The Emperor’s New Clothes In Housing Tech
Be careful who you listen to when it comes to the future of the housing market. It’s not the size of the company/organization or capital raise that matters as real estate undergoes disruption (or pseudo disruption), it’s the depth of their understanding of the consumer and anticipating what the consumer doesn’t yet know what they want. Does the emperor actually wear clothes in all the real estate tech stories you’ve been reading about?
Steve Jobs  –
“Some people say, “Give the customers what they want.” But that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, “If I’d asked customers what they wanted, they would have told me, ‘A faster horse!'” People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.”
And then there’s the following video – I remember seeing this in real time. I burst out laughing at the time, marveling at how misguided titans of industry can be.
But I digress…
Market Report Gauntlet: Q2-2019 Elliman Report: Manhattan & Northern Manhattan Sales
My readers of Housing Notes know that I’ve been writing an expanding series of market reports for Douglas Elliman  since 1994 and it’s a full-on obsession as are charts and data. So here we go.
MANHATTAN SALES MARKET HIGHLIGHTS
Elliman Report Q2-2019 Manhattan Sales 
Co-ops & Condos
“First annual rise in sales in seven quarters with buyers motivated to avoid exposure to new tax law.”
– Sales increased year over year for the first time after six quarters of declines
– The most significant rate of annual sales growth occurred from $2 million to $5 million
– Listing inventory rose annually for the seventh consecutive quarter
– Overall price trend indicators moved higher as median sales price set a new record
– Listing inventory for re-sales expanded year over year for the seventh consecutive quarter
– Highest co-op listing inventory total in six years and it exceeded the ten-year quarterly average
– After six straight quarters of annual declines, condo sales rose the most in three years
– The number of luxury sales at or above $10 million rose sharply from year-ago levels
– The first year over year increase in the number of new development sales in nearly two years
Our report results featured on the Bloomberg Terminals home page in “Chart of the Hour”
NORTHERN MANHATTAN SALES MARKET HIGHLIGHTS
Elliman Report Q2-2019 Northern Manhattan Sales 
“Apartment sales increased while townhouse sales declined.”
Co-ops & Condos
- Median sales price rose year over year for the third time in four quarters
- Listing inventory expanded annually for the fifth straight quarter
- The pace of the market, as measured by months of supply, was faster than the markets to the south
- Studio and 2-bedroom sales gained the most market share from the prior year
- Listing inventory remained unchanged as sales declined
- Price trend indicators showed mixed results
- Shorter marketing time with more negotiability
On The Floor of The NYSE, Not Talking About Stocks
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. They were terrific to speak with and I appreciated the invite. I was last there in 2007, interviewed by Erin Burnett when she was at CNBC. Back then I got to sit near the president of the Russian natural gas conglomerate Gazprom and his dozen very large bodyguards. This time was a bit different, thankfully.
Update: I forgot to mention the following little moment in this post when I shared my Erin Burnett/CNBC story today – the security 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.
Purplebricks Huffed And Puffed But No Match For Big Bad Wolf
The Purplebricks web site claims they save their customers an average of 40%. If that claim is actually true and they failed in the U.S. market, then there is clearly something else to this firm’s U.S. collapse.
This story reminds me of Foxtons YHD back in 2007. Technology firms proliferate in boom markets and many become challenged in their first down market.
Here is what I had to say back then (shout out to @johnwake  for reminding me!):
From my Matrix Blog in 2007 as the housing market was beginning to stall – Foxtons: Cutting Commissions = Watching MTV 
National Housing Stats Still Look Good
From Black Knight (worst corporate name ever) via Basis Point 
Pipelines & Weathervanes: New Development Deliveries Define Market Outlooks
Mansion Global does a good job showing the future incoming new development supply  for Manhattan (using our data) and Miami.
The Manor: This Week in Aspirational Pricing
$85 million – cash purchase in 2011 – was in good condition but was upgraded for $20M  subsequent to sale towards more a contemporary style.
$200 million – Original list price
$160 million – Last list price (20% price cut)
$119.75 million – Sales Price (price cut: 40% from original, 25.2% from last list)
With $105 million invested (cash purchase + renos), the seller made 1.76% per year on the sale. For the excessive risk, this seems like a terrible financial strategy all around.
Cheddar: How Property Taxes Are Calculated On Billionaire’s Row
Since Cheddar came up earlier here, I thought I’d share this clip:
Our favorite charts of the week of our own making
Notice our chart redesign? We finally packed up our Crayolas…
(For earlier appraisal industry commentary, visit my old clunky REIC  site.)
Location Update: ASC Special Meeting – North Dakota Temporary Waiver Request Thursday, June 13, 2019
UPDATE I just learned of this meeting update after sending out my Housing Notes:
The ASC will hold a Special Meeting on Tuesday, July 9th at 10:00 a.m. to consider the Temporary Waiver Request submitted by North Dakota. The Meeting will be held at 1100 New York Ave NW, Suite 200 East, Room: 2 A/B (Partnership for Public Service). If you plan to attend this Meeting, please send a request to Meetings@asc.gov.
