Crowdfunding, R-Ratings, Vacancy Decontrol & Extreme Ironing

In 1973, I saw my first “R” rated movie – Serpico starring Al Pacino – and got a specific impression of life in New York City from my vantage point as a 13 year old suburban Washington, DC teenager. I eventually went off to college in the midwest. From there, in 1979, I saw one of those silly gang movies that fit my demo – The Warriors. A few years later I watched Fort Apache, The Bronx. This was New York.

I have relatives who were born in Brooklyn but I had no real connection to NYC other than through the movies. It seemed to be a lawless, dangerous and dirty place back then. In 1985 my wife and I were living in Chicago and attended a wedding on Long Island but stayed overnight in Manhattan. Despite our movie impressions, we were hooked. We flew back to Chicago, sold our cars and an ironing board (that’s true but an inside joke) all in about 6 weeks.

And don’t get me started about the sport of Extreme Ironing.

But I digress

Family and friends from the midwest would periodically check in to see if we were safe as “New York Bashing” was embedded in national news content – plenty of murders and tourist muggings made NYC easy content fodder. But living in the city then wasn’t anything like it is now.

So it is especially hard to comprehend or appreciate how much New York City has improved since the 1980s. Although it’s a work in progress, outsiders now tend to focus on New York’s economic themes, often about the opportunities available here. The economy is booming and the housing market is setting records (perhaps I should switch careers and become a pitchman for the NYC tourism industry).

Last week I bought and watched a fantastic documentary called “Rubble Kings” that was written up in the New York Times. Here’s a teaser:

I’m big fan of documentaries but my wife finds it hard to drag me to movies – except for the occasional blockbuster (I’m dull and boring that way). New crowdfunding vehicles like Kickstarter, Indigogo and Fund Anything have made it much more engaging. Docs like Money For Nothing: Inside the Federal Reserve, It Came From Detroit and The Wrecking Crew may not have been possible otherwise.

But for some reason, crowdfunding for real estate puts me to sleep. I’m not sold on the sustainability of the real estate crowdfunding phenomenon much like the mainstream real estate broker auction hype a few years ago or Foxtons years ago. Please set me straight on this. I’m thinking this is like Google Glass. No one will talk about it in 5 years.

There are no shortages of disrupters in our current tech bubble including those disrupters relating to housing…i.e. Airbnb.

Records And Rent Controls In Close Proximity

Take a look at the growth in the prices for individual sales records in Manhattan over the past 33 years. These transactions give the impression that these sales represent NYC because they get 99% of the news coverage.


When I first moved to NYC, someone once told me that:

“Doing business in New York enabled you to screw over your partner in the same building and do business with the firm across the street.”

I don’t ascribe to that mentality (and don’t think it is unique to NYC) but I find it amazing how much geographic distance is overrated in New York City. A 160 square foot 6th floor walkup studio apartment may be located next door to a $20 million penthouse. Take the recent expiration (and renewal) of rent regulations in New York.

The majority of New York’s housing stock are rentals yet there are a slew of high priced properties embedded in the mix. I wrote a piece for Bloomberg View this week called Rent Control vs. Keeping Landlords Happy that talked about the concept of “vacancy decontrol.” The photo used in the piece was a sight that was visible everywhere when I moved here. When landlords are squeezed between rising costs and government mandated increases, at some point they simply walk away and the housing stock falls into disrepair. Tenants feel the pain as well, struggling to find affordable housing anywhere.


The concept of vacancy decontrol allows a regulated apartment to go to open market rates once the rent hits a certain threshold – currently amount is to be raised from $2,500 to an undisclosed amount with the new agreement. That enables landlords to have market rents growth fall short of expense growth and still keep the asset viable and the housing stock in tact. The problem for tenants is the slow bleed of available regulated housing stock. With the city wide average rent of regulated housing less than half of open market rentals, they rarely turnover. This is a lose lose or a win win depending on whether you are a tenant or landlord. It’s a never ending debate – here is something from 1983, shortly before I moved to New York.

It’s enough to make me go see a movie, but no way am I going to see Jurassic World. Dinosaurs are way too dangerous and the movie looks too scary.

See you next week.

Jonathan Miller, CRP, CRE


Miller Samuel Inc.

Real Estate Appraisers & Consultants

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