There Really Is A Floor To This Housing Market

October 28, 2022

But I digress…

The Hamptons Continue To See Listing Inventory Fall

I’ve been the author of an expanding series of U.S. market reports for Douglas Elliman Real Estate since 1994.

The Hamptons and North Fork markets on the eastern end of Long Island have gone through a significant restructure as it skewed towards larger “co-primary residences.”

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HAMPTONS KEY TRENDS

Elliman Report: Q3-2022 Hamptons Sales

“Prices continued to rise and set records as market strength towards higher-end.”

– Price trend indicators rose annually to near-record levels and more than fifty percent above the same period two years ago

– Listing inventory fell at a near-record rate year over year to the third-lowest level on record, restraining sales

– Days on market fell to their shortest amount in more than 15 years of tracking

– More than one out of four sales that closed in the quarter sold above the last asking price

– The market share of sales above $5 million was the highest tracked since at least 2006

– Luxury listing inventory fell by half in the past year

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NORTH FORK KEY TRENDS

Elliman Report: Q3-2022 North Fork Sales

“Prices reached records or near-records as chronic inventory shortages held back sales.”

– Median sales price rose to its second-highest on record for the third consecutive quarter

– Listing inventory fell sharply year over year for the seventh consecutive quarter, restraining sales

– Bidding wars reached a record high, accounting for more than half of all closings

– The market share of sales above $2 million was the highest tracked in more than nine years

Renovation Suggestion To Bring Adrenaline Into Your Buyer’s Life Far Into The Future

Long Island Isn’t Seeing YOY Listing Inventory Growth Yet

Douglas Elliman published our Long Island research this week and Newsday covered it quite thoroughly and included a cool summary table!

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LONG ISLAND KEY TRENDS

Elliman Report: Q3-2022 Long Island Sales

“Prices continued to reach highs, as sales declined and listing inventory remained at hand normal levels.”

– Median and average sales prices reached new highs for the second consecutive quarter
– The number of sales declined annually for the fourth consecutive quarter to a level consistent with the third-quarter average for the decade
– Listing inventory declined from both the prior quarter and prior year quarter to half pre-pandemic levels
– Bidding war market share accounted for more than half of all sales, the second-highest on record
– Days on market was the shortest record in more than two decades of tracking
– Luxury median sales price rose to a new high for the second consecutive quarter
– Luxury listing inventory saw a modest annual gain but was less than half of pre-pandemic levels
– Luxury market share of bidding wars rose to a new high of four in ten sales

Another Older Florida Condominium Was Evacuated

Per the Miami Herald…

The city of Miami Beach ordered residents of a 164-unit condo tower to evacuate the building Thursday after engineers found significant damage to a critical structural beam in the parking garage. Miami Beach spokesperson Melissa Berthier said around 4 p.m. Thursday that the city planned to post an unsafe structure notice and order residents of the Port Royale Condominium at 6969 Collins Ave., to vacate the 14-story building immediately.

It’s good to see local Florida governments are being much more proactive on the safety of their buildings. As an owner in a building like this – how do you process going back into the building after it’s remediated?

A Social Media Take On Engineering Skyscrapers Around Trains

Southern Cal Real Estate Pace Cooling As Price Keep Rising

Douglas Elliman published our Southern California research this week including Los Angeles including Malibu as well as Orange County and San Diego County.

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GREATER LOS ANGELES, INCLUDING WESTSIDE AND DOWNTOWN SALES KEY TRENDS

Elliman Report: Q3-2022 Los Angeles Sales

“Listing inventory remained low, keeping the market share of bidding wars at one-third of all sales.”

– Single family and condo price trend indicators rose the near-highs and were well above pre-pandemic levels
– The number of sales was down year over year for the third straight decline
– Listing inventory declined year over year for the sixth straight quarter and was well below pre-pandemic levels
– Listing inventory for luxury condos slipped annually for the fifth straight quarter

LA SUBMARKET

Elliman Report: Q3-2022 Malibu/Malibu Beach Sales

MALIBU/MALIBU BEACH
– Malibu single family listing inventory fell year over year for the ninth straight quarter
– Malibu Beach price trend indicators were skewed lower by a sharp decline in average sales size

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ORANGE COUNTY SALES KEY TRENDS

Elliman Report: Q3-2022 Orange County Sales

“Price trend indicators continue to rise to near-records as sales decline.”

