Luxury Real Estate Is The New Discount Outlet
I’ve always been a big fan of side by side comparison photos of street scenes. I have many Dover Books such as the cover shared below – they are great even though they might be a comparison between the 1890s and the 1970s, it allows me to think about that block today and how much things have changed yet again. I’ve spent many hours pouring through them.
Although I’m an east coast mutt having lived in the metro areas of Boston, Washington, D.C. and New York City, I went to college and met my wife in East Lansing, Michigan and my first job was in Chicagoland. I developed a keen interest in Chicago and Detroit, especially the latter. I don’t think many people realize how much the population has collapsed since the beginning of the 1960s …or how much vacant land there is. Detroit is slowly reinventing itself and crawling back .
but I’m not really digressing…
Detroit as a side by side
There is an awesome twitter account  that provides side-by-side comparisons of street views that show liveliness versus abandonment or decay versus rejuvenation. Click on each to expand and consider signing up to @DetroitStreetVu . The following photos were recently shared on the site – click on them to expand.
I’m pulling for you Detroit.
My Chart Handiwork in Elliman Magazine
Douglas Elliman Real Estate , the firm I author the Elliman Report series  for, did a complete upgrade of their magazine created a couple of years ago. The improvements to their Elliman Magazine  concept are significant and a good/fun read…and not because I authored two pages of chart heaven  (heh). No, really.
Here’s my handiwork. Ok, ok their crack design team took my excel charts and made them look beautiful. Click on the image below to expand to an epic size.
Talk Like A Pirate Day
This has nothing to do with anything but that’s the point. This past Tuesday (September 19th) was the annual holiday known as “Talk Like A Pirate Day ” and it fell on my son’s graduation from the police academy . It was a special day all around.
Discounting Luxury Real Estate
There has been a lot of news coverage on some big sales occurring nationwide. I’m not talking about Jed Clampett silliness , but rather, I’m focusing on why these sales occur. It’s not rocket science (or even pirate talk) to see that in most cases, these listings were finally priced correctly. In a macro sense, luxury housing prices are being discounted to market levels and their asking prices were never aligned with the market – as evidenced by multi-year marketing periods and massive discounts.
– 37.5%, 12 months on market: Billionaire buyer scores UES mega mansion for $45M [NY Post ]
-23.4%, since prior sale 3 years ago: One57 Condo Embroiled in Scandal Lists for $39 Million [Mansion Global ]
-34.2%, 8 years on market: Briar Patch home sells for $26M after eight years on the market [Curbed Hamptons ]
Do Luxury Market Participants Have Short Memories?
Back in 2014, a period of time I refer to as “peak new development” or “peak luxury” we were seeing $100+ million listings pop up all over the country. The vast majority never sold and were removed from the market. It was a weird period of luxury market optimism where seller expectations were vastly different from buyer reality. There’s a book to be written on this period somehow. There was an assumption that billionaires were a dime-a-dozen, and a 5&10 store brand could become a luxury brand. Here’s a perfect five and 10-cent segway…
Back in 2014, The Woolworth Building in Downtown Manhattan joined the growing list of super luxury condo developments. This one happened to be at the top of an office building that was once the tallest building in the world. The 8,975 square foot 5-story $110 million penthouse  in the offering plan got a lot of attention back then, probably because the asking price was 3 times the average price per square foot of the downtown luxury market. The penthouse and development failed to get much traction.
Now in 2017 the penthouse has been finished and the developer is essentially remarketing the propert y at the exact same price of $110 million. Because of the price, I’m assuming they see the upside in showing a finished space instead of buying off of plans as an offset to a market that has corrected sharply in the last 3 years? Marketwide super luxury is probably down 15% to 25% on average since the peak (just look at re-sales at One57) and the property didn’t sell in 2014 when it was offered.
Ironically, the Woolworth supermarket giant  in Australia is being sued by shareholders for $100 million – just under the asking price of that penthouse. (This is why I love the internet – it’s so easy to find unrelated things that show irony.)
And since a hipster, aside from fashion style, is characterized as someone always seeking irony…
The Hipster Pile-on As Canary In The Coal Mine on Housing Affordability
I am finding more and more use of hipster terminology as a “tell” for gentrification and diminished housing affordability:
I saw this t-shirt in Grand Central Station the other day and it struck me that we don’t pay enough attention to hipsters being squeezed:
It's on! 
WNYC talks about the new all avocado restaurant  and I noted that rents were way up.
Since then, rents in the neighborhood have increased 13.7 percent, according to Jonathan Miller, president of the appraisal firm Miller Samuel. Local housing advocates say, in a neighborhood where people have always struggled to afford their apartments, it’s getting harder.
