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Housing Trends & Cycles

The ‘Urban To Suburban’ Narrative Is Really ‘Manhattan To Suburban’

August 19, 2020 | 1:26 pm | | Charts |

This post previously appeared in the August 14, 2020 edition of Housing Notes. I’ve been writing these weekly summaries on housing topics for more than five years. To subscribe for free, you can sign up here. Then you can look forward to each issue every Friday at 2pm New York Time.

The New York Times created a terrific graphic on our Elliman New Signed Contract Report by illustrating the performance of Manhattan and Brooklyn versus Westchester County. Brooklyn’s sales market performance is closer to Westchester than it is to its city counterpart.


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[Spectrum TV/NY1] Stuy Town Vacancies Surge 7/6/20

July 7, 2020 | 8:34 am |

Michael Herzenberg of NY1 did a great story on the exodus from Stuy Town after the landlord provided terms for people to break their leases. The story was inspired by a press release from CHIP (I haven’t seen) which talked about the pandemic exodus as the reason for the rising vacancies. I thought that was a bit of hyperbole since the other key factor has been the inability of the real estate brokerage industry to do in-house showings by state mandate until June 22nd. The lack of mobility has also been a key factor in driving vacancy higher.

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[Bloomberg TV] Bloomberg Markets 7-6-20: A Busy Housing Market This Summer

July 6, 2020 | 5:17 pm | | TV, Videos |

Had a wonderful, nearly 7.5-minute conversation with Vonnie Quinn on Bloomberg Television’s Markets today discussing how the housing market will likely look over the summer. The interview touched on the analysis in the Douglas Elliman Report series I author.

Some ‘inside baseball’ fun. I was connected to Bloomberg via Zoom from my home for this. If you look closely at the 5:15 mark, you can see my garage door open as my wife drives in. My wife panicked when watching this clip, thinking she would be on TV as she walked out of the garage, but randomly ended up using the other door.


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My Forbes Column: Keeping Housing Market Results From The Public Is Never Justified: An Expansive View

June 28, 2020 | 5:00 pm | Explainer |

This piece was taken from my new Forbes column. I’m testing the platform to spread the word and you can help me by going here and then clicking “follow.”


Keeping Housing Market Results From The Public Is Never Justified: An Expansive View

Transparency is always the right strategy

When the Covid-19 crisis began halfway through March, the Manhattan housing market was placed on “pause,” as were many housing markets around the country. New York State “Shelter in Place” rules prevented the in-person showing of a property by a real estate broker. That was the beginning of the problem this crisis posed for the industry that lives and dies on sales and rental transactions. Then a startup agent trade group (NYRAC), made up of some of the most productive agents in the market and includes many of my long-time industry friends, pushed to hide the days on market metric from the public for what turned out to be a self-serving reason. I love what they stand for, but this was a strategic error that I could not support.

While I have been a real estate appraiser and market analyst for 35 years, I dipped my toe into real estate as a sales agent in Chicagoland for six months in the mid-1980s.

Lesson learned

From my experience there it was clear to me that the accuracy of the information our office possessed was critical to all parties for the market to function. I still have my old monthly MLS books and remember logging on to the MLS from one ancient (even then) terminal in the office – talk about delayed market information!

Days on market during Covid-19

The days on market (DOM) metric is significant to sellers because they don’t want their home to be perceived as overpriced if it sits unsold too long. DOM can be measured in several ways, but the one I see used the most is the average number of days between the last price change, if any, and the contract date (or today’s date if it has not sold.) When a potential home buyer looks at a listing on a public-facing web site, they look at DOM as one way to determine whether the listing price is reasonable. The longer a listing sits on the market as compared to other listings, the more likely it is over-priced. Sellers look at DOM too and become concerned when their listing sits too long relative to the competition, typically blaming the agent for not marketing the property enough. However, the asking price is usually set by the seller who is slow to recalibrate their asking price if the market is weakening. I’ve found it takes one to two years for a typical seller to capitulate on price in a downturn and not feel like they left money on the table.

Hiding DOM as a marketing strategy

When the government ordered lockdown hit New York City, and real estate agents were not allowed to provide in-person showings, market activity immediately stalled. NYRAC pressured various platforms to hide DOM information from listings. They still wanted users to be able to drill down and uncover the details, but at first glance, the DOM information was to be hidden.

Streeteasy (owned by Zillow), the de-facto Manhattan multiple listing system in the eyes of the consumer, and the Real Estate Board of New York (REBNY), the leading real estate trade group with their own platform known as RLS, initially balked at the manipulation but eventually caved to NYRAC pressure. NYRAC made a strategic error that further damaged the long-term credibility of the real estate brokerage industry with the consumer. Not all brokers agreed with this strategy either, but this group placed enough pressure on these platforms to make the change happen.

