Lawn Chair Precision Shows Us Folding Chair Sanity In A La-Z-Boy Housing World
Why? Because they can – and for the past 36 years. Arguably the past four months of fed policy have felt like we’ve been carrying a La-Z-Boy for 36 years.
A Weekly Shout Out To My Columbia Grad Students
Our first class of the summer semester was held on the Columbia University campus this week, and my ±150 students powered through a fire alarm and the summer heat to survive my three hour lecture (with an arguably inadequate supply of dad jokes). They were eager to absorb and peppered me with terrific questions and observations. Perhaps the biggest lesson of the day was that being on time, means being 5 minutes early!
See you next week!
But I digress…
This week’s read is a short one but long on charts!
Manhattan Rental Frenzy Despite Office Towers That Are 60% Empty
I’ve been the author of an expanding series of market reports for Douglas Elliman Real Estate since 1994. Douglas Elliman just published our June rental market research and the results were record-setting.
While all three boroughs tracked showed price records for average and median rents, there is likely more room for addition growth. Manhattan average rents reached the $5,000 threshold for the first time in history, mainly because mortgage rates are surging after the pivot in the fed policy this spring. Because mortgage underwriting hasn’t normalized, remaining tighter than normal since the great financial crisis, would-be home buyers priced out of the market are being pushed into the already tight rental market, making it even tighter. On top of that, New York City leasing season doesn’t;t peak until August, so we anticipate more demand in the coming months, pushing rents up further.
Bloomberg had a cool chart median rent chart cracking the $4K threshold last month:
And that article became the fifth most read article world wide on the 350K Bloomberg Terminals. I guess the world worries about their rents.
But there were other charts like this monster from the NY Post.
And this one from Axios that shows quite a spike from the depths of the pandemic.
Elliman Report: June 2022 Manhattan, Brooklyn & Queens
MANHATTAN RENTAL MARKET HIGHLIGHTS
“Average rent reached the $5,000 threshold for the first time as the vacancy rate remained under 2%.”
- Average rent reached the $5,000 threshold for the first time as median rent set a record for the fifth straight month
- New leases expanded month over month for the fifth consecutive time
- The vacancy rate remained under two percent for the seventh straight month
- Doorman’s net effective median rose to a record as landlord concessions fell to a new low
- Non-doorman net effective median rent reached a new high for the third straight month
- Luxury net effective median rent rose to a new high as landlord concessions fell to a new low
- Luxury market share of bidding wars exceeded non-luxury market share of bidding wars for the fourth straight month
BROOKLYN RENTAL MARKET HIGHLIGHTS
“Net effective median rent reached a new high for the second straight month as landlord concession continued to fall.”
- Net effective median rent rose to a new high for the second straight month
- Landlord concession market share fell annually for the thirteenth straight month
- Bidding war market share occurred in more than one out of five leases for the fourth consecutive month
QUEENS RENTAL MARKET HIGHLIGHTS
“Rental prices remained elevated as the market share of landlord concessions continued to fall.”
- Net effective median rent and median rent reached their second-highest levels on record
- Landlord concession market share fell to its lowest in nearly six years
- While new lease signings fell annually, they were higher than the same period three years ago pre-pandemic
Mortgage Rates Started Rising Again, Placing More Pressure On Rents
Apparently, TikTokers Might Quote Housing Experts Out Of Context: Who Knew?
A few weeks ago I shared my Bloomberg Radio interview by my friend Barry Ritholtz for his must-listen show “Masters In Business,” and something I said was exaggerated by Business Insider and then picked up by this TikTok guy. A bunch of real estate people started to share it with me, but it was a bit surreal seeing him parrot all I said to Barry. But the video went semi-viral with 22,000 views, up from his usual few hundred, so there’s that, I guess?
Here’s the transcript of my Bloomberg Radio interview with the specific segment mentioned below:
RITHOLTZ: So if you’re a contrarian, you become a buyer in the summer of 2023?
MILLER: Yes. Yeah, I think so. And what I find interesting is that, you know, when people look at pivoting conditions, pivoting markets, you upend the word forever, like prices are falling forever, prices are rising forever. It’s like this linear view. And if you look at some serious downturn periods in the housing market, like the housing bubble, you know, 15 or so years ago, 13, 15 years ago, really, prices really didn’t recover. It took about six years. But activity actually returned pretty quickly by late 2009, early 2010. So this isn’t like a decade or, you know, a generational thing. You know, it’s a shorter window than that.
