Indictment Of The Housing Market

March 31, 2023

Totally logical, right?

But I digress…

Manhattan Saw A Large Inbound In Migration During 2022

The U.S. Census just released a large update on annual migration trends. There was a general pattern of rising population in small counties, stability in mid-sized counties, and a large drop in large counties; presumably, most are urban areas.

Yet Manhattan was the exception, which saw an increase in inbound.

There seems to be a correlation in housing price levels and the size of the inbound/reduction of outbound in New York City. Higher-priced housing markets like Manhattan saw a pivot to inbound migration, while Brooklyn and Queens substantially reduced outbound. Bronx and Staten Island, the least expensive housing market boroughs, saw a slight expansion in outbound migration.


[Source: NY Times, Elliman Report]

From the New York Times

The commuter areas surrounding Manhattan — parts of Long Island and counties around the urban core — have not seen the same interest, with many areas continuing to lose population, despite early predictions of a suburban boom.

Those commuters are crucial to Manhattan’s continued resurgence and may help explain the struggling commercial real estate market, a bellwether for the city’s fortunes. Last week, office occupancy in the New York City area was 47 percent of pre-pandemic levels, according to Kastle Systems, a building security firm.

Pending Home Sales Start To Dig Out From ‘Bottom’

US pending home sales rise for third straight month; loan demand increases [Reuters]

Flat Iron Deal Falls Flat

What a strange week its been for the Flat Iron Building. The winning bidder, Jacob Garlick, won the auction for the historic Flat Iron building and couldn’t come up with the 10% to seal the deal.

He Bid $190 Million for the Flatiron Building, Then Didn’t Pay Up [NY Times]

Mr. Gural, whose family firm, GFP Real Estate, owns and manages more than 50 office buildings in New York, said he had expected to win the auction and “this just drags out the process.”

The conspiracy theories are all over this one.

Mr. Gural said he suspected Mr. Garlick might have been doing Mr. Silverstein’s bidding in driving up the sale price.

Long Island Home Prices Keep Moving Higher As Inventory Remains Limited

Newsday asked me to take a look at all the towns on Long Island, except for the east end, and compare housing prices from 2021 and 2022. Long Island has many towns, so it was quite an exhausting analysis.

Long Island home prices surged in these six communities in 2022 [Newsday]

Like much of the U.S., housing prices rose in 2022 despite nearly doubling mortgage rates. Why? Listing inventory has remained limited as would-be sellers are reluctant to give up that exceptionally low mortgage rate.

Across the board, real estate agents pointed to an insufficient number of houses for sale as the key factor keeping sellers in control — and thwarting buyers. At the same time, the average rate for a 30-year fixed mortgage has risen to 6.32% as of March 30, according to Freddie Mac, adding hundreds of dollars to homebuyers’ monthly payments. A year earlier, the average was 4.67%.

The article lets you dig into their extensive data tables.

Tech Cities In The West Are Seeing More Price Weakness

There was a terrific piece in the Wall Street Journal: A Tale of Two Housing Markets: Prices Fall in the West While the East Booms

Now, the cities most closely associated with tech have the fastest falling home prices.

I believe that the surge in interest rates forced tech firms to focus on their bottom line after overhiring during the pandemic.

Mortgage Rate Applications Hit A 28-Year Low

This Bloomberg headline and subheadline says it all:
Housing’s Scarce Supply Derails Buyers at Key Time for US Deals
A drop in new listings is stifling sales even as some buyers are lured in by the decline in mortgage rates.

This Week in Aspirational Pricing: The $500K Per Week Rental

This is a crazy super bowl party story from the Wall Street Journal: He Wasn’t Thinking About Renting His Arizona Home. Then Rihanna Came Knocking.

“The last thing I am is a real estate baron,” said Mr. Malaspinas. But, he said, “My pride’s not that big. I don’t mind moving out for $500,000 a week.” Mr. Malaspinas, who said the rental income for that week will cover his mortgage payments for two years, later learned his tenant was Rihanna.

Getting Graphic

My favorite housing market/economic charts of the week made by others

Apollo’s Torsten Slok‘s amazingly clear charts.

Kastle card swipe data charts

Remember that Kastle charts are overstating occupancy* because their pre-pandemic occupancy benchmark was 100% which is simply incorrect (*measures card swipe activity as a proxy for occupancy).

My favorite random charts of the week made by others

Appraiserville

I ran out of time this week to pontificate on our fair profession (and probably need to give my readers and TAF a brief respite).

OFT (One Final Thought)

and this…

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons at 2 p.m.) 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:

– They’ll buy things they can’t afford;
– You’ll buy things you can’t afford;
– And I’ll ask for a loan.

Brilliant Idea #2

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See you next week!

Jonathan J. Miller, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog
@jonathanmiller

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