Couch Surfing The 2023 Housing Market
Let’s not overthink the 2023 housing market and do not panic over the heavy usage of charts this week. Ask yourself ‘what’s wrong with a slippery pleather couch without safety belts?’ Who cares! The view is spectacular. Wait for it.
Man attempts to paraglide with couch pic.twitter.com/iSkgN4gUXY— Weird and Terrifying (@weirdterrifying) January 16, 2023
But I digress…
Florida Listing Inventory (and High Mortgage Rates) Continues To Handcuff Demand
I’ve been the author of an expanding series of market reports for Douglas Elliman Real Estate since 1994.
The Florida market coverage has exploded, with 18 reports covering nearly 30 markets, with three more coming out shortly.
FLORIDA REGIONAL HIGHLIGHTS
The Florida markets we cover continue to experience rising prices as listing inventory remains in short supply. Sales levels are below levels seen in the 2021 housing boom from limited supply and higher mortgage rates. Year over year comparisons have been temporarily distorted by the extreme conditions of the pandemic housing boom in late 2020 and 2021. Temporarily, comparisons against pre-pandemic conditions have been relied on to provide a more accurate context.
- Price trends continued to rise despite higher mortgage rates, mainly from chronic listing inventory shortages, resulting in prices that remain sharply higher than pre-pandemic conditions
- Sales are down from the year-ago sales boom and are generally below pre-pandemic levels
- Listing inventory has been expanding slowly but remains significantly less than pre-pandemic levels
- The pace of the market has cooled from the year-ago frenzy, but it is still moving faster than pre-pandemic levels
Access to all the Florida market reports can be found at Elliman.com/marketreports.
Elliman Report: Q4-2022 Boca Raton
Elliman Report: Q4-2022 Coral Gables
Elliman Report: Q4-2022 Deerfield Beach
Elliman Report: Q4-2022 Delray Beach
Elliman Report: Q4-2022 Ft. Lauderdale
Elliman Report: Q4-2022 Jupiter/Palm Beach Gardens
Elliman Report: Q4-2022 Lighthouse Point
Elliman Report: Q4-2022 Manalapan
Elliman Report: Q4-2022 Miami Beach
Elliman Report: Q4-2022 Miami Mainland
Elliman Report: Q4-2022 Naples
Elliman Report: Q4-2022 Palm Beach
Elliman Report: Q4-2022 Pompano Beach
Elliman Report: Q4-2022 St. Augustine (new)
Elliman Report: Q4-2022 St. Petersburg
Elliman Report: Q4-2022 Tampa
Elliman Report: Q4-2022 Wellington
Elliman Report: Q4-2022 West Palm Beach
A sampling of Florida housing market charts. For a full selection, go to our chart gallery.
Non-Competes For Real Estate Executives
Hiten Samtani of The Real Deal talks about the recent swirl of conversation around a proposed rule by the FTC about banning non-competes. It’s a really good explainer.
Fairfield County, CT, and Downtown Boston Suffer Severe Listing Shortages
As a Connecticut resident (and someone born in Boston), I am amazed at how anemic new inventory has been and how low listing inventory has remained through the pandemic-era housing boom.
And we launched a new market report! New Canaan!
FAIRFIELD COUNTY SALES HIGHLIGHTS
Elliman Report: Q4-2022 Fairfield County Sales
“Listing inventory continued to trend lower as prices pressed higher.”
- All price trend indicators pressed higher year over year and remained significantly above pre-pandemic levels
- Sales fell annually for the sixth consecutive quarter and slipped just below pre-pandemic levels
- Listing inventory slipped annually to the second lowest on record
- Luxury median sales price pressed higher year over year and remained significantly above pre-pandemic levels
- Nearly one-third of all luxury sales to close in the quarter sold above the last asking price
- Luxury listing inventory edged higher annually but was roughly two-thirds below pre-pandemic levels
GREENWICH SALES HIGHLIGHTS
Elliman Report: Q4-2022 Greenwich Sales
“Price trends were mixed as listing inventory continued to slide.”
