Bicycles and Rock Lobsters Can Change Your Housing Outlook
I’m nearly a third of the way into my Tour de France  watch-a-thon, a 7-hour per day, 23-day guilty pleasure every July. I just let the NBC feed run on my iPhone with the sound off and periodically glance at it to check up on changes. Forget staring at fishtanks for soothing relaxation. The amazing countryside scenery makes it well worth the time.
So with that frame of mind, here is my biking analogy of the week. It only takes two to bring everything down. Watch this in its entirety on a big screen if possible.
But I digress…
A Shout Out To My Columbia Grad Students
It’s that time of year again to teach Market Analysis in the Master of Science in Real Estate Development (MSRED) Program at Columbia University . It’s a strong program if I do say so myself. If the quality of student participation in yesterday’s first class was any indication, this semester is going to be engaging and fun for all of us. Plus the terrific faculty and alumni support make this position a dream for me.
Remember, a down residential housing trend goes like this:
EXTERNAL EVENT> (i.e. new tax law) >
SALES DECLINE > (buyers pause until fully understand)
LISTING INVENTORY RISES > (sellers remain in denial)
1-2 YEARS PASS > (sellers don’t sell unless they get their price)
PRICES ERODE > (sellers capitulate to the market)
Since the real estate brokerage community is transaction-based, I’ve never understood why the industry never spoke about a downturn directly. With greater transparency over the past decade, the smarter, more successful brokerage firms embrace market changes as an opportunity to educate sellers on the market reality that “the housing market doesn’t care what you think.”
Market Report Gauntlet: Elliman Report Q2-2019 Westchester, Putnam & Dutchess Sales
Let’s start with Westchester County, New York, an affluent suburban market to the North of New York City.
Wall Street loves Westchester housing news because many in the securities industry live there. The Bloomberg coverage of our Westchester research  was the third most read story on the 350,000± Bloomberg Terminal subscribers worldwide.
Even more fun – a chart, obviously.
Here’s an outline of the northern counties and some charts
WESTCHESTER SALES MARKET HIGHLIGHTS
“Countywide sales continued to expand as price trend indicators showed mixed results.”
– Countywide sales have increased at a rising annual rate for the fourth straight quarter
– The largest annual sales growth occurred in the $800,000 to $1,000,000 range
– Co-op and condo sales gained market share over single and 2-4 family sales
– Single family sales surged and outpaced the rise in listing inventory
– Single family listing inventory expanded annually over the past five quarters
– Luxury single family price trend indicators fell short of year-ago levels
– Luxury single family listing inventory declined annually for the third time in four quarters
And who wouldn’t like being superimposed on a chart?
PUTNAM SALES MARKET HIGHLIGHTS
“The second fastest paced quarter in fifteen years.”
– Median sales price increased year over year for the ninth straight quarter
– The number of sales rose annually for the third time in four quarters
– Listing inventory fell year over year for the second time in three quarters
DUTCHESS SALES MARKET HIGHLIGHTS
“The surge in sales overpowered the growth of listing inventory.”
– Median sales price declined year over year for the first time in nine quarters
– The number of sales rose year over year for the second time in three quarters
– The pace in the market moved sharply faster than the same period last year
Market Report Gauntlet: Elliman Report June-2019 Manhattan, Brooklyn & Queens Rentals
Despite an uptick in the Manhattan sales market, the Manhattan rental market continued to show strengthening trends. Incidentally, the new rental law passed in Albany has not played a role in the open market rental market yet that would show up in the trends.
But I digress.
The city rental market continues to see rising rents and falling market share of concessions. Rents are rising.
Elliman Report: June-2019 Manhattan, Brooklyn & Queens Rentals 
Because I’m partial to charts, here’s the Bloomberg story  featuring our research that ranked 16th most read yesterday worldwide:
Here are some of the key observations and charts for each borough.
MANHATTAN RENTAL MARKET HIGHLIGHTS
“Landlord concession market share continued to decline but remain a significant part of the rental housing market calculus.”
