Sometimes Housing Feels Like It's Going Off A Cliff

October 27, 2023

Sometimes Housing Feels Like It’s Going Off A Cliff

If this doesn’t talk you into relocating to Alaska, I don’t know what will.

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Did you miss last Friday’s Housing Notes?

October 20, 2023: The Proper Way To Go Pick Up A Pizza On A Friday Night In A Tight Housing Market

But I digress…

Hamptons Sales Jumped In The Summer/Fall

I’ve been the author of an expanding market report series for Douglas Elliman Real Estate since 1994. One of the most interesting housing markets has been the east end of Long Island, known as The Hamptons and North Fork.

The story for the last few years has been the drop in sales from higher mortgage rates and a collapse of listing inventory. In fact, for the past 18 years of tracking, sales declined from the second to third quarter an average of 15% and have only increased twice in this period. One of those years was 2023 when sales grew 11.5%. While I’m not entirely clear what it infers, the usual nature of the seasonal climb perhaps suggests patterns are changing soon.

Mansion Global covered this change in sales patterns from our third quarter report for Douglas Elliman

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HAMPTONS HIGHLIGHTS

Elliman Report: Q3-2023 Hamptons Sales

“Sales rose from the second to the third quarter for only the second time in eighteen years.”

– Both price trend indicators fell short of year-ago levels but remained sharply higher than pre-pandemic levels
– Sales declined year over year for the ninth consecutive time as bidding wars accounted for nearly one in five sales
– Sales rose from the second to the third quarter for only the second time in eighteen years
– Listing inventory rose annually for the fourth straight quarter

***Douglas Elliman has produced this spectacular reference for their agents using our metrics.


[click to open full broker report]

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NORTH FORK HIGHLIGHTS

Elliman Report: Q3-2023 North Fork Sales

“Price trend indicators remained the third-highest on record while sales began to rise year over year.”

– Both price trend indicators remained at their third-highest levels on record for the third straight quarter
– Sales rose year over year for the first time in nine quarters
– Listing inventory declined annually for the first time in five quarters
– Bidding war market share declined annually but accounted for more than one out of four sales

***Douglas Elliman has produced this spectacular reference for their agents using our metrics.


[click to open full broker report]

Lots of Bidding Wars: A Significant Repercussion Of Low Listing Inventory In NYC Metro

Long Island Housing Markets Sets Price Records, Here, There and Everywhere

This quarter was a first for me – every way we break down the Long Island region (excluding the east end) for the report: Overall, Luxury, Non-Luxury, Single Family, Condo, Nassau, Suffolk, both median and average sales prices set new highs while sales and listing inventory declined.

Newsday wrote a monster piece (with charts below!) on the results of our research. The Real Deal chimes in too.

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LONG ISLAND HIGHLIGHTS

Elliman Report: Q3-2023 Long Island Sales

“Every submarket showed prices reaching new records, as sales and listing inventory declined.”

– Average and median sales prices reached their highest levels on record
– Sales fell year over year for the eighth consecutive quarter
– Listing inventory fell annually for the second straight quarter
– Luxury average and median sales prices reached their highest levels on record
– The entry threshold for the luxury market rose to the highest on record
– Luxury listing inventory declined year over year for the second straight quarter

NAR Antitrust Trial Gets Real, With A Bleeping Bleeping Video

NAR seems doomed, and they are not handling it well. They’ve long avoided dealing with commission structures, and now it is probably too late.

Sitzer/Burnett lawsuit is based on antitrust claims from Missouri home sellers who said they weren’t aware that commission rates were negotiable

and…

Though Burnett said she had no qualms about compensating the agent she hired, she pushed back against the idea that sellers should be on the hook for paying agents they didn’t hire.

At trial, the plaintiffs played this video of Alan Dalton, SVP of Berkshire Hathaway HomeServices, sharing “the most effective commission cutting technique” – my goodness, was this inappropriate. NAR’s counsel asked for a mistrial, but I suspect that won’t be granted. I know hundreds of real estate agents and brokers, and none would speak like this to their clients. Wow – this guy is disconnected from his agents.

WATCH THIS ENTIRE CLIP

Inman News: Tom Ferry podcast video delivers fresh drama at Sitzer | Burnett trial

The Real Deal: NAR antitrust trial spotlights Missouri home sellers that started it all

Rents Are 75% Cheaper In Tokyo Than New York

Per a stand-up comedian…I know, I know, but his NYC housing commentary is spot on.

