Housing Is Skating On Thin Ice And A Private Resolution
This year I tried to come up with a New Year’s resolution that would stick. Since I see resolutions as a private thought – like those wishes we keep secret when blowing out the candles on a birthday cake – I’ll spare you the details and get down to business. But first…
…on the day after Christmas, I began ramping up for the market report gauntlet in January. Real estate firm Douglas Elliman releases over 30 of the research reports I author. But I couldn’t focus on that until I…
…figured out how to:
- turn on/off my home office desk lights with my new Amazon Echo Spot instead of simply flipping the light switch.
- master the 8 billion nuances of my new Apple watch with the magenta wristband.
- revive an important college skill with my new Balai sand-filled juggling balls,
- catch up on water skiing with snow ski videos…
ANNOYING RELATIVE: I can’t make it tonight— Jake Vig (@Jake_Vig) December 24, 2018
But I digress…
Year End Listicle Fever
Every year at this time we are exposed to a lot of real estate lists to close out the year. We like to look back to see where we came from and look ahead to where we might be headed. In the real estate world, this has to include super high-end sales with “pie in the sky” prices. (note to my Columbia grad students of last spring who learned that pie was better than cake so it follows, as a New York Times journalist once shared a deep thought, “pie in the sky is better than cake on the ground.”) Who knew baking was so philosophical?
But I digress again…
- New York Times Real Estate cover story: Manhattan Real Estate Slows After Years of Record Activity
While I contributed to the article and was quoted several times including in the title, I have a confession to make: I’ve never been on the autobahn (but aspire to).
There was even a fun discussion about the article by reporters at Bloomberg.
It was even cooler that Bloomberg news used my chart online where I listed the highest Manhattan residential sale for each of the three primary property type going back to the 1980s. You can see three distinct periods of luxury prices: 1980s/1990s, Nasdaq to Lehman, Post Financial crisis. So what will the next boom look like? My chart helps contextualize how detached these high end sales are from housing for mere mortals.
- Palm Beach Daily News: Palm Beach homes: What were the biggest sales of the year?
Palm Beach seemed to represent the case that despite the economic turbulence and jittery stock market, the high end seemed unphased.
“I think there’s no doubt that 2018 has proven to be a record-breaking year, in terms of the number of transactions, the dollar value of those transactions and the market in general,” said newly installed Palm Beach Board of Realtors President Jim McCann, an agent at Premier Estate Properties. “And contracts are being written, which is encouraging. Despite the recent stock market gyrations and rising interest rates, there are still a lot of reasons for people to buy in Palm Beach.”
- Yolanda’s Little Black Book: LA’s 20 biggest deals of 2018
It’s kind of amazing when the lowest priced house on a top 20 list is $28.5 million. It is also very amazing how the must-read luxury real estate blog Yolanda’s Little Black Book has burst into public awareness.
Economic Indicator of the Year: Housing
“The Indicator” is one of my favorite “explainer” podcasts. Each episode is short and to the point. Although this one is basically a Redfin PR pitched story, it is still worth a listen.
The key question on everyone’s mind is: Why is housing so detached from the economy?”
Defining Middle Class
One of the biggest soft spots in our economy is the middle class. Lack of housing affordability is crushing them. How is it defined?
A “Certificate of Sanity” Tells You All You Need to Know about Russian Real Estate
If you are a real estate agent, broker, buyer or seller in the U.S., please read this article in its entirety and then be thankful.
I’m not sure if the “Certificate of Sanity” covers the doctor’s note proving sobriety at the closing. And how do you digitize this process? Exhale into a breathalyzer at the title company?
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
A shout out to all my appraiser friends and colleagues during this holiday week. Nothing specific this week to rail against, largely because my brain is fried from learning how to use all the gadgets I got for Christmas.
For those that have shared news or bad practices with me, look for discussions on these and other issues appraisers are facing in the coming weeks of the new year.
The Last Line of Defense
As I wrote recently, we learned a lot about both our industry and ourselves in 2018. We do provide an invaluable service to the lending community even though most of the mortgage industrial complex doesn’t appreciate or want it, largely because of the moral hazard generated by the taxpayer bailouts of 2008. Our expertise will be shifting to the consumer in the near term with some snapback to mortgage work after this all ends badly in the not so distant future. We just can’t sit around and wait for it. As was said in the movie “The Shawshank Redemption” we need to:
Get busy living or get busy dying.
I prefer the former, after all, we appraisers are the last line of defense for fraud.
