Posted by Jonathan J. Miller -Sunday, March 18, 2012, 9:26 PM
The New York Post had a fun piece today on a $55 rent controlled apartment in Soho. Of particular interest to me was a huge info graphic using data from the upcoming 2011 NYC Housing and Vacancy Survey.
Posted by Jonathan J. Miller -Tuesday, August 25, 2009, 11:19 AM
National Trust for Historic Preservation does a lot of good work slowing the disappearance of US landmarks.
One might incorrectly assume their job might be a tad easier (thereby diminishing the urgency of their cause) without the massive quantity of essentially free mortgage money that was available for some crazy stupid development during the recent credit boom. The tear it down mantra seems a bit dated now.
The Trust created a Flickr photo pool for their new campaign.
No biggie but it’s fun to peruse. Of course, remember who is writing the blog and how boring he is. After being out of the loop for vacation, I feel the need to clear my desk so forgive the larger than usual volume of posts coming at you this week.
Posted by Jonathan J. Miller -Monday, May 5, 2008, 12:01 AM
Matt Woolsey at Forbes.com covered the World’s First Billion-Dollar Home.
Here’s a tour with photos.
Posted by Jonathan J. Miller -Tuesday, January 30, 2007, 12:05 AM
I came across an interesting article this weekend called The Draw of the Flaw [WaPo]. With a tag line of Railroad Tracks, Power Lines, Even Septic Tanks Can Be the Beginning of a Bargain.
A Diamond in the rough story, if you will.
The concept is this.
Many purchasers trying to buy into a housing market will accept obvious flaws because the discount associated with that amenity helps make the property more affordable.
The higher the perceived risk for health reasons, such as transmission lines, or for other defects that limit the number of buyers attracted to the property, the larger the discount.
In other words, if a problem is curable (appraiser speak for fixable) in the long run, the lower the discount. For example, a long commute will likely involve a larger discount than something that is more likely to be cured during ownership (like a massive capital improvement project in front of your property that may take five years to complete). You can’t shorten the commute but eventually that project will get done.
That is a logical approach and for purchasers who can live with inconvenience and it can make sense to some to put up with it by being rewarded with a lower purchase price.
Here’s a two reasons why the lower price invites higher risk and may ultimately backfire on the buyer:
The impact of property defects can change over time - The fact that you can live with the defect doesn’t mean you will find an eager buyer when you go to re-sell the property. Perhaps something that is considered an inconvenience today, may have a more negative impact on value when at re-sale because the value or penalty of amenities changed. Consider this. As a market weakens, inventory rises and the greater competition places defective properties at a disadvantage.
The “beta” of cost savings of the defect can fluctuate over time - I use the word “beta” in the context of a stock. This can be illustrated with location. In a tight, rapidly rising housing market, the spread in value between a location with a further commute and a close-in commute tends to contract, yet it expands during a weakening market condition. In fact, that is why newly developing market areas see higher appreciation during housing booms. But as the market retreats, these area can see bigger drops.
For example, suppose you buy a fund (property) with a beta of 1.5. You can expect that this fund (property) will beat its benchmark (overall real estate market) by 50% on the way up, and do 50% worse on the way down.
So the cost savings of a property defect achieved in a tight housing market may catch some new owners by surprise if their particular market weakens when they go to re-sell. Thats the flaw with the logic of this approach to “save” money.
Posted by Jonathan J. Miller -Monday, July 17, 2006, 9:55 AM
Its been a slow real estate news month other than the exploding townhouse in New York – or perhaps, better yet, the scope of the exploding townhouse coverage actually confirms that its a slow real estate news cycle right now. Incidentally, the property owner just died [NYT] this weekend.
However, our readers had a few other tidbits for us to digest which is not a bunch of hot air.
As a homeowner trying to sell my home with a registered sex offender right next door, I can say this is financially devastating. I live in an area with excellent schools and my home is geared for beginning families, 3 bedrooms, expensive play system in yard, etc. Already we have lost 3 sales in 3 months in an area where most homes sell within 2 weeks.
