Michelle Conlin of Reuters gives a nice overview of the state of the US housing on PBS, talking through the national reports that hit us recently. Check it out. This month’s weak NAR Existing Home Sales report has unleashed a surge of housing self-loathing (although today’s PHSI seems to take some of the drama/edge off).
If you missed this show on TV, it is now available in its entirety online. It’s an excellent collaboration between WNET/THIRTEEN and The Real Deal on the noted architect. I loved the way the assemblage of development air rights – basically a high stakes secret chess match – was presented.
Note to self: ask Amir Korangy, TRD’s publisher to do a doc on me someday – it would be brief, boring and attract little interest, but hey, who wouldn’t want their own doc?
Treasures of New York: Building Stories reveals the private life and the creative process of Costas Kondylis [WNET/THIRTEEN]
This weekend I ripped through a terrific book The Secret Life of Lobsters by Trevor Corson written back in 2004. Even if you’re not a lobster fan, I marveled at how he could take a mundane subject and weave an interesting (true) story on how the lobstermen of Maine have kept the production elevated for the past several decades, despite consistent claims of overfishing. (Incidentally my lobster pots were stolen this weekend, lines probably cut by commercial fisherman, plus we had 30 family members over to our house for the 4th for a lobster/clam bake.)
No one really knew whether cyclical declines in the number of pounds caught were natural or induced by man.
In other words, this is all about subprime lending.
While trying to find my interview on NPR about last week’s market reports (I was unsuccessful) I stumbled upon a WNYC interview with the Trevor Corson last week (the day our report was released) without using keywords such as “lobster,” “fishing” or “Maine”.
He correlated the sharp drop in Lobster prices this year with the collapse of the Iceland banking system via subprime lending. It’s worth a listen.
Basically, lobster prices have maintained a high price level for the past decade. A large portion of the catch was diverted to processing plants in Canada keeping supply of fresh lobsters restrained in the U.S. The Canadian plants shipped lobster products all over the world and were mainly financed by Icelandic banks who provided them revolving lines of credit. When the subprime crisis hit, these banks collapsed because of their heavy investment in financially engineered subprime mortgage products. As the lines of credit dried up, so did the processing plants and the excess harvests were stuck in the U.S. driving down wholesale lobster prices.
Oversupply of housing driving down prices correlates to the “V-notch” technique to increase the lobster population. I won’t even bring up the V-shaped recovery“, since I’m still full from our lobster bake.
Somehow it all comes back to lobsters.
UPDATE On a side note, the wholesale cost to restaurants has fallen sharply but the consumer is largely unaware of the drop, so restaurants have enjoyed a larger spread between what they charge you and what it costs them. Have you ever noticed how many lobster related items appear on a typical mid to upscale restaurant menu? It seems to be 4-5 items now have lobster in them. Menus used to contain one lobster item, a whole steamed version. Now lobster mac & cheese is a popular favorite. Thank synthetic CDOs for that.
About this time last year (and the year before that) I was interviewed by Suzanne Pratt of the Nightly Business Report, a news mainstay for 30 years, on the state of the New York City housing market. The situation has deteriorated quite a bit since last year. This segment “Reviving The Economy: Real Estate“
Ï€ is defined as the ratio of a circle’s circumference to its diameter
Ï€ can be also defined as the ratio of a circle’s area to the area of a square whose side is equal to the radius
In real estate economics (Matrix-wise), a Pi-type formula might be expressed as:
property value = ((consumer confidence + (1-their employment outlook/their employment outlook)) + (personal drive for home ownership x irrational behavior) + ((total distance from schools+ total distance from employment)/(White Castle projected visits/Whole Foods projected visits))/(mortgage rates x cash on hand x affordability ratios x size of down payment)/(mood of bank underwriter – name on stadium factor + amount borrowed from US Treasury))
In other words, its complicated.
Perhaps we can turn to Albert Einstein because its his birthday today and simply useE = mc squared and apply it to housing values to figure this all out.
He’s one of the big economists of the day who was the former chairman of the Council of Economic Advisers under president Bush, a professor of economics at Harvard University and most importantly, he wrote my son’s college textbook on macroeconomics. But he reminded me of Yoram Bauman.
But I digress.
