Falling Iguanas, Chocolate Donuts and Rising Rates Can’t Stop The Housing Market
What’s not to like about this?
John Belushi would’ve turned 73 today… pic.twitter.com/O1H4jLoBoT— Rex Chapman???????? (@RexChapman) January 24, 2022
And do you really need a toilet?
But I digress…
Hamptons, North Fork, and The Rest of Long Island Are Booming
I’ve been the author of the expanding expanding market report series for Douglas Elliman since 1994.
Long Island, New York has been a hotbed of housing activity in the pandemic era as indicated by our research published by Douglas Elliman this week. Since all my loyal Housing Notes readers understand my philosophy: Charts = Life, I’ll start with some cool charts in the Hamptons and Long Island coverage.
Bloomberg’s coverage of our Hamptons research had a good one in two versions…
…as did Newsday’s Long Island coverage…
Elliman Report: Q4-2021 Hamptons Sales
“Listing inventory continued to fall short of demand, keeping price trends well above pre-pandemic levels.”
- Average sales price and median sales price reached the highest level in fifteen years
- Listing inventory fell annually at the fastest annual rate on record to a new fifteen-year low
- Months of supply fell to the fastest pace in fifteen years, more than twice the pace of pre-pandemic levels
- For the second straight quarter, more than one out of four closings in the quarter sold above the last asking price
- The number of sales greater than or equal to $5 million was the second-highest on record
- Condo median sales price rose to the second-highest on record as the market pace was the fastest on record
- Single family price trend indicators reached new highs along with the market share of bidding wars
- Luxury market share of bidding wars was the highest on record as listing inventory fell in seven of the past eight quarters
NORTH FORK HIGHLIGHTS
Elliman Report: Q4-2021 North Fork Sales
“Price trend indicators reached new highs while the lack of adequate listing inventory held back sales.”
- Average sales price reached a new high, and median sales price reached their highest levels reached in sixteen years of tracking
- Listing inventory fell sharply year over year for the eighth straight quarter to a new low, creating the second-fasted paced market since 2005
- Nearly 4 out of ten closings in the quarter sold above the last asking price
- The number of sales greater than or equal to $2 million was the third-highest on record
- For the second straight quarter, at least half the condo closings in the quarter sold above the last asking price
- After eight quarters of year over year declines in single family listing inventory, supply fell to the second-lowest on record
- The luxury market moved at the fastest pace in a decade of tracking
LONG ISLAND HIGHLIGHTS
Elliman Report: Q4-2021 Long Island Sales
“The availability of listing inventory continues to fall rapidly, restraining sales.”
- Price trend indicators increased to the second-highest on record and well-above pre-pandemic levels
- Listing inventory fell to the lowest level in eighteen years of tracking
- The sharp drop in supply restrained potential sales for the first time in five quarters
- For the second straight quarter, more than half of all closings in the quarter sold above the last asking price
- Condo sales moved at their fastest pace in more than a dozen years of tracking as listing inventory fell to a new low
- Single family listing inventory fell to a twelve-year low, bringing the market face to the fastest on record
- Luxury price trend indicators rose to their second-highest levels on record
- Luxury listing inventory fell to a new low as the market pace moved to the fastest tracked since 2009
Wall Street Was Printing Money (Profits) in 2021 Which Is Good News For Luxury Housing
While we wait for the NYS Comptroller’s Report to be released in March, supercharged profits suggest high bonus comp. And since the securities account for just under a quarter of total wages but only a few percentage points of employment, this is good news for the region and provides more demand in the housing sector.
Hm, this might have to be my numbers-round number on Slate Money this week. Can someone give me the actual number or time series? pic.twitter.com/4dS8HTeKlR— Felix Salmon (@felixsalmon) January 20, 2022
Southern California Is Booming
This quarterly we’ve formally released new market reports covering Orange and San Diego Counties for Douglas Elliman.
GREATER LOS ANGELES INCLUDING WESTSIDE AND DOWNTOWN SALES HIGHLIGHTS
Elliman Report: Q4-2021 Los Angeles Sales
“Price trends reach new highs with more than one-third of sales closing above the list price.”