- Single family median sales price increased year over year and remained significantly above pre-pandemic levels
- Single family sales declined year over year for the past five quarters and remained below pre-pandemic levels
- Condo sales increased annually for the first time in five quarters and remained significantly above pre-pandemic levels
- Luxury price trend indicators fell short of year-ago levels but were well-above pre-pandemic levels
- Luxury listing inventory rose year over year for the first time in fifteen quarters yet was two-thirds below pre-pandemic levels
NEW CANAAN SALES HIGHLIGHTS (NEW)
Elliman Report: Q4-2022 New Canaan Sales
“Price trends pressed higher while listing inventory and sales continued to slip.”
- Single family price trend indicators expanded annually and remained sharply above pre-pandemic levels
- Single family listing inventory expanded annually for the first time in fifteen quarters
- Condo median sales price rose year over year for the seventh time in eight quarters
- Luxury listing inventory expanded year over year for the past three quarters but remained low
- Luxury median and average sales price expanded year over year for the past two quarters
DOWNTOWN BOSTON SALES HIGHLIGHTS
Elliman Report: Q4-2022 Downtown Boston
“Year over year price trend indicators showed mixed results.”
- Median sales price slipped year over year for the first time in six quarters
- Sales fell annually for the fourth consecutive quarter
- Listing inventory fell annually for the seventh straight quarter
“While the pace of the market remains brisk, sales continued to fall.”
- Nearly one out of four sales closed above the last asking price
- Sales declined year over year for the second straight quarter
- Listing inventory fell annually for the seventh straight quarter
Mortgages Rates Continue To Slide As World Begs The Fed To Stop
Mortgage rates have been drifting lower, and so has inflation. This quote is from Kiplinger’s.
Annual inflation fell to 6.5% in December, the sixth consecutive month of decline. The slowing economy is likely to bring the yearly rate down to 3.2% by the end of 2023. However, this will still be higher than the Federal Reserve’s target of 2-2.5%, so the Fed will not be cutting short-term interest rates this year
Douglas Elliman Town Hall With Jonathan Miller
Apologies in advance – I don’t usually share video that most of my readers can’t see, and this one is only visible to the 7,000 Douglas Elliman agents through their intranet but the experience was so positive with such great questions, that I wanted to share to DE agents that missed it. I got great feedback from agents from NYC, but also in other markets like Houston, Miami and LA. The bottom line, is that all agents who understand the hows and whys of what is happening are better equipped to navigate 2023, which in turn benefits their clients. That seems trite but I’ve worked through many cycles since I began in 1986 and those that adapt quickly will do well.
Downsizing While Overpaying And Owning It
Brickunderground had a fun piece on our 2022 downsizing adventure. They nicknamed me the Real Estate Whisperer and The Data Whisperer long ago. One of my partners laughs at the word “whisperer” as it applies to me, but still, I like the name. When my four boys were little, we dubbed our family name as the “Louds” for our entry into a room or my later name as the “Killowatts” for a seeming lifetime of turning off light switches around the house. But I digress.
We bought and sold at the moment of the Fed’s pivot to higher rates in spring 2022. The last of our four boys moved out, so Cheryl & I decided to downsize. The long and the short of it was we beat 30 other people for the privilege of paying 36% percent over ask to win a 267-year-old renovated house half the size of the home we sold but on more land. And we are still completely thrilled. No cognitive dissonance. No buyer’s remorse. A home built in 1755 before U.S. independence!
And here’s a well-deserved shoutout to our real estate agent, friend, and numbers dynamo, Jennifer Leahy, who helped us sell our former home and buy this one.
Here’s the Brick Underground Story: How the ‘real estate whisperer’ won a 30-way bidding war and landed his dream house
New Listings Coming To U.S. Market Are Anemic
We’ve been seeing this collapse across the U.S. markets we cover.
And a similar trend for active listings…
Here is a sampling of results from markets we cover:
Cash Buyers Exposed In Manhattan and Miami
I’ve always thought of cash buyers as a steady market segment, but here is a comparison of two markets, presumably driven by different economic forces, yet have shown a remarkable similarity in trends. This suggests, on a very superficial level, that cash, as a market phenomenon, is more of a macro driver than a hyperlocal phenomenon. Or is this just another spurious correlation. Thoughts?
Percentage of U.S. homeowners who believe their homes are haunted : 49— Harper's Magazine (@Harpers) January 12, 2023
Of Gen Z homeowners who believe this : 65https://t.co/MRcdwszbEC
My favorite housing market/economic charts of the week made by others
My favorite random charts of the week made by others
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
USPAP Won’t Expire. Can We See That In Writing?
