Feel the Housing Burn (But Don’t Try This At Home)
With our daily innundation of news and information, and the procession of optics like “perp walks” and “that’s not mine even though it was in my wallet” on shows like Live PD , did you ever get the feeling that laws and rules are optional to everyone else but you and a few people around you? And not just societal rules, but laws like gravity and physics? Well to me, it does on occasion. Please don’t try the following at home (if you live you happen to live near a foundry) and remember…there once was a “first time” for this.
but I digress…
Elliman Report Gauntlet Q4-2017 Week 4 (Eastern Time): Hamptons, North Fork and Long Island
Before we get into it, the Bloomberg article covering our Elliman Hamptons report  release was the 8th most emailed story on the Bloomberg Terminals worldwide (350,000± subscribers) yesterday, but the following screenshot was taken towards the end of the day. I know Housing Notes readers insist on being number 1 – that’s why you’re here – so we can assume our own truth that the article must have reached number 1 during the day.
And then, it is important to share the chart for the piece because it was, well, a chart. The piece provides a good feel for what is happening out east. In addition to the Bloomberg  story, there were other good reads including The Real Deal , Mansion Global  and the Hamptons.com .
The Newsday article on the Long Island market  was a good read as well and answers the question that many real estate brokers and other participants frequently ask me – “why is inventory low?”
Despite the strong demand throughout the Island, homeowners have been in no rush to list their properties, since the consistent increase in prices “sucks out the urgency to sell as owners try to time the market,” hoping to fetch the highest possible price, said Jonathan Miller, president of Miller Samuel.
And now for some of our charts on these markets…
Elliman Report Gauntlet Q4-2017 Week 4 (Mountain & Pacific Time): Aspen & Los Angeles+
Aspen continues to rebound from the 2016 doldrums while LA and its submarkets remain plagued by lack of inventory, yet still sees softer conditions at the high end.
Marinating in Aspirational Pricing
The Observer presented a fun piece on the Palm Beach market  presented the three most expensive listings there. I talk about the exodus of “aspriational pricing era” by luxury sellers who want to actually sell their homes. But this time I sounded like a foodie:
The author of Elliman’s report, real estate appraiser Jonathan Miller, says that one reason for the spike is that Palm Beach sellers actually discounted their properties, resulting in a burst of sales.
“Sellers, having marinated in their aspirational stew for several years, are finally looking around and seeing that the market is moving without them,” Miller said. Asked why the Palm Beach market is flourishing, while Miami is experiencing far more modest growth, Miller explained that they are simply “two different markets.”
The highest listing at $195 million had a 5-minute video and I noticed a basketball rolling across the court by itself. Other than a 62,220 square foot house, this explains the asking price!
“Small Enough To Jail” Versus “Too Big To Fail”
A friend and appraiser colleague of mine just shared this documentary with me: Abacus: Small Enough to Jail  – it was just nominated for an Oscar. I haven’t watched it yet but the trailer was riveting. I remember when the word spread about Abacus in our market but I didn’t understand the details. This is now available on Amazon Prime Video .
REBNY Video on New York City Housing Shortage/Affordability Crisis
Worth watching. The message really applies to most U.S. housing markets.
Where The Cranes Are
Mike Rosenberg of the Seattle Times covers housing and real estate. I find him to be an essential follow on The Twitter .
That’s interesting – this sounds just like New York City!
A flood of new rental high-rises hitting the market late last year led to the first significant rent drop in Seattle this decade, with 6 percent declines downtown, where the bulk of the new towers are.
Fewer cranes but still a lot.
Bloomberg Has Zeroed In On The High Cost of Housing
A couple of good reads about markets we keep reading about:
- Buying a Home in San Francisco Is About to Get Even Harder [Bloomberg ]
“The scale of the wealth created here and the scale of the technology sector is going to outweigh the effect of the tax plan,” said Patrick Carlisle, chief market analyst with Paragon Real Estate Group in San Francisco. “The Bay Area is unique because we have companies that didn’t exist five years ago and that are now the biggest the world. There’s no place on Earth that has a similar dynamic.”