Mankiw seemed to be saying that large government can’t management the spending that will be required for these stimulus plans and will result in a lot of waste, basically because we are rushing to do this without really analyzing it. Of course, we don’t have the luxury of time to do the due diligence either. So I really didn’t get much out of his interview or the NYT opinion piece.
But Mankiw also has a great blog, which is where I found the funniest YouTube clip on economics (yes, its possible) by “Standup Economist” Yoram K. Bauman a few years ago.
My immediate thought after watching the first segment (on tuesday) concerned a comment someone made that went something like:
…when the housing market stabilizes….
I am trying to figure out what that phrase really means. In other words, does that mean the rate of sales will level off, the pace of sales decline will ease, sales prices will flatten, the pace of sales decline will level off, permits will rise, inventory will level off, etc.
And what is going to get better in the short term to make the market reach a bottom, however it is defined? For the life of me, I don’t know right now. Affordability would be the obvious choice but tighter credit has made it necessary for housing prices to fall further before affordability is on par with a year or two ago. More time needs to pass and more things need to shake out.
Well, I stumbled across what looks to be a neat media blog at PBS called [MediaShift](http://www.pbs.org/mediashift/2006/11/top_5_week_fortyfive.html) written by Mark Glaser.
[Its got a pretty good overview of the whole real estate obsession](http://www.pbs.org/mediashift/2006/11/digging_deepernewspaper_bubble.html): bubble, bust, boom, expansion, crash with a heavy dose of vitreol, vengeance, blamethemedia and spin phenomenon and links to the leading blog resources. (ok, ok, Matrix is one of them…I was going to get to that).
I found his slant interesting (hey, its PBS), and perhaps ironic, that the leading bubble bloggers are supposedly making a lot of money (or so they say, yet haven’t quit their day jobs (I thought [Ben Jones](http://thehousingbubbleblog.com/) did?)).
However, I got the impression after reading this PBS piece, that these bubble bloggers were therefore incentivized to fuel the flames to get more readers, namely renters and burned investors (aka more advertising) but still venting their pure emotional frustration with the situation. Try to find one positive aspect of the current real estate market on any bubble blogs. It doesn’t exist because its contrary to the purpose of those blogs to begin with. I guess their counter point would be that there are no positive elements in the current market.
I suppose its a little of both. Bubble blogging was born out of a serious concern over the housing market and the spin from the real estate industry and now it seems to have matured and evolved into a mainstream phenonemon, which seems contrary to why it evolved to begin with. I guess cycles apply to everything. There is some great stuff out there written by people who care about the topic at a pretty deep level, but it doesn’t always mean its accurate or doesn’t have an agenda or spin behind it. They also seem to be free from lawsuits unlike Big Media (since they don’t have deep pockets).
Its a continuing battle to remain pure.
But I guess thats the same with all topics. Think about conversations around the dinner table at Thanksgiving. I am sure the topics for many included politics, religion and of course, real estate.
Mainstream media has tried to figure out blogging with some failures, but increasingly, more success. Included in my list of favorite real estate blogs (and columns) are many from “big media”, several were referenced in his column.
Real estate blogging is going to evolve and change. Technology and consumer acceptance all play a role. I can’t even imagine what the genre is going to look like when the real estate market has another up cycle.
I always admired Milton Friedman because he spoke with such clarity over complex economic issues and because he was so refreshing and full of new ideas. The first economics book I actually enjoyed was [Capitalism and Freedom](http://www.amazon.com/Capitalism-Freedom-Anniversary-Milton-Friedman/dp/0226264211/sr=8-1/qid=1163762974/ref=pd_bbs_sr_1/102-3436246-0198557?ie=UTF8&s=books). [When I learned of his death [Ch. Trib.]](http://www.chicagotribune.com/business/la-111606friedman,1,5214109.story?coll=chi-news-hed), I decided to re-read it.
He believed in less government control and the power of free markets. For example, housing was something government should have a limited roll in. [Here’s a transcript](http://www.hoover.org/publications/uk/3411401.html) and video excerpt from the show [Uncommon Knowledge](http://vodwins.stanford.edu/hoover/Libert200.asx).
