The Housing Market Story Takes Different Shapes
Telling the story of the Housing Market takes different shapes. I spend a lot of my time conveying what I think is the correct nuanced narrative to others after researching a particular market. Kurt Vonnegut, one of my favorite authors, conveys this point brilliantly, and with humor.
But I digress…
Long Island, Hamptons, and North Fork Housing Markets Continued to Roar
Elliman Report: Q3-2021 Hamptons Sales
“Prices continued to rise and set records as market strength towards higher-end.”
- Price trend indicators rose annually to near-record levels and more than fifty percent above the same period two years ago
- Listing inventory fell at a near-record rate year over year to the third-lowest level on record, restraining sales
- Days on market fell to their shortest amount in more than 15 years of tracking
- More than one out of four sales that closed in the quarter sold above the last asking price
- The market share of sales above $5 million was the highest tracked since at least 2006
- Luxury listing inventory fell by half in the past year
NORTH FORK HIGHLIGHTS
Elliman Report: Q3-2021 North Fork Sales
“Prices reached records or near-records as chronic inventory shortages held back sales.”
- Median sales price rose to its second-highest on record for the third consecutive quarter
- Listing inventory fell sharply year over year for the seventh consecutive quarter, restraining sales
- Bidding wars reached a record high, accounting for more than half of all closings
- The market share of sales above $2 million was the highest tracked in more than nine years
Our Research Made The Cover of Newsday!
Although it’s our 5th time, making the cover story of Newsday, the largest newspaper on Long Island – and I wasn’t dead or indicted – is always a win.
LONG ISLAND HIGHLIGHTS
Elliman Report: Q3-2021 Long Island Sales
“Record prices, heavy sales volume, and near record-low inventory.”
- Average and median sales price surged to new records, collectively for the fifth straight quarter
- More than half of all closings in the quarter sold above the last asking price
- Condo sales surged to the third-highest on record as price trend indicators set new records
- Single family listing inventory fell sharply to the third-lowest level on record
- Luxury median and average sales price rose to a new record for the fourth time in five quarters
- Luxury listing inventory fell to their lowest level in more than eleven years of tracking
More Weirdness About Inflation And Helpful To Understand
My friend Dan Alpert spoke about inflation on Bloomberg Radio. Really interesting.
Here’s a very helpful twitter thread from Dan with lots of charts.
VIDEO DiMartino: The Demographic Delusion Threatening U.S. Housing
Economist Danielle DiMartino Booth sits down with one of my favorite housing analysts (and of Zelman & Associates) “Dennis McGill Strips Away the Demographic Delusion Threatening U.S. Housing“
I Can’t Stand This “Housing Market Madness” Messaging
Barbara Corcoran sold her firm exactly 20 years ago for a big number. She turned real estate on its head with her innovative marketing and branding that was new to real estate. IMHO she never really was a real estate expert, but she was a brilliant marketer and she has continued her amazing success with Shark Tank. She has nothing to do with the real estate company that bears her name and her appearances on real estate shows reflect her homespun approach without understanding the underlying issues. This is not meant to be criticism at all to her. She is a real estate legend. Kudos to Barbara, truly.
Yet her branding always defaults to her as a real estate expert and she is on TV every day and is loved by many. As the current CEO that negotiated the deal with NRT to buy Corcoran said:
“Barbara would always say, ‘I want the last page of my book to say, I never even read a piece of paper,’” Liebman told The Real Deal in 2016. “She didn’t want to get involved in the details.”
I assume that is why she was the perfect fit for this CNN special Housing Market Madness which is ripe for anecdotal explanations and low on actual details. That “Housing Market Madness” title suggests something wildly complicated, scary, and irrational is happening along the lines of the housing bubble 15 or so years ago. Shows like this will not convey useful information to consumers, but rather, leave them feeling even more confused.
As you can probably tell, I can’t stand this type of housing market sensationalism. The housing market situation is really not that complicated. Take a 5% 30-year mortgage rate in 2018 down to 2.5% during strong economic conditions pre-pandemic and then a few months later into the pandemic and throw it against already low inventory levels and you get a massive housing market distortion. Leverage is not a big factor and mortgage underwriting is very conservative. Don’t confuse housing price trends with mortgage payment trends.
My favorite charts of the week made by others
What late-cycle looks like in one chart…— Julien Bittel, CFA (@BittelJulien) October 28, 2021
According to the latest NFIB survey, a record no. of small businesses are planning to raise worker compensation.