- The Wealthy Are Bidding Up U.S. Mansion Prices [Bloomberg ]
Redfin shares exactly what we are seeing in the local markets we cover. Luxury supply is falling. But it’s that paradox I’ve talked about before – listings existing the market in large numbers because they were always wildly overpriced but sellers are cutting their asks even more, resulting in record prices in aggregate.
The supply of listings priced at $1 million or above fell almost 24 percent from a year earlier, the third consecutive quarter of declining inventory, the brokerage said. Sales of million-dollar homes jumped more than 15 percent.
Upcoming Speaking Events
January 26, 2018 – The 92Y is presenting their 2nd annual City of Tomorrow event that starts this evening. I’ll be moderating two panel discussions tomorrow morning:
Saturday 10AM  All Around the Town: Get the Inside Scoop from Top Brokers on Some of the City’s Most-Coveted Neighborhoods
- Raphael De Niro, Douglas Elliman
- Julia Spillman, Chief Executive of Sales & Operations Of Eklund|Gomes
- Lorenzo Avati, Berkshire Hathaway HomeServices
- Stephen Kliegerman, President, Terra Development Marketing
- Moderated by Jonathan Miller, President and CEO of Miller Samuel Inc.
“Join broker-experts and New Development gurus as they share their insights on hot neighborhoods such as Tribeca, the West Village and the Lower East Side. Learn where you can get unexpected value right now, what the next hot neighborhoods are to invest in, and which ones are making a comeback. Leave with an insider’s take on the newest “ground ups,” conversions, retail and restaurant concepts that are going to shake up the grid.”
Saturday 11AM  What’s Happening in 92Y’s Backyard
- Beth Fisher, Senior Managing Director, Corcoran Sunshine Marketing Group
- Matthew Bauer, President, Madison Avenue Business Improvement District
- Gina Malin, Executive Director, Parents League of New York
- Joanna Cawley, Executive Director, Carnegie Hill Neighbors
- Moderated by Jonathan Miller, President and CEO of Miller Samuel Inc.
“With a slew of fresh retail concepts like Peloton opening over on Madison, multiple noteworthy condominiums coming on line over the next 18 months, and primary or ongoing schools opening and expanding, there is no better time to be talking about the Upper East Side. Join our panel of experts and brokers as we take a tour around the neighborhood.”
It’ll be fun!
The theme this week is “Get it cheap and fast” because “quality and reliability” is the same for all appraisers nationwide.” Right?
Wall Street’s Appraiser Epic Fail
There was an epic Wall Street Journal this week called: What’s a House Worth? Wall Street Turns to Drive-By ‘Appraisals’  (behind paywall) that got the appraisal industry’s blood boiling. Here’s another publication’s interpretation  of the piece outside of the paywall and yet another interpretation  (I’m in this one, LOL).
BPOs for $10 bucks and outsourcing drive-bys from India…what could go wrong?
It is clear to me that Wall Street views the value aspect of asset management as a piece of paper that needs to be completed and thrown in a file. To save a nominal amount of money, they are behaving like commercial banks and mortgage brokers during the housing bubble.
Since the existence of the Federal backstop was confirmed by the bailouts in the banking industry in the aftermath of the housing bubble a decade ago, the take appears to be that there is no real need for competent asset valuation. Risk management is simply reduced to form-filling.
I like to paraphrase Mark Twain who said “History doesn’t repeat itself but sometimes it rhymes.”
Craigslist is A Great Way to Find The Best Appraisal Talent on Complex Assignments, Right?
Dave Towne sent me this example of a request for appraisal service on Craigslist which was pretty jaw-dropping:
Certified NY State Real Estate Appraiser (Midtown East)
employment type: contract
One time gig. Need professional appraisal of two combined apartments. Unusual circumstances and layout. Not your everyday appraisal. Needed for current litigation, so must be thorough. Not under any time constraint. $500.
Can discuss further on phone call if you contact me. Thank you.
I can imagine how this case will go. I hope I am hired by the other side.