Only sellers matter?

The incentive to “partially” hide DOM comes down to this:

1) Give the sellers a “break” after two years of softening price trends.

2) Address the sellers’ concerns about extended marketing times during the pandemic.

3) But the primary reason is that real estate brokers didn’t want to lose their listings if the sellers removed them from the market and returned to the market later with a new agent.

Why this effort was wrong

NYRAC and several real estate agents said to the effect, “the buyer or seller can still look at the listing history to know how long a listing has been on the market. That data was never removed.”

I always respond with “Then why hide it in the first place?” To brokers in favor of this temporary rule who wonder why I appear to be obsessing about a nuance I say, it is never appropriate to manipulate data, made even worse by the primary motivation behind this action.

Ignoring the buyers

This “solution” ignores the buyer’s position in a sales transaction and yet last time I checked, buyers are on the other side of every sale. Any effort to partially or fully hide DOM results or any other market metric conveys the wrong message and smacks of the old “information gatekeeper” mentality, no matter the state of the market.

Recently, the official word came down that all days between the shutdown and the reopening will count as “one day” for the DOM calculation presented to the public.

Going forward I have the following questions:

  • Are we to anticipate a suspension of DOM anytime there is an unexpected external event that impacts the housing market (9/11, The Lehman Brothers bankruptcy, Super Storm Sandy)?

  • Who makes the call to do this? A trade group, a regulatory body, a for-profit platform?

-Do we think that buyers and sellers of real estate are unaware of the 90+ day COVID-19 market shut down? Will a new listing added today as the market opens with 1 DOM will sell differently than an identical property with a 91 DOM listing that sat through the 90+ day COVID-19 lockdown?

The market doesn’t care what the brokerage community thinks (or what I think). The act of intentionally hiding or partially hiding data from the consumer is never justified in any scenario.

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NYT Real Estate Event May 21st @2:30 E.T. New York Real Estate: How Low Will Prices Go?

May 20, 2020 | 1:19 pm | | Events |

I’ve been asked to participate in Thursday’s New York Times Event New York Real Estate: How Low Will Prices Go?”.

Click on the image below to RSVP!


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Median sales price can be subject to skew by consumer behavior more than math

May 12, 2020 | 11:19 am | Explainer |

Here’s an updated excerpt from my Housing Note newsletter dated October 28, 2016, digging into the median sales price. You can subscribe to Housing Notes and other housing resources for free.


I wrote about the median sales price a decade ago, and the message still holds. A couple of years ago, I whipped up a table that shows how median sales price can perform in a changing housing market. The median sales price is the default price trend indicator of real estate because it eliminates the extreme highs and lows of a data and merely represents the middle number. However, it is also subject to skew by consumer behavior that can overpower the math. So I always provide two to three price trend indicators depending on the quality of available information (average sales price, median sales price, median sales price) for all of the reports in my Elliman Report Series. The relationship between median and average sales price can also tell a story.

Click on the graphic below to expand.

medianexplained

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Contract Data Is Pending Data Is Lagging Data

April 29, 2020 | 11:50 am | Explainer |

In our post-Coronavirus world, it is clear that market conditions and our understanding of the future are subject to change every day. In my prior post Establishing the COVID-19 Demarcation Line: From ‘Hanks To Banks’, data that falls after the line represents a different market.

So how do we determine what data falls in after the demarcation line? It’s not as straightforward as it sounds.

Throughout my career, I have seen brokerage firms publish pending/contract reports, touting pending trends as more reliable than reports based on closings. I don’t look at them as better or worse, just a different way to look at the market. The simplistic, uninformed argument for pending sales is that contract dates occur before closing dates, so they are more current. Incidentally, contract prices are not readily shared. I get all of this. Yet I have seen the failure rate of contracts be as high as 40% – in other words, many contracts might not close whereas closing reports are solely based on successful transactions. Still, pending sale trends are useful as long as the reader understands their shortcomings. I plan to develop one someday.

Closing data and contract/pending data lags the “meeting of the minds.

Meeting of the minds (also referred to as mutual agreement, mutual assent, or consensus ad idem) is a phrase in contract law used to describe the intentions of the parties forming the contract. In particular, it refers to the situation where there is a common understanding in the formation of the contract.

While we know that closing dates lag the “meeting of the minds,” we also need to understand that signed contract dates are lagging indicators, often by 2-4 weeks. During this crisis, I’m speculating the failure rate will be high initially, and the time lag will be on the longer end rather than, the shorter end of this 2-4 week range.

