Housing Guilt: The Gift That Keeps on Giving


Real estate firm Douglas Elliman published a bunch of our research this week and like last week, there were a lot of records set. The continuing storyline concerns the cost of housing to actual people, not jet setters with a dozen homes world wide. We are in the midst of a global housing affordability crisis that is not easily remedied.

However I don’t think any U.S. housing policy analysts have considered playing the “guilt” card yet. Oy.


But in Moscow, this tact isn’t necessary. Rents are down 42% per Knight Frank. Of course rents are NOT dropping in New York.

One of the drivers of higher housing costs is it becoming seen as more of a commodity by financial institutions. Two New York City film graduate students asked to interview me in a short documentary earlier this year (5:51) that lays this concept out.

NYC Home Shuffle from Studio 20 on Vimeo.

And we’re not in a bubble, at least not in the 2008-financial-crisis-high-leverage sense as presented in this Yahoo! Finance piece.

Here’s a guilt-free overview of this week’s four research reports covering seven housing markets in the NYC metro area:

Manhattan, Brooklyn & Queens Rentals (June 2015) Manhattan median rental price continued to grind higher in response to a strengthening local economy and tight credit conditions. The core price indicator rose 2.1% to $3,369 from the same period last year, up for the sixteenth consecutive month. All rental price indicators for the Brooklyn market moved higher than prior year levels for the third consecutive month. Brooklyn median rental price increased 5.9% to $2,964 from the same month last year to the highest recorded level since January 2008, when the metric was first tracked for this report. The northwest region Queens rental prices showed weaker results as the overall price indicators moved lower. Median rental price fell 10.7% to $2,528 from the same month last year.

Brooklyn Sales (2Q 2015) In what continues to be a recurring theme, Brooklyn housing prices pushed higher and records were set across the market. Attribution for these price gains goes to improving local economic conditions and low, but rising inventory. While median sales price set a record in the previous quarter, Brooklyn average sales price set a new high in the second quarter, rising 0.7% to $788,529 from the prior year quarter.

Queens Sales (2Q 2015) For much of the past year a strong local economy and tight supply pushed Queens housing price indicators higher. Median sales price rose 8.5% to $385,001 from the prior year quarter. This was the fourth consecutive quarterly increase and the tenth gain in the past twelve quarters. Median sales price was up 13.7% year-to-date to $415,000 over the same period last year. Condo median sales price rose 12.8% to a new record of $468,000 from the prior year quarter. Condo average sales price jumped 19.8% to a new record of $575,339 over the same period.

Westchester & Putnam (2Q 2015) The Westchester County market share of single family sales, the most expensive housing type, slipped by 1.7% to 61% skewing the overall price indicators lower. The median sales price of a Westchester single family sale was essentially unchanged with a nominal 0.1% increase to $650,500 from the prior year quarter. In Putnam County, price indicators generally moved higher with more sales and inventory.

On a side note, investors worldwide seemed more interested in record prices for Queens housing than the financial crisis in Greece or the Chinese stock market bubble. I’ve got proof.

New Urbanism: Victim of its own success?

Since the financial crisis began, New Urbanism with concepts like walkability have firmly taken hold. While I’m a big fan, I believe there is something missing from the calculations: rising housing prices as supply is relatively inelastic.

In markets like New York, where land prices are at record levels (if you can acquire them at all), housing prices are rising – as our research has consistently showed. Wage growth hasn’t kept up with housing price growth and at some point the guilt kicks in for city lovers and they begin to look for cheaper alternatives. They are moving outward as housing prices rise in the core markets. At some point they run out of city to explore and consider the suburbs.

A few years ago, when city life was becoming a powerful draw, many wrote off the suburbs as a bygone era. Yet I’ve always seen the suburbs as simply a competing market with the adjacent city. If the city gets too pricey, has too much crime, etc. the population shifts to the suburbs and vice versa in a slow motion ping-pong match played out over decades.

Disrupters (like Airbnb): Driving rents higher by removing supply

Property owners are flooding to services like Airbnb to maximize their rents. And why wouldn’t they?

Unfortunately this has caused rents in markets like San Francisco to skyrocket as available inventory drops, taken up by those Airbnb party ragers. Ok, ok I’m exaggerating. Still,The Onion covers skyrocketing San Francisco rents like no other.

To counter the trend, opponents are trying to shame landlords as “moguls” and feel guilty for benefiting unecessarily from services like Airbnb.

While its a fun clip, do we really think landlords will feel guilty?

Racked by guilt for staying too long

You’re seeing this discussion come up more and more in response to record housing prices. There’s a great New York Times piece this week on this:

For many young parents who make the leap to suburbia for the usual reasons — more space, better schools and a more manageable lifestyle — Brooklyn is still very much a part of their identity. Particularly for those who are hesitant to fully embrace the minivan culture, visiting an old haunt isn’t just a trip down memory lane — it’s also what they’re doing on Saturday.

But in the affluent Hamptons market on the eastern end of Long Island, Timeout New York Magazine goes all out to shame, nor I say, guilt it’s residents not so be so douchey.

This new era of shaming is not your grandmothers guilt. At least as it applies to housing.

See you next week.

Jonathan Miller, CRP, CRE


Miller Samuel Inc.

Real Estate Appraisers & Consultants

ps Please feel free to share.  If you get tired of all the charts, real estate commentary and articles presented in each weekly note, just opt out.  I always appreciate feedback so please email me.

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