Here’s an excerpt:
FRIEDMAN Housing and Urban Development has done a enormous amount of harm. My god, if you think of the way in which they’ve destroyed parts of cities under the rubric of eliminating slums. You remember Martin Anderson wrote a book on the federal bulldozer describing the effect of the urban development. There’ve been many more dwelling units torn down in the name of public housing than have been built.
ROBINSON Jack Kemp has proposed selling to the current inhabitants of public housing their unit- their townhouse, their apartment for a dollar apiece and just shifting the ownership to the people who live..
FRIEDMAN If you got rid of the Department of Housing and Urban Development, it would be worth doing that.
[From the Chicago Tribune:](http://www.chicagotribune.com/business/la-111606friedman,1,5214109.story?coll=chi-news-hed)
Friedman was considered a leading economic thinker of the 20th century. His many prescriptions for policy, notably on managing the nation’s money supply and curbing the welfare state, influenced presidents and presidential candidates dating back to the 1960s. His sweeping, pro-capitalist ideas earned him legions of followers domestically and overseas, while also sparking dissent and controversy.
Friedman was awarded the Nobel Prize in economics in 1976 for a body of “original and weighty work,” including his money supply research, which jurors said had influenced fellow scholars as well as the U.S. Federal Reserve and the central banks of other nations.
Friedman’s influence extended far beyond the ivory tower. He became an economist-celebrity, promoting his passionate beliefs in books, magazines and television appearances. With confidence and a professor’s logic, he sought to demolish the conventional wisdom after World War II that government must play a sweeping role in people’s lives.
[From the AP:](http://seattlepi.nwsource.com/business/292696_obitfriedman17.html)
Friedman favored a policy of steady, moderate growth in the money supply, opposed wage and price controls and criticized the Federal Reserve when it tried to fine-tune the economy.
A believer in the principles of 18th century economist Adam Smith, he consistently argued that individual freedom should rule economic policy. Friedman saw his theories attacked by many traditional economists such as Harvard’s John Kenneth Galbraith.
More than anyone else, Milton Friedman was responsible for challenging the worldview of British economist John Maynard Keynes, who believed in the power of government to guide and stimulate economic growth. As an alternative to Keynesianism, he put forth a more laissez-faire philosophy known as monetarism—the doctrine that the best thing the government can do is supply the economy with the money it needs and stand aside.
[Here’s a great collection of brief clips [SA]](http://usmarket.seekingalpha.com/article/20800) from a PBS special he did in 1980. I inserted one of them below on the problem with the gold standard.
Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).
[Click here to expand](http://www.nytimes.com/imagepages/2006/08/19/business/20060819_CHARTS_GRAPHIC.html)
With all the buzz about the consumer’s 2/3 share of the economy and housing as the biggest purchase in many of our lives, [we have tended to be housing-centric [pbs]](http://www.pbs.org/newshour/bb/business/july-dec06/housing_08-23.html) in the search through the tea leaves.
Sometimes I think that we can be better informed by looking at other industries for the health of the economy as it relates to the housing market rather than the other way around.
And since I was just in Detroit to visit family, what better way to look at the housing market, than to look at the impact of the auto industry on the economy? Afterall, 1 in 6 jobs is linked to this sector.
Floyd Norris does that for us in his [A Car-Sales Indicator Suggests a Recession Is Near or Already Here [NYT]](http://www.nytimes.com/2006/08/19/business/19charts.html) using census data.
The accompanying chart shows the rate of change in sales by new-car dealers, comparing the most recent 12 months with the 12 months before that; it is adjusted for inflation. The rule — unveiled here for the first time — is that if the figure is down 2 percent or more, a recession is either under way or set to begin within a few months. The figure fell to a negative 2.4 percent when June sales figures were released last week by the Census Bureau.
There is, of course, no mystery now as to what the problems are for car dealers. They are pinched by the slumping real estate market because people can take less money out of home equity to buy cars. And soaring gasoline prices have made driving much more expensive and new-car payments more burdensome. In July, sales at gasoline stations accounted for 10 percent of all retail sales, the highest figure in decades.
We are starting to see warnings from large car dealerships. [This one is from AutoNation [OCR]](http://www.ocregister.com/ocregister/money/economy/article_1251196.php).
