Keeping Housing Above Water
Nothing like an Oceanfront View!
Ocean front view pic.twitter.com/XwTylOdWwz— Weird and Terrifying (@weirdterrifying) January 20, 2023
But I digress…
Long Island And North Fork Prices Rise, Hamptons Slips
I’ve been the author of an expanding series of market reports for Douglas Elliman Real Estate since 1994 and have reported on the Long Island, Hamptons and North Fork regions for about two decades. These regions, especially on the East End of Long Island, link to different primary markets. The Hamptons seems joined at the hip with Manhattan via Wall Street, and The North Fork is more closely connected with Long Island and possibly Brooklyn.
This week, Douglas Elliman published our research on these markets for the fourth quarter of 2022.
LONG ISLAND HIGHLIGHTS
Elliman Report: Q4-2022 Long Island Sales
“Price trend indicators remained sharply above pre-pandemic levels as listing inventory remained near record lows.”
- Median and average sales prices rose to their third-highest levels on record
- Sales fell below long-term norms, as a combination of cooling demand from higher rates and lack of supply
- Listing inventory rose year over year from the previous record low to the third-lowest on record
- Luxury median and average sales prices rose annually and remained sharply above pre-pandemic levels
- Luxury listing inventory edged higher year over year but was less than half of pre-pandemic levels
- More than one out of four luxury sales to close in the quarter sold above the last asking price
Elliman Report: Q4-2022 Hamptons Sales
“Listing inventory remained chronically low, less than half of pre-pandemic levels.”
- Price trend indicators declined annually but remained sharply above pre-pandemic levels
- Listing inventory rose annually from a prior record to the third lowest on record and less than half of pre-pandemic totals
- Sales fell annually by half and were restrained by higher mortgage rates and chronically low listing inventory.
- Nearly one in five sales that closed in the quarter went into a bidding war
NORTH FORK HIGHLIGHTS
Elliman Report: Q4-2022 North Fork Sales
“Prices continued to press higher as listing inventory remained chronically low.”
- Median sales price rose annually to an all-time high for the fourth time in five months
- Listing inventory increased year over year from a prior record and was less than half of the pre-pandemic total
- Sales fell sharply year over year, restrained by higher mortgage rates and chronically low listing inventory
- Nearly one in four sales that closed in the quarter went into a bidding war
Why Is The Ultra-Luxury Real Estate Market So Disconnected?
Here’s a good explainer video from Hiten Samtani of The Real Deal (and not because I get a lot of love).
Redfin CEO Thinks Housing Has Begun To Recover: THREAD
1 of 16: On 3.15.22, we said housing was “cresting,” and that it was “crazy for demand to be so strong in the midst of war, market volatility & inflation.” The market worsened each month through November. Now we believe the market, while still fragile, is recovering. Here's why!— Glenn Kelman (@glennkelman) January 25, 2023
Strip Mall Guy Makes Case Against Dry Cleaners: THREAD
Drycleaners, their devastating impact on our communities that nobody talks about, and a solution:— StripMallGuy (@realEstateTrent) January 25, 2023
As a strip mall owner, I've dealt with this issue for 15 years, and I'd like to address it here.
Hope this gets Retweeted so we save lives!
Since the 1930s, the
The Difference Between “Correction” And “Cooling”
A New Canaan, CT real estate agent, John Engel references my appearance on he and Roberto Cabrera’s podcast ‘Bouroughs & Burbs‘ that I’ve been on a few times in addressing the word “correction.”
The sharp decline in sales at the end of 2022 was largely caused by the doubling of mortgage rates and the lack of listing inventory. The word “correction” in real estate usually relates to prices, not sales. Whats been different in this cycle, is that supply has been chronically low, providing much more support to prices than we usually see when sales drop sharply.
And a fun listing presentation video!
SoCal Is Devoid Of Listing Inventory
I began covering the Los Angeles/Malibu market for Douglas Elliman circa 2014 and have recently expanded the footprint to Orange and San Diego Counties.