– Landlord concession market share declined year over year for the fifth time in six months
– The net effective median rent has risen annually each month since the beginning of the year
– Rent growth skewed to smaller apartments as market share gains skewed to larger apartments
– New development median rent increased at three times the rate as existing median rent
– Median annual rent gains were most pronounced in the 61% to 90% price strata
– The lowest year over year price growth was seen in the luxury and super luxury markets
BROOKLYN RENTAL MARKET HIGHLIGHTS
“The market continued to pivot away from concessions as rental prices continued to rise.”
– Concession market share declined annually for the sixth straight consecutive month
– All three face rent trend indicators have been rising annually since July 2018
– Net effective median rent rose year over year for the seventh consecutive month
QUEENS RENTAL MARKET HIGHLIGHTS
“Rental prices pressed higher as landlord concession market share declined.”
– The annual change in concession market share fell sharply for four consecutive months
– Net effective median rent rose annually for the seventh time in eight months
– New development concessions have experienced a more pronounced decline than concessions for existing rentals
Market Report Gauntlet: Elliman Report Q2-2019 Brooklyn, Queens & Riverdale (Bronx) Sales
Here are some key observations on these three NYC sales markets.
BROOKLYN SALES MARKET HIGHLIGHTS
Elliman Report: Q2-2019 Brooklyn Sales 
“Although median sales price reached a new record, sales slipped annually for the sixth straight quarter.”
– Median sales price set a new record this quarter for the seventh time in three years
– The number of sales declined year over year for the sixth straight quarter
– Listing inventory expanded annually for the fourth consecutive quarter
– Sales from $1-2 million and $4 -10 million were the only price strata to see an increase
– Luxury listing inventory increased year over year for the fifth consecutive quarter
– New development sales surged as price trends showed mixed results
QUEENS SALES MARKET HIGHLIGHTS
Elliman Report: Q2-2019 Queens Sales 
“Price trend indicators flirted with records as sales continued to slip.”
– Median sales price rose annually to the second highest on record and thirteenth quarter without a decline
– The seventh consecutive quarter with a year over year decline in sales
– Listing inventory increased annually for a ninth straight quarter
– Co-op median sales price reached its second-highest mark after setting records in six of the seven previous quarters
– All 1-3 family price trend indicators rose year over year for the thirteenth straight quarter
RIVERDALE SALES MARKET HIGHLIGHTS
[includes Fieldston, Hudson Hill, North Riverdale and Spuyten Duyvil]
Elliman Report: Q2-2019 Riverdale Sales 
“Price trends pressed higher as sales fell short of year-ago levels.”
– Median sales price rose year over year for the fifth straight quarter
– Number of sales fell annually for the fourth time in five quarters
– Listing inventory moved higher year over year for the fourth consecutive quarter
Albany Legislators Need To Consider Economics For Future Tax Revenue
Since last fall, the Albany legislature has turned New York’s real estate environment upside down. Best intentions I’m sure, but no evidence of understanding of how a real estate economy works, which is needed to generate the revenue needed to fund an expanding budget. Worst of all we’ve seen this movie before (1960s, 1970s and 1980s).
Failed Amazon Deal in Long Island City – The outcry against it  was based on a false common lack of understanding that the city was going to outlay billions to a rich company, when in fact the tax break was coming out of the additional revenue Amazon would provide.
Proposed/Failed “Pied-a-terre tax” – I was reading The Real Deal  online this morning and a video with me speaking popped up! It was from March and I had forgotten about the interview – my short term memory is pretty weak. The overturned proposal would have decimated real estate development and investment.
The updated mansion tax and transfer tax – placed a wet blanket  on an already struggling new development market. Because the high-end market was so weak, sellers and developers will be forced to cover the cost. The real damage to the market is the global image NYC is creating as a hostile place for investment.
The new rent law – the changes will ultimately decimate the multifamily sales market and effectively end all building improvements . We are already hearing about layoffs of construction workers by landlords who upgraded apartments as they became vacant. State legislators removed all financial incentives to renovate a multifamily property in New York State, likely crushing the multifamily sales market going forward. We are hearing that landlords are stopping renovations – look for the quality of affordable housing stock to deteriorate over the coming years. A repeat of the In Rem housing crisis of the NYC metro area of the 1970s and 1980s is here.
