Rats And Housing Markets Don’t Care What You Think
But I digress…
Brick Underground Podcast Interview: The Market Doesn’t Care What You Think
That was the theme but my interview episode was called “the state of the market.“
The indispensable NYC web site Brick Underground has been doubling down on its podcast as of late and I was fortunate enough to be invited to speak about the state of the market.
It was fun and hopefully, I conveyed some helpful insights to their listeners. You can subscribe to the Brick Underground Podcast feed here.
And specifically my interview here.
Aspirational Pricing: A Record Number of Manhattan Records in 2019
Wall Street Journal Mansion Section reporter Kathy Clarke broke all three of these record price stories.
Here’s how it played out.
January 2019: Highest purchase price in North America (220 Central Park West $238 million) but went to contract in 2015 so it was not a recent “meeting of the minds” and sparked the ill-conceived “pied-a-tax” proposal which was killed in Albany and replaced by the new Mansion Tax. June 2019: Highest priced townhouse in New York City History (14-16 East 67th Street $80 million (est)). It was a pocket listing. The seller said the square footage was expanded to 30,000 up from its 13,300 square feet from the prior sale. I inspected this property a few times before Falcone acquired it and based on the new photos, this property was gut renovated through and through. June 2019: Jeff Bezos reappeared after rumors swirled about Amazon expanding their footprint in NYC despite the blow-up of their deal with NYC in Long Island City. He purchased a 3 unit condo in a new conversion (212 Fifth Avenue $80,000,000±). The penthouse itself hasn’t been recorded so the exact total price hasn’t been confirmed.
What does this mean? Is this a comeback for the super luxury market?
Nah. But it does somewhat suggest that buyers for high-end Manhattan property are circling the wagons waiting until the seller gets real.
All these building photos came from the WSJ articles announcing the records.
- The Griffin purchase reflects the market of four years ago when it went to contract [Source: Wall Street Journal]
- The Falcone sale wasn’t openly marketed and therefore vetted since it was a whisper listing [Source: Wall Street Journal]
- The Bezos purchase reflected a 21% drop from the original ask but that’s only to the last asking price. The definitive contract price is not recorded yet but it represents at least a 21% discount from the original ask. [Source: Wall Street Journal]
As far as high-end real estate goes, it looks like the highest levels of the Manhattan luxury market are comprised of sellers willing to accept offers at market value. As I mentioned in the Brick Underground Podcast above:
The Market Doesn’t Care What You Think
“The Plaza” by Julie Satow is a Great Read!
“Trust” is Hard To Win Back
Trust is a wildly important asset to have in the banking industry. They violated the public trust during the housing bubble and have worked hard but still haven’t reach pre-bubble trust levels. Let this be a lesson to Appraisal Management Companies, Mortgage Lenders, GSEs and Regulators who are currently working hard to undermine consumer trust again through the mortgage valuation process in order to generate more volume.
Here’s yet another amazing infographic from Visual Capitalist infographic:
Our favorite charts of the week of our own making
Len Kiefer‘s Chart Handiwork
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
House Panel: What’s Your Home Worth? A Review of the Appraisal Industry
Phil Crawford of Voice of Appraisal sent a “call to action” email to his followers early this week to recommend I provide testimony on this upcoming June 20th panel. As a result, there were hundreds of recommendations sent to the House Financial Services Committee providing why I would be a good candidate to speak on the panel. I was blown away by the support and the professionalism of the emails. I thank you all.
The committee told me yesterday that I would not be on the panel but offered other ways to share our views and I was very appreciative of the opportunities offered to me. Today I was told by someone outside of the committee that these were the names of the panelists. Four were chosen by Democrats and one was chosen by a Republican.
Jennifer Wagner (Mt State Justice) Jeff Dickstein (REVVA) Andre Perry (Brookings Institute) Stephen Wagner (AI) Dave Bunton (TAF)
My only concern with the information to be discussed is that the appraisal industry sees the re-introduction of checks and balances to the appraisal process, that the consumer and public trust is protected and a stabilized housing market is promoted.
I have the gravest of concerns for the inclusion of The Appraisal Institute who haven’t been relevant in the residential mortgage appraisal community for at least a decade. My other grave concern is the inclusion of REVAA which is the trade group of appraisal management companies that control 80% of residential mortgage appraisals and are the single reason for higher consumer appraisal costs and reduced quality.
Still, I will keep an open mind and believe me, appraisers across the country will be watching this hearing very closely.
The November 2016 House hearing on this same topic was largely a misrepresentation by the Appraisal Institute on the state of the industry.
However, I have full confidence that Chairperson and Congresswoman Maxine Waters and her legislative colleagues and staff will see the challenges very clearly.
Let’s Focus on the Public Trust
If you missed it – take a look at a banking industry trust visual I presented earlier in these Housing Notes:
“Trust” is Hard To Win Back
Banking still hasn’t recovered from the financial crisis using this metric. History is repeating itself right now with the “modernization” movement – code word for “automated valuation” using abysmally unreliable technology.
OFT (One Final Thought)
Ladybugs are on our radar.
The @NWSSanDiego reports that the large echo showing up on radar in Southern California last night was actually a cloud of ladybugs about 80 miles by 80 miles in size flying at between 5,000 and 9,000 feet: https://t.co/0tZQryBR1v pic.twitter.com/qiMKcDd3Pe— Shah Selbe (@shahselbe) June 5, 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 not care what the market thinks;
- You’ll not care what they think;
- And I’ll care what the market thinks.