GREATER LOS ANGELES, INCLUDING WESTSIDE AND DOWNTOWN SALES HIGHLIGHTS
Elliman Report: Q4-2022 Los Angeles Sales
“Chronically low listing inventory and higher mortgage rates restrained sales.”
- All price trend indicators rose annually, with average sales price reaching a new high
- Sales fell by half year over year for the fourth straight annual decline
- Listing inventory expanded year over year for the first time in seven quarters
- Price trend indicators for luxury condos rose sharply to near-records
LA SUBMARKET HIGHLIGHTS
Elliman Report: Q4-2022 Malibu/Malibu Beach Sales
– Malibu single family increased year over year for the tenth straight quarter
– Malibu Beach listing inventory edged higher year over year but remained sharply below pre-pandemic levels
ORANGE COUNTY SALES HIGHLIGHTS
Elliman Report: Q4-2022 Orange County Sales
“Price trend indicators showed mixed results as sales declined from low supply and higher mortgage rates.”
- Price trend indicators showed mixed results but remained sharply higher than pre-pandemic levels
- Sales declined year over year for the sixth consecutive quarter, constrained by low listing inventory and higher mortgage rates
- Bidding wars accounted for nearly one in four sales but are down sharply from year-ago levels
SAN DIEGO COUNTY SALES HIGHLIGHTS
Elliman Report: Q4-2022 San Diego County Sales
“Price trend indicators edged higher as sales declined from low supply and higher mortgage rates.”
- Price trend indicators pressed higher year over year and remained substantially above pre-pandemic levels
- Sales declined year over year for the sixth consecutive quarter, constrained by low listing inventory and higher mortgage rates
- Bidding wars accounted for more than one in four sales but are less than half of year-ago levels
My favorite housing market/economic charts of the week made by others
A look into builder-paid mortgage rate buydowns. FIXED not ARMs pic.twitter.com/ilI8YA4oki— Ali Wolf (@AliWolfEcon) January 23, 2023
The number of housing markets where inventory is BELOW pre-pandemic levels: 361— Lance Lambert (@NewsLambert) January 21, 2023
The number of housing markets where inventory is ABOVE pre-pandemic levels: 39
Data via @RDC_Economics pic.twitter.com/vWN62pBPbm
My favorite random charts of the week made by others
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
Getting Weirded Out By The Byzantine TAF Regulatory Structure
In this week’s hearing on appraisal bias hosted by The Consumer Financial Protectiopn Bureau, there was riveting testimony shared. The final questions were presented by CFPB Director Rohit Chopra who said and I’m paraphrasing because I was so startled by his fantastic question that I burst out laughing at the 2:05 mark where he was referring to the ASC’s lack of oversight powers regarding TAF? On my second listen, I did hear some laughter.
Does this arrangement seem weird?
– CFPB Director Rohit Chopra
[As a reminder, 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). I wonder if EY is aware one of its partners is the current Chairman of TAF’s Board of Trustees?]
The panelists were solid. Craig Steinley, president of AI was good, and so was the Dr. Howell from Chicago. The Tates who testified were terrific at conveying the pain they experienced. As an added bonus, I could watch Dave and Kelly’s reactions as they testified.
Also, it was great to see Assistant Secretary for HUD ask a series of questions just before the one-hour mark, specific to appraisal bias, to get a show of hands. All experts agreed with the questions about the existing problem. This was unlike the 2019 testimony in the house. All experts then said there was no problem.
Some of the thoughts shared in the testimony:
- The issue of “overvaluing” white-owned properties rather than “undervaluing” POC properties.
- Tidewater process of reviewing has been successful (but only applies to purchase appraisals, not refi’s)
- GSEs are beginning to flag low appraisals instead of only “high” appraisals
- All stressed the importance of appraisal independence and that the goal was not to increase valuations.
- The word “accountability” was used a lot.
Some other thoughts on the hearing:
Accountability – standards that don’t change all the time as they remain clear. Banks don’t offload responsibility by using the services of AMCs. Currently, AMCs lather up the order with pages and pages of requirements. There is no separation of responsibility between banks and AMCs.
Placing the racial bias aside here – and we’ve all seen this. How can an appraisals in the Tate’s case vary by $500,000? How about getting the appraisals right? I saw a situation in Manhattan years ago were the appraisers were $15,000,000 apart? How is that possible?
My Working CFPB Conspiracy Theory Premise On The ASC Hearing Chat Forum
I thought it was unusual that there was a chat box for this CFPB event and as usual, many appraisers are our own worst enemies. I was thinking that the CFPB wanted to create the opportunity for appraisers to speak their mind, much like some of the Facebook appraisal groups, that have a handful of members that say bat-shit super dumb, incriminating crazy things, placing everyone else in the group in jeopardy.
Here’s a screenshot – while there was some good commentary, they are instantly associated with dumb commentary. My thought? Appraisers were set up by CFPB and easily fell into the trap to be used later.
This conspiracy theory is probably wrong but I thought I’d share it.
As an aside, a respected TAF BOT member was providing running commentary selling TAF pretty hard in the chat. IMHO, probably not a good idea, given how TAF has behaved in recent years. Being in the private sector without any oversight, run exclusively by one person, a monarchy, for three decades with $12M in the bank for no reason other than their stated goal of financial independence, is the exact reason they need oversight. ASC Monitor & Review powers are toothless. Because TAF is in the private sector, they engineered a workaround for the grant process by making hard-working appraisers cough up money for BOT to talk appraisal theory over steak and wine in Palm Springs. Making appraisers pay and allowing companies to pay via the IAC is a way to avoid oversight from the grant money, which comes with strings attached as Congress intended.
PAREA As Designed By TAF Won’t Scale
Here’s something that was shared with me this week:
word is that AI will be charging $5,000 per module for PAREA tuition. That means $5,000 to get the experience for a Residential License, and another $5,000 for the experience to get a Residential Certification. This could significantly hamper PAREA as TAF’s “solution” to bring more appraisers into the industry, and may create a disparate impact on people of color wishing to do so.
My response to this comment was this:
TAF could credit developers with a million bucks each or more to knock down the cost to zero, and they would still have millions left over!
BTW, what is the stated use of those funds? Inquiring minds want to know. Remember, TAF has no oversight.
To have an impact on the industry, PAREA has to scale quickly. It’s not a complete solution, but it does bypass the mentoring structure. The remaining problem is, what does the future look like for appraisers coming into the industry? Right now its not a good look and for PAREA to be successful, there has to be a perceived future by the industry’s one entrants.
Change my mind.