- All price trend indicators rose to new highs for the second time in three quarters
- The second-highest sales total in more than seventeen years of tracking
- Listing inventory fell to the lowest level on record at the largest rate on record
- With the rise in sales and the drop in supply, the pace of the market was the fastest moving tracked
- Nearly four out of ten sales went to bidding wars, for the second-highest market share reached on record
- One out of four sales at or above $5 million was a pocket listing
- Luxury single family listing inventory fell year over year for the second straight quarter to a new low
- Luxury condo listing inventory fell year over year for the third consecutive quarter to a new low
Elliman Report: Q4-2021 Malibu/Malibu Beach Sales
- Malibu single family median and average sales price again increased annually to their second-highest levels on record
- Malibu Beach average sales size fell sharply year over year, skewing price trends lower
ORANGE COUNTY SALES HIGHLIGHTS (NEW)
Elliman Report: Q4-2021 Orange County Sales
“Price trends set new highs as listing inventory fell to a record low.”
- All price trend indicators rose to their highest levels since at least 1998
- More than six out of ten sales closed above the last asking price during the quarter
- The highest share of sales to close with a days on market of less than or equal to thirty days in seventeen years
- The average listing discount from the last price change showed a premium for the past three quarters
- Listing inventory fell year over year at three times the rate of sales, as chronically low supply continued to restrain sales activity
- Luxury price trend indicators surged annually to new highs and were at least more than one third higher than pre-pandemic levels
SAN DIEGO COUNTY SALES HIGHLIGHTS (NEW)
Elliman Report: Q4-2021 San Diego County Sales
“Bidding wars accounted for more than half the sales to close in each of the past four quarters.”
- Median sales price rose year over year for the ninth consecutive quarter
- Median and average sales prices rose to their third-highest levels on record
- Nearly six out of ten sales closed above the last asking price during the quarter
- The average listing discount from the last price change showed a premium for the past three quarters
- Listing inventory fell year over year at nine times the rate of sales, as chronically low supply continued to restrain sales activity
- Luxury price trend indicators jumped year over year to record and near-record levels
Brick Underground On Pet Rules And My Pet Puns
I stopped tracking the market patterns of apartment sales within buildings about a year ago. This was the last chart we created with the data:
I stopped because the ratio of buildings with certain rules didn’t really seem to change and the chart I created infers that values within these buildings are established by pet rules which they aren’t. Brick Underground appreciated my pun and I had a fair amount to say about the topic.
Never one to waste a good pun: Looking at the cost of pet-friendly apartments is perhaps the definitive example of the tail wagging the dog, says Jonathan Miller, president and CEO of appraisal firm Miller Samuel.
My favorite charts of the week of our own making
My favorite charts of the week made by others
A strong labor market with robust job growth and enticing salaries & benefits should support the « unretirement » trend through 2022, notwithstanding the temporary Omicron winter slump ⤵️ https://t.co/rxo4Eericc— Gregory Daco (@GregDaco) January 27, 2022
More good covid news in NYC:— Mark D. Levine (@MarkLevineNYC) January 24, 2022
After some bouncing around, hospitalizations are now declining quickly. Let's keep this going! pic.twitter.com/QrgQyYymBs
Len Kiefer‘s Chart Handiwork
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
Voice of Appraisal’s Phil Crawford Interviews The South Dakota Governor’s Daughter, Kassidy Peters
This was a fascinating interview. Kudos to Phil. The governor of South Dakota is a polarizing figure on the national political stage and this interview has nothing to do with that. They walk through the four-year process it took to get state-certified. Please listen to the entire interview.
More Thoughts About The Independent Study On TAF
Last week in my Appraiserville post “The ASC Releases An Independent Study That Finds TAF To Be An Unconstitutional Mess” I touched on the independent report commissioned by the ASC.
After reading through it again, here are some other thoughts:
- This report is a playbook for future congressional actions. Congress needs to address The Appraisal Foundation’s lack of oversight. The not-for-profit, beside sending bat-shit crazy letters, literally operates without full oversight. Congress did not intend to create a not-for-profit that reports to no one. Congress needs to provide further powers to the ASC for greater oversight rather than only being able to “monitor and review.”
