Posted by Jonathan J. Miller -Saturday, March 24, 2012, 1:00 PM Comments Off
Brick Underground published an article on smoking bans in buildings a few weeks ago that continues to have legs on it – it just appeared in AM New York as well.
I am not a smoker. I’m highly allergic to smoke and tobacco. A number of relatives of mine have died from lung cancer, second hand smoke and other smoking related illnesses. I wish people wouldn’t smoke (and better able to quit) so I struggle to be neutral in my view of it’s impact on property values.
My quote on the issue for the Brick Underground piece was:
“I am not aware of any compelling studies that provide empirical evidence proving a smoking ban impacts values one way or another,” said Jonathan Miller, president and CEO of Miller Samuel, a real estate appraisal and consulting firm. “Personally, I would think such a ban would be slightly more of a help to values than a hindrance, since the number of smokers are on the decline — and the idea of selling the health benefits of a lack of secondhand smoke would be a plus.”
The policy momentum of our society has grown with the elimination of smoking on airplanes, public transportation, commercial buildings, public spaces and they all speak to the issue of invasiveness. Forcing non-smokers to breath something that has been shown to be unhealthy, even lethal, is no longer tolerated and anti-smoking public policy continues to expand.
So the issue as it relates to multi-family housing would seems to be the next shoe to drop with public policy. Perhaps that is already happening and I’m not aware of it.
Even though a smoker may own their residence and have the right to enjoy it as they see fit, the impact of their behavior moving outside their domicile (i.e. smoke permeating walls and air exchanges) would seem to be invasive and not their right.
With possibly one exception
Grandfathering. As an apartment homeowner, they may have had the right to smoke when the property was purchased and I don’t see how their bundle of rights as a property owner can be altered. They followed the rules and non-smokers who purchased during that era would be aware that there was no ban on smoking.
A new building that bans smoking from day one – that’s not a problem.
But back to the valuation issue. I think I see more potential downside to property values in the long run within buildings that allow smoking to new buyers than to a value upside in buildings that never allowed smoking from day one.
Admittedly I’m merely voicing a subjective opinion. I’m relying on the logic that societal norms will continue to move away from public smoking tolerance.
Posted by Jonathan J. Miller -Saturday, March 24, 2012, 10:00 AM 1 Comment
REBNY is the trade group for the commercial and residential real estate industry in NYC. Here’s video that remains on their home page that addresses the issue of inconsistent tax liability between the four tax classifications.
I’ve been remiss in not posting this video since it was produced more than a year ago but it was well done, whatever your view on this issue is. My friend, journalist, columnist, former Crain’s editor and blogger Greg David as well as a number of well respected New York real estate types participate.
What could go wrong? Well, as Aaron Task and I discuss with Jonathan Miller, president and chief executive officer of appraisal firm Miller Samuel and proprietor of the authoritative Matrix real estate blog, pretty much everything.
From the heavy comment volume on the post, I’d say the take for Yahoo! Finance readers to Dan’s question was: NO
Posted by Jonathan J. Miller -Wednesday, March 21, 2012, 9:43 AM Comments Off
[click to expand]
When I was contacted to do yesterday’s Bloomberg interview, a by-product of the producer’s call was to show the affordability of housing to Wall Street. We never covered it in the interview and I was (self) taught never to waste a good charting opportunity.
While there is no reliable causation measure of bonus size to Manhattan housing prices there has long been a connection (i.e. common sense). I took the Manhattan annual average sales price for the past 20 years and compared it to the average annual Wall Street bonus per person. The resulting multiplier shows some element of affordability: the higher the multiplier, the less affordable Manhattan housing is.
I realize there are disclaimers needed in doing this including:
With the regulatory overlay from DC rising, bonuses are becoming smaller relative to overall compensation.
Not everyone on Wall Street getting a bonus lives in Manhattan (but a
disproportional amount probably do).
Bonus income is just less than half of total Wall Street compensation.
Post-Lehman saw higher share of deferred bonus over cash.
Wall Street total comp only accounts for about 25% of total NYC wages.
Foreign buyers and Fortune 500 type executives have picked up some of the Wall Street slack.
With those disclaimers aside or perhaps because of them, the chart shows:
The 20 year trend shows greater affordability over time but significant volatility along the way.
