If you find yourself fretting about the future of the housing market with a potential looming recession or the confusion of a jubilant stock market alongside a terrified bond market as illustrated by rates that continue to fall, I wouldn’t recommend remaining oblivious to the world around you — case in point, this gentleman at the bar during a robbery.
And of course, #WhyILoveNYC no matter what the housing market is doing (listen for the bone-crunching street sounds).
Does anyone know what the hell kind of chicken massacre happened in Boerum Hill? pic.twitter.com/Wfk73zm1jZ
— Sara Vilkomerson (@Vilkomerson) August 30, 2019
But I digress…
Movin’ Out Of New York At Twice The Rate Of Last Year
Since the introduction of the Tax Cut and Jobs Act of 2017, there has been an acceleration of outbound migration according to a Bloomberg article: More People Are Leaving NYC Daily Than Any Other U.S. City.
New York leads all U.S. metro areas as the largest net loser with 277 people moving every day — more than double the exodus of 132 just one year ago. Los Angeles and Chicago were next with triple digit daily losses of 201 and 161 residents, respectively.
In addition to the new federal tax law, the New York State legislature has passed and attempted to pass anti-investment/anti-landlord legislation that reflects a stunning lack of understanding of market forces. The anti-real estate zeitgeist is already reflected in this exodus from New York. I don’t believe the Albany political majority understands the long-term direct consequences of what they have created – the massive tax revenues real estate generates enables extensive social programs they are so focused on.
Why Uncertainty In Real Estate Still Remains, Well, Uncertain
Hint: Trade War With China & Brexit
US Economic Policy Uncertainty at highest since #Brexit — mostly due to #China #tariffs announced Aug 23 & applied Sep 1 but don't worry… #BorisJohnsonPM trying his best to make Brexit even more interesting…
via @SoberLook pic.twitter.com/dfrgr1kG1T— Gregory Daco (@GregDaco) September 2, 2019
Wait, Renting Isn’t Throwing Your Money Away?
The classic ‘Rent v. Buy’ argument is thrown upside down in this Bloomberg video “No, Renting Isn’t Throwing Your Money Away.“. The problem with these types of arguments is that it applies the same logic to everyone regardless of their personal situation. The very idea that the ‘homeownership versus renting’ market share is 3:1 in the suburbs but 1:3 in the cities speaks directly to affordability and lifestyle. In current conditions, we are in a housing affordability crisis and a student loan crisis while wage growth has been tepid and mortgage rates flirt with records. I get that the longstanding mantra of “renting is throwing your money away” was never questioned until the financial crisis, but I still find narratives like this too generic (but entertaining).
VOX: Why So Many Suburbs Look The Same
Not So Spurious Housing Correlations: Refrigerator Size v. Household Size
h/t @PlanMaestro @voxmediainc
The Rush To Buy Before July 1 NYS Mansion Tax Deadline Revealed Scorched Earth In July
Last June I warned against the giddiness of the Q219 surge in sales activity, that the excess demand was actualy poached from Q319. Because changes in tax policy change consumer demand patterns, the Q2 uptick was not evidence of a return to better market conditions. Although though I do think the heavy lifting of the decline in activity has already occurred and the continuing drop in mortgage rates may have helped mitigate some of the sales drop and price damage that was expected.
As it turned out I was right as illustrated in these compelling visuals.
Getting Graphic
Our favorite charts of the week of our own making
Len Kiefer‘s Chart Handiwork
Some of My Upcoming Speaking Events
9/12/19 – The Metro New Jersey Chapter of the Appraisal Institute
9/17/19 – NYcorp: New York Council of Relocation Professionals
Speaking to NYC Metro Housing Trends.
Appraiserville
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
Sitting In The Witness Chair
I’ve sat in the witness chair as a real estate expert many times over the years. It’s nerve-wracking, but it is also fun and fascinating. My partner in our commercial firm says there is something wrong with me because I enjoy it so much.
Consider that something you wrote in an appraisal report six months ago is being discussed now and what you wrote back then is not subject to edits. You have to live with what you wrote. I think the quality of appraisals in the U.S. would improve substantially if all appraisers had to sit in that chair early in their career and have to answer to all the B.S. they piled into their report.
When you sit in that chair and are sworn in to testify, there is no going back. You are answerable to no one but the truth.
Sadly many of my peers run away from the opportunity of testimony. Or perhaps that fear makes it more lucrative for those that are willing to testify. It can be a worthy alternative to generic bank appraisals and provides absolute clarity on how non-appraisers, especially adversaries, can interpret (twist) your results and how you conveyed them to the report reader. My favorite clients have long been lawyers because of how they think. It is a strategy exercise like playing chess.
