Sometimes We Don’t See Signs Of Housing Trends Until They Hit Us
Since the New Year began, reporting on the housing market has been consistent in identifying that many markets are undergoing changes after many years of consistent white hot conditions. In many ways the changes that are being openly discussed already began more than a year ago but consensus wasn’t yet formed. Now the chorus is getting louder.
Need directions? pic.twitter.com/f6n2DuX7A8— Car Crash TV (@Crashingtv) January 9, 2019
No more signs to share – but I do have some cool charts below.
I clearly have digressed.
Market Report Gauntlet Q4 Week 2: Westchester, Putnam & Dutchess Counties
Since 1994, I’ve been the author of an expanding independent series of market reports for Douglas Elliman, the third largest real estate company in the U.S. After each quarter ends, they publish our research in more than 30 U.S. housing markets in what I call “The Gauntlet.”
Bloomberg provided a nice chart on our results for the quarter illustrating the tight co-op market. I’ve got this data back to 1994. The chart shows the compression (faster speed) of the past two years.
WESTCHESTER SALES MARKET HIGHLIGHTS
– Overall price trend indicators slid year over year by a shift in the mix toward apartment sales
– Single-family and 2-4 family sales and their market share declined year over year
– Total contracts fell year over year for the fourth consecutive quarter
– Sales declined annually for the sixth consecutive quarter
– Total contracts fell annually for the ninth straight quarter
– Listing inventory expanded annually for the third consecutive quarter
PUTNAM SALES MARKET HIGHLIGHTS
– In contrast with the region, sales rose year over year for the third time in the past four quarters
– Inventory, marketing time and negotiability tightened year over year
– Median sales price increased year over year for the seventh consecutive quarter
DUTCHESS SALES MARKET HIGHLIGHTS
– Listing inventory rose year over year for the second straight quarter after falling for the previous nine
– The number of sales decreased year over year for the fourth consecutive quarter
– All price trend indicators rose year over year for the second consecutive quarter
Market Report Gauntlet Q4 Week 2: Brooklyn, Queens & Riverdale Sales
BROOKLYN SALES MARKET HIGHLIGHTS
– The market continued to be characterized by steadily rising prices, and a fast-moving pace.
– The number of sales declined year over year for the fourth consecutive quarter
– After reaching a record low in the prior year quarter, listing inventory rose sharply
– Median and average sales price increased year over year for the second consecutive quarter
QUEENS SALES MARKET HIGHLIGHTS
– Consistency in setting new price records, sliding sales, and rising inventory trends
– Seventh consecutive quarter with average sales price record
– Fifth consecutive quarter of year over year declining sales
– Listing inventory rose year over year for the seventh consecutive quarter
RIVERDALE SALES MARKET HIGHLIGHTS
[includes Fieldston, Hudson Hill, North Riverdale and Spuyten Duyvil]
– Price trends moved higher despite rising inventory
– All price trend indicators move higher as sales fell sharply
– Listing inventory edged higher, but marketing time dropped
– Negotiability eased nominally as the market pace slowed
Market Report Gauntlet December 2018: Manhattan, Brooklyn & Queens Rental Markets
Elliman Report: 12-2018 Manhattan, Brooklyn & Queens Rentals
MANHATTAN RENTAL MARKET HIGHLIGHTS
– The Manhattan rental market saw fewer new leases, more concessions, and aggregate prices skewed upward by higher quality rental housing stock.
– Median net effective rent slid year over year for the second consecutive month
– Vacancy rate continued to fall year over year, down for the seventh consecutive month
– Market share of concessions rose year over year for the forty-third consecutive month
– Mid-tier, entry tier and starter median rent moved higher year over year
– Luxury median rent fell year over year for the fifth time in the past six months
BROOKLYN RENTAL MARKET HIGHLIGHTS
– The Brooklyn rental market continued its trend of rising rents skewed higher by the influx of higher quality new development rentals.
– Market share of 2-bedroom and 3-bedroom rentals rose 1.8%, skewing overall price trends higher
– Median net effective rent rose year over year for the second time in five months
– Market share of concessions increased year over year for the 35th consecutive month
QUEENS RENTAL MARKET HIGHLIGHTS
– The Amazon “HQ2” announcement has led to speculation that the market will tighten soon if not already. It hasn’t.