The survey leads wage growth by 2Q & targets >5%.
Historically, the pain threshold for margins was ~4%. pic.twitter.com/pE8zQX9Lw7
Upcoming [Past] Speaking Events
Yesterday I got to speak to a very large group of real estate agents in Northern California for an hour on behalf of Metrolist and CREB. It turned out to be a very engaging event and I’ll probably do something again for them in the first half of 2022.
It was so awesome to get great feedback from the audience to understand what they are seeing on the front lines and the kind of questions their sellers and buyers are asking.
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
Appraiser Red Flags
This thread recaps the story of my career through similar experiences. Be sure to click on the tweet to read the thread.
"I don't want to ask you to do anything unethical, but just do your best on the appraisal…." 🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩🚩— Ryan Lundquist (@SacAppraiser) October 20, 2021
Cosmic Cobra Guy: Appraisers, shampooers, goat masseuses and librarians all require licenses
I just wanted to point out that Jeremy left out barbers and dog walkers. I remember taking the state exam in New York and sitting in the waiting room with barbers and dog walkers. Heh.
Here’s his latest piece:
Jeremy Bagott, MAI, AI-GRS
Telephone: (805) 794-0555
FOR IMMEDIATE RELEASE
APPRAISERS, SHAMPOOERS, GOAT MASSEUSES AND LIBRARIANS ALL REQUIRE A LICENSE
(October 29, 2021) – Say, you’re an architect and you wish to lead a walking tour of the architecture of New Orleans. The bons temps will not rouler for you and your audiences until you first seek permission from the city, where tour guides must pay the city a fee and pass a test on the Big Easy’s history and culture. The City of New Orleans is basically licensing storytellers. And, as any college student working the “Jungle Cruise” ride at Disneyland will tell you, you go off-script at your own peril.
Say, you’re a veterinarian in good standing in Kentucky with an interest in massaging hooved creatures as part of your practice. Don’t plan on doing it in the Bluegrass State in 2021 without special training. Last year, legislation failed to pass the state’s lower chamber (House Bill 346) that would have allowed you to massage large or small animals without first providing the state’s Board of Licensure for Massage Therapy proof of completion of 100 hours of training.
A version of the animal massage licensing melodrama played out one state to the south as Tennessee’s Department of Health threatened two women, Martha Stowe and Laurie Wheeler, with fines and jail time for providing horse massages without a veterinary license.
Among the ranks of the occupationally licensed, depending on the state, are fortunetellers, party planners, home entertainment installers, packagers, florists, shampoo assistants, interior designers, gas pumpers, beekeepers and librarians.
Over the past several decades, observed a White House report, the share of U.S. workers required to obtain an occupational license has grown sharply. When implemented carefully, licensing can offer important health and safety protections to consumers. However, the explosion of occupational licensing (and the thousands of bureaucracies created to ride herd on licensees) adds big costs, which are spread to the public at large. Often the requirements for obtaining a license are outdated. Such licensing restricts employment opportunities, and hampers worker mobility, making it more difficult for workers to take their skills across state lines.
In 2020, South Dakota Gov. Kristi Noem was rudely introduced to something akin to a medieval guild operating under her nose when, in September 2019, her daughter applied to become a state-certified residential real estate appraiser. But almost a year later, the state’s Appraiser Certification Program still had not granted the license upgrade she had been working toward since 2016. Kassidy Peters, then 26, ultimately received the certification in November 2020. But for her intervention, the governor was sued by the agency head on age discrimination charges. A $200,000 settlement made the complaint go away, and the head of the entrenched agency went quietly into the night.
Appraiser credentialing in neighboring North Dakota became so dysfunctional, and created such a scarcity of licensed appraisers, that most appraisals were waived in that state. The dispensation allowed banks and credit unions in North Dakota to waive appraiser credentialing requirements for federally related commercial real estate transactions under $1 million.
Lori Noble, a Daniels, West Virginia-based real estate appraiser, has something to say about occupational licensing in the Mountain State – specifically, how it is crippling her own profession and adding hidden costs for all West Virginia property owners.
West Virginia requires licensing for some 70 different occupations. It presents a complicated tangle of requirements overseen by more than 30 entrenched bureaucracies. Noble contends laws in West Virginia require too many aspiring workers to obtain government permission to work. She slams the practice as un-American.