– Median sales price increased annually for the twelfth consecutive quarter to the second-highest on record
– The market share of bidding wars fell by half from the prior quarter to one-third of all sales
– The number of sales fell annually for the fifth straight quarter
– Luxury condo median sales price increased annually for the ninth consecutive quarter to the second-highest on record

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SAN DIEGO COUNTY SALES KEY TRENDS

Elliman Report: Q3-2022 San Diego County Sales

“Overall price trend records rose annually to their respective third-highest on record.”

– Median sales price increased annually for the twelfth straight quarter to nearly forty percent above pre-pandemic levels
– The market share of bidding wars fell by half from the prior quarter to one-third of all sales
– The number of sales fell annually for the fifth straight quarter

The Next Time Someone Tells You To ‘Go Pound Sand’ Tell Them We’re Running Out Of It

I’ve shared information about this topic in the past but it continues to be a big issue. Concrete uses a lot of sand. I once read that China has used as much sand in three years as the U.S. has used in the past century.

REBNY Membership Committee Presents: How’s The Market: All Stars Weigh In, Part II (Manhattan)

Always fun to participate.

The Compass Chronicles: Late October 2022 Edition

A continuing saga…

It’s good to see Compass leadership bring an adult into the room with real estate experience in their effort to be profitable. Their hard-working brokers deserve that respect.

Compass taps Cushman exec as CFO [The Real Deal]

Former president and current Chief Evangelist for Compass Leonard Steinberg made a conspiracy-theory-style post in early October on Instagram that made the real estate industry rounds but was quickly taken down. My colleagues who saw it said it was hard to imagine a C-Suite executive of a publically traded company being allowed to send such media conspiracy insanity (it is also quite lazy to “blame the media”). He reads these Housing Notes regularly because he sends me weird criticisms anytime I mention Compass news items and provide first-hand observations about the firm. Over the past decade, my issues with the firm have been with their business model, “the emperor wears no clothes,” not the agents. Hi Leonard. Can you share a copy of the original video from the Instagram post you took down?

Back to reality…

While Compass has shown a much greater decline than the others, in fairness, all publically traded real estate-related stocks are being battered by changing conditions. Compass has yet to show a profit since going public, so moves to shore up the less than a year runway of cash like the personnel move above is a step in the right direction, especially since the model still hasn’t been proven despite burning through hundreds and hundreds of millions in capital.

Here are a number of the big real estate stocks that have been doing recently. I only included News Corp below since it owns Realtor.com. I also included Berkshire Hathaway for its huge real estate group, the second largest in the U.S. Realogy was renamed Anywhere with the cute ticker “HOUS.”

Real Estate Market FUD: Fear, Uncertainty, and Doubt

A longtime colleague of mine – Jim Duncan – in Charlottesville, Virginia writes a substack, sharing his thoughts on real estate in a clear way that resonates with me. I’ve shared his newsletter before.

The challenge is

No one knows what will happen with the economy or real estate market. Right now, all we have are questions and speculations. We know that the real estate market is changing, prices are sticky, and people still need shelter.

We’ve not seen this before — peak prices + peak mortgage interest rates + stock market crash + unprecedented velocity of inflation + a housing shortage + most homeowners having a significant amount of equity and not needing/wanting to sell.


Compstat Tells Us Most NYC Crimes Are Up But Wildly Below 1993 Levels

We moved to the city in 1985, just like in the movies. My Dad was mugged in broad daylight twice in front of our old office. However, the way the city is being described anecdotally now by outsiders, we’ve returned to that extreme level of crime since the pandemic when crimes are rising but significantly below levels of 29 years ago. The city is no longer as it was portrayed in Paul Newman’s “Fort Apache The Bronx.” But I sure hope our new mayor stops the recent trend.