The result? Its a double edged sword. An offset, or perhaps not enough of one. Recession means a weaker economy and falling borrowing costs, but it also means layoffs, lack of job growth and more consumer pessimism, which brings more complacency about housing.
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About Jonathan Miller
Jonathan Miller is President and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm he co-founded in 1986. He is a state-certified real estate appraiser in New York and Connecticut, performing court testimony as an expert witness in various local, state and federal courts. He holds the Counselors of Real Estate (CRE) and Certified Relocation Professional (CRP) designations. He is an Appraiser “A” Member of the Real Estate Board of New York and a member of Relocation Appraisers and Consultants, Inc. Learn More...
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“Our man Jonathan Miller drops the truth bomb.”–Barry Ritholtz, The Big Picture Blog
“Jonathan Miller of Miller Samuel is a NYC real estate "cultural icon."”–Katherine Clarke, New York Daily News
“The oracle of New York City real estate: Jonathan Miller.”–Amir Korangy, Publisher, The Real Deal
“Jonathan Miller, the most popular guy on the block when talking about real estate in New York.”–Tom Keene, Bloomberg Radio
“Jonathan Miller delivers the unflinching and un-fluffy truth about an industry he knows inside out.”–Teri Rogers, Brick Underground
“Jonathan Miller: Best online real estate expert.”–Money Magazine
“Jonathan Miller is a master of his craft...we are lucky to have him as an advocate for appraisers.”–Phil Crawford, ‘Voice of Appraisal’ Radio Show
“Renowned appraiser and [Matrix] real estate blogger, Miller is a statistical wizard. Can dodge bullets in slow-mo.”–Real Estate Tomato
“It’s tough to find the good guys..Fortunately we found one. His name is Jonathan Miller.”–Glenn Beck, CNN
“Jonathan Miller...one of the nation’s most prominent appraisers.”–Money Magazine
“His quarterly reports on the New York City-area market is considered required reading among real estate professionals.”–Reuters
“Jonathan Miller, Go-To Appraiser. Appraising the state of real estate.”–Barry Ritholtz 'Masters in Business,' Bloomberg Radio
“Jonathan Miller: One of the most famous appraisers in America today.”–Phil Crawford, 'Voice of Appraisal' Radio Show
“A web site 'worth visiting.'”–Realtor Online Magazine
“Miller is arguably the most influential voice in residential property valuation markets today.”–Altos Research
“Jonathan Miller: The man who knows.”–Real Estate Weekly
“Jonathan Miller delivers real estate news in language even a blogger can understand.”–Curbed DC
“Why is Jonathan Miller’s Matrix required reading? …He grabs you right from the start.”–New York Times
“Jonathan Miller is the DJ Khaled of real estate.”–Stefanos Chen, New York Times
“"Between the Bricks" Columnist gives a 2016 Data Brick to Jonathan Miller for keeping the industry honest.”–Lois Weiss, New York Post
“Should we have seen this coming?...I spoke to appraiser Jonathan Miller 3 years ago.”–Jane Wells, CNBC
“In the real estate world, Jonathan Miller is where street-smart meets book-smart.”–Jed Kolko, Chief Economist, Trulia
“Miller is the best real estate blogger out there.”–Bankrate
“Our sherpa in the land of broker euphemism for the current state of the housing market.”–New York Observer
“His prescient 2012 declaration that “luxury real estate is the new global currency” was repeated as gospel...”–New York Post
“In this ever changing NYC market, Jonathan’s reports give me an accurate snapshot at any given time.”–John Gomes, The Eklund Gomes Team / Douglas Elliman Real Estate
“Jonathan Miller is 'one of the most important people in real estate.'”–Elizabeth Ann Stribling-Kivlan, President, Stribling & Associates
“Jonathan makes real estate statistics come alive by explaining what they mean now and indicate for the future.”–Joe Connolly, WCBS Radio
“Jonathan Miller is 'a complete pro, a shining star in the real estate industry.'”–Donna Olshan, President, Olshan Realty Inc.
