- Miller Samuel Real Estate Appraisers & Consultants - https://millersamuel.com -

November 9, 2018

Watching the Housing Detectives

It’s been an exciting 10 days, to say the least so bear with me while I spin my yarn.

It started with a trip to the epic Appraiserfest 2018 [1] in San Antonio, Texas, hence my “placeholder” Housing Notes last week. The event was a rousing success for the underrepresented residential appraisers across the U.S and was the talk of D.C. regulators (in a good way) as I found out later. I got to meet all my “fake” appraiser friends (my wife classifies online friends as “fake” until you meet them in person.)

I keynoted on Thursday and got to hear my peers present amazingly pragmatic insights to promote appraisers’ professional practice and their businesses. During the convention – which was more like attending a rock concert wearing a bubble suit – several of my colleagues and I were interviewed for an upcoming epic documentary on the financial crisis that finishes with our industry (you know, the one that warned everyone what was coming but the history books have already laid blame at our feet).

From the conference, my wife and I flew to D.C. on Sunday for Monday’s Appraisal Subcommittee Roundtable (ASC) at the OCC (with LMNOPQRSTUVWXYZ) on Monday where I met more of my appraiser colleagues and senior officials from federal agencies and chief appraisers of global financial institutions to look at the path ahead for valuation services. For the first time, appraisers were representing themselves rather than relying solely on trade groups, one of which does not have our best interests in mind.

On Tuesday, my wife and I took the train back to Connecticut to vote. Oh, and I had an emergency root canal and had to replace my brand new “iBrick” with an iPhone XS Max that actually worked. Then I published the Douglas Elliman rental report [2] that was the top ten most read story on the 350K± Bloomberg Terminals and was interviewed many times on the Amazon HQ2 decision to locate 25K high wage earners in Long Island City, Queens.

Tonight we’re headed to see Elvis Costello with friends and I can’t clear my mind of the song “Watching the Detectives”…

I’m exhausted but highly satisfied with the past ten days. Now I need to downshift a bit. Some people watch fish tanks to relax [3]and clear their mind. I do this:

But I digress…

Elliman Report: Manhattan, Brooklyn & Queens Rentals October 2018

I’ve been the author of the expanding series of market reports for Douglas Elliman [6] since 1994. Most of the research is pushed out quarterly but we also release a monthly rental report covering Manhattan, Brooklyn and the northwest region of Queens. [2] The news leak that Amazon had selected Long Island City Queens as a split site for HQ2 along with Crystal City, Virginia was a simultaneous bombshell news event that I’ll discuss later in these notes.

I was pretty confident that after this week’s mid-term elections [7] and the Amazon HQ2 announcement, no one would care about the status of NYC rental market [2]. As my sons often tell me, “you’re wrong, Dad” and the story coverage ranked the “tenth most read” on the 350K± Bloomberg Terminals and we got a chart!



Here are some bullet points on the release:

– Market share of concessions rose year over year for the 41st consecutive month
– Vacancy rate fell to lowest level for an October in nine years
– Median face rent skewed higher with heavy influx of higher quality rentals
– 2 and 3+ bedroom median rent were only size categories to see declining rents and market share
– New development median rent declined while existing median rent increased respectively year over year
– Median rent for the Mid Tier segment ($2,700 – $3,800) continued to outperform all others

– Market share of concessions rose year over year for the 33rd consecutive month
– Second highest concession market share in more than eight years
– New development prices rose much faster than existing rentals, skewing overall prices higher
– Several years of new development activity is skewing price trends higher

Queens (Northwest)
– New development rents accounted for nearly 43% of all activity
– Face rent indicators continued to rise as new development skewed prices
– Fourth consecutive month with large year over year gain in new leases

Some of my favorite rental charts from our gallery:

We’re All Amazon Now: HQ2 Lands in LIC, Queens NYC

For years, we’ve observed the massive overbuilding of rental and condo multi-family development in Long Island City, Queens. After all, it is only one subway stop from Manhattan and has more in common with Midtown than the borough of Queens itself based on pricing. Despite the thousands of units coming online there over the next few years, the streetscape retail there is largely barren. It has long felt less like a neighborhood and more like a collection of new buildings.

But that may change.