If any of you can attend this meeting, please do! It is critical that the appraisal industry shows its strength in numbers – this proposal by North Dakota is a travesty for its damage to the public trust, the attack against the consumer, and fraudulent premise.
AVMs Are Not Understood By A Large Swath of Non-Appraisers
Here is a NAR deck on AVMs  (automated valuation models).
Here are some recent survey results that show more than half of the respondents indicated, it is either NEVER appropriate or NOT SURE if it is appropriate for a non-appraiser to perform a valuation on a home.
So the jury is still out for a third of respondents but a third are absolutely sure it is inappropriate. One can infer that appraisers have an opportunity to convey what AVMs really are to the public.
OFT (One Final Thought)
All three videos are fake, but which one scares the heck out of you?
via GIPHY 
via GIPHY 
Brilliant Idea #1
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- They’ll bowl with robots;
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Brilliant Idea #2
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See you next week.
Reads, Listens and Visuals I Enjoyed
- 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] 
- Former Spelling Manor Sells, Sets Record For Highest Price On Record In California [Forbes] 
- Purplebricks to exit US market as losses almost double [Financial Times] 
- Purplebricks Exits U.S. After Shares Plummet 75% in Two Years [Bloomberg] 
- Starchitect Zaha Hadid’s One Thousand Museum Has Reached Completion in Miami [The Big Bubble Miami] 
- Palm Beach homes: Sale of mansion on market for 4 years tops $40 million, deed shows [Palm Beach Daily News] 
- Rent Control Used to Work – During Wartime [Bloomberg] 
- Why financialisation is not causing the housing crisis [Centre for Cities] 
- Wondering why low mortgage rates haven't goosed the housing market? Here's the answer [Housingwire] 
- 13 Reasons U.S. Real Estate Market Is Stronger Than You Think [The Basis Point] 
My New Content, Research and Mentions
- 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] 
- Luxury Sales Spike as Buyers Rush to Avoid Higher Mansion Taxes [NY Times] 
- Savills : Plight of the condo [MarketScreener] 
- Manhattan Real Estate Volume Up After Six Straight Quarters of Decline [Cheddar] 
- American Suburbs Swell Again as a New Generation Escapes the City [Wall Street Journal] 
- Development Pipeline is a Weather Vane for Home Prices [Mansion Global] 
- Foxtons: Cutting Commissions = Watching MTV [Miller Samuel] 
- 豪宅税开征前夕 曼哈顿房屋销量飙升 [Boxun] 
- Wealthy New Yorkers and Californians might be fleeing to Miami to find lower taxes — but there still aren't enough buyers to fill up Miami's condo glut [Business Insider] 
- How Extra Wide Is Better Than Super Skinny (In Real Estate) [NBC Los Angeles] 
- Home sales in Manhattan surge as wealthy buyers rush to avoid mansion tax [Housingwire] 
- New York City buyers and brokers rush to close ahead of new mansion tax [City Realty] 
- People Were Hurriedly Buying Homes Before the Mansion and Transfer Taxes Went Into Effect – Report: Manhattan Condo and Co-op Sales Spike in 2Q 2019 [Cooperator] 
- Real Estate Values In Manhattan? They're Out There, And Here's Where To Find Them [CBS Local] 
- New York real estate weakness intensifies amid tax changes, hikes [Fox Business] 
- Manhattan home sales get short-term lift on mansion tax increase [National Mortgage] 
- Manhattan Real Estate Sales Are Soaring [CBS Local] 
- Người giàu nhất hành tinh mua 3 căn hộ giá 80 triệu USD [Dau Bao] 
- Manhattan condo sales jump to 2,957 ahead of 'mansion tax' [The Standard] 
- Manhattan sales jump as buyers rush to close before July 1 deadline for new mansion tax [Brick Underground] 
Recently Published Elliman Market Reports
- Elliman Report: Northern Manhattan Sales 2Q 2019 [Miller Samuel] 
- Elliman Report: Manhattan Sales 2Q 2019 [Miller Samuel] 
Appraisal Related Reads
- Establishing a White House Council on Eliminating Regulatory Barriers to Affordable Housing [Federal Register] 
- Should Appraisers Study Statistics? – George Dell, SRA, MAI, ASA, CRE [George Dell] 
- Don't Waste a Good Crisis [Consumer Home Value] 
- Cost vs value, Johnny Cash, & an explosion of murals [Sacramento Appraisal Blog] 
- Appraisal Management Companies Are the Issue – Blanket Waiver Danger [VaCAP/Appraisers Blogs] 
- Let's Have Bank Employees Make Numbers Up! ND Waiver Request [Jonathan Miller/Appraisersblogs] 
Extra Curricular Reads
- 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] 
- Mad Magazine, Irreverent Baby Boomer Humor Bible, Is All but Dead [NY Times] 
- Jony Ive Has Left the Building He Designed [Wired] 
- Why People in Cities Walk Fast [The Atlantic Cities] 
- The Statue of Liberty Was Well Traveled Before She Reached Her Final Home [Atlas Obscura] 
- Talking Heads: Remain in Light Album Review [Pitchfork] 
- T. Rex: The Slider Album Review [Pitchfork]