– Rental price trend indicators skewed higher by an influx of new development product
– Market share of concessions increased year over year for the 4th consecutive month
– Only 2-bedrooms saw a year over year rise in rental market share
Shifting Fortunes of International Real Estate
Knight Frank, a global real estate firm affiliated with Douglas Elliman has issued forecasts for 2019 for a number of global cities. Europe (and Miami) are poised to be standouts.
Home Sales Are Slowing
Here’s a Bloomberg video featuring our Elliman Report research on slowing sales. Admittedly I prefer rock music in the background.
New in the Real Estate Lexicon: Shutdown
Please be advised that surveys are one step worse than bad data but NAR is taking an aggressive stance on the impact of the shutdown to the spring housing market.
Among those that reported problems, 9 percent said clients who were federal employees had held back from buying, while 25 percent said buyers pulled out simply because of “economic uncertainty,” according to the report. Of those, about half had closings delayed or canceled because customers’ mortgages were backed by the Federal Housing Administration, U.S. Department of Veterans Affairs or the U.S. Department of Agriculture.
New report on impact of shutdown from @NAR_Research says what you'd probably expect: Increased economic anxiety is indirectly causing some buyers to delay and more directly forcing some fed employments to suspend plans to buy a home.— Laura Kusisto (@LauraKusisto) January 8, 2019
Uncertainty Still Remains Popular in The Housing Lexicon to the point where homebuilders can’t forecast their outlook for the year. Now THATS uncertainty.
The “R” word
According to JP Morgan, the odds of a recession in two years are 70%
The issue isn’t whether we will go into one – we always do eventually. The issue is how bad it will be. Rates are already low so the Fed has less wiggle room to work with since the tax cut was made a time when the economy was booming – generally the opposite moment when a tax cut should be issued. The Indicator Podcast by Planet Money does a great job explaining.
This Week in Aspirational Pricing
Yawn, another $125 Million Los Angeles listing.
Here’s proof that titans of Wall Street don’t get housing. The $70 million price cut from a $115 million price set five years ago isn’t a price cut. The cut really shows how wildly over the market the listing was priced around the time of “Peak Luxury.”
According to our data, the top 1% of the market had an average sales price of $28,447,888 in 4Q18, a 97% increase since 4Q13. Basically double. This listing cut its price by 61% over the same period. Wow.
Punchbowl Economics: Metro Home Supply-Demand Imbalance
This AEI study (h/t Ritholtz) is measuring recent market changes across 100 metros.
I love how AEI constantly refers to the “punch bowl” in a serious research piece:
Minimal access to the leverage punch bowl makes difficult for buyers in high price tier (almost exclusively repeat buyers) to offset higher home prices and interest rates. As noted earlier, these buyers have been using quality trade-offs to offset rising constant quality home prices. As a result, 40 of 100 metros are buyer’s markets, while many others are just moderate seller’s markets.
Raking The Living Room Carpet
One of my friends during college had a mom that was a bit enthusiastic about there living room. It was a shrine. The carpet was “raked” so she could see if the kids ventured into the room where all the couches and chairs with covered in clear plastic.
One of the simplest reasons so many clamor for formal spaces is because they are a signifier of wealth and prestige, a sign of having “made it.”
Working With Appraisers
Here’s a good video for agents to better understand how to work with appraisers – wait for the end of the clip.
h/t Maureen Sweeney
Upcoming Speaking Events
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
12-24 Hour Valuations: How Are We Worth So Little?
An appraiser sent me the following email. It has become clear to me that the valuation industry that engages appraisers now places more value on the physical inspection than it does the actual valuation itself.
They can’t replicate the interior inspection so the valuation portion is where the fee shaving occurs and believe they can come up with the value themselves or find people that will work for wages that won’t attract people who are competent, but rather, people that are desperate.
[Bold for emphasis]
You are receiving this email because you have expressed interest in completing desktop products for Computershare. If you are not interested in completing these products and wish to no longer be contacted, please let me know and I will remove you from our list.
We have recently completed a recording of our AppraisalX (Desktop Hybrid Appraisal) and ARA (Appraisal Review) training session and made it available for everyone on our BrickFTP site. This training runs for approximately an hour and covers both products as well as general system navigation within our Acuity platform. This is a requirement to complete, along with a short test, in order to be eligible to receive these assignments.
On the BrickFTP site you will find our video labeled “AppraisalX _ ARA Training Recording 2018-09-18” which is in .mp4, .mov, .wmv, or .avi format. These are all the same video, just different formats that your computer or portable device might be able to read. Also included within the BrickFTP site are our training documents: (Three for each product) A completion guide, instructions and an example. This documentation should be downloaded and reviewed in conjunction with the video and testing.