Some thoughts:
– Always get paid for your report before you deliver the result and hopefully at engagement. Always get paid in advance for your court appearance with the understanding that any overage in time will be paid for immediately after the appearance. Don’t block out a bunch of availability dates unless you have been paid so you livlihood is impacted by a false promise or change in their needs.
– One of the most important things I’ve learned is to simply answer the question. No embellishment. Remember that opposing counsel will ask you incomplete questions, fish when they don’t know what they are looking for and try to trip you up anyway they can if you are a threat to their client. They’re doing their job so you want to prepare and do yours.
– You are auditioning for more work. One of the greatest complements I can get is when I am hired by opposing counsel for a new matter.
– Remember that you are the expert and you are not guilty of anything. This sounds trite but that is what runs through the minds of those new to this. Your job is to express your opinion and to do it in a way that is credible and conveys it clearly.
– If you don’t know the answer, then say “I don’t know” – its ok if you don’t know the answer.
With Fannie and Freddie working hard to automate and the whole world jazzed about evaluations and oblivious to the long term decline in reliability that the now terrified bond market expects, expand your consulting footprint. Legal support services are a great way to start.
OFT (One Final Thought)
What laser focus looks like.
my god https://t.co/g5YkjnOp1w
— Patton Oswalt (@pattonoswalt) September 5, 2019
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:
– They’ll hear it through the grapevine;
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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
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog
@jonathanmiller
Reads, Listens and Visuals I Enjoyed
- Overseas Investors Unload U.S. Real Estate [Wall Street Journal]
- Overseas Investors Turn Net Sellers of US Real Estate in H1 [Real Capital Analytics, Inc.]
- Why so many suburbs look the same [VOX]
- More People Are Leaving NYC Daily Than Any Other U.S. City [Bloomberg]
- No, Renting Isn't Throwing Your Money Away [Bloomberg]
- Big city growth stalls further, as the suburbs make a comeback [Brookings]
My New Content, Research and Mentions
- ‘Lifesizing’ is Miami area’s new real estate trend [Miami Herald]
- These Are the World’s Most Liveable Cities in 2019 [Bloomberg]
- After Rush to Beat New Tax, Manhattan Luxury-Apartment Sales Slump [Wall Street Journal]
- What happens to NYC residential real estate if there's a recession? [Brick Underground]
- The foreign buyer fallout [The Real Deal]
- Foreign investors battered by losses amid city's real estate shake-up [Crains NY]
- Manhattan Luxury-Apartment Sales Plunge After New Transfer Tax | Survival [ZeroHedge]
Recently Published Elliman Market Reports
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 7-2019 [Miller Samuel]
- Elliman Report: Malibu + Malibu Beach Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Venice + Mar Vista Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Los Angeles Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Aspen + Snowmass Village Sales 2Q 2019 [Miller Samuel]
- Elliman Report: North Fork Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Hamptons Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Long Island Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Fort Lauderdale Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Miami Coastal Mainland Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Miami Beach + Barrier Islands Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Wellington Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Delray Beach Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Jupiter + Palm Beach Gardens Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Palm Beach Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Royal Palm/Boca Raton 2Q 2019 [Miller Samuel]
- Elliman Report: Boca Raton 2Q 2019 [Miller Samuel]
- Elliman Report: Downtown Boston Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Greenwich Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Fairfield County Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Putnam & Dutchess Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Westchester Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Riverdale Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Northwest Queens Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Queens Sales 2Q 2019 – [Miller Samuel]
- Elliman Report: Brooklyn Sales 2Q 2019 – [Miller Samuel]
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 6-2019 [Miller Samuel]
- Elliman Report: Northern Manhattan Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Manhattan Sales 2Q 2019 [Miller Samuel]
- Elliman Report: Manhattan, Brooklyn & Queens Rentals 5-2019 [Miller Samuel]
Appraisal Related Reads
- Appraising "Bifurcated" [Working RE]
- The Appraisal Profession & The Double Tree of Casorzo [Cleveland Appraisal Blog]
- 5 Reasons Why A Seller Would Get a Pre-Listing Appraisal And Then Not Use It [Birmingham Appraisal Blog]
- $15 USPAP Appraisal Reviews in 15 Minutes? [Vacap/Appraisers Blogs]
- Appraising Split & Bi-Levels…Where The Ground Meets the Wall [Cleveland Appraisal Blog]
Extra Curricular Reads
- Is Your Airplane Seat Covered in Other People's Pee? An Investigation [MEL Magazine]
- Florida man parks Smart car in kitchen so it won't blow away [SF Gate]
- Which States Are in the Midwest? [FiveThirtyEight]
- How Giving Up Refined Sugar Changed My Brain [Fast Company]
- Those Hurricane Maps Don’t Mean What You Think They Mean [NY Times]
- World's Chillest Man Lights Cigarette at Gunpoint During St. Louis Bar Robbery [Riverfront Times]