In the current edition of mortgage fraud 2019, the regulators are leading the charge for removal of underwriting guardrails rather than the banks themselves. This is being done in the name of generating more mortgage volume to enjoy more fees. Falling mortgage rates over the decade resulted in falling loan volume because low mortgage rates were not the solution. Banks don’t trust the economy and the government any more than appraisers do.
This reckless behavior being pursued by regulators is all out in front of us to see and we as an industry need to point it out.
Appraisers are essential to help maintain the public trust, especially in the banking system, even as the regulators move away from safe practices. Exposure to consumers/taxpayers is expanding.
I am looking towards 2019 as a period of real opportunity from consumers for appraisers who seek it out, despite the repetitive mantra from large comprised institutions.
OFT (One Final Thought)
When you run out of things to do this week, try thinking of the purpose of chimes.
Brilliant Idea #1
If you need something rock solid in your life (particularly on Friday afternoons) 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 be more middle class;
- You’ll be more of a mere mortal;
- And I’ll play some chimes.
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 next week’s Housing Note.
See you next week. Oh, and HAPPY NEW YEAR!
Reads, Listens and Visuals I Enjoyed
- LA’s 20 biggest deals of 2018 [Yolanda's Little Black Book]
- Palm Beach homes: What were the biggest sales of the year? [Palm Beach Daily News]
- Once-Hot Housing Market Likely to Cool Further in 2019 [Wall Street Journal]
- This home was San Francisco’s priciest listing of 2018 [Curbed SF]
- U.S. Consumer Confidence Drops to Five-Month Low [Bloomberg]
- A Russian oligarch’s guide: How to hide $20M in a NYC skyscraper [The Real Deal]
- Think You’re Middle Class? Check This Chart to Find Out [Howmuch.net]
- These were the 10 priciest Manhattan condo filings of 2018 [The Real Deal]
- Housing Prices in Moose Jaw Consistently Inconsistent [DiscoverMooseJaw.com]
- Podcast: Indicators Of The Year: Housing [The Indicator from Planet Money]
- Home-Price Growth Kept Pace in October [The Wall Street Journal]
- Selling Real Estate in Russia? Are You Crazy? [The New York Times]
- How Tariffs Could Trickle Down to Your Kitchen Remodel [The Wall Street Journal]
- For U.S. Cities, Size Increasingly Matters [The Wall Street Journal]
- A Hedge Fund Makes Billions Off Americans’ Underwater Mortgages [The Wall Street Journal]
- U.S. Population Grew at Slowest Pace in More Than 80 Years [The Wall Street Journal]
- The Hangover: UMich House Buying Sentiment Lowest Since Fed’s QE Began (Draining The Spiked Punchbowl Has Consequences) [Confounded Interest]
- Regulating Airbnb drives down local rents (as well as house prices) [Boing Boing]
- Once-Roaring U.S. Luxury Home Sales Deflate in October [Mansion Global]
- The exodus of New York City’s endangered middle class [New York Post]
- Here's what the US housing supply could look like by 2028 [Livabl_]
My New Content, Research and Mentions
- Manhattan Real Estate Slows After Years of Record Activity [New York Times]
- 2019: The Year of the Vanishing Home Buyer [Mansion Global]
- High-end real estate in top markets headed for 'reset' in 2019 [The Real Deal]
- Podcast: East Harlem Real Estate Has Plenty of Curb Appeal [Bloomberg Radio]
- NYC’s Top 10 Apartment Sales Fetched Half a Billion Dollars in 2018 [Bloomberg]
- 全球七大顶级房产市场未来12个月表现预测：2019年是购房者消失的一年_伦敦 [Sohu]
- Se estabiliza mercado de propiedades de Miami Beach [Entorno Inteligente]
- ¿Se terminó la fiesta de los millonarios en Nueva York? Caen precios de los apartamentos más caros [Yahoo! Finanzas]
- Obamacare helps poor Americans pay their rent and mortgage on time [Daily Mail]
- Google amps up city's tech space race [Real Estate Weekly]
Appraisal Related Reads
- An Extraordinary Year for Appraisers [Jonathan Miller/AppraisersBlogs]
- CoreLogic shifts focus to appraisals, moves away from loan origination software [Housingwire]
- What Kind of Appraiser Are You? [George Dell, SRA, MAI, ASA, CRE]
Extra Curricular Reads
- Paul Bocuse, French Chef Who Became Cultural Star, Dies at 91 [New York Times]
- The All-American Muscle Car Will Outlive the Doomed Sedan [Bloomberg]
- Finding It Hard to Focus? Maybe It’s Not Your Fault [New York Times]
- The people who get how Facebook works are also the most likely to leave it [Fast Company]
- Podcast: NBC Chimes [Twenty Thousand Hertz]