Housing Dumpster Fire

[Due to Mail Chimp technical difficulties (highly confident there was no Russian hacking involved), this Housing Note was released at 5:12 pm ET instead of its usual 2 pm ET slot. Even though I’m sure there was a lot more housing news to occur within the three-hour span on a Friday afternoon, I went and ate lunch after I added another huge penthouse sale mention at 2:10 ET.]

‘Dumpster fire’ was the American Dialect Society‘s ‘2016 Word of the Year’ #WOTY and it really resonated with me. However, I humbly suggest to the society that this is a ‘phrase’ rather than a ‘word.’

But as prolific power broker, master planner and builder Robert Moses once said, “You have to break a few eggs to make an omelette.”

Watch this video for 10 minutes, and all your troubles will fry away. Really, watch the whole thing.

but I digress…

Week 2 of our Market Report Gauntlet

Yesterday Douglas Elliman published our research on a bunch of markets in NYC metro (next week: South Florida). We analyzed Brooklyn and Queens sales markets, Manhattan, Brooklyn and NW Queens rental markets, Westchester, Putnam and Dutchess county sales markets and Riverdale in the Bronx. The latter is new and I am very excited about providing the first in-depth research on this market. We’ve been expanding our Elliman Report series since 1994.

Last week our Manhattan research showed a market that was resetting from exuberant times and transitioning into more sustainable long term trends. This week nearby Brooklyn sales are booming and so is the adjacent Queens sales market.

Of course, no market report release would be complete without graphics. Bloomberg’s coverage of our Brooklyn report went to #2 most read worldwide on the Terminals. Wall Street likes Brooklyn – or more likely they funded the boom as commercial banks sat on the sidelines still grappling with the legacy of bad lending decisions during the bubble.


And of course, a real estate story is always cool when it contains a chart using our data.


Here are the reports:

Elliman Report: Brooklyn Sales 4Q 2016
A contrarian housing market within New York City is the role that Brooklyn continues to assume. For the final quarter of 2016, the housing market showed a combination of rising prices, falling inventory and more sales. Median sales price increased 15.4% year over year to a new record of $750,000, the fourth new quarterly record of the past 2 years. Average sales price jumped 17.3% to $947,553 as this metric continues to approach the $1 million threshold…

Elliman Report: Queens Sales 4Q 2016
Queens continued to set new housing price records across the market yet still see more sales activity. Average sales price increased 9.8% to $573,455 to a new record while median sales price slipped $1,000 from the record set in the prior quarter. Median sales price increased 6% to $498,000 from the prior year period, the ninth increase in ten quarters. Median sales price year to date was up 6.8% to $470,000 over the same period a year ago. The luxury market threshold set a record of $990,000 and continues to flirt with the $1 million threshold…

Elliman Report: Manhattan, Brooklyn & Queens Rentals 12-2016
MANHATTAN Manhattan net effective rents continue to slip as landlords expanded their use of concessions to protect face rent. Landlord concessions set a record 26.4%, the third in three consecutive months and more than double the share of the prior year. The net effective median rent, defined as the face rent less landlord concessions, did not rise for the fifth consecutive month, down a nominal 0.1% to $3,291 in December…
BROOKLYN Brooklyn rental price trends continued to soften as inventory expanded. Listing inventory increased 32.5% as the market share of landlord concessions more than doubled to 13.7%. Median net effective rent drifted lower on a year over year basis for the third consecutive month and the fifth time in the past six months. Median face rent declined 3.8% to $2,700 from the same period last year. While all size categories reflected year over year declines in median rent, larger declines were observed in the larger sized apartments on a year over year basis…
QUEENS (NW) The northwest Queens rental market, including the neighborhoods of Long Island City, Astoria, Sunnyside and Woodside, showed double-digit price increases as the market remained heavily influenced by influx of new development apartments. Median rental price increased 11.7% to $2,850 from the same period last year. This was only the sixth increase in twelve months and illustrated the choppy trends of a market moving sideways over the past year…

Elliman Report: Riverdale Sales 4Q 2016
The Riverdale section of the Bronx, including Fieldston, Hudson Hill, North Riverdale and Spuyten Duyvil, enjoyed price growth over the past year along with more sales activity. Median sales price increased 7.5% to $280,500 from the year-ago quarter. Average sales price followed the same pattern edging up 2.7% to $389,520 over the same period…

Elliman Report: Westchester Sales 4Q 2016
Westchester had the most fourth quarter residential sales since at least 1981 as inventory continued to fall sharply. There were 2,419 single-family, 2-4 family, co-op and condo sales, up 0.3% from the year ago quarter. Since the mid-2015, countywide sales have occurred at a blistering pace, as residents of New York City have increasing sought out suburban markets for greater affordability. Listing inventory continued to decline, falling 21.2% to 3,004 from the year ago quarter to the lowest fourth quarter total in 15 years…