Anecdotal isn’t data – CompStat is data, and it shows the deterioration, but it also provides context.

CompStat—or COMPSTAT (short for COMPuter STATistics, which was the computer file name of the original program)—is a computerization and quantification program used by police departments. It was originally set up by the New York City Police Department in the 1990s. Variations of the program have since been used in police departments worldwide.

It’s not perfect, but it’s a benchmark. I constantly walk through the city – mostly Manhattan, which is obviously not the entire city and likely a skewed perspective – it’s not much different than before the pandemic in the context of safety from my personal perspective. It’s definitely dirtier, and there are more homeless, but I don’t feel less safe; the sidewalks are packed with happy tourists, and new shops are opening. Six months ago, I had a conversation with a relative from the midwest and an ardent cable news watcher. We got into an argument about my safety, and he insisted that I needed to carry a gun on each hip. I found myself arguing with someone on a couch in the midwest who hasn’t been here post-pandemic lockdown and has seldom ever been here. I am arguing with someone I love and respect while I walk around the city typing him, and he is sitting on a couch typing back from a suburban midwestern home. My personal experience was deemed less reliable than cable news talking heads. I eventually muted his Facebook feed to great relief.

NYC needs some PR help.

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

Appraiserville

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

UAD FHFA Pushes Aggregate Data Out To The Public

From the new UAD Homepage:

The Uniform Appraisal Dataset (UAD) Aggregate Data includes summary statistics derived from aggregating UAD appraisal records. This dataset is derived from the UAD, which is a standardized industry dataset for appraisal information that is provided electronically to Fannie Mae and Freddie Mac (the Enterprises) through the Uniform Collateral Data Portal® (UCDP®). The UAD was first developed in 2010 by the Enterprises at the direction of FHFA. The UAD Aggregate Data File is intended for advanced users that utilize statistical software to extract and analyze data. The data contains variables categorizing appraisals by year or quarter, home characteristics, and geographic location, as well as appraisal statistics.

I’ve just started playing with it and haven’t looked at it thoroughly. The appraisal industry has been asking for this UAD data disclosure for years – have the GSEs shared our data with THE APPRAISAL INDUSTRY? I would guess that most appraisers were thinking about this disclosure in the context of actual sales transactions – usable sales data – but FHFA worries about creating a feedback loop – I agree. This FHFA data could be useful in better understanding past trends but in general; I’m not sure many appraisers will refer to or reference this in their work. But perhaps it’s a start.

It’s an interesting approach to a complex issue, and the interface is well done, but the results are problematic for me in my market.

Here’s a chart on the New York County (Manhattan) single family results. Single families represent about 2% of the market, and our research shows that the median sales price for 3Q22 was $5,500,000. The conforming loan limit for a single family in Manhattan for 2021 was $822,375. The chart showing the loan data with $4 million values means that these houses have conforming mortgages relative to their values. This is literally a subset of the market in Manhattan. What do I do with this information as it relates to my appraisals? I’m not sure.

Dave Towne, in his must-read emails, writes about some of the issues:

Some of that data is granular down to specific Census Tracts………..which appraisers seldom, if ever, use in their market analysis to determine comps and the locations of those.

As we go through this information, we’ll better understand its usefulness. But more transparency is a good thing for the industry, the opposite of what we have seen from TAF. You know, the authors of the bat-shit crazy letter, the chickenshit letter and who is the subject of an active investigation by HUD on whether USPAP promotes a lack of diversity in the appraisal profession (BLS: 98% of appraisers are white)

My analogy for FHFA’s UAD Dataset is the Making of a McRib sandwich. It’s pre-shaped, kinda gross, but to some, it tastes pretty good.

An Appraiser Halloween Costume

This meme has been making the rounds…

OFT (One Final Thought)

Brilliant Idea #1

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– They’ll be more flooring underneath;
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– And I’ll not bury a plastic skeleton under my deck.

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 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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