- It looks like ASC requested an independent report by fair housing experts and long-time and highly respected appraisal industry lawyer Peter Christenson to prepare a report so that TAF and others wouldn’t be able to say this report had a “pre-determined conclusion.”
- TAF has widely adopted an insular “pay to play” design which I experienced as a member of IAC. It costs money to give input to TAF so large institutions like Zillow can buy their way onto IAC even though their Zestimate AVM is damaging to the appraisal industry and as we learned after their iBuying fiasco, a danger to the consumer. The same “pay to play” is built into the Board of Trustees where sponsors pay to be on the body and are able to extert their influence.
- Why is there an updated USPAP course this year? Dave Bunton has been hard-selling how joyous USPAP instructors (with only first name endorsements) are about the new course, yet USPAP did not change. There are no updates to USPAP so why should any appraiser have to take the class this year – and why would instructors be singing the praises of a document that they haven’t field-tested by instructing? Because it’s a money grab.
- There are no fair housing experts in TAF yet they have inserted their interpretation of fair housing into this new course. That’s unbelievably irresponsible but then again this new course is just a money grab. Their check box approach to D, E & I (Diversity, Equity & Inclusion) places appraisers in the crosshairs of future litigation. I’ll repeat this point: TAF is not a fair housing expert.
- AO16 is ludicrous for the very reason many have pointed out by saying appraisers can make value adjustments for racial compositions if data is out there when in fact, appraisers are not supposed to do this. USPAP is ambiguous about this. This is one of the problems of TAF cost-saving mantra by not having lawyers review any of their USPAP changes for things like compatibility with “fair housing.” Just look at the laundry list of stupid appraiser quotes about this topic culled from appraisal reports by the GSEs. What a mess.
- Pay to play applies to USPAP. ASC has the funds to make it all free but TAF needs to collect money from hard-working appraisers unnecessarily so that they can achieve their Vision 2030 goal of financial independence. TAF has made Standards 1-4 free so they seem to feel they’re covered yet if someone wants to read AO16 they have to pay $75. The Cosmic Cobra Guy has been warning us about this for years.
- There is no tangible proof that college makes us better appraisers.
- The inclusion of appraiser dominating on all the boards gives us West Virginia and by having on one outside the industry TAF is conveying this “appraisers picking other appraisers to protect appraisers.” Good grief. In the case of the banking industry, most states require outsiders on their boards.
- Perhaps the biggest bombshell of this report is that TAF does not have the legal authority to behave the way they do. Congress needs to fix this situation by making TAF’s creation far less ambiguous.
More on this next week!
OFT (One Final Thought)
Falling Iguanas Are A Florida Thing Yet Floridians Never Seem To Talk About… (h/t @oshratcarmiel)
From the National Weather Service
Wait for it…
COLDEST NIGHT IN TWO YEARS – And cold enough that some of our cold-blooded iguanas may stiffen up and fall from trees (let them be… they'll perk back up when it warms up). See the hour-by-hour for your neighborhood at https://t.co/vwgjZ2edlG pic.twitter.com/cHCGyDqlJp— WPLG Local 10 News (@WPLGLocal10) January 24, 2022
Temperatures plummet tonight, with wake-up temps in the 40s across most of South Florida. It may even be cold enough for falling and frozen iguanas in the western suburbs! pic.twitter.com/JuJufrhZms— Jackson Dill (@Jackson_Dill) January 23, 2022
What else are Floridians hiding from us?
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 iguanas falling from trees;
- You’ll be want more chocolate donuts;
- And I’ll wait for rates to rise.
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 next week’s Housing Note.
See you next week.