Here’s why contract dates are a lagging indicator and not necessarily more insightful than closing data:

1) The “meeting of the minds” occurs when buyers and sellers negotiate price and terms, usually facilitated by a real estate agent or broker.

2) The price and terms are handed off to transaction attorneys who work together to craft language agreeable to both parties.

3) The contract is signed by both parties and often indicated as such in an MLS-type system.

4) In some markets or marketing periods, especially when a market is cooling, many contracts never close, so their initial inclusion makes pending trends reports suspect.

If there is a four week signed contract lag from the meeting of the minds, and considering the March 15 demarcation line for post-Coronavirus, that means that with us being six weeks into the crisis, we are only able to see two weeks worth of post-Coronavirus data. And even with that reality and current shelter in place rules, many current contracts might have been older deals that were facilitated by the buyer who had already inspected the home in January/February – we are seeing some of that now.

In other words, relevant data on the new market remains extremely limited.

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The Brick Underground Podcast: 1-23-20 Talking Peak Uncertainty

January 23, 2020 | 2:07 pm | | Podcasts |

I joined Emily Myers of Brick Underground for my third interview on their podcast series. The discussion topics are covered here: The Brick Underground Podcast: How does NYC real estate move past ‘peak uncertainty’ in 2020.

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Bloomberg TV 10-7-19: Manhattan Pivots

October 9, 2019 | 9:12 am | | Podcasts |

I had a nice chat with Vonnie Quinn of Bloomberg Television on Monday concerning the state of the Manhattan housing market, following a highly read Bloomberg article on the terminal covering our Elliman Report results for Q3-2019 as well as a followup on Bloomberg Radio here and here.

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Talking Manhattan Podcast: The Market’s Underlying Issues, and How to Value Outdoor space

September 26, 2019 | 4:12 pm | Podcasts |

I was just interviewed by Noah Rosenblatt and John Walkup of Urban Digs for their “Talking Manhattan” Podcast. I’ve known Noah for well over a decade and always enjoy geeking out on the market with him. He’s a data nerd with a real estate agent and day trader background. I’m proclaiming that John Walkup has the best real estate-related last name in the business and is clearly able to “elevate” any real estate conversation.

They weren’t kidding yesterday when they said they were going to get this podcast out right away, placing the interview online this morning. I was speaking to a group of real estate agents on the roof deck of a new building this morning, and four of them told me they had already listened to the podcast and one confirmed that he heard it in the shower and noted that was high praise. Love it.

One of the topics we focused on covered the adjustment for outdoor space in valuation. Throughout my career – when I get a lot of similar inquiries on a particular valuation topic, I turn it into a blog post – here is a collection of value-related posts in one place. One of the most read “value” resources in the collection covers outdoor space in a blog post I wrote in 2010. Admittedly I’m a bit relieved my written methodology still holds up nine years later!

Their interview of me is below. I hope you enjoy it and subscribe to their podcast as I do.


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My July 3, 2019 Cheddar Interview on the NYSE Floor

July 6, 2019 | 1:23 pm | TV, Videos |

After the publication of the Elliman Report for Q2-2019 Manhattan Sales, I was asked to join Cheddar anchors Kristen Scholer and Tim Stenovec on the floor of the exchange on Wednesday morning.

When I came through security, the guard at NYSE asked me “when was the last time you visited the NYSE?” and I said, “about 10-12 years ago.” He looked it up to confirm and deadpanned, “I’ll bet you remember that I was the guy that took your picture in 2007, right?!?! He and his colleague and I all had a good hard chuckle over that. Moments like this are what I love so much about my job.

Back in 2007, I was interviewed by Erin Burnett (now CNN) and Mark Haines (sadly passed away in 2011) at CNBC on the balcony overlooking the exchange floor. It was a tight fit on the balcony so I got to sit near the president of the Russian natural gas conglomerate Gazprom and his dozen very large bodyguards. It was very crowded. While he was being interviewed I thought to myself, there is no amount of money in the world I would take to live with that kind of personal risk every single day.

No such worries today. Kristen and Tim were terrific to speak with and I appreciated the invite.


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The Nelson Report Podcast: What’s the deal with the residential market in New York City?

June 12, 2019 | 11:16 am | Podcasts |

I was recently interviewed by James Nelson, one of New York commercial real estate’s star brokers at Avison Young whom I’ve known since his Massey Knakal days. I’ve been on his podcast several times over the years and always enjoy the conversation. This time he did the interview at CUNY studios in Manhattan. In addition, he brought in Vince Rocco, a residential real estate agent at Halstead who has a broker-centric podcast known as “Good Morning New York Real Estate with Vince Rocco.” I had never met Vince before so it was nice to get his perspective on the market.

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Housing Notes by Jonathan Miller

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