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[NYT] Donut Housing Market Economics Rebranded As “Hard to Trade-up” Market

December 26, 2012 | 2:06 pm | | Charts |

Back from a short self-imposed overwhelmed-with-year-end-deadline-work-blogging-hiatus. Hope everyone had a nice holiday.

So I’m a bit late but the donuts are still fresh…

Michelle Higgins at the New York Times wrote a great piece weekend before last on the current stratification of the housing market that I call a “donut.” Strong on bottom, strong on top and weak in the middle. Mortgage rates are pulling in first time buyers at entry-level and high end is being driven high net worth and international buyers, leaving a weaker middle. The NYT editors weren’t very excited about my “donut” analogy even when I suggested a more New York City-ish bagel or bialy. However the piece correctly focused on the challenges the “trading-up” market in today’s houisng market.

I had lunch with my friend Barry Ritholtz last week and he didn’t like my donut analogy saying it should have been a “barbell” – but seriously, can you put icing or frosting on a barbell? I thought so.

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Sweet! “Making The Donuts” (A Housing Market Theory)

May 30, 2012 | 9:43 am | |

Years ago, there was a Dunkin’ Donuts commercial with the catch phrase “got time to make the donuts” which has remained one of my regular phrases.

For the past few months I’ve talked a lot about housing markets with “a hole in the middle” in my speaking engagements. I’ve been surprised at the volume of in-person feedback on “Donuts” just from my Bloomberg TV appearance with Deirde Bolton a few weeks ago including a senior bank executive at a board meeting I was presenting, a WSJ editor and reporter and others.

For lack of a better description, many housing markets, especially along the coastal US, are like a donut (NYC’s version is more of a bagel than a donut – thicker but not as sweet). Incidentally, I made donuts at the bakery in college so I’m obviously more than qualified to use this weak analogy.

The “hole in the middle” pattern is something I’ve been observing in the various housing markets I follow or dabble in – i.e. Manhattan, Westchester, Hamptons, Brooklyn, Miami, SF, DC, to name a few. I’m not defining it by a specific price but the middle is more like the segment just above the middle in these markets. It’s placement is specific to the price structure of each market.

It goes like this:

  • Strength at the entry-level – due to record low mortgage rates and pricey rental market;
  • Strength at the upper end – less dependent on irrational lending standards with limited places to invest, foreign buyers, wealthy domestic buyers; but
  • Weakness (a hole) in the middle – relative to the top and the bottom.

The “donut housing economy” is holding back consumers from trading up in an orderly fashion. i.e. from the low to middle of the market, from middle to high (or the reverse).

By describing the middle as a “hole” I don’t see the middle as a stark barren wasteland (i.e. w/o sprinkles). I’m simply observing that it’s weaker relative to the top and bottom…for now.

[Donuts On April 15] Payin’ Taxes, Feelin’ Good

April 15, 2008 | 12:40 am |

Ok, so we aren’t feeling so good about things lately. To top it off, today is Tax Day. And why is it on April 15th? (hint: float)

Some people, arguably, are way too happy about today.

The real reason April 15th is such a great day:

’cause you get free:

  • donuts
  • pizza
  • beer …and of course,
  • photocopies.


[Three Cents Worth NY #244] Manhattan’s Middle Market Shows Life

August 20, 2013 | 3:11 pm | | Charts |

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out my 3CW column on @CurbedNY:

This week I thought I’d take a look at the breakdown of sales by price in the most recently completed quarter. Last year I was using a donut analogy to describe the Manhattan apartment market—weak in middle and strong on the outside (bottom/top). I wanted to illustrate how the mix in 2013 could be showing signs of change rather than continuing to see a disproportionate amount of activity on the margins. For reference I provided an inset in the form of a pie (sorry) chart to show a simple breakdown of the market in the second quarter of 2013…

[click to expand chart]


My latest Three Cents Worth column on Curbed: Manhattan’s Middle Market Shows Life [Curbed]

Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami
Three Cents Worth Archive Curbed Hamptons

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[Three Cents Worth NY #206] Shades of Purple: Manhattan Sales by Price

September 4, 2012 | 8:38 pm | | Columns |

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m simply here to take measurements.

Read this week’s 3CW column on @CurbedNY:

…As we’re recovering from a really nice long weekend and are hopefully ready to enter the fall season, I labored (sorry) over a donut analogy for this chart and ended up with Shades of Purple instead. We’ve had a lot of hype pointed at the top of the market and I addressed the seldom discussed strong sub-million (studio) market a few weeks ago—but we haven’t talked about the middle much. These market share numbers represent the share of each segment at the end of each quarter when I reported them in our market reports—I didn’t go back and re-crunch to adjust for inflation (hey, this is Curbed)…


[click to read column]

Curbed NY : Three Cents Worth Archive
Curbed DC : Three Cents Worth Archive
Curbed Miami : Three Cents Worth Archive

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Bloomberg Surveillance Midday with Tom Keene 6-15-12, On The Housing Market

June 18, 2012 | 12:41 pm | | Public |

Got to join Tom Keene on his Bloomberg Surveillance Midday to talk housing – national and NYC metro, credit, distressed and donuts. I love the show structure, one of the few networks that provides a longer interview format for more substantive conversations in their programming.

Ironically I rode in on the train with Tom that morning:

Jonathan Miller on Housing Market [Bloomberg TV]

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[Contract Contingency Quagmire] A Seller Decides To Keep A Buyer’s Life Savings

June 16, 2009 | 8:41 pm | Public |

Tonight the well-known consumer reporter Tappy Phillips of WABC’s 7 On Your Side covered the story of a couple who entered into a purchase agreement on a co-op with a mortgage contingency clause that made the deal subject to the lender providing a commitment letter. I was interviewed briefly saying that most contracts in our market are being signed with mortgage contingencies.

The buyers got a commitment letter from the lender but at some point the lender changed their mind after discovering the co-op was subject to a ground lease.

The seller decided to keep the downpayment because the buyers did get a commitment letter and the down payment would help defer the loss of value on the property during the time the property was under question. The seller did not appear in the segment.

Several thoughts come to mind after hearing this segment:

  • Based on this presentation, the seller focused on their technical interpretation of the contract – morality and empathy took a back seat to money.
  • The buyers can’t afford to fight to get the money back.
  • Never underestimate the need for a good attorney – contract boilerplate sounds impressive to us laymen but it may be not protective, especially now in a weak market.
  • Why isn’t the lender culpable in some way? In other words, aren’t we playing with semantics by calling a “commitment letter” a “commitment letter”, when in fact, they aren’t “committed” to lending if they find something wrong later on? They don’t have any skin in the game.

If the commitment letter was called a “a huge bag of donuts list” instead, would this situation still exist? Or is it more complex than that?

We are starting to hear about funding contingencies to protect the buyer if the lender doesn’t show up at closing.

There will be more of these types of situations going forward in weaker market. It shouldn’t make anyone scared to buy property – they simply need to upgrade their appreciation for the quality of professional advice.

I hope this story has a happy ending.

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