Word was leaked to the New York Times [9] and the Wall Street Journal [10] about their intentions, to which Amazon said:

Oh, and Google is doubling down on New York City [14]. Good for the economy but so much for housing affordability.


Here are some of the stories on the HQ2 move:

Selling a Penthouse to Amazon’s Jeff Bezos Is a Queens Broker’s Dream [16] [Bloomberg]


Amazon’s New Headquarters May Be a Prime Deal for Two Cities, but Where Will Workers Live? [17] [Realtor.com]

HQ2 In Long Island City: If You Build It, Amazon Will Come [18] [Forbes]

Influx of Amazon, Google hires could hike Long Island housing costs [19] [Newsday]

News Long Island City Might Get 25,000 Amazon HQ2 Jobs. Here’s Who Would Benefit. [20] [Bisnow]

50 Million Chinese Homes Are Empty?

While visiting China in 2015 and 2016, namely Shanghai and Beijing, I was obsessed with the question of housing resale activity. I observed that there was basically either an ancient, dilapidated housing stock or newly constructed towers. I was skeptical about my theory that new development did not have a resale market. I was told that multi-generational efforts by families to pool their funds to buy a new unit drove all sales, and of course, all land is owned by the government. Consumers are wary of the stock market there (rightly so given government manipulation) and they seemed enamored with the housing boom. As much as I asked, I never got a satisfactory answer or saw evidence of an active resale housing market (resale is called by the derogatory term “used” in China). If you can show me the error of my thinking, please do!

Bloomberg now reports that 20% of all homes are vacant:


This Week in Aspirational Pricing

A Manhattan Penthouse Faces Reality, Cuts Price to $62 Million [22] [Bloomberg]

The odyssey of the Mountain: Inside the struggle to sell 157 acres atop Beverly Hills [23][The Real Deal]

Former Home to Michael Jackson and Marc Chagall Sells for $32 Million [24] [New York Times]

According to the New York Post [25]


Travis Kalanick, co-founder of ride-hailing giant Uber who was pushed out as chief executive by investors last year, has inked a deal to buy a glamorous New York City penthouse for about $36.4 million, according to people familiar with the deal.


Yay! Millennials Look Away From Their Screens Long Enough To Buy A House

According to the Wall Street Journal’s analysis [27] of the just-released U.S. Census data [28]:

The share of households who own their home and are headed by someone under 35 years old rose to 36.8% in the third quarter from 36.5% in the second quarter, and was up 1.2 percentage points from a year earlier.

That was significantly more than the overall increase in the homeownership rate. The share of American households that own a home inched up to 64.4% in the third quarter, up from 64.3% in the second quarter and up half a percentage point from a year earlier, according to data released Tuesday by the U.S. Census Bureau.

No Time For Sex When Housing Prices Are Rising

I’m a sucker for junk stat correlations when they’re fun. Here’s the latest from Zillow: Birth Rates Dropped Most in Counties Where Home Values Grew Most [29]. Here’s the Tableau work table to play with (if you have time):



(For earlier appraisal industry commentary, visit my old clunky REIC [31] site.)

Appraiserfest Has Your Back (And Your Teeth)

After an amazing Appraiserfest conference in San Antonio, I had to have an emergency root canal. So for protection, I wore my Appraiserfest t-shirt and all went well. Proof positive that the Appraiserfest movement has your back (and teeth).

What The Appraiserfest 2018 Conference Happening Meant

I can’t speak for each attendee at the San Antonio happening but I can say what it meant to me:


Cheaper = Less Reliable

I saw this on Mark Skapinetz’s 100% RE Appraisers Facebook private group and I hope he doesn’t mind. This image says it all.

Remember that many financial institutions embrace this misinformed think because of the federal backstop.

Banking Propaganda About Appraisal Services Ignores Keeping The Public Trust

This is a super dumb interview, seriously.

OFT (One Final Thought)

If this chart contained “Manhattan” instead of the five boroughs of “NYC” it would be well over 50%:

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 [38]. And be sure to share with a friend or colleague if you enjoy them because:

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 [40]
Miller Samuel Inc. [41]
Real Estate Appraisers & Consultants
Matrix Blog [42] @jonathanmiller [43]

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