The Housing Market Did Not Fall Like Dominoes From COVID
One of the benefits of quarantine has been the sheer brilliance of innovation by our youth. I regret not coming up with this innovation when I lived in the dorms. Sign.
But I digress…
The New York City Rental Market is Weak and Getting Weaker
Douglas Elliman Real Estate published our August rental market analysis this week and the news wasn’t great. I’ve been the author of this expanding Elliman Report series since 1994.
Elliman Report: August 2020 Manhattan, Brooklyn & Queens Rentals
This rental report covered the second full month since the lockdown expired on June 22 and interest in the findings was intense. The Bloomberg story was the most emailed article yesterday by the 350K Bloomberg Terminal subscribers.
Now this is a chart…(using Crocodile Dundee’s voice for “now this is a knife.”)
The takeaway from the report is that this was a record month of records and it stems largely from the drop in would-be tenants that moved to other boroughs or out of the city, mostly Manhattan, to rent or buy in the suburbs or second home markets.
MANHATTAN RENTAL MARKET HIGHLIGHTS
“With a nominal month over month uptick in new lease signings, activity appeared to bottom in last month.”
- The largest market share of landlord concessions in nearly a decade of tracking
- Highest total of listing inventory in over fourteen years and third straight monthly record
- The vacancy rate exceeds five percent for the first time and the fourth consecutive month with a new record
- Most substantial year over year decline in studio and 1-bedroom median price in eight years of tracking
- Existing and new development median rent fell annually for the third time in four months
- While all price segments covered, saw declines, more significant reductions occurred in the lower price strata
- Concessions market share for non-luxury rentals was above luxury rentals and rose to their highest level since 2015
BROOKLYN RENTAL MARKET HIGHLIGHTS
“Listing inventory doubled from its year-ago level despite the moderate decline in the number of new leases.”
- Listing inventory reached an eleven and a half year high for the second straight month
- Net effective median rent fell year over year for the second consecutive month after nineteen months of gains
- Three out of four new development new signed leases had a landlord concession
QUEENS RENTAL MARKET HIGHLIGHTS
“Listing inventory rose to its second-highest level recorded as new leasing activity fell for the thirteenth straight month.”
- Thirteenth consecutive year over year decline in new leases with second-highest inventory total recorded
- The fourth straight annual decline in net effective rent
- The most significant yearly surge in listing inventory in four and a half years
NBC News 4 New York Covered The Softening Rental Market Conditions
@Glorioso4NY gets the rental market nuances in his segment on the report:
The New York Times Corrected The Narrative On NYC’s Outbound Migration
In this coming weekend’s New York Times real estate cover story, In New Development, Buyers Favor the Boroughs – Yes, some buyers are leaving Manhattan. But others are doubling down on Brooklyn and Queens.
The article includes a cool research piece on new development contract activity.
And the following thread provides a nice summary of what is actually happening and accurately tags me as the “OG appraiser” so there’s that.
Second, the 'exodus,' in so far as its real, is not a big city problem – it's an affordability problem, and it's mostly just Manhattan. From the OG appraiser, @jonathanmiller "This is all about wealth and mobility, not density”— Stefanos Chen (@stefanoschen) September 11, 2020
Upcoming Speaking Events
What’s In Store For New York City Real Estate in 2020 and Beyond!
I’m joining my friend and co-data nerd Noah Rosenblatt of Urban Digs for a live 1 on 1 discussion moderated by John Walkup, also of Urban Digs.
Urbandigs is a great resource and I love to connect with these guys. Register and mark your calendar for September 17th at 11 am!
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
The Appraisal Foundation Is Pivoting Its Alliances To Maintain Relevancy
These are my observations from The Appraisal Foundation’s perspective on how the unthinkable simply happens in this progression:
For years: “The Appraisal Institute is worse than the devil” and “We have enjoyed a long partnering relationship with The Appraisal Subcommittee.”
Recent history: “The Appraisal Subcommittee has no oversight rights and will not be allowed to speak at our meetings” (While the ASC continues to work with the Appraisal Institute.)
Latest history: While scrambling…”The Appraisal Institute is an organization we can work with to solve our respective complete lack of diversities.” Given the vitriol exchanged between AI CEO Jim Amorin and TAF President Dave Bunton, this seems absolutely impossible and to most of the people I interact within their circles, the only end to this Hatfields & McCoys type feud is when both of these people exit their organizations. It’s deeply personal.
So that’s why I am scratching my head about this and believe it is happening because TAF is currently all alone and needs to align with another organization to maintain its relevancy.
OFT (One Final Thought)
September 11, 2001.
Here is some of what I remember on that day when I saw the towers burn in person…
On the street level outside our office buildings on September 11, 2001, all the appliance stores had their TVs in the windows switched to CNN which was zoomed in on the gaping holes in the towers. My office was on West 45th Street in Manhattan’s Midtown central business district. I walked west to the end of my block towards Avenue of the Americas and then walked east towards Fifth Avenue. From both vantage points, I could see that the twin towers were clearly on fire. Numb, I went back to my office to close up and send everyone home. My wife called me crying that now there was only one tower left, the other had just fallen. I was getting emails from colleagues in other parts of the world asking if I was still alive. I often think of the times I went to the Windows on the World restaurant at the top, buying an ice cream cone at Ben & Jerry’s in the ground floor mall after an appraisal in Battery Park City, a visit with colleagues at a law firm or other meetings. All of that was obliterated.