The early 1990’s recession, 2001 recession and 2008 credit crunch/recession all showed sharp reductions in affordability (higher multiplier).
The 20 year average annual multiplier is 9.9
Given the fact that sales contract activity seems to be ahead of last year, prices remain stable, foreign buyers continue to participate in large numbers and the economy is grinding towards improvement in the region, the decline in bonuses doesn’t appear to be a huge deal for the housing market at this point. Certainly not helpful but perhaps can be characterized as having a nominal impact on the market – if you believe this methodology.
Posted by Jonathan J. Miller -Thursday, March 15, 2012, 12:08 PM 2 Comments
I was looking through the NYC’s Fiscal Year 2013 Assessment roll to see how the city measured year-over-year changes in property values – of course its a function of revenue so assumed to be biased high but its interesting.
I zeroed in on the “market force” changes based on property types for the city and boroughs. The increase for all property types in NYC was +1.75% and the boroughs by rank were:
Tax Assessments Should Not Be Relied On For Determining Market Value
Speaking at a hearing in Washington, D.C., the Appraisal Institute today urged a federal judicial agency to require the use of real estate appraisals when calculating loss in mortgage fraud cases.
(The Commission is charged with the ongoing responsibilities of evaluating the effects of the sentencing guidelines on the criminal justice system, recommending to Congress appropriate modifications of substantive criminal law and sentencing procedures.)
Amazingly there are…
proposed amendments to the federal Mortgage Fraud Sentencing Guidelines because the amendments propose using tax assessments, and not real estate appraisals, to determine fair market value when the property in question has not been sold.
While I’m not on board with requiring the use of designated appraiser infused in this release even though they are often more qualified (I have always had a problem with mandating the use of a private organization by a government entity), the very idea of using a tax assessment as a basis for any type of value is a terrible mistake.
Assessment values vary significantly across the country:
they usually do not include an interior inspection.
they rely on public records data, which can be inaccurate.
usually not correlated to market value (just take a look at NYC’s tax assessment method).
increases can be subject to restrictions and phase-ins.
Simply put, tax assessment values are not usually the same as market value. If value is to be used as a basis for determining value, then the damages to the victim should be fair.
This is interview required viewing for anyone connected with real estate and mortgages. Here are a few choice snippets:
“We’ve made fraud and perjury just a business expense.”
“Felony, fraud, perjury on a mass scale.”
“It wasn’t Jamie Dimon…or the $8 burger flippers…the process was too institutionalized…what we don’t know is who the mid-level bank execu who said too hell with 700 years of property law…just rubber stamp it and get it through…”
“It’s the Ford Pinto approach…eh some will burn to death, we’ll write a check later.”
Spoken with amazing clarity – always love Barry’s insights and delivery of his views.
WashPost Columnist: Mortgage Settlement Makes “Fraud a Business Expense” [Bloomberg Law/YouTube]
The Robosigning Deal is a Useless Embarrassment [The Big Picture]
Foreclosure settlement a failure of law, a triumph for bank attorneys [Washington Post]
From my perspective, the $26B was a nominal rounding error despite the trillions in mortgage related fraud that occurred during the credit/housing boom. For essential context and the stunning lack of fairness to “Main Street” the agreement speaks volumes about why we can’t fight our way out of a paper bag (housing crisis).
If you want to gain perspective on the settlement deal, then you must read his blog post and his column. Please.
Foreclosure settlement a failure of law, a triumph for bank attorneys [Washington Post]
The Robosigning Deal is a Useless Embarrassment [Ritholtz/Big Picture]
Posted by Jonathan J. Miller -Friday, February 24, 2012, 12:40 PM Comments Off
The following was shared by an appraiser colleague in the Midwest as told to him by a loan officer:
“You want to talk welcome to America. I am doing a loan for [redact] and they [the borrowers] are not US citizens. He did not work all of last year and she made approx. $21,000. And, their tax refund is $9200!!! ….”
“….How is that even possible? I knew you would enjoy this as much as I did, except I had them in front of me and my head was going only in America!“
Had a fun interview with Tom and Sara this morning on the always MUST watch/listen Bloomberg Surveillance. We talked housing, rentals, vacancy and inventory. An added bonus was the addition of Adam Davidson – co-founder and co-host of Planet Money... Read More
