Posted by Jonathan J. Miller -Wednesday, April 25, 2012, 9:28 AM 1 Comment
Quest Magazine asked me to write an intro piece on the luxury housing phenomenon i.e. “Real Estate Renaissance” followed by a number of housing types from the markets they publish within. Quest is a beautiful magazine with some interesting editorial perspectives and great visuals on high end real estate.
Here’s what I wrote (I’m arguably the driest writer in the magazine, but hey, it’s how I think):
Real Estate Renaissance: Jonathan Miller – April 2012
One of the primary characteristics of the U.S. coastal housing markets, after the dust settled from the collapse of Lehman Brothers, has been a sustained period of high-end market strength. Trophy properties are seeing new demand.
The sudden end to an era of reckless bank underwriting and subsequent entry into a period of fiscal austerity was expected to disproportionately crush the luxury housing market. Easy access to credit allowed for many consumers to live beyond their means.
The onset of the credit crunch led to the overnight evaporation of the secondary market for jumbo mortgages, too large to be purchased by ailing Fannie Mae and Freddie Mac. While the federal government focused on the former GSEs, little attention was given to improving access to mortgage financing for high-end housing. Banks now have to hold jumbo mortgages in their own portfolios rather than offload the risk to investors hungry for bigger returns. The much tougher jumbo mortgage financing requirements were expected to bring a collapse of high-end housing prices and grind sales activity to a halt. But that isn’t how it played out. The price spread between high-end and starter homes has expanded over the past several years despite irrational mortgage underwriting standards for jumbo mortgages. In fact, a remarkable number of home purchases at the high end of the market have been paid with cash rather than obtaining mortgage financing at commercial banks, thereby bypassing the lending industry’s legacy of poor lending decisions in the prior decade. The global accumulation of wealth during the global economic boom enabled many investors after its end to seek out luxury housing in the U.S., helping coastal markets outperform others.
The weakness of the U.S. dollar against other foreign currencies, specifically in Europe, South America, and Asia has brought investors to U.S. soil in droves. Initially, this was viewed as a currency play where wealthy foreign investors were simply taking advantage of the sharp discount for U.S. housing. While the favorable exchange rates may have tipped the balance towards the acquisition of U.S. assets like housing because of the perceived discount, investors were also moving their assets into a relatively more politically and economically stable environment.
Will the use of cash in housing purchases continue? It seems likely, perhaps out of necessity. Rational jumbo mortgage underwriting standards and the creation of stable secondary market for jumbo markets is not expected to return for years. Once those problems are eventually resolved, the widening gap between luxury housing and the balance of the market could very well widen further.
Posted by Jonathan J. Miller -Wednesday, April 4, 2012, 10:45 PM Comments Off
Had a quick couple of clips in this one covering the Manhattan housing market. Inventory restrained, pent-up demand for Q2 to be released, credit remains tight, etc. Always great to speak with Suzanne Pratt at NBR.
Posted by Jonathan J. Miller -Tuesday, March 20, 2012, 10:32 PM Comments Off
Was invited to be on Bloomberg TV’s Street Smart today with Trish Regan to talk about the outlook for Manhattan housing prices with particular attention paid to reduced bonus compensation. Always fun to go to BB.
True (funny) story just before I did the interview:
I was getting mic’ed up and makeup applied while waiting for my turn on the set when I looked up and standing in front of me was Patrick Doyle of Domino’s Pizza holding a large pizza box as a prop for his appearance (It must have been warm because it smelled great).
I introduced myself and he couldn’t have been nicer, and a bit self conscious standing in a newsroom holding a pizza box. I immediately remembered his latest commercial – my kid’s and I were commenting on it last weekend while watching March Madness. I quipped to him that I had a few ideas that could make me CEO – he cracked a smile and then proceeded to do a great interview – check out his closing line in the commercial so my story makes sense.
Posted by Jonathan J. Miller -Wednesday, February 29, 2012, 12:38 PM Comments Off
[click for video]
The Caroline Hepker of the BBC reports on the uptick in short sales on the East End. There are more and the number of high end listings are rising. I’m not clear of the reference for the following statement but she cites that:
For the first time, America’s wealthiest families are now losing their homes at a faster rate than any other group.
For my part, I was asked to discuss the state of national housing market for context. Short sales were not held back by the robo-signing scandal that had the effect of providing a temporary reprieve from foreclosures entering many housing markets across the country.
Short sales are a fact of life everywhere and don’t generally depress housing prices in and of themselves since lenders won’t accept offers that are significantly below current market levels.
House hunting in Hamptons as US market remains depressed [BBC News]
Posted by Jonathan J. Miller -Friday, February 3, 2012, 10:44 AM 1 Comment
Had a lot of fun with Tom Keene, Bloomberg’s editor-at-large, radio and TV anchor on his must watch show Midday Surveillance yesterday. Always flattering to be asked to guest co-host for the hour and a challenge to keep up with his fast paced wit. I’ve always felt that Bloomberg news, now with new emphasis on TV is business news the way it should be delivered – longer interviews and neutral presentations.
The show’s theme was housing and I felt compelled to give him more reasons to hand-wring about his upcoming apartment rent increase. Was fun to do.
The hour was divided into 4 segments, the last three with guests: