The Hunt For Red October Housing
Why do people do things like this? Because they can.
I especially like the red color. It looks like a vat of red ink – and that’s been a big talking point this week.
But I digress…
Talking Manhattan Podcast: The Market’s Underlying Issues, and How to Value Outdoor space
I was just interviewed by Noah Rosenblatt and John Walkup of Urban Digs  for their “Talking Manhattan ” Podcast. I’ve known Noah for well over a decade and always enjoy geeking out on the market with him. He’s a data nerd with a real estate agent and day trader background. I’m proclaiming that John Walkup has the best real estate-related last name in the business and is clearly able to “elevate” any real estate conversation.
They weren’t kidding on Wednesday when they said they were going to get this podcast out right away, placing the interview online Thursday. I was speaking to a group of real estate agents on the roof deck of a new building Thursday morning, and four of them told me they had already listened to the podcast and one confirmed that he heard it in the shower and noted that was high praise. Love it.
One of the topics we focused on covered the adjustment for outdoor space in valuation. Throughout my career – when I get a lot of similar inquiries on a particular valuation topic, I turn it into a blog post – here is a collection of value-related posts in one place . One of the most read “value” resources in the collection covers outdoor space in a blog post I wrote in 2010 . Admittedly I’m a bit relieved my written methodology still holds up nine years later!
Their interview with me is below. I hope you enjoy it and subscribe  to their podcast as I do.
Where The HNWI Congregate (Hint: Not At My House)
Every year, Wealth-X published research on trends of the world’s wealthiest  individuals. To save you a click, globally there was a modest increase in the number of HNWI (high net worth individuals with at least $30M in net worth) individuals while their holdings saw a modest decline.
NYC: New York City has seen a minor reduction of cranes from the January 2019 Crane Index, but year-on-year, has experienced a 35% increase. As the New York City construction industry remains in robust health, crane counts will continue to be steady, particularly when developments for the JP Morgan Chase HQ and the redevelopment of the Hyatt at Grand Central Station commence.
Housing Density Defined: Hong Kong’s Walled City of Kowloon
Demolished in 1993, this former walled settlement  in Hong Kong had 50,000 residents. Here’s a photo from 1989. Be sure to click to expand.
Vote For My Parent’s Studio Co-op!
Shameless plug warning – My parents are retired and living in Florida – recently they decided to sell their pied-a-terre  on Manhattan’s Upper West Side. Marketed by superstar Douglas Elliman broker and friend Jessica Cohen  at the right price, it is up for a vote in Curb’s What $380,000 buys in NYC right now  contest.
Their listing is now sitting in first place! Let’s extend the lead!!!
Their studio is on the Upper West Side so do my parents a favor and vote “Upper West Side” at the bottom of the Curbed post  or just click on the graphic below and vote! You’ll feel better all day for doing that.
The WeWork Unicorn Gets Outed For Its Actual Business Model
My goodness, has the “disrupter” monniker been the most overused business descriptor in history?
Take the WeWork example as laid out in yesterday’s New York Times , an early investment of Softbank . My friend Dan Alpert wrote a great piece on the sudden down turn in the fortunes of WeWork for Business Insider WeWork could cause a disaster for New York City’s real-estate market .
Uber, another Softbank investment, is also in trouble, losing $5B last quarter and dropping 30% in value  from its initial IPO price.
Why do I bring this topic up in these Housing Notes? Look at all the brands in the background above. One of them is a national real estate startup.
Compass , a traditional real estate brokerage marketing itself as a tech firm to realize higher multiples, has enjoyed significant investment by Softbank. This startup been a disrupter, in the context of having access to unprecedented amounts of capital for recruiting agents, without bringing notable innovations to the industry or a bottom line sustainable reality. This conclusion has been drawn from people who have been recruited by them, Moxiworks  and others. Great brokerage companies like Stribling and Pac Union who were recently acquired, must have received offers from Compass they couldn’t refuse.
After covering this topic a while back, a Compass agent emailed me back and said to the effect, “Don’t worry about us Jonathan, we’ll be just fine.” Of course. Compass has attracted some great brokers and agents who will always be in demand for their services regardless of what happens to the company. I am not being critical of their agents whatsoever and count a number of them as friends. My issue is at the corporate level which suggests images of an emperor who wears no clothes and only those outside the industry are falling for it.
This is the part I never want you to forget.— Downtown Josh Brown (@ReformedBroker) September 24, 2019 
Wall Street was THISCLOSE to selling you #WeWork  at $50 billion.
Stop quacking like a duck and they’ll stop throwing breadcrumbs at you. pic.twitter.com/phV9Ubyn53 
After the disasterous WeWork IPO attempt, what would happen if other startups attempt an IPO in the near future without a sustainable business model in a low margin business?
The lesson being played out with WeWork is that companies that market themselves as disrupters must have a tangible business model to sustain operations or the claims are just words. When the real math is subjugated by fantastical stories of changing the world, we get WeWork.
New Yorker: Bedbugs
Len Kiefer ‘s Chart Handiwork
(For earlier appraisal industry commentary, visit my old clunky REIC  site.)
RAC’s 2019 Conference In Dallas Crushed It
Last week a group of some of the best residential appraisers in the country met in Dallas for RAC’s two day annual conference . I’d call the experience “hi-density learning” with an equal amount of fun and laughter. I’m still smiling a week later.
