market:

It Only Took a Missouri Jury 2.5 Hours To Decide NAR Was Behind A Conspiracy To Raise Commissions

Wow. It’s over, just like that.

For years, NAR pushed the “cooperative compensation rule” where the seller had to pay a commission to both the buyer’s agent and the seller’s agent and a seller had to pay the commission to appear in an a local MLS in order to be exposed to the market. The “Sitzer/Burnett” class action trial has been closely watched but in reality, this has been an ongoing topic for decades that NAR either ignored or avoided. On top of this, their widely known practice of c-suite sexual harassment and the generally toxic culture at NAR probably accelerated the arrival of the verdict.

2.5 hours to arrive at a verdict in what was supposed to be a complex issue? What are going to be the Las Vegas odds on NAR’s appeal outcome? And this is just one case. There is another imminent class-action trial coming up as well as a few others and likely more after that.

The problem with a monopoly, is that bad behavior can run rampant as it did at NAR.

What are the odds that NAR membership will collapse by more than 1 million members over the next year from its current 1.6 million members? Or that NAR as an organization will go under? It was likely expecting to see a membership decline with the lower level of U.S. home sales – but throw in the impact of this class action decision? I’d say the odds of either bet coming true are probably very high.

Highest & Best Newsletter: Boca Beckons Wall Street

I continue to love this new Florida newsletter: Highest & Best from Oshrat Carmiel, formerly of Bloomberg News…c’mon, sign up and show her an appreciation of great reporting.

🌴 Boca Beckons Wall Street
First new office in 25 years is “a really big deal.” Plus: Bezos to Miami

Specifically, the story about the A Battle of the Barbs in a Miami Beach Tower Fight caught my attention for the attack on a certain kind of bacon, paired with Miami condo development.

Some Florida Markets Are Starting To See YOY Gains In New Signed Contracts

Palm Beach County, Miami-Dade County, and St. John’s County all saw annual gains in newly signed contracts after several years of declines.

Elliman Report: October 2023 Florida New signed Contracts

Growing Gotham: What Does NYC Look Like In The Aftermath Of COVID

If you followed the headlines since 2020, there are only a handful of people left in Manhattan because everyone moved to Florida. I work in Midtown, Manhattan and the sidewalks are packed. How do we square this? And what should NYC focus on to grow and continue to be a place where people want to live and do business?

As part of the CDC’s Migration Working Group over the past year, we’ve been talking about this. Using a Venn diagram analogy, my expertise barely overlaps with the incredible expertise of the group but it was a terrific experience.

The CBC conference n the results of our meetings was held this week: Growing Gotham: Realities, Risks, and Remedies to NYC’s Population Loss was chock full of information and insights.

I encourage anyone reading this post and cares about the future of NYC to spend the needed time listening to the three panels and pouring through the slides. It will help you understand what NYC faces and some ideas on how to move forward.

Here are some of my favorite slides from the conference.

I spoke with a number of economists at the conference that thought the census data was flawed during the pandemic and the population has already returned to pre-pandemic levels.

SoCal: The High End Of Housing Is Growing Faster Than The Remainder

This week, Douglas Elliman published our So Cal research covering October new signed contracts and the market north of $1 million is seeing growth while the overall market continued to decline. It’s probably related to the lower impact of higher mortgage rates on cash buyers.

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

Elliman Report: October 2023 California New Signed Contracts

Los Angeles County
The high-end new signed contract market outperformed the remainder with year over year gains. Both single family and condo newly signed contracts above the $1 million threshold rose annually for the first time in a year and a half while the overall market continued to slip.

Orange County
The high-end new signed contract market surged annually, outperforming the remainder with year over year gains. Both single family and condo newly signed contracts above the $1 million threshold jumped annually while the overall market edged up modestly.

San Diego County
The high-end new signed contract market surged annually, outperforming the remainder with year over year gains. Both single family and condo newly signed contracts above the $1 million threshold jumped annually while the overall market slid.

Ritholtz: The End Of Rate Hikes Is Here

My friend, The Big Picture blogfather, Bloomberg Radio’s Masters in Business host and host of a new podcast “At The Money,” Barry Ritholtz, wrote a piece declaring the Fed was done raising rates the just before the latest Powell press conference: The Fed is Finished*

He makes the point about the fastest rate rise in many decades “where the Fed is creating new problems and making existing ones even worse” such as:

– Lack of Single Family Homes
– Low Mortgage Rate Golden handcuffs
– Owner’s Equivalent Rent

The Fed is Finished* [The Big Picture]

Getting Graphic

My favorite housing market 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

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Voice of Appraisal Podcast Talks Tips, Junk and NAR With Yours Truly, Goes 2 for 2

Phil Crawford interviewed me for a two-parter this week on his must-listen Voice of Appraisal Podcast.

Tips, Junk and Our Last “Chance”! Jonathan Miller joins the show!!! PART 1

Junk and NAR Troubles”! Jonathan Miller joins the show!!! PART 2

AMC Head Discloses His Bias Towards AMCs In Chat Room At Third Appraisal Bias Hearing

This is the third of four planned hearings on the topic of appraisal bias by the Appraisal Subcommittee. I testified at the second hearing back in May.

The third appraisal bias hearing was held in Washington on Wednesday and I found the conversations in the chat room just as interesting. It is clear that people outside the profession don’t have any idea what the cost approach really is. But it gets better.

After reading the initial comments, I noticed Aaron Lively, CEO of an AMC based in Missouri, refuting appraiser comments about their experiences with AMCs. He specifically told me (warning: pretzel logic) that my anti-AMC opinions were biased because I was an appraiser. Of course that brought out calls for him to disclose he was from an AMC. It took him a few beats to disclose that, which basically exposed him as a hypocrite. I don’t know him and he may run a good company, but to use that kind of logic in an argument, is beyond self-serving. This situation is a parallel to the idea that everyone can speak to the appraiser’s perspective except appraisers themselves.

I am so tired of AMCs claiming they speak for appraisers, and that they understand us. The AMC structure has removed our valuation independence.

OFT (One Final Thought)

Somehow this truck defeated the laws of physics too.

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 defy gravity;
– You’ll like open face jelly sandwiches;
– And I’ll think about getting a new pickup truck.

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
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog

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