Here are a few photos from that time taken by myself, my staff, and my friends. This was not the Instagram world we have now and taking pictures wasn’t quite the obsession it is now, but you get the picture.
Brilliant Idea #1
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Brilliant Idea #2
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See you next week.
Reads, Listens and Visuals I Enjoyed
- London Offices Aren’t Refilling Fast Enough for Shops Relying on Them [NY Times]
- Americans Stayed Inside Even as Cities and States Reopened [Bloomberg]
- Rising Vacancy Rate Could Undo NY’s Rent Stabilization Law [The Real Deal]
- NYC Vacancy Rate Soars During Pandemic [NY1]
- Mortgage Credit Availability Decreased in August [MBA Newslink]
- LA Approves 151 Micro-Apartments for Downtown [Commercial Observer]
- Business Vacancies Rise on New York City’s Broadway [Wall Street Journal]
- SL Green’s $3 Billion One Vanderbilt in New York City Faces Big Challenges [Wall Street Journal]
- Victory in the courts continue for land use in New York City – by Ross Moskowitz and Eva Schneider [NYREJ.com]
- The Mystery House: How a Suspicious Multimillion Dollar Real Estate Deal Is Connected to California’s Deadliest Fire [Propublica]
- When Did the Suburbs Get so LOUD? [NY Times]
- “All of a Sudden a Lot of These Families Wanted a Yard”: How the Pandemic Gold Rush Is Remaking the Housing Market [Vanity Fair]
- How the Fed Is Bringing an Inflation Debate to a Boil [Bloomberg]
- More Evidence For Mass Exodus To The 'Burbs [Mortgage News Daily]
- Discount Points on Jumbo Mortgages are Hot Again. Here’s Why. [Wall Street Journal]
- Cincinnati Tenants Are Building Equity With Each Rent Payment [Reasons to be Cheerful]
- Apartment Prices Surge in Russia, Raising Fears of a Bubble [Bloomberg]
- The High Cost of Panic-Moving [The Atlantic]
- Looming ‘deluge’ of evictions threatens thousands of Pa. families as school begins [WHYY]
- The Price of Saving Paradise [Bloomberg]
- The Next Frontier [Investor Amnesia]
- Moon Faces a Bigger Political Threat Than Kim Jong Un: Real Estate Prices [Foreign Policy]
- 2020 Year of Crisis: The Real Estate Reckoning [Bloomberg]
- Millions of Americans risk being evicted. This tenants rights lawyer says the courts aren’t prepared. [VOX]
- Fannie Mae extends evictions until December 31 [Real Estate Weekly]
My New Content, Research and Mentions
- In New Development, Buyers Favor the Boroughs [NY Times]
- Star Island Is Reliving Its Glory Days, Thanks to Buyers Like Ken Griffin and Jennifer Lopez [Wall Street Journal]
- 'Weak and getting weaker': Manhattan vacancies hit record high as rental market plunges [Washington Examiner]
- The best apartments in NYC you can rent for less than $3,000/month [6sqft]
- CNN – Breaking News, Latest News and Videos [CNN]
Recently Published Elliman Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 8-2020 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 8-2020 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 8-2020 [Miller Samuel]
- Elliman Report: California New Signed Contracts 8-2020 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 8-2020 [Miller Samuel]
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 7-2020 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 7-2020 [Miller Samuel]
- Elliman Report: California New Signed Contracts 7-2020 [Miller Samuel]
- Elliman Report: Florida New Signed Contracts 7-2020 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 7-2020 [Miller Samuel]
Appraisal Related Reads
- Random Thoughts of an Appraiser [Appraisal Buzz]
- AI Project Team to Review VP Election Process, Seeks Input [Appraisal Institute]
- How To Avoid Appraisal Issues When Using An Escalation Clause [Birmingham Appraisal Blog]
- Sellers, you don’t need 20 offers [Ryan Lundquist/Sacramento Appraisal Blog]
- Reconciling the Erosion Within My Profession [The Con]
- Challenging a mortgage appraisal [Annarbor Appraisal]
Extra Curricular Reads
- Emma Gatewood Survived Domestic Abuse to Become an Appalachian Trail Legend [Adventure Main]
- Starbucks, monetary superpower [JP Koning]
- Member Spotlight: Reid C. Wilson, CRE® [Counselors of Real Estate]
- Sturgis Motorcycle Rally contributed to 260,000 new cases of coronavirus, study finds
- Finding Founders: No Emotions, All Data – The Big Picture [Ritholtz]
- The John Thompson School of Unapologetic Black Excellence [MEL Magazine]
- Bankrate analysis shows New York economy hardest hit by COVID-19 [The Center Square]