@aaronknowshomeloans “Best Time to Buy a House will be Summer 2023 Says 30-Year Real Estate Expert. Is He Right?” #economy #besttimetobuyahouse #inflation #recession #mortgage #mortgages #realestateinvesting #mortgagerates #housingmarket #realtor #interestrates #realestate #housingbubble #homebuyertips #firsttimehomebuyer #housingcrash #housing #bubble ♬ original sound – Aaron Gordon
Blown Deals At Their Highest Since 2020
So 14.9% of contracts in June fell apart according to Redfin, but that’s not a crazy high number – I recall it was closer to 30% during the Great Financial Crisis. But it does tell us two things:
- Surging mortgage rates are straining buyers efforts to purchase homes and this number is likely to rise.
- Contract data is very fillable despite it being more current than closed data – how informative are contracts to market trends when a large chunk of them never close. Just like much to do with housing and market analysis, measuring trends takes understanding of a lot more than one metric.
My favorite charts of the week of our own making
My favorite charts of the week made by others
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
CRE® Top Ten Issues Affecting Real Estate – Chock Full Of Insights
I’m a proud member of the Counselors of Real Estate and every year they publish their Top Ten. It provides useful insights to all walks of the real estate industry.
OFT (One Final Thought)
Here are some alternative versions of a “soft landing” that are certainly more entertaining than the “hard landing” the Fed seems to be steering us toward. Be sure to watch all four – with the last one being my favorite.
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:
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- And I’ll crash.
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
- This English Country Property Dates Back 1,000 Years—and Even Comes With Two 17th-Century Artifacts [Robb Report]
- There's a massive housing shortage across the U.S. Here's how bad it is where you live [NPR]
- Ken Griffin’s Palm Beach Estate Plans Approved [The Real Deal]
- Mortgage Rates [FreddieMac]
- Current State of the Housing Market [Calculated Risk]
- The Montana Broker Whose Listings Suddenly Won’t Sell [Curbed]
- 2022-23 Top Ten Issues Affecting Real Estate® [Counselors of Real Estate]
- The Housing Shortage Isn’t Just a Coastal Crisis Anymore [NY Times]
- The Deal Is Off: Home Sales Are Getting Canceled at the Highest Rate Since the Start of the Pandemic [Redfin]
- Housing Market Update: Nearly 1 in 5 Sellers is Dropping Their Price, the Highest Rate Since October 2019 [Redfin]
- Some Companies Are Going Remote—and Upgrading to New Offices [Wall Street Journal]
- Relief Eludes Many Renters as Fed Raises Interest Rates [NY Times]
- Housing Could Provide More Fuel for Inflation [Wall Street Journal]
- No Deal: U.S. Buyers Reneged on Home Deals at Record Rate in June [Mansion Global]
My New Content, Research and Mentions
- Signs point to a more buyer-friendly housing market [ABC 30]
- NYC Real Estate Brokerages Ruch to the Hamptons [The Real Deal]
- Ranking Manhattan’s 10 Most Expensive Neighborhoods [The Real Deal]
- Sellers Turn to Renting in Hot Market [The Real Deal]
- 3 reasons many will be stuck renting forever in this tight real estate market [Axios]
- Evening Briefing: July 14, 2022 [NY1]
- Average rent in Manhattan crosses $5,000 for first time [Washington Examiner]
- Signs the housing market is turning more buyer-friendly [WBAL]
- North Fork Affordable Housing Project Still Alive … For Now [The Real Deal]
- Average Manhattan rent tops $5,000 for the first time ever [6sqft]
- Average rent in Manhattan jumps to a record $5,000 a month [CNN]
- For the first time ever, Manhattan's average rent surpasses $5,000 a month [MarketWatch]
- Manhattan Rent Tops $5,000 [Barron's]