Elliman Report: Putnam & Dutchess Sales 4Q 2016
PUTNAM Putnam county sales reached their highest fourth quarter total in more than 20 years as price trend indicators slipped. There were 310 sales, up 3.7% from the year ago quarter. The record was attributable to the growth in single family sales, up year over year by 8.6% to 277, accounting for 89.4% of total sales. Condo sales fell 25% to 33 over the same period and accounting for 10.6% of all sales. Year to date, overall sales jumped 20.1% to 1,173 from the same period last year. Inventory continued to fall sharply as the heavy sales volume cleared out market slack…

DUTCHESS Dutchess county continued to see record sales activity and modest price growth. Single family and condo sales reached the highest fourth quarter total and the second highest quarterly total in at least two decades. There were 357 sales, up 32.2% from the year ago quarter…

The Right Time to Sell Is Anytime

This was the title of this weekend’s New York Times real estate cover story. I’ve long said that “timing the market” isn’t something that should be emphasized since housing is not a stock. This article explores this topic. I provided the listing trends – the chart below is the raw look for Manhattan. August is low and May and October are the seasonal highs. This is what people do, but it doesn’t mean it is the best time of the year for you to sell. I only used resales since new development listings come on the market with less randomness (awkward).

[click to expand]

Zillow Acquires HREO

The New York real estate industry continues to mourn the gradual erosion of quality at property search site Streeteasy, acquired by Zillow a while back. It is being ‘Zillowized” by reducing features much loved. They can use this strategy because there are no real competitors. Zillow’s recent purchase of Hamptons Real Estate Online can only make Zillow look good. HREO has one of the most dated listing interfaces ever seen.

Yes, Penthouses Still Sell In Mid-Eight Digits (or Double-Commas)

Despite all of the softness reported (my research included) since Peak Super Luxury in 2014, there are still high priced sales occurring in markets like Manhattan. They were not selling in droves like before, but are more consistent with sanity and economic reality.

I can’t wait until the supposed $250± million penthouse closes at 220 Central Park South signed in 2015 (I think). I can only imagine the media frenzy it will create. Here’s one fresh off the presses:


The Appraisal Institute “Taking” policy debacle” on hold

From my “Real Estate Industrial Complex (REIC)” website:

Wednesday January 11, 2017 Discussion of the Appraisal Institutes’ New Chapter Financial Management and Administration Policy with Jim Amorin, MAI, SRA, AI-GRS, President, Appraisal Institute

During yesterday’s meeting, Jim Amorin announced that on Tuesday, the AI National Board voted to put the controversial financial policy (the “taking”) on hold for membership feedback. Note: This policy has already been forcefully rejected by many chapters in writing. I don’t see what additional feedback is needed. The membership outrage clearly demonstrated is how the membership already feels.

Thanks to Jim for validating this blog’s (REIC) purpose. He mentioned his displeasure with this “NY Blog” multiple times during this event. GOOD. That is the point. If the collective action of many members wasn’t undertaken and REIC wasn’t created, it would be AI National business as usual and the disrespect towards AI membership would continue unabated.

And membership continues to decline.

This forced AI National decision is only a baby step: While this controversial policy is on hold, the cause of AI National disconnect is still not being addressed. This is merely a band-aid on a symptom. AI National of old still remains AI National of old. Let’s make it relevant again.

Next step: earn trust

2004 Allen letter with FNC-AI Deal Terms regarding the “Appraisal Institute Residential Database”

While we are on the path to reforming AI National leadership, the next stop is the FNC deal which is now much more relevant to CoreLogic’s recent purchase of FNC for $475 million.

The following letter has been in wide circulation lately concerning the AI National deal with FNC. I’ll be writing more on this in the coming weeks.


I am losing it

I have to admit it, my memory is fading. I speak to many reporters in the course of a week, but I can’t remember being interviewed for this piece. I mean I’m sure I did at some point but I am drawing a blank.

Multiple offers and low appraisals [Akron News]

Re-addressing the inaccuracy of the Zestimate and the trend it started

There was a great Ken Harney column on Zillow’s “Zestimate” from 2 years ago that was making the rounds among the appraisal community this week. It got me thinking that the fascination with the Zestimate at the time of Zillow’s 2005 launch was perhaps an early sign that our culture was more interested in salacious insights (how much is that celebrity or neighbor’s home worth?) rather than factual well-researched information. It was less about the accuracy of the value and more about allowing the reader to gather up cocktail talk.

This erosion of accurate valuation sentiment fueled by the “Zestimate” frenzy a decade ago may have justified lender reliance on AMCs for valuation despite their poor quality. We all know that a large swath of the AMC results is poor but their use proliferates because they offer a promise of costs savings. With the U.S. federal government backstop in place, what’s the lender’s real risk? In other words, I don’t think it is too far of a leap to see the Zestimate as a populist catalyst for providing the optics that accuracy is no big thing.

Can you imagine performing a relocation appraisal with this sort of accuracy?

For example, in New York County — Manhattan — the median valuation error rate is 19.9%.

But thankfully I know what the value of my neighbor’s house is.

A Brilliant Idea

If you need something rock solid in your life (particularly on Friday afternoons) and someone forwarded this to you, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them. They’ll help you restore a car in the woods, you’ll avoid dumpsters and I’ll finally crack a few eggs.

See you next week.

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

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