Within the video there will be instructions on how to contact us to have the tests sent to you. These tests will be sent through SurveyMonkey, which is a third party site. You are required to get a 90% or better on each test to be eligible. If you fail the test the first time a wait period of a week is enforced before a new test will be sent to you. If you fail the test twice, you will not be eligible to complete that particular product. We do allow you to review the documentation while taking the test, so these are essentially open book tests to ensure you pass.
Each of these products pays $50. The typical turn time for the AppraisalX is 24 hours from assignment. The ARA has two different turn times based on the clients’ needs. One is 24 hours, and the other is 12 hours (or basically the next morning).
Below you’ll find the link to our BrickFTP site as well as the login information you will need to access the video and training documentation. When you login to the site, click the upper left icon that says “All Files”. This will take you to the videos and documentation. You do not need to download any additional software to view these files. The website does have an option, but we don’t recommend this.
If you have any additional questions regarding this, feel free to reach out to me directly.
Thank you again and we look forward to working with you!
Sr Valuation Analyst > Loan Services > Property Solutions
T +1 303 895 2858
8742 Lucent Boulevard, Highlands Ranch, CO 80129
Because firms like this and their clients believe they can reliably value property through automation despite clear evidence they can’t. Their clients don’t seem to care about valuation reliability because of the need to drive more lending as profits have waned as well as the moral hazard created by the federal backstop used in 2008. The taxpayers will bail these institutions out.
Our industry has a weak voice, largely from a combination of self-loathing, ineffective trade group leadership and the shear nature of the largess of the financial institutions that lobby against us. We are the last resort for the consumer and taxpayer, but ultimately regulatory authorities have yet to prove they care.
OFT (One Final Thought)
And you thought Millennials were hard to understand:
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 overprice their listing;
- You’ll rake the carpet;
- And I’ll dig out my rotary dial telephone.
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.
Reads, Listens and Visuals I Enjoyed
- Golf-Home Owners Find Themselves in a Hole [Wall Street Journal]
- PODCAST: Are We Ready For A Recession? [The Indicator from Planet Money]
- Cyclists Endangered as West Village Bike Lanes Attacked With Glass, Signs [Streetsblog]
- One of the largest homebuilders said it can't give a forecast because the market is so 'uncertain' [CNBC]
- Pols ask county to explain home value reductions [Newsday]
- New $125M Home Vies for Most Expensive Sale in Los Angeles [Mansion Global]
- This UES townhouse listed for $77M in 2015. It's back. [The Real Deal]
- Realtors say the government shutdown is sinking home sales [Crain's Chicago Business]
- The Economy Is Finally Coming Through for U.S. Workers [Bloomberg]
- Falling Mortgage Rates Raise Hopes for Battered Housing Market [The Wall Street Journal]
- Palm Beach homes: Ten condo, co-op deals hit $5 million mark last year [Palm Beach Daily News]
- Charts of the Month: Understanding the Dynamics of Today’s Housing Market [AEI]
- U.S. Luxury Home Sales to Slow in 2019 [Realtor.com]
- Boston home prices heading into 2019 show convergence at lower, higher ends [Curbed]
- Judge Blocks New York City Law Aimed at Curbing Airbnb Rentals [The New York Times]
- TREB Housing Market Charts [Toronto Real Estate Board]
- Window to the Law: Working with Appraisers [National Association of Realtors]
- Matt Damon Breaks Records In Brooklyn's Housing Market [Forbes]
- Help! My Co-op Has No Leader and Might Collapse [The New York Times]
- Where are we in the cycle? Some experts say luxury condo market will remain ice cold in 2019 [The Real Deal]
- Our homes don’t need formal spaces [Curbed]
- Zeckendorfs carve up $130M penthouse at 520 Park Avenue [The Real Deal]
My New Content, Research and Mentions
- First- and Second-Home Buyers Can Expect Discounts in 2019 [Bloomberg]
- It's more affordable to rent than buy in most US cities, report finds [Markets Insider]