Unfortunately,we purchased a new home and moved in anticipation of selling our old home quickly only to find that our neighborâ€™s son is a registered offender. He is 27 and has always lived at home and isnâ€™t going anywhere. We even asked them to have him move temporarily and they refused.
We are now faced with a 250,000 home that is essentially worthless which is financially devastating to us. I understand the idea behind the register for sex offenders but at what cost to innocent neighbors? We are honest, law abiding citizens who are being unfairly punished for another personâ€™s crime.
My other problem with NAR is that they typically donâ€™t provide more than one year worth of stats. The result is youâ€™re stuck with their analysis without the benefit of having access to the data from prior time periods (i.e. 3 years, 5 years, and 10 years). Like you, our local MLS posts their market reports with data from prior years. NAR has a lot to learn from you and your market reports. If NAR thinks it has a corner on the market in terms of market data, sooner or later they will find someone out there providing better data. Openness and unbiased analysis is what gains credibility with the public.
Is this data dated from the closing date or contract date? If so, there could be a significant time lag from contract to closing date. Is there any data on the lag between contract and closing date? Could it be as much as 3 months? It took me more than 1 month to close from contract signed in early may â€˜06â€¦ but iâ€™m just one data point.
Posted by Jonathan J. Miller -Friday, June 23, 2006, 12:01 AM
Actually, swimming in Fifth Avenue condo inventory…
In Peter Slatin’s column Lord & Taylor’s New Master [Forbes.com] he announces that new owners have purchased the shopping chain and speculates that they may have seen hidden value in their real estate holdings. The flagship store may be the source of speculation of future condos?
Although condo conversions have been spreading all along Fifth Avenue, from the Plaza Hotel at 59th Street to south of the Empire State Building at 34th Street, all indications point to a slowing market, and it will take the new owners some time to get plans in place to make significant changes in the property–if that’s what they seek to do.
“Our plan is to operate the company, review every store, understand which should be left alone and which should be modified,” said NRDC principal Richard Baker. “The flagship will be analyzed like everything else–does it need to be that large? Maybe it only needs to be half that large.“
Hotels have gotten all the press lately about their conversion to condo. Could department stores be the next ones to go? Unlikely and there is no real pattern yet. Admittedly I am stretching here, but what about the former Gimbels on 86th and Lexington (a condo)? The former Alexanders on East 58th and Third Avenue (a condo) and a few others.
My angst about this potential conversion is this: My offices are around the corner…
Where am I going to go for that last minute gift?
Posted by Jonathan J. Miller -Tuesday, May 16, 2006, 12:01 AM
In Sara Schaefer Munoz’s extensive article Historians and Fans Are Racing to Catalog Homes Sold by Sears [WSJ] she describes the attempts by preservationists to catalog the remaining houses sold through the Sears Catalog.
Precut houses ordered from a Sears catalog were shipped by boxcar in 30,000 pieces — including shingles, nails and paint — and assembled by a local carpenter or by the buyers themselves. Styles ranged from the elaborate, nearly $6,000 Magnolia, to the three-room, no-bath Goldenrod, sold in 1925 for $445. (Outhouses sold separately.)
The choices were quite elaborate: From 1908â€“1940, Sears, Roebuck and Company sold more than 100,000 homes through their mail-order Modern Homes program. Over that time Sears designed 447 different housing styles.
Sears has a surprisingly extensive archive of information. This includes photos, floor plans, chronology and an extensive history. There is also a nice write up in Wikipedia.
After looking through all this material, it struck me how much higher consumers expectations about housing are now as compared to 100 years ago. Its something that would not fit in a catalogue.
Posted by Jonathan J. Miller -Monday, May 1, 2006, 12:01 AM
In Stephanie Rosenbloom’s cover story for the real estate section Some Buyers Regret Not Asking: Anyone Die Here? [NYT] she explores the realm of prior occupancy. Specifically she looks at people who have discovered that someone had died in the property prior to their purchase. It was a good read and explores far more about the topic than I thought existed.