I saw commentary on an appraisal chat board that Dave said there will be no expiration date for the next edition of USPAP and only updated when needed. While this is encouraging, it also brings a lot of questions.
TAF hosted a webinar last week called State of the Profession: A Discussion With The Appraisal Foundation and The Appraisal Subcommittee. If you’ll recall, TAF is the organization that wrote the bat-shit crazy letter, the chickenshit letter and is the subject of an active investigation by HUD on whether USPAP promotes a lack of diversity in the appraisal profession (BLS: 97.7% of appraisers are white)
As I’ve mentioned before, the overarching narrative projected from The Appraisal Foundation, is that appraisal bias, whether conscious or unconscious, seemed to only become an issue circa 2018. And they responded immediately with a laundry list of things to do like form committees and hire outside consultants. Its been five years and there is literally nothing I can think of that has made a major impact on TAF. There is a reason Dave has been at the helm so long. He has been a master at fogging, and taking meaningless actions to convey a sense of resolution in progress.
Yet the reality here is that Dave has been at the helm for 33 years and all the issues that are throttling the appraisal industry are because TAF was asleep at the wheel. They installed an African-American board member for the first time in three decades in 2020 only because of external pressure. TAF remains an organization of, as a friend of mine put it: “Stale, Male & Pale.” TAF slow-walked PAREA for years until it became an obvious partial solution to a systemic problem.
The highlight of the presentation was when Dave referred to their Fair Housing law firm Relman Colfax as “preminant” as he always did in his monthly emails until I was seemingly banned from the list.
Here’s a reference in the announcement to extend USPAP: with the preeminent fair housing law firm Relman Colfax, which has caused me to nickname the firm “Preeminent, Relm & Colfax” in the context of TAF and fair housing. You can’t make this up.
While I poked fun at the absurdity of Dave’s laundry list sharing of TAFs do nothings to change anything while listing reems of actions underway, I thought the webinar is really worth listening to.
Dave Bunton (TAF) takes:
- For enforcement and encourages GSEs to turn in appraisers
- PAREA is moving forward – 37 states have approved giving credit to graduates despite not being available
- Their Survey Monkey survey in 2021 was done to establish a baseline. (not credible – just use BLS)
- Writing USPAP exams that are tested not to be biased
- The requirement that the majority of trustees be appraisers was removed (think West Virginia)
- All three boards have term limits – it’s a “conveyor belt” (why does he choose the same people repeatedly?)
- Looking at the composition of boards by outside groups (look at the headshots on the website)
- PAREA products will probably start from the private sector mid-year and the 4th quarter and will be residential only
- ROV – time frames – codify a form – how many sales can be provided, provide rationale, etc.
Jim Park (ASC) takes:
- 1989 ASC provides oversight of state boards but can only monitor and review TAF
- Concerns about appraisal shortages, appraisal bias deeply concerning
- Values can be very far apart with the same scope of work so there are deeper issues to look at
- Ethics rule being revised AQB needs to review entrance restrictions
- Hopeful that PAREA helps
PAVE – participated – major objective with 13 govt agencies how important this is
Reconsideration of Value (ROV) An issue for all parties. There is no standard process for an ROV. AVMs, Second appraisals, borrowers may not know they can request. The appraiser who changes the value in an ROV – may end up in front of the state board – so important it is in PAVE action plan. Maintaining appraiser independence – we have to be careful – we all make mistakes. Recently HUD/FHA is proposing a new process. The proposal may set a benchmark for other agencies. Appraisal product types – hybrids, desktop, drivebys – all different ways that appraisal was ordered
My thought – if USPAP has no expiration date, how will TAF get its funding if it continues to avoid ASC grants because those require oversight?
OFT (One Final Thought)
Pay attention to where the legs go. There’s lots of wind in NYC.
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 be more couch surfing;
- You’ll get a seat belt;
- And I’ll turn on my couch lamp.
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 following week’s Housing Note.
See you next week.