- The Average Rent for a Manhattan Apartment Just Hit a New Record High: Report [Yahoo]
- Manhattan Apartment Rents Hit $5K Average For First Time Ever [Bisnow]
- NYC’s real estate rental market has reached a shocking point [NY Post]
- Manhattan's average monthly rent hits record high for 5th straight month [CBS News]
- New York's Condo Market Hits Reset As Interest Rates, Uncertainty Take Their Toll [Bisnow]
- Average rent in Manhattan was $5,000 last month [Outdoor Enthusiast Magazine]
- Summer Scorcher: Manhattan Rents Hit $5,000 for the First Time [Mansion Global]
- The Average Rent in Manhattan Is Now $5,000 [Curbed]
- Brooklyn Home Prices Soar to Record Highs in Second Quarter, But Feverish Market Could Chill [Brownstoner]
- A truly massive interest rate hike is now on the table [CNN]
- Despite hitting new records, there are signs the Brooklyn and Queens sales markets are cooling [Brick Underground]
- Rental rates in Manhattan now average $5,000 [WLOX]
- Manhattan saw highest average rent ever last month: report [NY1]
- Rental rates in Manhattan now average $5,000 [6 News WOWT]
- It’s Official—the Average Rent in Manhattan is $5,000 a Month, a New Record [The Daily Beast]
- Average Manhattan rent breaks $5,000 for the first time in history [NY Post]
- Average Manhattan Rent Breaks $5,000 for First Time [The Real Deal]
- Manhattan Rents Soar to a Record With Landlords in Driver’s Seat [Bloomberg]
- Average rent in Manhattan was a record $5,000 last month [CNBC]
- Manhattan rent is now $5,000per month, on average [Axios]
- Paul Allen’s Estate Sells Two New York Apartments for $101 Million [Wall Street Journal]
- Signs the housing market is turning more buyer-friendly [ABC News]
- Signs the housing market is turning more buyer-friendly [KTSA]
- Nick Candy Lists Art Deco Los Angeles Estate for $85 Million [Bloomberg]
- The McKibbin Lofts Super Asked for a Raise But Was Evicted Instead [Curbed]
- Aspen’s Mansion Market Is Cooling Right as the Buying Season Starts [Bloomberg]
- NYC Real Estate market seems to cooling down [La Voce di New York]
- Six Manhattan Apartment Towers Reportedly Sell for $1.75 Billion as Rents Surge [CoStar News]
Recently Published Elliman Market Reports
- Elliman Report: Queens Sales 2Q 2022 [Miller Samuel]
- Elliman Report: Brooklyn Sales 2Q 2022 [Miller Samuel]
- Elliman Report: Putnam & Dutchess Sales 2Q 2022 [Miller Samuel]
- Elliman Report: Westchester Sales 2Q 2022 [Miller Samuel]
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 6-2022 [Miller Samuel]
- Elliman Report: Northern Manhattan Sales 2Q 2022 [Miller Samuel]
- Elliman Report: Manhattan Sales 2Q 2022 [Miller Samuel]
- Elliman Report: Colorado New Signed Contracts 6-2022 [Miller Samuel]
- Elliman Report: California New Signed Contracts 6-2022 [Miller Samuel]
- Elliman Report: Normandy Isles/Normandy Shores New Signed Contracts 6-2022 [Miller Samuel]
Appraisal Related Reads
- Donald Trump's Real Estate Appraiser Says It Reached an Agreement to Turn Over Documents to New York AG, Stay Contempt Order [Law and Crime]
- Is the housing market getting back to normal? [Ryan Lundquist/Sacramento Appraisal Blog]
- AI Board to Consider 5 Candidates for 2023 Vice President in August [Appraisal Institute]
Extra Curricular Reads
- Seven Decades Later, the 1950 Census Bares Its Secrets [NY Times]
- A Breath of Fresh Air: A Short History of the Sleeping Porch [Brownstoner]
- 10 Mysterious Windowless Buildings in New York City [Untapped New York]
- Rage Against the Machine kick off reunion tour: Video + Setlist [Consequence]
- He Had a Dark Secret. It Changed His Best Friend’s Life. [NY Times]
- What’s Going on With RadioShack’s Twitter Feed? [Wired]
- One Small Step for Democracy in a ‘Live Free or Die’ Town [NY Times]
- How One Restaurateur Transformed America’s Energy Industry [NY Times]