As energy jobs in West Virginia dry up under the current war on fossil fuels, occupational licensing is increasingly forcing displaced energy workers to seek permission from state government agencies just to earn a paycheck. They must pass exams, pay fees and jump through various costly and time-consuming hoops. Some become discouraged. It keeps an unknown number of young people from participating in the job market altogether.
An occupational license, says the Arlington, Va.-based Institute for Justice, is essentially a permission slip from the government to work at one’s chosen profession. As such, these licenses routinely stand in the way of honest enterprise. The requirements for licensure can be an enormous burden and often force entrepreneurs to waste valuable time and money to become licensed. These burdens too often have no connection at all to public health or safety. Instead, they are imposed to protect established businesses from competition.
Occupational licensing affected about 5% of American workers in the 1950s. By 2016 it had grown to more than 22%, according to the Brookings Institution. This licensing results in wasted or misallocated resources and creates unnecessary barriers to employment and economic prosperity. It deprives the marketplace of new ideas and chills innovation.
Occupational licensing is plagued by what scholars at the Mercatus Center at George Mason University call “regulatory accumulation.” The mounting regulatory burden and high barriers to entry have resulted in artificial scarcity in some licensed professions and the inability to rapidly expand and contract to meet market demand.
Quietly, imperceptibly, society pays for it all.
Jeremy Bagott, a licensed appraiser and former newspaperman, sends up a warning flare in his 2019 book “Dispatches from the Cosmic Cobra Breeding Farm.” He takes the reader deep inside a tiny Washington, D.C., foundation that has managed to have its copyrighted code of conduct enshrined in federal and state law. All 50 states, even the U.S. territories of Guam and the Northern Mariana Islands, now enforce it. The nonprofit, known as the Appraisal Foundation, has parlayed the arrangement into a lucrative publishing cartel. In his journey, the author uncovers a troubling trend deep in the plumbing of government.
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OFT (One Final Thought)
Precision has its rewards. Wait for it…
Brilliant Idea #1
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Brilliant Idea #2
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Reads, Listens and Visuals I Enjoyed
- Industry and housing groups expect big things from FHFA [HousingWire]
- Zillow's Flips Are Now Flops [Gizmodo]
- Ellen DeGeneres Sells $55 Million Montecito Estate, Buys Two More Homes [Dirt]
- Siteline Another Huge Flip for Ellen DeGeneres and Portia de Rossi [Siteline]
- Thomas Heatherwick’s High Line Condos Are Just One Idea About Windows, Repeated [Curbed]
- San Francisco’s Empty Offices Delay Apartment-Rent Recovery [Bloomberg]
- Thread by @DanielAlpert on Thread Reader App [Thread Reader App]
- Kastle Systems – Data Assisting in Return to Office Plans [Kastle]
- New Home Sales: Record 106 thousand homes have not been started [Calculated Risk]
- Zillow’s Zeal to Outbid for Homes Backfires in Flipping Fumble [Bloomberg]
- Housing Market Disruptor Banks on Help From Blackstone [Bloomberg]
- Multifamily Redevelopment Spreading at SoFla Shopping Centers [The Real Deal]
- The Market for Single-Family Rentals Grows as Homeownership Wanes [NY Times]
- Flashback: How The Mayoral Candidates Said They'd Fix NYC Housing, 1989 [City Limits]
- Psychoanalyzing the Housing Frenzy With Redfin’s CEO [Curbed]
- "Taxi King" Gene Freidman Dead at 50 [The Real Deal]
- Manhattan Luxury Apartment Sales See Biggest Week Since 2013 [Bloomberg]
- The World’s Biggest Real Estate Bubbles in 2021 [Visual Capitalist]
- U.S. existing home sales surge to 8-month high in September [Reuters]
- The house from the movie 'A Nightmare on Elm Street' is up for sale [NPR]
- Paintmakers Are Running Out of the Color Blue [Bloomberg]