Jonathan J. Miller, CRE, Member of RAC
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller
Reads, Listens and Visuals I Enjoyed
- US Mortgage Rates Drop to 6.15%, Lowest Level Since September [Bloomberg]
- Can 3-D Printing Help Solve the Housing Crisis? [New Yorker]
- What Banning Noncompetes Could Mean For Brokerages | Resi Rundown [The Real Deal]
- The East Village Standoff I Missed [Curbed]
- Trees Vs. Houses: In The Fight to Build More Housing in Colleyville, Who Wins? [CandysDirt.com]
- The uneasy US housing stalemate [Financial Times]
- Airbnb – Not for Me. [Gallet Dreyer & Berkey, LLP]
- Current State of the Housing Market; Overview for mid-January [Calculated Risk]
- Mapping South Florida’s Branded Condo Tower Boom [The Real Deal]
- Redlining Settlement Will Cost City National Bank $31M [The Real Deal]
My New Content, Research and Mentions
- NYC Evictions Well Below Pre-Pandemic Levels In 2022, But A Surge Is Expected This Year [Bisnow]
- South Florida Resi Sales Plunge in Q4 2022 [The Real Deal]
- Market Share of Cash Buyers [Manhattan v. Miami] [Miller Samuel]
- Can Miami Beach Stay Hot After Covid? The Shore Club Redevelopment Might Hold the Answer. [Wall Street Journal]
- Ultra-Rich Flip Palm Beach Homes to Score as Much as 86% Returns [MSN]
- Real estate sales drop as prices soar in Palm Beach, new fourth-quarter 2022 reports show [Palm Beach Daily News]
- Ultra-Rich Flip Palm Beach Homes to Score as Much as 86% Returns [Bloomberg]
- Housing Prices Drop In Boca Raton, Delray Beach [BocaNewsNow.com]
- How the 'real estate whisperer' won a 30-way bidding war and landed his dream house [Brick Underground]
- NYC Apartment Rentals See Mix of Ups and Downs in December [Connect CRE]
- The condo king of Miami bets his new Fisher Island luxury project can weather a recession [CNBC]
- Of 7 $100M-Plus Sales in 2022, 4 Were in Fla. [Florida Realtors]
- Under-Construction Penthouse to Become Priciest Home in Brooklyn’s Dumbo Neighborhood [Mansion Global]
- Under-Construction Penthouse to Become Priciest Home in Brooklyn’s Dumbo Neighborhood [Wall Street Journal]
Recently Published Elliman Market Reports
- Elliman Report: West Palm Beach Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Wellington Sales 4Q 2022 [Miller Samuel]
- Elliman Report: South & Greater Downtown Tampa Sales 4Q 2022 [Miller Samuel]
- Elliman Report: St. Petersburg Sales 4Q 2022 [Miller Samuel]
- Elliman Report: St. Augustine Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Pompano Beach Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Palm Beach Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Naples Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Miami Coastal Mainland Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Miami Beach + Barrier Islands Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Manalapan, Hypoluxo Island & Ocean Ridge Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Lighthouse Point Beach Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Lighthouse Point Beach Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Jupiter + Palm Beach Gardens Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Fort Lauderdale Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Delray Beach Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Deerfield Beach Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Coral Gables Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Royal Palm/Boca Raton 4Q 2022 [Miller Samuel]
- Elliman Report: Boca Raton 4Q 2022 [Miller Samuel]
- Elliman Report: Greenwich Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Fairfield County Sales 4Q 2022 [Miller Samuel]
- Elliman Report: New Canaan Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Downtown Boston Sales 4Q 2022 [Miller Samuel]
Appraisal Related Reads
- Do We Need a Neighborhood Section? [George Dell]
- Is 30 Comps Just Right? – George Dell, SRA, MAI, ASA, CRE [George Dell]
- Was This Home Overimproved or Underimproved? [Cleveland Appraisal Blog]
- The Science of Appraisals [M Report]
- How are appraisers handling concessions? [Sacramento Appraisal Blog]
- Torturing housing stats & recapping 2022 [Sacramento Appraisal Blog]
- All the Tips You Need to Make Moving to a New State Much Easier [Cleveland Appraisal Blog]
Extra Curricular Reads
- A guide to getting started with Twitter alternative Mastodon [Washington Post]
- A Eulogy For Sierra Mist [Digg]
- Scenes from Tampa’s ‘dead mall,’ alive with nostalgia [Tampa Bay]
- What the Kardashians Can Teach Climate Activists [Bloomberg]
- Is It Bad to Drink Coffee on an Empty Stomach? [NY Times]