Luxury Housing Optics With Massive Discounts

When reviewing the massive influx of information, especially when a lot of it is presented through the optics of someone with a different agenda, it can get confusing not only to you but to all the others in your professional space.

Like solving the Rubik’s cube. One of my sons can solve it in about a minute yet I have no module in my brain that can make any sense of it. Of course for those that live in high-density urban areas, you run into people with very specific expertise during the normal course of the day. This tweet illustrates why I love working in Manhattan:

Best Real Estate Headline Ever

This week the penthouse triplex at The Pierre, a famous Fifth Avenue hotel/co-op on the southwest corner of Central Park, sold for $44 million. Page Six, the gossip page of the New York Post provided the BEST REAL ESTATE HEADLINE EVER:

Cantor Fitzgerald CEO buys iconic triplex at $81M discount

The very idea that a home seller would discount their home by $81 million to make the sale is an insane thought. This speaks to the concept I call “aspirational pricing.” The asking price was set to a price so ridiculous that it would literally sit on the market for years and the market would unlikely catch up in a lifetime. More importantly, it serves as misdirection for other high-end properties coming to the market by influencing them to also wildly over price as well.

After hitting the market in March 2013 at a then-staggering $125 million, it was reduced by $30 million to $95 million in December. In early 2015, the price was slashed again to $63 million before it was taken off the market. Following a modern redesign, it was listed again in April 2016 for $57 million.

The monthly maintenance (HOA) charges are a very {reasonable} $51,840 per month.

Here’s a fun read from Brick Underground on penthouses.

Although one highrise has had recurring fires (the name includes “torch”).

VIDEO Nightly Business Report: U.S. Luxury Market Trends

Diana Olick of CNBC interviewed me on the reason behind the luxury market uptick as a companion piece to her story on the luxury report released by Redfin.

The luxury real estate story starts at 20:58 into the broadcast:

Why Presentation in a Market Report Matters

And then there was a report by Ten-X Commercial (formerly that was issued this week and covered in the Wall Street Journal: New York Apartment Vacancies Projected to Soar

A new report predicts New York City apartment vacancy rates will soar to more than 11% by the end of next year. The scenario, which some local housing analysts rejected, would mean a grim reckoning for landlords.

I just can’t wrap my mind around it. I spoke to a number of analysts and journalists about how baffling this report was and a lot of the confusion stemmed simply from the way it was written. It painted a gloomy picture on macro conditions like population growth and job growth even though city economy remains robust, just not the insane pace of a few years ago. It was hard to tell that it excluded one of NYC’s 5 boroughs (Staten Island). The apartment rent they presented for all of NYC was nearly the same as the rents we track for Manhattan specifically so it made me wonder if they were confusing “Manhattan” for New York City” as many outside the market do in their nomenclature. This study only looked at new buildings with 40 or more apartments – a very specific subset. After the reader was forced to jump through all the hoops to understand the point being made, it seemed irrelevant because it didn’t consider the idea that prices would (and are) declining.

Bloomberg Radio’s Masters In Business: Rich Barton

My friend Barry Ritholtz interviewed Rich Barton, the creator of Expedia and the Co-founder of Zillow and Glass Door, on his Bloomberg Radio show Masters in Business. I actually met Rich the day before the Zillow launch. Lockhart Steele, founder of Curbed and Brad Inman hosted a real estate tech type party after the New York Inman Connect conference a decade ago. Lock also introduced me to the founder of Foursquare. In fact when I asked Rich what he did, the conversation started with “Are you familiar with Expedia?” and continued with something like… “Tomorrow we’re launching Zillow as in ‘rhymes with pillow.'” Nice people. Quite a party.

Uh-oh, FICO Is Now The Bad Guy

A piece in Housingwire: Senate to consider bill to end “FICO monopoly” at Fannie Mae and Freddie Mac seems misdirected to me:

Earlier this year, a bipartisan group reintroduced a bill in the House of Representatives that would allow Fannie Mae and Freddie Mac to consider alternative credit-scoring models beyond the FICO credit score the government-sponsored enterprises currently use.

This action might help to a certain degree, but the bottomline is that tight credit conditions are not fully fixed by playing around with FICO. It is a noble gesture but, bank mortgage underwriting remains risk averse and Fannie and Freddie are still struggling with the banking sectors inability to extract theselves from fetal position they have held since the financial crisis began. Making credit scores more pragmatic and representative will help, but only the real improvement comes when banks take a realistic view of risk.


Vacations are running rampant for me, my staff and most of my friends in August. Apparently even radio hosts take vacations. It looks like Phil Crawford conned me into hosting next week’s Voice of Appraisal show. Unfortunately I don’t have Phil’s velvety radio voice but I do have plenty to talk about so please be sure to listen.

Who owns the data?

Recently I was on Housingwire’s webinar that covered appraisal questions with Tony Roveda. He then wrote a column for their REwired site called “Who owns the data relating to an appraisal? :The appraiser, the AMC or the homeowner

The headline was probably changed by Housingwire for SEO because the piece doesn’t address this. I’ve always looked at it this way. I am hired by a client for my expertise. I find out details on the market that are not available in the public domain because I know people who know people, etc. I use that information in the report for client #1. However, I also use that developed comp in another report for client #2. Client #1 claims they own the data in my report so they are entitled to sell it or use it in analytics to put me out of business. In reality I might use that data repeatedly in my professional practice.

I am not being compensated for further use beyond what I was engaged for. This is an assumption being made by AMCs and providers of AVMs. In fact, this issue burst on the scene when AMCs became dominant and appraisal fees were cut by 50% or more.

In other words, I am being compensated less for someone to use my developed data outside of my appraisal. Its a flawed logic and often protected in the fine print against a residential appraisal industry that has no residential leadership on this front.

A Couple of More Weak Articles on “Appraisal Shortage, So Automation Comes Next”

Inspired by that Joe Light article for Bloomberg on our doom there are two more – all 3 miss the nuance that makes the story accurate. For the first one, the author promised me a rebuttal. I know the second article’s author and will request the same.

Will the home appraisal industry be replaced by technology? [Curbed]

Algorithms threaten the jobs of 97k real estate appraisers [Axios]

Don’t shoot the messenger

I loved this local article where the appraiser was used as a positive metaphor, something that rarely happens.

Consider the CBO as the policy equivalent of a real estate appraiser. When someone hires an appraiser to determine the value of their property, the appraiser examines the property, conducts research, checks market prices, and arrives at the value. The appraiser is not part of the transaction, nor does the appraiser tell the person whether or not they should sell the house; he or she simply provides an educated guess of the property’s value.


A Brilliant Idea

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. They’ll play with their own Rubik’s Cube, you’ll discover Tetris and I’ll stick to Bejeweled.

See you next week.

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

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