Housing Is Out In Left Field
We really are tribal by nature. Whether it is politics, your favorite sports teams, alma maters, Mac versus PC, iPhone versus Android or most importantly, pie versus cake. We cheer for stuff we don’t fully understand or we have so much confirmation bias we can’t see for the forest for the trees. Like a home seller who is stuck on an asking price from a previous market or a market analyst who can’t see change occurring in a housing market.
After sitting in seats near the right field in Yankee stadium for 15-years, I’m more of a right field bleacher seat fan.
Here’s a shout out to my Columbia grad students who used critical thinking to arrive at answer “C” in the quiz of life.
Market Report Gauntlet Q2-2018 Week 4: Hamptons, North Fork and Long Island
This was the final week of our Q2-2018 market report gauntlet for Douglas Elliman Real Estate. I’ve been authoring this expanding real estate report series since 1994. There is more in the works. Be sure to check out the newly published Elliman Reports in the link section at the bottom of these Housing Notes or at Elliman.com/marketreports.
Douglas Elliman published our Long Island and the East End research this week. As regular readers of these Housing Notes have learned over the years is that there is nothing better than a good chart or a good ranking. Bloomberg’s story on the Hamptons had both with the fifth most read ranking and a great chart on the 350k± Bloomberg Terminals world wide.
But that wasn’t all. Newsday published a great analysis of our three regional reports (Long Island, Hamptons and Long Island).
The federal tax overhaul is having an impact on the luxury market, she said. The measure imposes a $10,000 cap on deductions for state income and local property taxes, among other changes. For buyers, “it plays into the price they’ll pay for a home,” Conroy said.
Long Island metrics show tight conditions on closed sales but easing conditions with more current metrics: total pending sales (contracts) for Long Island, excluding Hamptons and North Fork, are down 14.1% year over year and new pending sales (signed in Q2) are down 12.7%. The Long Island market tends to behave a lot like the U.S. existing home sale market for closed sales but Long Island has been outperforming the U.S. aggregate existing trends as U.S. existing home sales have been falling for 5 consecutive months. Rising price trends for 5 years combined with higher mortgage rates and uncertainty with the new federal tax law has begun to slow activity in the housing market nationwide and more recently in Long Island.
Here are some charts on these three markets.
Market Report Gauntlet Q2-2018 Week 4: Aspen/Snowmass Village, Los Angeles and related submarkets
The Los Angeles market saw some weakness in price and sales trends this quarter – the market went from “white hot” to “hot” or something along those lines. CNBC published a story about the slowdown in sales for the entire Southern California region so that seems consistent with our LA findings.
At first glance, the Aspen market looked weaker than last quarter, but upon closer inspection, it really wasn’t. While sales fell sharply, they fell to the historical norm and from year-ago levels that enjoyed the released of pent-up demand from 2016. The average price per square foot is the most reliable price metric in a market where the average square footage for a condo sale surged 24% and the average square footage for a single family sales dropped 21.1%.
Q: Is California A Leading Indicator For Housing? A: Nah
Click on the tweet and explore the commentary. Plus, what does leading indicator refer too? i.e. canary, canary in a coal mine
- Is California is a canary that lets us see downturns coming?
- Is California a canary because it tells us all trends in housing?
This chart shows when markets peaked in the Great Recession. Boston and Detroit first. Cali in the middle. Seattle and Charlotte last. pic.twitter.com/w3I9n7vj4r— Gustafson & Assoc (@GustafsonSnoco) July 25, 2018
We Have Officially Arrived At A Moment In Housing Nationwide
Two different markets show the same trend for somewhat different reasons:
- High-cost markets seeing a slowdown in sales due to the uncertainty of the impact of the December 22, 2018, federal tax law as it relates to the housing market.
