Set Housing Market Milestones While Capitulating to Pokemon Go

In 2006 I first blogged about my “Theory of Negative Milestones” as it applied to the housing market.

This was a week to mark a milestone in housing history. Michelle Higgins of the New York Times wrote an epic piece on the end of the super luxury housing boom: In New York, a Falling Market for Trophy Homes in the Sky. Although super luxury condo values have dropped, asking prices haven’t yet in aftermath of the new development boom where too much was built for a narrowly defined price point. The disconnect between price and value has created a large pause in activity where a number of new towers haven’t had a sale since last summer. However some developers are willing to negotiate and are bringing their prices down to meet the current market conditions. This meeting of the minds between buyers and developers enables contracts to be signed. Those particular developers are smart in doing so, given the heavy volume of new projects still in the pipeline that will only serve as additional competition and provide more downward price pressure. I was quoted at the end of the A1 story as follows:

“It takes a while for sellers, whether in new development or resales, to capitulate to sudden changes in the market,” he said. “It’s not that there aren’t any buyers at this level. It’s that there aren’t buyers willing to pay 2014 prices.”

This was the 13th time I’ve been quoted in a Page One (A1) New York Times Story which is pretty cool in and of itself. However I am much more excited about being sourced in a prominent story using the word “capitulate.” Seriously. Do you actually know anyone personally that has been quoted using the word “capitulate” on the front page of any newspaper? Perhaps you know might know people that have been quoted using words like “the” “is” “or” “and” etc. But “capitulate?” I seriously doubt it.

I digress…

And now mortgage rates are hovering near record lows, largely as a result of Brexit.

Pokemon Go and Life As We Know It Stops

The release of Pokemon Go app was featured on page one of the New York Times next to the super luxury real estate era article I chronicled above. It was the fastest roll-out of a new app in history and brought augmented reality to the mainstream overnight.

Journalists were catching Pokemons in a meeting between US Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov. One of my sons texts me “Dad, how do u think I’m going to become a Pokemon master if I don’t dedicate time to Pokemon hunting?” I downloaded the app and grabbed a Pokemon in my house. The next morning I was walking to a morning presentation in Manhattan and found myself looking for Pokemon characters on Park Avenue. At some point I became overwhelmed with confusion and asked myself – “Jonathan what are you #$&&^%%&% doing?” I closed the app.

Apparently there is proof that I still am looking for Pokemons even when I am speaking.

No doubt there will be a creative person who figures out how to have Pokemons appear at open houses and real estate offices to drive attendance figures higher.

Ok, that’s enough Pokemon talk for a lifetime. So about that presentation…


When Super Luxury Condo Development is Played Out, Think Super Luxury Assisted Living

Back in May, Bloomberg published an article by Oshrat Carmiel with the best title of the week (that was an inside joke to New Yorkers) Midtown TGI Friday’s to Become the One57 of Assisted Living. The Wall Street Journal covered the same ground in June with Housing for New York City’s Senior Moment and CNBC covered it this week and invited me to speak to it at their studio.

The key takeaway for me on all of this is that developers build what is economically viable at a particular development site. After 5 years of super luxury condo development nationwide, I think there is an assumption that developers only build condos. In a housing market that has been overplayed by high end condo development, something different makes sense, especially with aging baby boomers. We could even throw in the idea that height limitations by zoning wouldn’t yield the views to make a condo on this site make economic sense.

Always an appraiser, after the interview (below) I took their car service from their NJ headquarters back to Manhattan and was dropped off at a location for an appraisal assignment – I am appraising a couple hundred square feet of raw roof area to be use to house compressors.

South Florida Housing Market Recap

This week Douglas Elliman published the 5 market reports I author there: Miami Beach, Miami Mainland, Boca Raton, Fort Lauderdale and Palm Beach. Here is some of the coverage of the reports. The general theme was that the Miami market was in the middle of a cooling process after a hyperbolic previous several years. Inventory is up across the region but significantly higher at the top of the market – with the exception of Palm Beach. Sales levels are below the past several years but well above the previous several years – activity is somewhere in the middle. Our research is predominantly based on local MLS which has limited data from new development sales, much of which is still in the contract phase. It’s been fascinating to read the outside observers call for a crash but basing it on the conditions that existed in the housing bubble. The market is about 70% cash and therefore not highly leveraged. There is clearly waaaaaaaaay too much new development and it is skewed to the high end of the market. But unlike the last cycle, let’s not brushstroke over the entire housing market. Super luxury very vulnerable. The mid to entry level markets not much at all.