She discusses the obligations of disclosure for the seller and broker. (shameless plug: I provided some commentary on the impact on value.) Basically, the death of an occupant is probably unlikely to have an impact on other units in a multi-family building, especially in larger buildings but it will more likely have an impact on the value of the individual property in the near term. The reason being that this condition simply dilutes the number of buyers that would consider this type of property as an acceptable purchase. I believe that this stigma’s impact on value would erode over time. If this were not true, many of the turn of the century properties in many urban markets would not be worth much.
I’d speculate that a murder has more stigma than and natural death, and a murder done by a stranger has a more severe impact on value than death by a relative. The concept of safety and security of the home seems fairly self-evident here.
Stigma tends to be more pronounced in a soft housing market than in a market where the supply of property is severely limited. This can apply to other unusual conditions such as house that are supposedly haunted, or have other nortorious histories.
For added fun, a mashup of New York Police Department homicide statistics and google maps are included in the online feature. One hundred years ago, before nursing homes and extended care facilities proliferated, it was more common for the elderly to die in their home. My own home was built circa 1825 so I am fairly confident there are a few stories to be told but I try not to think about it too much [wink].
A Story (Dancing On A Bleached Floor)
I remember appraising a multi-family 120 year old brownstone on the Upper West Side of Manhattan about 10 years ago and the owner was telling me about the death of his last rent controlled tenant. The tenant was elderly and because of his central location in the building, it prevented the owners from converting the house to a single family. They had bought out the other rent controlled tenants over the years and he was the last one remaining. However, their relationship was cordial and the owners would see him entering and leaving the building a few times a week.
After a few weeks of a noted absence and an unpleasant smell coming from the apartment, the owners knocked on the door repeatedly to see if he was there but there was no answer. They suspected a problem and called the police. As it turned out, the gentleman had expired on the floor of his apartment. Without going into the gory details, he had taken his own life about two weeks prior. He had no known relatives.
The body was removed and the sellers convinced the police to let them clean the apartment right then, since the stench was so strong and was permeating the rest of the house.
They bleached the floors and threw a party shortly after to celebrate their good fortune… The house was now worth about triple what it was before. Real estate can be a cold business.
A Story (Haunted)
This is a story that pertains more to general concept of stigma, than it does specifically to death (sorry to disappoint). An appraiser colleague in another part of the country told me a story about a supposed haunted house he was asked to appraise. He is a well-regarded professional who was active in local and national appraisal organizations. Local residents believed the house to be appraised was haunted, which did not impress my colleague much at all.
The house was vacant and he was provided the keys by the owners (I believe he was appraising this for estate tax purposes). It was a bright and sunny day, no wind, nothing extreme or unusual in any way.
He entered the house and was immediately uncomfortable – a perpetual chill down his spine for the duration of the inspection. He became very anxious to leave but saw the entire house and completed the inspection. He walked out on the front porch to finish his notes. As he turned to look back at the house, the front door slammed shut. He ran to his car without looking back and got out of there. Needless to say, there was an impact on value of the house when it sold later on.
Posted by Jonathan J. Miller -Wednesday, March 1, 2006, 12:01 AM
I stumbled across the latest issue of the National Catholic Reporter (ed. note- its an independent weekly established in 1964) with the front page headline: Catholic real estate bonanza: Firm touts ties with Vatican in bid for U.S. church property [NCR]. The article was about An Italian-owned Manhattan real estate development company claiming ties to high-ranking Vatican officials is bidding on properties owned by dozens of U.S. dioceses and religious orders.
Why is the Catholic church under contract to sell $100M in assets in three US cities and taking bids on $250M more?
Changing demographics – The church was experiencing a shift from North and East to West and South and from city to suburb.
Payouts from sexual abuse scandals – The church has paid off a $1B in lawsuits to date with more expected.
In Boston, the church has sold more than $200M in real estate since 2003 [Boston Globe].
Its not clear why the purchaser would announce the deal if they are still bidding on other properties with the church. The municipalities would benefit as these properties presumably would enter the tax roles as their ownership and use changes.
Posted by Jonathan J. Miller -Monday, February 20, 2006, 12:01 AM
A tip ‘o the hat to Big Picture for this one. The Many Unusual Looking Buildings On Earth [uniquedaily] has a series of buildings that seem to belong in Disney World (no offense to Michael Graves intended)
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