Highest & Best Newsletter: South Beach Tower Gets a Shrink

I continue to love this new Florida newsletter: Highest & Best from Oshrat Carmiel, formerly of Bloomberg News… Whether it’s Beehive, Substack, or something more homegrown, it’s got me thinking about the next steps for Housing Notes, so I will continue to follow along.

South Beach Tower Gets a Shrink
Plus: Droning about real estate; and a Palm Beach New Year’s tease

Florida is marketing itself to the NYC securities industry!

Sometimes You Have To Build Around And Over

My friend and colleague Bob Knakal, the legendary investment sales broker (with a map room!), shares a cool story on assemblages for development sites. (author’s note: as X continues to break and I refuse to pay to be authenticated since I was before Musk took over, I can’t embed video, so screenshots will have to do).

Boroughs & Burbs Podcast: What Lies Ahead For Commercial Real Estate

I was invited back for a fourth visit to the podcast to discuss the commercial world. It’s always fun to talk with John & Roberto.

Here’s Something That’s NOT True: “WFH Workers Don’t Grind As Hard”

While this industry titan is quite successful, he’s also detached from everyday workers. Always consider the source when processing proclamations like this. I encourage you to scroll through the comments. Wow.

Work From Home isn’t going anywhere.

Southern Cal Sees Good Weather, Accelerating Price Growth And Limited Inventory

The three coastal markets we cover continued to see rising prices due to limited supply and more price growth at the high end.

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GREATER LOS ANGELES, INCLUDING WESTSIDE AND DOWNTOWN SALES HIGHLIGHTS

Elliman Report: Q3-2023 Los Angeles Sales

“Listing inventory remained lower than pre-pandemic levels.”

– Price trend indicators continued to show mixed annual results but remained above pre-pandemic levels
– Listing inventory edged higher annually for the fourth time and remained well below pre-pandemic levels
– Sales declined annually for the sixth consecutive quarter
– Luxury average price per square foot for luxury condos rose annually for the tenth time

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ORANGE COUNTY SALES HIGHLIGHTS

Elliman Report: Q3-2023 Orange County Sales

“The market share of bidding wars accounted for nearly one out of two sales.”

– All price trend indicators rose to new records, remaining sharply higher than pre-pandemic levels
– Sales declined year over year for the ninth consecutive time as bidding wars accounted for nearly one in two sales
– Listing inventory declined sharply for the second straight quarter after four quarters of surging supply

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SAN DIEGO COUNTY SALES HIGHLIGHTS

Elliman Report: Q3-2023 San Diego County Sales

“The market share of bidding wars accounted for nearly one out of two sales.”

– Both price trend indicators fell short of year-ago levels but remained sharply higher than pre-pandemic levels
– Sales declined year over year for the ninth consecutive time as bidding wars accounted for nearly one in two sales
– Listing inventory declined sharply for the second straight quarter after four quarters of surging supply

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

Appraiserville

On November 1, the ASC will hold the third Appraisal Bias Hearing. Please register and be involved.

The witnesses include some heavy hitters:

Robbie Wilson, Chief Appraiser, RSDS LLC, and President, National Society of Real Estate Appraisers
Dean Kelker, Board of Directors, Real Estate Valuation Advocacy Association
Danny Wiley, Senior Director of Single-Family Valuation, Freddie Mac
Lyle E. Radke, Senior Director, Single-Family Collateral Risk, Fannie Mae
Sharon Whitaker, Vice President, CRE & Mortgage Finance, American Bankers Association

I sure hope those unsigned letters sent by Fannie Mae to state real estate appraisal boards are discussed. Fannie Mae underwriters are protected and free to destroy the reputation of an individual appraiser without a chance for the appraiser to respond. As I’ve said before, appraisers must have the right to hold their accusers accountable. Remember that these love letters are all part of Fannie Mae’s attempt to automate fully and jettison appraisers from the mortgage process, removing protection for the consumer (because Fannie Mae thinks they have the numbers).

OFT (One Final Thought)

Classic.

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 drive a bus off the cliff;
– You’ll drive the minivan off the cliff;
– And I’ll feast on chocolate donuts while watching the cliff.

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

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