- The balance of the U.S. market has crossed an affordability threshold after years of rising housing prices, years of chronically short inventory levels, years of nominal wage growth and now…rising mortgage rates. There is buyer fatigue out there and more are starting to take a break from the merry-go-round until more certainty returns. Here’s the relevant news feed on this:
— Southern California home sales crash, a warning sign to the nation [CNBC]
— U.S. New-Home Sales Dropped in June [WSJ]
— Existing-Home Sales Slide, Thanks to Soaring Prices [Realtor.com]
Terminator: AI National Is Still Vigorously Fighting For Evaluations Against Residential Appraiser Interests For Reasons That Can’t Be Explained
One of my favorite lines from the original Terminator movie from the Kyle Reese character that can apply to the unknown driver of AI National’s obsession to force evaluations on residential appraisers because they can count on the designation handcuffs that keep many from speaking out and continue to damage the public trust and continue to damage the livelihoods of its own members in slow motion without bothering to reach out and explain what is behind it (gasping for air sound). Remember that it took 10-years of screaming by AI membership to get AI National to disclose their dealings with FNC with an admission inserted into their email newsletter in the middle of other generic announcements.
Listen, and understand. That terminator is out there. It can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until you are dead.
The Florida Real Estate Appraiser Board is having a meeting on August 6, 2018, concerning the FREAB’s February action (by a 7-1 vote) to require appraisers to comply with USPAP when performing appraisal and evaluation assignments.
The Appraisal Foundation will be there as well as AI National’s well-traveled evaluation-advocate-in-chief Scott DiBiasio.
Be sure to read three attached documents, especially the written comments on pages 13-15 of the “Discussion Documents”. A shout out to my friend and appraiser colleague Frank Gregoire from Florida who is working hard behind the scenes for all residential appraisers on this issue – you can see his emails and his professional discourse (unlike me).
Documents from Public Record:
- Discussion Documents
- AI National Discussion
- Appraisal Institute Documents for 08062018 FREAB Rules Discussion 61J1-9…
Remember that AI National, aside from doing battle with The Appraisal Foundation, is beginning to focus on befriending the state coalitions. I have a feeling that will be impossible and they will remain alone in the wilderness continuing to damage the public trust and our livelihoods.
The only way to stop AI National from further damaging our livelihoods AND THE PUBLIC TRUST is to demand the removal of the old guard that has been able to personally insulate themselves from removal – the arrogance of current leadership while flying first class to valuation conferences around the world is an abomination. Residential appraisers will have to do a lot of $25 evaluations to pay for 1-4 of their first class round trip tickets to China, Singapore, Portugal, Canada, Germany, Serbia, Brazil, etc.
Brilliant Idea #1
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- They’ll be more tribal;
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- And I’ll go to California and will not think it leads U.S. housing trends.
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 Miller, CRP, CRE
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog @jonathanmiller
Reads, Listens and Visuals I Enjoyed
- Southern California home sales crash, a warning sign to the nation [CNBC]
- TFW you’re halfway through a wash cycle and you decide it would be easier just to sell your house [Terrible real estate agent photographs]
- The History of Miami’s Edgewater Neighborhood [CondoBlackBook Blog]
- Why Do All Home Repairs Cost $1,000? [NY Times]
- In New York City, Even the Cheapest Homes Are Waiting for Buyers [Bloomberg]
- U.S. New-Home Sales Dropped in June [Wall Street Journal]
- Here’s why more brokerages are taking developers to court [The Real Deal NY]
- Men of Steel: How Brooklyn’s Native American ironworkers built New York [6sqft]
- The Wooden Houses of Windsor Terrace's Temple Court [Brownstoner]
- US sales of new homes drop sharply in June [Financial Times]