Claim Limits Should Become Florida Law
Proud to be a Florida REALTOR – This motion adopted by Florida REALTORS Board of Directors yesterday. pic.twitter.com/NT1MORWYay— Francois Gregoire (@AppraiserActive) January 22, 2023
OFT (One Final Thought)
The common process of solving problems (all over Twitter but not clear who source is)
Brilliant Idea #1
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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
- Mortgage Rates Keep Falling [FreddieMac]
- New Home Sales at 616,000 Annual Rate in December; Previous 3 Months Revised Down Sharply [Calculated Risk]
- Hard Rock Co-Founder Pays Around $35 Million for Macklowe Gallery Founders’ Hamptons Home [Mansion Global]
- Big Tech Binged on Workers During Covid. Now, the Purge. [Bloomberg]
- New York City Completes Construction on Latest American Transit Disaster [Vice]
- NAR victorious in renewed DOJ antitrust probe [Real Trends]
- News Corp in talks to sell Realtor.com Parent Move to CoStar [The Real Deal]
- It looks like people are actually moving back to San Francisco (really) [VOX]
- Housing Market Predictions for the Next 5 Years Promise Lots of Surprises [US News & World Report]
- Building More Housing Makes It Cheaper. Really. [Bloomberg]
- Prime London Market Report – Winter 2022/23 – LonRes [Infogram]
- Land in Bel-Air Hits Auction Block at 70% Discount. Bids Start at $39 Million. [Bloomberg]
- A Conversation With The Developer Behind The Country’s Biggest Office-To-Resi Conversion [Bisnow]
- For Tech Companies, Years of Easy Money Yield to Hard Times [NY Times]
- 1.51 million Total Housing Completions in 2022 including Manufactured Homes; Most Since 2007 [Calculated Risk]
- Glenn Kelman: Redfin Have Shuttered iBuyer Earlier [The Real Deal]
- Homebuyers Are Locking in Lower Mortgage Rates With Seller-Paid Buydowns [US News & World Report]
- Red-hot Miami housing market expected to defy 2023 cost correction as blue state exodus continues [Yahoo Finance]
- Miami to escape the home price correction in 2023 while ‘overheated’ housing markets like Austin get hammered, says Goldman Sachs [Yahoo Finance]
- A tiny gingerbread house got listed on Zillow for 31 days, and the price felt all too real [Salon]
My New Content, Research and Mentions
- Hamptons Sales Fall to Lowest Since Financial Crisis [Investopedia]
- East End home sales plunge in Q4 | Long Island Business News [Long Island Business News]
- Hottest Home Markets Cool as Cities That Missed Pandemic Boom Gain [Investopedia]
- Long Island, Hamptons home sales plunge in fourth quarter [Newsday]
- WSJ News Exclusive | Hard Rock Co-Founder Pays Around $35 Million for Macklowe Gallery Founders’ Hamptons Home [Wall Street Journal]
- Low Listings Stifle Home Sales In Hamptons, North Fork [The Real Deal]
- Record-high number of people are now spending more than 30% of their income on rent [Daily Mail]
- Douglas Elliman names Todd Bourgard as CEO for Long Island [Newsday]
- If You’re So Good at Real Estate, Stephen Ross … [Curbed]
Recently Published Elliman Market Reports
- Elliman Report: San Diego County Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Orange County Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Malibu + Malibu Beach Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Los Angeles Sales 4Q 2022 [Miller Samuel]
- Elliman Report: North Fork Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Hamptons Sales 4Q 2022 [Miller Samuel]
- Elliman Report: Long Island Sales 4Q 2022 [Miller Samuel]
- 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]
Appraisal Related Reads
- Bringing More People Into a Dying Profession! [Appraisers Blogs]
- Wells Fargo Must Face Black Homeowners’ Bias Suit Over Appraisal [Bloomberg Law]
- Overcoming 2023’s biggest appraisal challenges [HousingWire]
- How Three Black Women Hope to Change the Home Appraisal Industry [NY Times]
- Chopra: It's time to revisit 'byzantine' regulatory regime for home appraisals [American Banker]
- It’s not just home prices. Rents are dropping too. [Sacramento Appraisal Blog]
- Appraisal Subcommittee Hearing on Appraisal Bias [Consumer Financial Protection Bureau]
- Appraisal Subcommittee Hearing on Appraisal Bias [YouTube]
Extra Curricular Reads
- What Happens When AI Has Read Everything? [The Atlantic]
- Pluralistic: Tiktok’s enshittification (21 Jan 2023) – Pluralistic: Daily links from Cory Doctorow [Pluralistic.net]
- There have been more than 600 mass shootings since January 2022 [Washington Post]
- On gun violence, the United States is an outlier [HealthData.org]
- Mass shootings: America’s challenge for gun control explained in charts [BBC]
- How Waze changed the way we drive [NY Times]
- U.S. Department of State Cuts Diplomatic Ties With Serifs [Curbed]
- Luxury boom shows the staying power of the ultra-rich [Financial Times]
- Doom & Gloom From The Tomb [tumblr]