Econ Insight Episode 41 — Real Estate Boom or Bust?
My friend Alex Heil, Chief Economist, Planning & Regional Development of The Port Authority of New York and New Jersey asked me to do another podcast  but this time it was culled from my multi-agency presentation at the Port Authority – they step you through my presentation and inserted some of my audio. My first podcast for PANYNJ was back in September 2015 right after the market peaked: Housing and the Metro New York Economy 
If you’re not signed up to “Econ Insight” by the Port Authority, it is a good idea to subscribe to their newsletters and podcasts  for great monthly snapshots and other insights on the NYC metro area regional economy.
Here is the first page of June PANYNJ Monthly Economic Indicators newsletter which provides some of the information from my presentation. Great info on these pages every month.
Realogy Sues Compass, Realogy Gets Sued By Investors
There was a big Wall Street Journal story this week: Compass Engaged in Illegal Activity, Realogy Lawsuit Alleges 
Here’s the formal complaint 
This is a good read for all of you non-lawyers out there. Realogy names names and is incredibly direct against the practices of Compass. It really is a good read.
Of course, if you’re a Realogy fan, no good deed goes unpunished. Realogy was just hit with a class action lawsuit.
From the Real Deal today: On heels of Compass legal battle and dwindling stock, Realogy hit with securities fraud suit 
Len Kiefer ‘s Chart Handiwork
(For earlier appraisal industry commentary, visit my old clunky REIC  site.)
Taking a break this week
Even though there was a lot of important things to discuss here like the one year North Dakota waiver, I simply ran out of time this week if you haven’t noticed the early content in these Housing Notes.
OFT (One Final Thought)
Speaking as wanna be lobster fisherman, I’ve always loved this song. Who knew that this band would get so popular? Always loved their playful vibe. I was a sophomore in college when this came out and wore out the album. So different than the hairband stuff that dominated the airwaves back then.
40 years ago today, The B-52s’ self-titled first record was released. Here they are performing “Rock Lobster” from that album at the Downtown Cafe in Athens, Georgia in 1979. pic.twitter.com/Ruup9L8FiZ — Dust-to-Digital (@dusttodigital) July 6, 2019 
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 rent;
- You’ll rock lobster;
- And I’ll talk a lot.
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
- On heels of Compass legal battle and dwindling stock, Realogy hit with securities fraud suit [The Real Deal] 
- The "B" Word: Can We Spot the Next House Price Bubble? [Freddiemac] 
- Opinion | Only Washington Can Solve the Nation’s Housing Crisis [NY Times] 
- The Guilty Pleasures of Mansion Porn [The Atlantic] 
- How New York's Rent Reforms Will Impact Condo And Co-Op Conversions And Beyond [Forbes] 
- Compass Engaged in Illegal Activity, Realogy Lawsuit Alleges [Wall Street Journal] 
- Palm Beach homes: Four sales in a week total more than $200 million [Palm Beach Daily News] 
- NYC Investment Sales On Pace To Hit 9-Year Low [Bisnow] 
- Homebuyer Bidding Wars Are Fading Fast, Even in San Francisco [Bloomberg] 
- Toll sells penthouse at 1110 Park for $17.25M — a 50% discount [The Real Deal] 
- First-Time Home Buyer Map of America [howmuch.net] 
- Opinion | A New Approach on Housing Affordability [NY Times] 
- It's a Great Time for Billionaires to Splurge on Real Estate [Bloomberg] 
- Brutal brokerage realities [The Real Deal] 
- ‘This Old House’ Turns 40 [NY Times] 
- Not Enough Homes, and the Wrong Kind [NY Times] 