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
- After $50 Million Price Cut, a Vast Bel Air Property May Still Struggle [Bloomberg]
- The Widows of the Plaza Hotel [New York Times]
- Cuomo and Lawmakers Signal Compromise on Rent Regulation Reforms [The City]
- Spec Mansions for Billionaires Is Not As Good a Business As It Seemed Like [New York Magazine]
- Manhattan’s top listers [The Real Deal]
- Ex-GE CEO Jack Welch sells Midtown condo for 34 percent off [NY Post]
- 6 in 10 Californians want to end single-family-only zoning near transit and jobs, poll says [LA Times]
- Developers, start your engines: Moratorium on hotel conversions expires [The Real Deal]
- Two years after Premier Agent fracas, NYS regulators tighten rules for online ads [The Real Deal]
- New Zealand Billionaire Inks Deal for $34 Million New York Penthouse [Wall Street Journal]
- Developers Built a 30-Story High-Rise. They Might Have to Chop Off 5 Floors. [NY Times]
- Inside Jeff Bezos’ epic $114 million New York penthouse [Yahoo Finance]
- Manhattan Condo Owners Are Cutting Deals as Their Tax Breaks End [Bloomberg]
- The Economics of Skyscraper Height (Part IV): Construction Costs Around the World – Skynomics Blog [Building the Skyline]
- WATCH: TRD reporters discuss the Big Brother-ing of real estate [The Real Deal]
- A $4 Trillion Plan Could Make or Break Dreams of U.S. Homebuyers [Bloomberg]
- Could Detroit become Mortgage City? It now boasts two top lenders [Freep]
- Watch out, StreetEasy — a new NYC house-hunting tool is here [NY Post]
- New Study Of Old Real Estate Bubbles (1582-1810) Finds Two Surprising Similarities With Modern Bubbles [Real Estate Decoded]
My New Content, Research and Mentions
- When the Real Estate Mogul Tried to Supersize His $8 Million Brownstone [USA News Hub]
- It’s the economy, stupid: Luxury sales are hurting, but records are still being set [The Real Deal]
- Jeff Bezos Buys Top Floors of Luxury Downtown Building [Morningstar]
- 5 questions to ask before moving near a ferry stop in NYC [Brick Underground]
- $50 Million Malibu Mansion Joins Crowded Market for Lavish Spec Homes [Mansion Global]
- New York City’s Evolving Skyline [NY Times]
- Back-Country Greenwich, Conn.: Where Privacy Doesn’t Come Cheap [NY Times]
- 貝佐斯買紐約豪宅 狠砸25億台幣 – 工商時報 [Commercial Times]
- Amazon’s Jeff Bezos dropping $80 million on massive NYC ‘mega-home’ [Fox News]
- Philip Falcone Sets NYC Record With Nearly $80 Million Townhouse Sale [Wall Street Journal]
- Jeff Bezos really does love New York: Months after Amazon ditched city, CEO drops $80M on 3 condos [Geek Wire]
- Philip Falcone Sets NYC Record With Nearly $80 Million Townhouse Sale [Mansion Global]
- A new record for NYC [New Jersey Real Estate Report]
- Jeff Bezos lands $80 million dollar ‘deal’ on three New York City condos [CNN]
- Jeff Bezos Has Reportedly Bought Three Condos In New York City For $80 Million. Here’s A Look Inside The Penthouse [Forbes]
- Jeff Bezos is spending $80 million on 3 NYC condos, but he already owns 4 apartments in the city. Take a look inside the building where he owns $13 million worth of real estate [Business Insider]
- Jeff Bezos Buys Fifth Avenue Condo Spread For Around $80 Million [Mansion Global]
- Los Angeles in ‘oversupply’ of mega-mansions for sale, report says [Fox Business]
- A renovated two bedroom in Riverdale for $330,000, no board approval required [Brick Underground]
- Bill to cap rental commissions is amended to only affect brokers repping landlords [The Real Deal]
- $85M penthouse with a ‘trip to space’ is not what it seems [NY Post]
- Business Monday: Aspen’s luxury real estate market holds its ground [Aspen Times]
- LI housing market allowing some to ‘trade up’ [Newsday]
- Perk for the ultrarich: Buy an $130m apartment, get a trip to space [NZ Herald]
- Advice to Hamptons Luxury Home Buyers: Be ‘Picky and Patient’ [Bloomberg]
- How Can I Avoid a Rent Increase? [NY Times]
Appraisal Related Reads
- Why price per square foot is not the appraisers choice [annarbor appraisal]
- Photoshopping & price per sq ft in real estate [Sacramento Appraisal Blog]
- US House Financial Hearing on Appraisals – Another Appraisal Waiver [Appraisers Blogs]
Extra Curricular Reads
- Podcast: David Gilmore discusses The Black Strat – Episode 1
- Click or drag to fade between images … [interactive.guim.co.uk]
- Josh and Barry Tweet Like Crazy. Are They Revolutionizing RIA Marketing — or Just Wasting Time? [RIA Intel]
- Rats — Quartz Obsession [qz.com]
- Old economists can teach us new tricks [Financial Times]
- What 10,000 Steps Will Really Get You [The Atlantic]
- 9 Sober Musicians on How They Thrive Creatively Without Drugs or Booze [GQ]