  • Miami’s real estate market is coming back down to earth [Miami Herald]
  • Miller: Miami Market Shifting Away From Frenzied State [Curbed Miami]
  • Miami’s housing market hits the reset button: Elliman reports [The Real Deal Miami]
  • A ‘Healthy’ Cooling for Miami Beach’s Luxury Condo Market [Mansion Global]
  • Elliman Report: At top of market, second quarter saw trend toward bigger Palm Beach homes [Palm Beach Daily News]

is a recap of the South Florida reports I authored that Douglas Elliman released yesterday:

Elliman Report: Miami Beach + Barrier Islands Sales 2Q 2016
Miami Beach average sales price set a new record this quarter, as sales declined and inventory expanded. Average sales price increased 12.1% to $1,071,679, the first time this metric has exceeded the $1,000,000 threshold in the decade this metric has been tracked. Median sales price increased 2.4% to $435,000 over the same period. The rise in average sales price was the result of higher end housing entering the market and the continued decline of distressed housing. The market share of lower priced distressed sales fell to 5.3% of all sales…

Elliman Report: Miami Coastal Mainland Sales 2Q 2016
Housing prices along Miami’s coastal mainland exceeded year ago levels despite the expansion of inventory and fewer sales. Overall median sales price increased 7.7% to $280,000 over the same period. This pattern was consistent with the 6.7% rise in average sales price to $441,915. Like the prior quarter a large portion of the decline in sales was attributable to the reduction in distressed sales activity, namely foreclosures and short sales. The number of distressed sales dropped 44.3% from the prior year quarter bringing their market share down to 16.7% of all sales. However the number of nondistressed sales slipped only 1.2% respectively from the year ago quarter…

Elliman Report: Boca Raton Sales 2Q 2016
Most price trend indicators in Boca Raton were above year ago levels. Single family average sales price rose 7.9% to $708,396 and median sales price increased 3.8% to $415,000. Although the condo market showed mixed results with a 13.2% decline in median sales price to $165,000, there was a 3.9% increase in average sales price to $315,048…

Elliman Report: Fort Lauderdale Sales 2Q 2016
The Fort Lauderdale housing market saw more sales volume but with expanding inventory the pace of the market remained stable. There were 14.5% more condo sales and 3.7% more single family sales than the prior year quarter. Listing inventory matched sales gains with 15.1% more condo listings and 5.1% more single family listings respectively over the same period…

Elliman Report: Palm Beach Sales 2Q 2016
Overall price trend indicators for the Palm Beach housing market continued to rise, helped by the shift towards larger sized sales. The single family median sales price jumped 28.8% to $4,500,000 from the year ago quarter. The rise was partially due to the 31.7% rise in average square feet to 5,127 over the same period…

Manhattan Absorption: Entry Level Remains Wicked Fast

Since the summer of 2009 (sounds like a movie title), I’ve been tracking the monthly absorption period – the number of months to sell all properties at the current rate of sales in each price segment. It is a way to tell you have the market “feels” as the intersection of supply and demand. Here’s the analysis for June. A screaming fast entry market and a super slow super luxury market.



Since I am an appraiser and not just a non-economist, I thought it would be a good idea to devote a portion of this weekly Housing Note to appraising. My industry hasn’t adopted very well to social media- which is a shame since there are a lot of smart appraisers out there with something to say.

There are a lot of good things beginning to happen through the appraisal state coalitions which are adhoc groups of good people and good appraisers trying to fix the self-dealing mess of a post-financial crisis appraisal world. Appraisal trade groups such as the Appraisal Institute are so mired in their own complicated politics that they don’t communicate well with their members, and don’t really help their members very much these days. The Appraisal Foundation is fixated on a constant stream of micro changes to valuation rules that, while probably best intentioned, seem to be more of a process of self-preservation. Here’s a good link to bookmark if you want to know more about the “appraisal network” of coalitions. Appraisers like Tom Allen of Oklahoma and Lori Noble of West Virginia are helping to make a difference.

Here are two of the best appraisal blogs out there and my regular reads. These aren’t just for appraisers – real estate agents should be reading these resources on a regular basis since valuation is a huge part of what they do as well.

I hope my Housing Note readers will share other great resources on both the art of appraising as well as the state of the industry.

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 feel like capturing a Pokemon, you’ll create a positive milestone and I’ll break out the Floppotron.

See you next week.

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

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