Brilliant Idea #1
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Brilliant Idea #2
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Reads, Listens and Visuals I Enjoyed
- Abacus: Small Enough to Jail [Documentary Trailer] 
- Housing in America’s Most Expensive Area Is About to Get Even Pricier [Bloomberg] 
- Fewer cranes on Seattle skyline for first time in years, but city still leads U.S. [Seattle Times] 
- How a red-hot housing market became a crisis [Marketplace] 
- Apartment Supply Volumes Peak at a 30-Year High in 2017 – MPF Research [Real Page] 
- Lack of affordable housing worries many U.S. mayors in new survey [Seattle Times] 
- Manhattan Duplex Penthouse First Listed for $39.8M Returns to Market for $23M [Mansion Global] 
- NYC’s supertall skyscraper boom, mapped [Curbed] 
- Mapping Detroit’s construction boom [Curbed] 
- China’s Housing Market Is Like a Casino. Can a Property Tax Tame It? [NYT] 
- No good reason for banks to offer more government-backed mortgages [American Banker] 
- We’ll Always Have Sky City [Slate] 
- You Think Your Landlord Is Bad? Try Renting From Wall Street [The Intercept] 
- What’s Behind Door No. 2? Life as a Real Estate Reporter [New York Times] 
- Reis looks at the Impact of The Tax Cut and Jobs Act [REIS] 
- Multifamily Market Commentary – January 2017 2017 Multifamily Market Outlook – Reduced Speed Ahead [Fannie Mae] 
- Amazon pick for second HQ likely in already overheated housing market [Housing Wire] 
- The Slow Death of a Brutalist Vision for Buffalo [Citylab] 
- Pre-view the #REBNY122 video, "New York City… – Real Estate Board of New York [Facebook] 
- A Hissing Radiator and Sleepless Nights [NYT] 
My New Content, Research and Mentions
- LI home prices post biggest gain in more than 10 years 
- Hamptons Real Estate Market Closes Out 2017 On A High Note [hamptons.com] 
- Sales Volume Up in the Hamptons, Buoyed by Lower Priced Transactions [Mansion Global] 
- Hamptons Home Sales Jump, Chopping the Supply of Listings [Bloomberg] 
- Aspen’s Luxury Market Warms up During Ski Season [Mansion Global] 
- Prices in the LA luxury-home market are dropping: report [The Real Deal LA] 
- Los Angeles Luxury Market Cools at the Highest End [Mansion Global] 
- The Wealthy Are Bidding Up U.S. Mansion Prices [Bloomberg] 
- citybizlist : New York : Under Tax Reform CRE Thrives, Residential Takes A Hit [citybizlist] 
- Under Tax Reform CRE Thrives, Residential Takes a Hit [Globest] 
- Hamptons housing market ends 2017 on a high note [The Real Deal NY] 
- Bowling Alleys and 33-Bedroom Estates: Palm Beach Properties for $100M and More [Observer] 
- Putnam Home Sales Decline in Fourth Quarter [Tapinto.net] 
- Brooklyn rents fall as new units come online [Real Estate Weekly] 
Appraisal Related Reads
- What Exactly Do I Get When I Order An Appraisal? [Birmingham Appraisal Blog] 
- Appraisers and public trust: Why are professions concerned about public trust? – by John Rynne [NYrej] 
- A decade after the Great Recession, we're outsourcing home appraisals to India [Motherjones] 
- What’s a House Worth? Wall Street Turns to Drive-By ‘Appraisals’ [Wall Street Journal] 
- Big investors are valuing homes with a method outlawed for everyone else after the housing crash — and the SEC is asking questions [Buisnessinsider] 
Extra Curricular Reads
- Warren Miller, Ski Bum Turned Filmmaker, Is Dead at 93 
- “Slow Burn”: What Can Watergate Teach Us? [New Yorker] 
- The halo effect, and other managerial delusions [McKinsey] 
- After 61 Years, America’s Busiest Highway Is Almost Complete [The Atlantic] 
- Top French chef Paul Bocuse dies aged 91 [The Guardian] 
- NFL Playoffs Are Just Dismal Viewing [Bloomberg]