Kind of an insane retail concept, no? But lots of job growth in that area is a force in pushing rents higher.
Sriracha hot to cold-brew cool
Here’s a humorous SEO headline change in a Crain’s  article I provided info for – from something less trendy to hipster:
ORIGINAL “In New York’s gentrifying neighborhoods market drops are sharper than the rest of the city”
REVISED “Some gentrifying neighborhoods see rents go from sriracha hot to cold-brew cool”
I’m skipping over dog yoga .
More and more suburban talk, some of it trademarked
Lots of good reads on the urban/suburban relationship…
- Brooklyn’s Bed-Stuy experiences big economic turnaround, but poverty and crime remain a concern [NY Daily News ]
- The Future is Urban, Even in Suburbia [Rivard Report ]
- The Suburb of the Future, Almost Here [NY Times ]
- Corporations are leaving suburbs: Can anything reverse the trend? [Curbed ]
I love how John Burns Consulting trademarked the term “Surban.” I looked up “Exurb” and it’s still available. Perhaps this will be the next dot-com like boom where everyone scurrys to claim domain names, only this time they are terms for describing the suburban/urban push/pull.
Leaning Tower of San Francisco – 14 inches!
The sad story continues and I remain riveted to this story :
Millennium Tower is a luxury residential high-rise that has sunk 17 inches and tilted 14 inches since it was completed in 2008. Though an inspection by the city showed it’s safe to occupy, the building’s wealthy residents take no solace. The value of their multimillion-dollar condos has tumbled $320,000 on average.
I’ve been able to put aside the idea of constructing a high-rise on a major earthquake fault line in San Francisco. While the average diminishment in value  was calculated, it would appear that the stigma will remain for years, even after there is remediation.
They still need your help! Support Texas/Florida Appraisers #Harvey #Irma
Because the 24/7 news has ended for Irma and Harvey coverage, it’s more important than ever to help your appraiser colleagues in need. Please click here .
Rinse Lather Repeat: Appraisal Institute Has Not Made The Replacement Process of Vacant CEO Transparent
Since the resignation of their longtime CEO in August , the appraisal industry’s largest trade group has not been transparent in their succession plans other than having two-time president Jim Amorin become the temporary CEO until December 31st. The former CEO, Grubbe began his term back in 2007 . Given the recent membership survey questions and the outrage of national membership that exploded last fall with the “taking” effort, I would speculate that it could have played a role in his unexpected departure – that it quantified the backlash outside of the cocoon he had constructed over the past decade and he saw the writing on the wall.
With the sharp decline in membership, largely of the CEO and executive committee’s doing, I believe this calls for a much more transparent recruiting process. Although I wouldn’t be surprised if Jim Amorin, as a consummate insider, is made permanent CEO. The organization needs a fresh start to survive. The rapid decline in membership, adversarial lobbying against its residential members’ (evaluations, alternative standards) interests, dilution of the SRA designation, complete lack of transparency, bad judgment on FNC deal, stealth relationship with REVAA, the international recruiting boondoggle, etc. creates a situation that requires transparency with membership going forward. Oh, and throw in the “taking” (the event that inspired this forum) that is on track for January 1, 2018. I can’t imagine every chapter giving up all their funds without the destruction of the organization.
Otherwise, AI National is finished in short order as members will continue to flee.
How does a person go about throwing their hat in the ring for the CEO position? It seems like new leadership is a requirement for survival. Right now that looks to be impossible.
UPDATE: I’ve been approached by a few individuals who have expressed interest in running for president of AI National but see it as too daunting to take the first step since the organization remains tightly controlled by the individuals who are the problem.
A Brilliant Idea
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See you next week.
Jonathan Miller, CRP, CRE
Miller Samuel Inc. 