- Howard Hanna Built a Big Real-Estate Firm and Kept It in the Family [Wall Street Journal]
- Median House Price Growth Decelerated for Fourth Consecutive Month [Calculated Risk Blog]
My New Content, Research and Mentions
- Empire State Building owner, struggling to find tenants, moves into acquiring apartments [Crain's New York]
- New York City Penthouse in Jean Nouvel-Designed Building to List for $25 Million [Wall Street Journal]
- Hamptons Home Market Is Still Hot, There’s Just Little to Buy [Bloomberg]
- Hamptons Trophy-Home Sales Persist as Severe Housing Shortages Plague the Rest of the High-End Beach Spot [Mansion Global]
- Hamptons home market is still hot, but there’s little to buy [Crain's New York]
- Long Island Home Prices Surge to 20-Year High [The Real Deal]
- Hamptons Home of Macklowe Gallery Founders Lists for $60 Million [Wall Street Journal]
- L.A. Residential Market Is Hot And Holding [The Real Deal]
- No room to negotiate: LI homes sold at record speed [Newsday]
- Real estate season preview: Calling all Palm Beach sellers! Buyers await in the wings [Palm Beach Daily News]
- Former Victoria’s Secret CEO Lists New York City Penthouse for $18.5 Million [Wall Street Journal]
- Brooklyn Townhouse Sale Prices Jump Almost 30 Percent in the Third Quarter [Brownstoner]
Recently Published Elliman Market Reports
- Elliman Report: Long Island Sales 3Q 2021 [Miller Samuel]
- Elliman Report: Hamptons Sales 3Q 2021 [Miller Samuel]
- Elliman Report: North Fork Sales 3Q 2021 [Miller Samuel]
- Elliman Report: West Palm Beach Sales 3Q 2021 [Miller Samuel]
- Elliman Report: Wellington Sales 3Q 2021 [Miller Samuel]
- Elliman Report: South & Greater Downtown Tampa Sales 3Q 2021 [Miller Samuel]
- Elliman Report: St. Petersburg Sales 3Q 2021 [Miller Samuel]
- Elliman Report: Royal Palm/Boca Raton 3Q 2021 [Miller Samuel]
- Elliman Report: Palm Beach Sales 3Q 2021 [Miller Samuel]
- Elliman Report: Miami Coastal Mainland Sales 3Q 2021 [Miller Samuel]
Appraisal Related Reads
- JPMorgan Chase commits $3 million to appraiser diversity [HousingWire]
- Is the housing market going to crash? [Ryan Lundquist/Sacramento Appraisal Blog]
- Clear Capital and the National Society of Real Estate Appraisers Partner to Promote Appraiser Diversity [AP News]
- Adaptive Reuse 2.0 – Top Ten in 10 (with K.C. Conway, CRE) [Counselors of Real Estate]
- High-Impact Home Upgrades for Any Budget [Cleveland Appraisal Blog]
- Desktop Appraisals: Pros and Cons [Tom Horn/Birmingham Appraisal Blog]
- Desktop Reports – Desktop Appraisals, Panaceas for Faster Reports? [Appraisers Blogs]
- Racial and Ethnic Valuation Gaps In Home Purchase Appraisals [Freddiemac]
- A New Appraiser Discusses his Journey into the Industry [Appraisal Buzz]
- As Appraiser Shortage Delays Closings, Mortgage Giants Try Workaround [Bankrate]
- Fannie, Freddie give green light for remote appraisals [OC Register]
Extra Curricular Reads
- Michael Stipe Looks Back On R.E.M.'s 'New Adventures In Hi-Fi' 25 Years Later [Stereogum]
- When does reputation lie? [Santa Fe Institute]
- Who Had Covid-19 Vaccine Breakthrough Cases? [NY Times]
- To Save a Swirling Season, Atlanta Turned to Soft Serve [NY Times]
- When does reputation lie? [Santa Fe Institute]
- NYC’s Hudson Yards debuts world’s highest outdoor building climb [NY Post]
- ‘The Problem Is Him’ [NY Magazine]
- B.J. Novak’s Face Is on Products Worldwide. He’s Not Sure Why. [NY Times]
- With City Climb, You Can Scale a Manhattan Skyscraper [Untapped New York]
- Opinion | The First Thing We Do, Let’s Kill All the Leaf Blowers [NY Times]
- A damming situation: Busy beaver threatens Mechanicville water supply [Times Union]
- His mom died in 1975. He spent decades trying to find her car and buy it back. [Washington Post]
- How to Rock a Big Suit Tastefully, Just Like David Byrne [Inside Hook]
- Audm presents: ‘I Don’t Want to Fucking Die’: Foo Fighters and the Art of Survival [share.audm]
- Audm presents: Boardwalk’s End [share.audm.com]
- Kellogg’s faces $5 million lawsuit for not having enough strawberries in its Pop-Tarts [Yahoo News]
- Audm presents: A Reporter at Large: The Dead Ship [share.audm.com]