The emphasis of the organization has been modified in recent years from exclusively relocation to complex residential which includes relocation. Although we still get tremendous support from WERC and many relocation third parties, litigation support has been a growing area of interest from our membership as of late.
NSFW Expert Witness Testimony
I’m always pushing for good appraisers to get into expert witness testimony and litigation support work as the mortgage side of our industry is slowly being replaced by wildly inaccurate AVM technology. When you read this short transcript at your own peril, make sure you imagine the NSFW discussion being spoken in monotone:
Talk about a hostile witness. This may be the most extraordinary deposition I've ever seen, via Miami defense lawyer Jonathan Jordan pic.twitter.com/c0t1CQbUex — David Ovalle (@DavidOvalle305) September 16, 2019 
OFT (One Final Thought)
Where to park your car? Do the math and be prudent.
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 know where to park their car;
- You’ll tell fewer fantastical stories;
- And I’ll start swearing on the witness stand.
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
- What $380,000 buys in NYC right now [Curbed NY] 
- Ultra Wealthy Population Analysis: World Ultra Wealth Report 2019 [Wealth-X] 
- Catherine Zeta-Jones and Michael Douglas Buy and Sell in the New York Suburbs [Mansion Global] 
- Perspective | Can you hold your real estate agent and attorney liable for bad advice? [Washington Post] 
- Chicago way ahead of U.S.—in those who can’t afford to sell their home [Chicago Business] 
- Landlords Often Oppose Short-Term Rentals. These Developers Court Them. [Wall Street Journal] 
- Millennials Continue to Leave Big Cities [Wall Street Journal] 
- WSJ News Exclusive | Candy Spelling Selling Beachfront Malibu Home for $23 Million [Wall Street Journal] 
- Extell’s One Manhattan Square launches rent-to-buy program [MSN] 
- What the ‘Crane Index’ Says About Your Changing City [Citylab] 
- Agents blame Southern California homebuying lull on fears the market’s peaked [OC Register] 
- 5 changes lenders want from CFPB’s rewrite of QM rule [National Mortgage News] 
- WeWork could cause a disaster for New York City's real estate market [Business Insider] 
- New ordinance slows down condo-to-rental deconversion trend [Curbed Chicago] 
- Compass' COO Maëlle Gavet is out [The Real Deal] 
- How Technology is Disrupting the Construction Industry [Visual Capitalist] 
- Seven Ways Telecommuting Has Changed Real Estate [NY Times] 
- NYC Homeowners Face Huge Unknowns as Flood Insurance Changes Loom [City Limits] 
- Chart of the Week [Mortgage Bankers Association] 
- Does Your Real Estate Broker Owe You a Refund? [NY Times] 
- Chinese U.S. homebuying to hit eight-year low, says leading property site [Reuters] 
My New Content, Research and Mentions
- Yonkers sees growth of real estate development [Lohud] 
- Millionaires' fortunes are shrinking. Here’s what that means for real estate [The Real Deal] 
- U.S. Real Estate Market Will Likely Stay the Course Despite Impeachment Inquiry [Mansion Global] 
- The Real Deal: Long Island's Gold Coast Loses Its Luster [The Foggiest Idea] 
- Rents rise in Manhattan, Brooklyn, fall in Queens [Real Estate Weekly] 
Appraisal Related Reads
- 5 Reasons Buyers Overpay For Homes [Tom Horn/Birmingham Appraisal Blog] 
- When 1,000 square feet doesn’t count [Ryan Lundquist/Sacramento Appraisal Blog] 
- War on the Appraisal Industry. Another Great Real Estate Depression… [Frederick Rossiter/Appraisers Blogs] 
- Crowdsourcing Appraiser Data – Hyper-Local Database [Jerin Harper/Appraisers Blogs] 
- Highland Lakes Housing Update And Tips For Selling Your Home In The Fall [Tom Horn/Birmingham Appraisal Blog] 
- Low appraisals, weed, & rent control [Ryan Lundquist/Sacramento Appraisal Blog] 
- VA picks Veros to provide appraisal management services for VA loans [Housingwire] 
Extra Curricular Reads
- What's The Origin Of The Phrase "Nice Guy"? [dictionary.com] 
- To understand the genius of Elon Musk, Thomas Edison, and Mark Zuckerberg, look at their desks [qz.com] 
- Study: Crying Can Help You Lose Weight & The Best Time to Cry is From 7pm to 10pm [World of Buzz] 
- SoftBank’s Venture Capital Riches Swamp the Market [Bloomberg] 
- Robyn Hightman Found a Life on Bikes. In an Instant It Was Gone. [Bicycling] 
- Organised labour has returned [Financial Times] 
- Five Songs That Explain the Cars’ Influence [The Atlantic] 
- Gilligan's Island's S.S. Minnow was named as an insult to the chair of the FCC [boingboing.net] 
- How to Boil the Perfect Egg [NY Times] 
- The Southern Monkee [THE BITTER SOUTHERNER] 
- Why Vinyl, Books and Magazines Will Never Go Away [Bloomberg] 
- She Quit Her Job. He Got Night Goggles. They Searched 57 Days for Their Dog. [NY Times]