- "Unheard of": Corcoran broker suggests record $27M listing for two historic Harlem townhouses [The Real Deal]
- Concessions galore: Manhattan rental incentives just keep climbing [The Real Deal]
- Elliman Unveils Surveys of the Two Boroughs – Rising Prices, Declining Sales Define Brooklyn & Queens Residential Markets in Q4 [The Cooperator]
- Sales continue to slide in Brooklyn and Queens. Are price drops next? [Brick Underground]
- Westchester home sales are seeing a ‘steady erosion’ [The Real Deal]
- Fast-paced home market in Brooklyn and Queens loses steam [Crain's New York]
- Sales in Brooklyn and Queens are falling, but prices aren't: Elliman [The Real Deal]
- Fading beauty? In a sea of new dev, UES co-ops have fewer takers [The Real Deal]
- Manhattan’s Luxury Rental Market Ended 2018 With a Whimper [Mansion Global]
- Prices Rise in Brooklyn and Queens As Sales Fall [Mansion Global]
- In Tax-Heavy Westchester, Homebuyers Shift to Condos, Co-Ops [Bloomberg]
- For $27M, two historic Harlem townhouses with megamansion potential [Curbed]
- Two Harlem Townhouses Ask One Record-Breaking $27 Million Price [Mansion Global]
- Real estate community and hipsters rejoice over canceled L train shutdown [Active Rain]
- 2018 cerró con mercado inmobiliaria a la baja en Nueva York [El Diario NY]
- Manhattan home prices fall under $1 million in 4th quarter as sellers cut deals [BusinessWorld]
- Manhattan median condo price falls below $1M [Inman]
- Manhattan home prices fall below $1 million for first time since 2015 [The National]
- Manhattan Home Sales and Prices Fall in Fourth Quarter [GlobeSt]
- Median price of Manhattan apartments drops below $1m [Financial Times]
- Manhattan home sales dipped as 2018 came to a close, reports show [am New York]
- 2018 Threw 'Wet Blanket' on Manhattan Real Estate [Professional Builder]
- Jarred Kessler Real Estate In Manhattan Hits Record Low For 2018 [Patch]
- Real Estate in Manhattan Downgrades Near Year’s End in 2018 [Business Times]
- With L Train Shutdown Reversal, Williamsburg Braces For Rent Hikes [Gothamist]
- Nightly Business Report – January 3, 2018 [NBR]
- Manhattan housing prices cooled in 2018 [Marketplace]
- What’s Coming in New York Real Estate in 2019 [The New York Times]
- Real estate community and hipsters rejoice over canceled L train shutdown [The Real Deal]
- Icon asking $714M for under construction UES condos [The Real Deal]
Recently Published Elliman Market Reports
- Elliman Report: Putnam & Dutchess Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Westchester Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Riverdale Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Northwest Queens Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Queens Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Brooklyn Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 12-2018 [Miller Samuel]
Appraisal Related Reads
- Will buyers step on the gas or brakes in 2019? [Sacramento Appraisal Blog]
- What Is A Quality Home Appraisal? [Birmingham Appraisal Blog]
- Ready or Not- It's Another Year [DW Slater Co. Blog]
- Exposure Drafts [The Appraisal Foundation]
- Proposed Changes for the 2020 -21 Edition of USPAP [The Appraisal Foundation]
- What Are You Waiting For? Only 179 Comments…Please Comment Now! [Appraisersblog]
- AGA Objects De Minimis Increase Proposal – It is Time to Call out the Liars [Appraisersblog]
- Appraising Home Purchase Appraisals [Federal Reserve Bank of Philadelphia]
- RICS Joins Valuation Organizations to Call for Public Hearing on Residential Appraisals [SCNOW]
- Algorithm vs. appraiser: Estimating a home's value can be complicated. Here's what sellers should know. [Chicago Tribune]
- Mortgage Industry Expert Wants to “Eliminate” [Appraisersblogs]
- Appraisal startup Bowery Valuation raises $12M in Series A [The Real Deal]
Extra Curricular Reads
- The Big Mac index shows currencies are very cheap against the dollar [The Economist]
- 18 Photos Of Glitches In The Matrix That'll Make You Think, "Yep, We're Living In A Simulation" [Buzzfeed]
- WeWork and SoftBank Live in Their Own World [Bloomberg]
- Put The Cream In First Before You Pour The Coffee [Digg]
- How pizza could save the world [Fast Company]
- The Trouble With Rock Songs About Rock [Vulture]
- Why Gout Is Making a Comeback [The Cut]
- Perspective | Pink Floyd, ‘Dark Side of the Moon’: The Week In One Album [The Wall Street Journal]
- Lines for salads out of control after ‘eat healthy’ resolutions [NY Post]