- 3 Ways To Stop The Next Real Estate Crash & Save The Fed A Trillion Dollars [Forbes] 
My New Content, Research and Mentions
- Multifamily properties trade in Bridgeport, Toll Brothers buys in White Plains and more Westchester & Fairfield real estate news [The Real Deal] 
- Jeffrey Epstein’s $56 million mansion could become a real-estate nightmare [Market Watch] 
- Jeffrey Epstein's $56 million mansion could become a real-estate nightmare [Morningstar] 
- Big-Ticket Homes Sales in Brooklyn Spiked Ahead of Mansion Tax [Mansion Global] 
- 豪宅税开征前 这两大区房屋销量不升反跌？！[The China Press] 
- At years' halfway point, Westchester sees a rebound in residential sales [The Real Deal] 
- Westchester Home Sales Climbing Again, Along With Listings [Bloomberg] 
- Mansion tax deadline boosts Brooklyn's high end, but it can't prop up slowing sales [Brick Underground] 
- Manhattan homebuyers continue “camping out” in the rental market: Elliman [The Real Deal] 
- Why resi sales didn’t surge in Brooklyn and Queens ahead of mansion tax [The Real Deal] 
- Brooklyn supera a Manhattan en subida de precios de alquileres [Yahoo Finance] 
- Brooklyn Beats Manhattan for New York Apartment Rent Increases [Bloomberg] 
- Aston Martin’s First Residential Project Makes Landfall In Miami [Forbes] 
- Epstein’s New York Mansion Could Set Townhouse Record in Sale [Bloomberg] 
- Rise in Manhattan Co-op and Condo Sales [GlobeSt] 
- Boston’s Luxury-Defining Neighborhoods [Mansion Global] 
- Bunny Williams Home Welcomes New Leadership, Mansion Tax Goes Into Effect, and More News This Week [Architectural Digest] 
- How to Price Your Mansion [Mansion Global] 
- Cleanup brokers [The Real Deal] 
- More New Yorkers Embrace Solar Power [NY Times] 
Recently Published Elliman Market Reports
- Elliman Report: Putnam & Dutchess Sales 2Q 2019 [Miller Samuel] 
- Elliman Report: Westchester Sales 2Q 2019 [Miller Samuel] 
- Elliman Report: Riverdale Sales 2Q 2019 [Miller Samuel] 
- Elliman Report: Northwest Queens Sales 2Q 2019 [Miller Samuel] 
- Elliman Report: Queens Sales 2Q 2019 – [Miller Samuel] 
- Elliman Report: Brooklyn Sales 2Q 2019 – [Miller Samuel] 
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 6-2019 [Miller Samuel] 
Appraisal Related Reads
- Marijuana Appraisals: Still Hazy [Working RE] 
- Coester Risen from Ashes? – Homeowners to Provide Data for Evaluation [Dave Towne/Appraisersblogs] 
- What Housing & Carnivals Have in Common [Cleveland Appraisal Blog] 
- Incomplete Data Provides Incomplete Assumptions [Jonathan Miller/Data Pollution Reality] 
- ASC Grants Temporary Waiver of North Dakota Licensing and Certification Requirements [ASA] 
- Rates are low, but buyers aren’t going nuts [Sacramento Appraisal Blog] 
- The Untold Truth of Home Appraisals [Real Estate Decoded] 
- Establishing a White House Council on Eliminating Regulatory Barriers to Affordable Housing [Federal Register] 
Extra Curricular Reads
- MIB's Standard Podcast Questions: My Answers [The Big Picture/Ritholtz] 
- The Inside Story of Tazer Ball — The Most Shocking Extreme Sport in TV History [MEL Magazine] 
- Jim Bouton Was Baseball’s Misunderstood Evangelist [New Yorker] 
- 361- Built on Sand [99% Invisible] 
- They covered their school in racist graffiti. They apologized. But will they change? [Washington Post] 
- In 1919, driving cross-country was a crazy idea. An Army convoy set out to show it could be done. [Washington Post] 
- A Cyclist Turns to Gravel to Stay Fit [Wall Street Journal] 
- Selfie Deaths Are Like Market Crashes [Bloomberg] 
- Media Frame: Time to Ban Ride-Along Police TV [The Appeal] 
- Elvis Costello created a mammoth list of the 500 most essential albums in music history [Far Out Magazine]