“Jonathan Miller, President of Miller Samuel and real-estate savant.”–Curbed Miami
“Jonathan Miller: the true God of real estate data.”–Fredrik Eklund, The Eklund Gomes Team / Bravo’s MDLNY
“Jonathan Miller is one of the icons of the real estate industry.”–Real Estate Board of New York
“If New York real estate is a sport, one of its most prominent score keepers is Jonathan Miller.”–New York Daily News
“Jonathan Miller...Manhattan’s most revered independent appraisers of residential property.”–Daily Telegraph (UK)
“Jonathan Miller, the demigod of New York real estate stats.”–New York Observer
“Jonathan Miller, the appraiser who is the savviest observer of the local residential market.”–Crain’s New York Business
“Jonathan Miller’s blog Matrix. Completely Keanu Reeves-free real estate economics, not for beginners.”–Curbed San Francisco
“Jonathan Miller, the go-to expert on all residential real estate figures.”–Crain’s New York Business
“Jonathan...understands how to take numbers and explain them to people in a way that makes sense.”–Dottie Herman, President and CEO, Douglas Elliman
“When it comes to markets trends, nobody knows the multiple NYC real estate markets better than Jonathan Miller.”–John L. Heithaus, CSO, Buyside
“Jonathan is considered the 'dean of appraising' in the industry.”–Donna Olshan, President, Olshan Realty Inc.
“Jonathan is a legend, one of the most quoted appraisers and experts in the industry.”–Dottie Herman, President and CEO, Douglas Elliman
“Jonathan Miller: One of the top 25 most influential U.S. real estate bloggers.”–Inman News
“A Curbed reader goes all 'Jonathan Miller' on us.”–Curbed New York
“Jonathan Miller is the most trusted (and quoted) man in New York real estate.”–New York Observer
“A combination of Godzilla, King Kong, and Hurricane Katrina all wrapped up in one as he wreaked havoc on the housing market.”–New York Sun
“Check out Superstar Appraiser Jonathan Miller’s blog Matrix for the latest in depth information on NYC housing.”–Urban Digs
“JM makes real estate stats talk in language that normal people understand.”–Teri Rogers, Brick Underground
“Matrix: One of the top five U.S. real estate blogs.”–Inman News
“Then there is Miller’s authority in residential appraisals.”–Reuters
“Jonathan Miller: One of the best finance people on Twitter.”–Business Insider
“His market reports are to the Manhattan housing market what those brackets are to the NCAA Tournament.”–New York Observer
“Miller Samuel CEO Jonathan Miller holds the key to the luxury real estate market.”–Deirdre Bolton, Anchor, Fox Business
“Jonathan Miller, an appraiser dubbed 'the Wikipedia of Manhattan real estate.'”–Barrons
“If market guru Jonathan Miller said it, it must be true.”–Stuart Elliott, Editor-In-Chief, The Real Deal
“Expert Appraiser Jonathan Miller: New York City’s Real Estate Data Wizard”–Epoch Times
“Market Analyst Jonathan Miller: Thank the Flying Spaghetti Monster he's on our side.”–Curbed Miami
“Jonathan Miller: He's the guy with 'boots on the ground' when it comes to real estate.”–Tom Keene: Bloomberg TV, Surveillance
“Jonathan Miller, owner of New York City’s Miller Samuel and one of the nation’s most prominent appraisers”–Money Magazine
“Jonathan Miller—the data whisperer”–Brick Underground
“Somebody-explain-this-crazy-market-to-me guy Jonathan Miller.”–Curbed New York
“New York real estate maven Jonathan Miller.”–Slate
“Miller’s more than 20 years of real estate experience comes out in this no-nonsense blog.”–Seeking Alpha
“Jonathan Miller is well-known for taking the pulse of Manhattan real estate.”–PBS Nightly Business Report
“Jonathan Miller is an incredible real estate analyst, a true Rockstar on NYC metro luxury markets.”–Ivy Zelman, CEO, Principal, Zelman & Associates
Columns by Jonathan Miller
'Three Cents Worth' column 3CW ('05-'16)
When Curbed was acquired by Vox, my eleven years of 3CW chart art and column links were broken on Curbed NY, Curbed DC, Curbed Miami, Curbed Hamptons, Curbed LA, and Curbed Ski.
The Office of the New York State Comptroller released its analysis of Wall Street Bonuses for 2022 last week. The real estate industry used to go gaga over this report before the housing bubble. But now, with so many bonuses… Read More
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