- The state of millennial homeownership [Urban.org]
- Chinese Investors Have Been Selling Properties, But Not at Any Price [Wall Street Journal]
- Can there be an Amazon of housing? [Hot House]
- FHFA House Price Index Up 0.2 Percent in May [FHFA]
- Apartment Construction Is Finally Slowing down in 2018 After a 6-Year Upward Streak [Rent Cafe]
- Finally, a fix for the city's worst land-use mistake [Crains New York]
- Existing-Home Sales Slide, Thanks to Soaring Prices [Realtor.com]
- Overstock is making a push into real estate [CNN Money]
- Cannabis cubicles: Developer repositions DTLA building for pot-related companies [The Real Deal LA]
- Gentrification 2.0? The rich are being pushed out by the richer in this Miami-area city [Miami Herald]
- Tallest Buildings in NYC | Building Tall Towers | One WTC [The Real Deal NY]
- Open for Business? – Comstock's magazine [Com Stock Mag]
- Foreign buyers, tax refugees, retirees drive surge in S. Florida luxury home sales [Sun-Sentinel]
- Portland's hot housing market is cooling off [Oregon Live]
- The copious capacity of street grids [CNU]
My New Content, Research and Mentions
- The People’s Penthouse [NY Times]
- The market slowdown is seeping into the Hamptons: report [The Real Deal NY]
- The U.S. Housing Market Looks Headed for Its Worst Slowdown in Years [Bloomberg]
- A New York Weekend Island Retreat Gets Fancy [Wall Street Journal]
- Aspen Luxury Market Cools During Off-Peak Ski Season [Mansion Global]
- Los Angeles Luxury Market Saw Strong Second Quarter [Mansion Global]
- Hamptons Homebuyers Hold Off While They Wait for Lower Prices [Bloomberg]
- Report: Starter homes snapped up; luxury sales slow [Newsday]
- Market takes summer holiday as sales, prices dip [Real Estate Weekly]
- Back in balance [Long Island Business News]
- Miami’s secret home deals dried up when feds started watching [Amrank Real Estate]
- Here are America's Most Profitable Housing Markets: Cash In! [My San Antonio]
- 3 realtors discuss why some Greenburgh homes sell & others don't [Patch]
- Greenwich Home Sellers Are Finally Getting Realistic. Median Price: $1.85 Million [Greenwich Time]
- Douglas Elliman Releases Q2 Market Reports For South Florida As Pricing Continues To Rise [Profile Miami]
- Brown: Good news on housing market [Newsday]
Recently Published Elliman Market Reports
- Elliman Report: Los Angeles Sales 2Q 2018 [Miller Samuel]
- Elliman Report: Malibu + Malibu Beach Sales 2Q 2018 [Miller Samuel]
- Elliman Report: Venice + Mar Vista Sales 2Q 2018 [Miller Samuel]
- Elliman Report: Hamptons Sales 2Q 2018 [Miller Samuel]
- Elliman Report: North Fork Sales 2Q 2018 [Miller Samuel]
- Elliman Report: Long Island Sales 2Q 2018 [Miller Samuel]
- Elliman Report: Palm Beach Sales 2Q 2018 [Miller Samuel]
- Elliman Report: Aspen Sales 2Q 2018 [Miller Samuel]
Appraisal Related Reads
- Seeing the market over two decades [Sacramento Appraisal Blog]
- When Is It Time For a Second Opinion? [Cleveland Appraisal Blog]
- Attention Investors: 3 Steps to a More Accurate ARV • Birmingham Appraisal Blog
- Tara Subdivision Baton Rouge Reader Question Post-Flood Values [Baton Rouge Appraisal Blog]
- Moving to a New Market [Valuation Nation]
- What is a Hybrid? [George Dell]
- Fake Hybrid "Inspectors" : When Untrained Inspectors of Hybrids Rule The World [Appraisers Blogs]
- Valuation Cowboy [Valuation Nation]
Extra Curricular Reads
- Looking at France’s cities: Montpellier [Larry Sicular]
- Literary ambition. Fabulous parties. A hidden past. Who is Anna March? [LA Times]
- The House That Spied on Me [Gizmodo]
- How Big Is an Acre, Anyway? [New York Times]
- Paul McCartney Just Recreated The Beatles' Famous Abbey Road Crossing [Town and Country Mag]
- Great Big Story : Men Do the Laundry in This Washing Machine Club [Great Big Story]
- Life may have existed on the Moon four billion years ago [Telegraph UK]
- Ernest Hemingway's 8 Favorite Bars Around the World [Architectural Digest]
- Scrabble is played in 22 languages around the world, but it was invented in Jackson Heights, Queens [6sqft]
- A light shines on the concentration of power in Silicon Valley [Financial Times]
- Los Angeles Times restaurant critic Jonathan Gold dies at 57 [LA Times]
- If the first men on the moon had become stranded, President Nixon would have given this speech [CNBC]
- Is the Healthiest Milk Whole, Skim, or Nut? – [The Atlantic]