Jonathan J. Miller, CRP, CRE, Member of RAC
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller
Reads, Listens and Visuals I Enjoyed
- Wall Street’s $85 Billion Housing Bet Intensifies U.S. Land Boom [Bloomberg]
- Can NYC Successfully Convert Hotels and Offices to Affordable Housing? [Commercial Observer]
- Do I Really Need a Toilet? [NY Times]
- Blackstone Quarterly Earnings Double, Led by Real Estate [The Real Deal]
- Real Estate Is Emerging as a Hedge Against Roaring Inflation [Bloomberg]
- Fredrik Eklund Quits Million Dollar Listing [The Real Deal]
- Lubbock’s Most Interesting House May Soon Be an Airbnb [Second Shelters]
- US Major Hotel Sales Survey for Q4 [GlobeSt]
- Will the US Workforce Ever Return to the Office? [Worldwide ERC]
My New Content, Research and Mentions
- SoCal Housing Market Has “Monster Quarter” [The Real Deal]
- Hamptons home search just got harder, as listings drop by half [Newsday]
- East End homebuyers face tightest market ever [The Real Deal]
- 'Troubling' claim by rental aid overseer, false overtime at NYCHA, & more [Brick Underground]
- Hamptons Luxury Homes Draw Bidding Wars and Far-Away Suitors [Yahoo Finance]
- Hamptons Luxury Homes Draw Bidding Wars and Far-Away Suitors [Bloomberg]
- Los Angeles Sees ‘Exceptionally Strong’ Luxury Market [Mansion Global]
- LI homes: Sales fall as inventory has 'collapsed' [Newsday]
- Are pet-friendly apartments more expensive in NYC? [Brick Underground]
- Nassau County Freezes Property Assessments Again [The Real Deal]
- There’s a Shortage of Luxury Rentals Again [Curbed]
- Nassau assessments frozen for second year in a row [Newsday]
- Real estate’s rebound examined in HGAR event [Westfair Communications]
Recently Published Elliman Market Reports
- Elliman Report: Long Island Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Orange County Sales 4Q 2021 [Miller Samuel]
- Elliman Report: San Diego County Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Malibu + Malibu Beach Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Los Angeles Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Naples Sales 4Q 2021 [Miller Samuel]
- Elliman Report: North Fork Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Hamptons Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Jupiter + Palm Beach Gardens Sales 4Q 2021 [Miller Samuel]
- Elliman Report: West Palm Beach Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Wellington Sales 4Q 2021 [Miller Samuel]
- Elliman Report: St. Petersburg Sales 4Q 2021 [Miller Samuel]
- Elliman Report: South & Greater Downtown Tampa Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Palm Beach Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Miami Coastal Mainland Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Miami Beach + Barrier Islands Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Manalapan, Hypoluxo Island & Ocean Ridge Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Delray Beach Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Fort Lauderdale Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Coral Gables Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Royal Palm/Boca Raton 4Q 2021 [Miller Samuel]
- Elliman Report: Boca Raton 4Q 2021 [Miller Samuel]
- Elliman Report: Fairfield County Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Greenwich Sales 4Q 2021 [Miller Samuel]
- Elliman Report: Downtown Boston Sales 4Q 2021 [Miller Samuel]
Appraisal Related Reads
- What The New ANSI Standard Requirement Means For Appraisers and Agents [Tom Horn/Birmingham Appraisal Blog]
- Gentrification, neighborhood boundaries, and bias [Ryan Lundquist/Sacramento Appraisal Blog]
- How can appraisers evaluate aging condos without docs? [Loop North]
- The appraisal industry’s governance problem [HousingWire]
- The Appraisal Foundation Opens Call for Board of Trustees Members [PR Newswire]
- Desktop appraisal option to start in March [HousingWire]
- 'Deep structural issues': New report calls for appraisal industry reform, blasts lack of diversity [ABC 7 News]
- After concerns of racism in home appraisals, what will it take to fix the $156 billion racial housing gap? [SF Chronicle]
- "I don't want to say we're archaic": Appraisal Institute president vows reform [HousingWire]
Extra Curricular Reads
- The NYT’s polarizing pandemic pundit [Politico]
- Led Zeppelin Gets Into Your Soul [New Yorker]
- Buying an Old Staten Island Ferry Is a Terrible Idea [Curbed]
- 2021 Atlantic hurricane season [Wikipedia]
- The beauty queen who beat a military dictatorship & made football history [BBC]
- An old Virginia plantation, a new owner and a family legacy unveiled [Washington Post]
- Is Old Music Killing New Music? [Ted Gioia]