Real Estate Appraisers & Consultants
Reads, Listens and Visuals I Enjoyed
- Briar Patch home sells for $26M after eight years on the market [Curbed Hamptons] 
- Billionaire buyer scores UES mega mansion for $45M [NY Post] 
- Bed-Stuy experiences big economic turnaround, but poverty remains [NY Daily News] 
- The Future is Urban, Even in Suburbia [Rivard Report] 
- Stressed retailers begging owners for huge reductions to sky-high rents [NY Post] 
- 15,000-square-foot Santa Monica Home Sells for $41 Million [Mansion Global] 
- Madonna’s suit against co-op board tossed [Page Six/NY Post] 
- Potential First-time Buyers Still on the Sidelines [Realtor.org] 
- First numbers: Mortgage delinquencies climb 16% in Hurricane Harvey-impacted areas [HousingWire] 
- Why Newark could be perfect for Amazon's new headquarters [Yahoo Finance] 
- BlackRock on Fed slimming down its balance sheet [CNBC] 
- Steve Miller’s Idaho Estate Hitting Market for $16M [Mansion Global] 
- One57 Condo Embroiled in Scandal Lists for $39 Million [Mansion Global] 
- Existing-Home Sales Tumble for Third Straight Month [WSJ] 
- Woolworth Building Penthouse Hits the Market for $110 Million [WSJ] 
- Detroit Real Estate Heats Up [NY Times] 
- Will Quantitative Un-Easing Make Housing Unaffordable? [First American] 
- KB Home CEO lashes out at Kathy Griffin in profanity-laced tirade [NY Post] 
- Hurricane Irma’s path of destruction won’t dampen luxury residential sales, some brokers claim [The Real Deal Miami] 
- Allied Home Mortgage ordered to pay $296 million for widespread FHA fraud [HousingWire] 
- A 58-story skyscraper in San Francisco is tilting and sinking — and residents say their multimillion-dollar condos are 'nearly worthless' [Business Insider] 
- Traditional real estate brokerage firms get hit by wave of consolidation [Washington Post] 
- The final days of John Aaroe Group: A shuttered office, and a sudden retirement [The Real Deal LA] 
- A Down Payment With a Catch: You Must Be an Airbnb Host [NY Times] 
- Texas Cities Face Housing Crunch in the Wake of Hurricane Harvey [WSJ] 
- Opinion | The Suburb of the Future, Almost Here [NY Times] 
- China Formalizes Restrictions on Capital Outflow [Pacific Union] 
My New Content, Research and Mentions
- Trendy Amenities: Dog Yoga, Rock ’n’ Roll Rooms [Realtor Mag] 
- Manhattan's eager renters can't make a dent in supply [South China Morning Post] 
- Does This Avocado Toast Come With A Side of Gentrification? [WNYC] 
- Some gentrifying neighborhoods see rents go from sriracha hot to cold-brew cool [Crains New York] 
- More Queens homes are being used seasonally: Census [amNY] 
- Gentrified Neighborhoods Feel New York's Rent Slowdown The Most [Bisnow] 
- Matrix Blog: Real Estate ChartArt in Elliman Magazine’s Fall 2017 Issue [Miller Samuel] 
- ELLIMAN magazine Fall 2017 [Douglas Elliman] 
- New Development: Soft in the Middle, Splashy Up Top [NY Times] 
- Dog Yoga and Electric Guitars: Amenities, at a New Level [NY Times] 
- Looking to negotiate your rent down? You may have the best luck in these NYC neighborhoods [Brick Underground] 
- Balonul imobiliar din Manhattan se sparge. Proprietarii mută locuințele nevândute spre închiriere, dar rata de neocupare tot crește [Profit.ro] 
- 探秘布鲁克林丨纽约这个集万千宠爱于一身的地方 [Pinlue] 
- Manhattan's Eager Renters Can't Make a Dent in Apartment Supply [Bloomberg] 
Appraisal Related Reads
- Does it help appraisers when agents increase the pending price in MLS? [Sacramento Appraisal Blog] 
- Should A Seller Be Present During the Home Appraisal? [Lansing State Journal] 
- NAR Comments on GSE Appraisal Waivers [NAR] 
- HouseCanary Unveils Agile Appraisal, Its Flagship Technology-fueled Valuation Solution [Broadwayworld] 
- HouseCanary, Another High Powered AVM Affecting Appraisers [AppraisersBlogs] 
- Compromise with the seller a good idea after a low appraisal [Albuquerque Journal] 
- What Is an Appraisal Contingency? [Bankrate.com] 
- The myth of the collapsing market [Sacramento Appraisal Blog] 
- Appraisal Waivers Pushback, Treasure Valley Clarification & More [AppraisersBlogs] 
Extra Curricular Reads
- Trix with artificial flavors is coming back after customer complaints [CNNmoney] 
- America's Overlooked Addiction Crisis [Bloomberg] 
- NBC University Theater 49 08 27 Nineteen Eighty Four [Archive.org] 
- Guess What These Two Cars Have In Common [Jalopnik] 
- The American War: A podcast guide to 'The Vietnam War' documentary [Washington Post] 
- Opinion | It took Ken Burns and Lynn Novick 10 years to unbury the secrets of the Vietnam War [Washington Post] 
- The day that destroyed the working class and sowed the seeds of Trump [NY Post] 
- Coal Hogs Work Safe [99% Invisible]