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Understanding Housing’s Dog Days



Understanding Housing’s Dog Days – Bloomberg View

The Myth of Real Estate Stigma



The Myth of Real Estate Stigma – Bloomberg View

Housing Data Is Old and Moldy



Housing Data Is Old and Moldy – Bloomberg View

Homebuying Gets a Housecleaning



Homebuying Gets a Housecleaning – Bloomberg View

Demanding More

“Both low inventory and cash define the current housing market and the terms of sale are now as important as the agreed upon price.”

Luxury Real Estate: In Pursuit of a Collectible, Seeking Upside in a Low Return World

Since the global credit crunch began five years ago, interest rates have remained near historic lows as central banks around the world have been working to stimulate a broad economic recovery. International and domestic investors have grappled with anemic returns on cash instruments, tight credit policy, and the continued volatility of global financial markets. With limited options, these investors have looked to a variety of hard assets to provide more reasonable returns. Although the world’s financial institutions continue to be risk-averse, the luxury investor populace and related wealth management institutions have sought out new opportunities, including real estate as an investment strategy in the “search for upside in a low return world.” A key beneficiary of this trend has been the growth of luxury real estate…

Country Life UK: Once upon a time in the American market

Jonathan Miller retraces the history of the American property crash and examines what is driving fresh price rises.

LUXURY REAL ESTATE As The World’s New Currency

Since the beginning of the global credit crunch in 2008, luxury real estate has morphed into a new world currency that provides investors with both a tangible asset and a cachet that cannot be found within the financial markets. It’s as if these emboldened investors zoomed out of their local Google Earth view to discover the wider global perspective on luxury real estate…

Real Estate’s Renasissance

SUBMITTED TITLE “Luxury Housing’s Cash Purchase Legacy”
PUBLISHER APPENDED LAST PARAGRAPH (only visible in magazine version)


Jonathan J. Miller, CRE, CRP
Miller Samuel Inc.
Real Estate Appraisers & Consultants

for Quest Magazine


One of the primary characteristics of US coastal housing markets such as New York, Washington DC, Miami, Boston, San Francisco and Seattle after the dust settled from the collapse of Lehman Brothers has been a sustained period of high-end market strength. Trophy properties selling for 8 to 9 digit prices have become a dime a dozen and stalled high-end housing developments are seeing demand rekindled.

The sudden end to an era of reckless bank underwriting standards and subsequent entry into a period of fiscal austerity was expected to disproportionately crush the luxury housing market. Easy access to credit during the housing boom created an opportunity for many consumers to live beyond their means through excessive leverage.

The onset of the credit crunch led to the overnight evaporation of the secondary market for jumbo mortgages, too large to be purchased by ailing Fannie Mae and Freddie Mac. While the federal government focused on the former GSEs, little attention was given to improving access to mortgage financing for high-end housing. Banks now have to hold jumbo mortgages in their own portfolios rather than offload the risk to investors hungry for bigger returns. The much tougher jumbo mortgage financing requirements were expected to bring a collapse of high-end housing prices and grind sales activity to a halt.

But that isn’t how it played out.

Distressed real estate continues to be a thorn in the housing market’s side as well as the struggling US economy, but it has been disproportionately concentrated in the lower half of the price spectrum. While not immune to foreclosures, the lower concentration of high-end distressed real estate in the pipeline over the next few years is expected to continue.

The price spread between high-end and starter homes have expanded over the past several years despite irrational mortgage underwriting standards for jumbo mortgages. In fact, a remarkable number of home purchases at the high end of the market have been paid with cash rather than obtaining mortgage financing at commercial banks thereby bypassing the lending industry’s legacy of poor lending decisions in the prior decade. The global accumulation of wealth during the global economic boom enabled many investors after its end to seek out luxury housing in the US, helping coastal markets outperform others.

The weakness of the US dollar against other foreign currencies, specifically in Europe, South America and Asia has brought investors to US soil in droves. Initially, this was viewed as a currency play where wealthy foreign investors were simply taking advantage of the sharp discount for US housing. While the favorable exchange rates may have tipped the balance towards the acquisition of US assets like housing because of the perceived discount, investors were also moving their assets into a relatively more politically and economically stable environment.

Will the use of cash in housing purchases continue? It seems likely, perhaps out of necessity. Rational jumbo mortgage underwriting standards and the creation of stable secondary market for jumbo markets is not expected to return for years. One those problems are eventually resolved, the widening gap between luxury housing and the balance of the market could very well widen further.

CHANGE is the Constant in a Century of New York City Real Estate

While researching the last 100 years of New York City residential real estate, I came to appreciate the single constant in the tumultuous ebb and flow of housing: a market that continually adapts to significant economic, political, and social change.

Over the past century, the city has been held together by a diverse economy that links every economic capital across the globe, and as the result of this collaborative character that has come to define New York City, its housing market has proven to be a direct reflection of the conditions of the world at large. The housing stock has shifted from dependence on single-unit dwellings, to apartments, to co-operatives, to condominiums. It has ranged from overcrowded tenements to newly developed luxury high rises. The addition of new housing or re-purposing of existing structures has resulted in a wide array of residential property that forms the texture of the New York City real estate market.

The irony of this evolving housing legacy is that, when simply gazing upon the physical configurations of buildings, we take comfort in a sense of permanence, which, as it turns out, is more illusive than accurate. Leaf through “before and after” photo books of New York, and the revolving landscape is readily apparent. The founders of Douglas Elliman recognized the opportunity that change brings, and therefore were able to build a company that has remained a significant part of the history of the last 100 years of the New York housing market.

The timeline below illustrates the evolution of value of New York City real estate and the series of events that helped shape it…

Regional Market Summary: Manhattan and New York City Metropolitan Areas

Appraisers and Foreclosure Sales Bring Havoc to Housing Markets

In many ways, the quality of appraisals has fallen as precipitously as many US housing markets over the past year. Just as the need for reliable asset valuation for mortgage lending and disposition has become critical (fewer data points and more distressed assets) the appraisal profession seems less equipped to handle it and users of their services seem more disconnected than ever…

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