Posted by Jonathan J. Miller -Wednesday, June 30, 2010, 12:13 AM Comments Off
I really enjoyed speaking with Orest Tomaselli, CEO, National Condo Advisors, LLC about project approvals, reserve funds, Fannie Mae, FHA and shadow inventory. National Condo Advisors, LLC, is comprised of real estate finance and legal professionals and provides expert consultation to builders, developers, homeowners’ associations, institutional investors, lenders, and real estate firms.
His other firm National Condo Inspections, LLC provides services such as reserve studies, phase I environmental site assessments, noise studies, and flood zone solutions.
“First time homebuyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts,” said James J. Saccacio, chief executive officer of RealtyTrac. “As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration.”
Average sales price in some stage of foreclosure was nearly 27 percent below the average sales price of properties not in the foreclosure process.
Foreclosure sales increase 2,500 percent from 2005 to 2009
A total of 232,959 U.S. properties in some stage of foreclosure
Foreclosure sales accounted for 29 percent of all sales in 2009, up from 23 percent in 2008 and up from 6 percent in 2007
Ohio, Kentucky, Illinois post highest foreclosure discounts (39%)
Foreclosure sales accounted for 64 percent of all sales in Nevada, the highest in the nation
It doesn’t look very good for housing. However, the sooner these properties work their way through the system, the sooner we’ll see a housing market recovery.
The U.S. Department of Housing and Urban Development (HUD) and the
U.S. Department of the Treasury today introduced a monthly scorecard on the nation’s housing
market. Each month, the scorecard will incorporate key housing market indicators and highlight
the impact of the Administration’s unprecedented housing recovery efforts, including assistance
to homeowners through the Federal Housing Administration (FHA) and the Home Affordable
Modification Program (HAMP).
“Scorecard”? They got game of transparency, no? Ok that’s harsh – nevertheless it captures a lot of great housing data captured in one location to show the “Obama Administration’s efforts to stabilize the housing market and help American Homeowners.”
The acquisition market has been gathering steam in the second quarter, with cap rates declining nationally and the gap between buyers and sellers narrowing.
For the last two years, the typical sellers seemed to be only those who had to sell. And the perception that rents and values will escalate two years from now has kept many owners who bought at the height of the market from listing their properties.
But among longer-term holders, there’s been a shift in attitudes in the past 90 days. The bidding on high-quality assets has become so frenzied that owners are beginning to ask themselves if now really is such a bad time to sell.
We are already seeing this on an individual apartment and single family home basis, with investors comprising the lion’s share of the purchase activity for speculative purposes. Record low mortgage rates and a precipitous drop in housing prices made the purchase decision pretty easy.
Economically speaking, nothing has changed in a meaningful way in the short term, although the consensus seems to be that we are going in the right direction.
After raising fresh capital over the past 18 months from investors hungry to recoup their losses of the past few years, funds looking to invest in multi-family and distressed assets have been waiting on the sidelines afraid of their own shadow, looking for the right time to make a move. But the problem is, everyone seems to be doing it at the same time and they seem to be more concerned about what their colleagues are doing rather than the fundamentals.
That’s because investors want their money working for them and are tired of waiting for the fund managers to get in the game so to speak.
The surge in SFR and condo sales activity nationwide as a result of the tax credit, sharp declines in prices and rising foreclosures are bringing more affordability and falling borrowing costs to the housing market. It’s not clear whether this can be sustained. If this level of activity can be, I’m not sure how to do that math.
This “happy” real estate news for the past 6 months has played a role in the new unbridled optimism by fund managers looking to acquire multi-family and distressed assets and are under pressure from their investors and who don’t want to be left behind.
Our commercial group Miller Cicero is seeing this sentiment first hand when speaking with investors.
It feels like the beginning of a new asset bubble because the math simply isn’t there. There are a lot of smart analysts punching key strokes on their HP12c’s trying to do the math.
Of course they don’t seem to know how to do the math and in a bubble, that’s besides the point.
Posted by Jonathan J. Miller -Monday, June 28, 2010, 11:59 PM Comments Off
A few years ago I agreed to provide aggregate luxury housing market data I was compiling to Bloomberg News for an index they were building. Time passed, the person who contacted me left and I forgot about it. There has been significant interest in the coverage of the luxury housing market in Manhattan in the past few weeks and it reminded me to check out that index. Apparently, it’s live, kept current and running on the Bloomberg terminals (that I can’t afford but would love to have).
We’ve got two namesake indexes!
Miller Samuel Manhattan Luxury Housing Price Per Square Foot [MLH SQFT]
Miller Samuel Manhattan Luxury Housing Median Sales Price [MLH MED]
The luxury market has showed renewed vigor since the beginning of 2010 after being largely dormant in 2009. Our 1Q 2010 report series showed a jump in activity in the high end market across the New York City metro area no matter the price point of the local market. A shift in sales mix towards larger sized property sales was a heavy dose of deja vu. It’s quite a curious phenomenon given the problems with jumbo financing, the stronger dollar, pending financial reform and high unemployment. However it is clearly happening – but will it be sustained?
Here’s a sampling of the recent luxury market coverage:
Co-op Sales Spark Market Worry [WSJ]…the deal, a dramatic example of how badly some segments of the luxury co-op market have been hit by the downtown, is raising a tizzy among brokers. It raises doubts about the rosy picture portrayed by brokers who have insisted that sales activity is picking up—so much so that some recent co-op deals have been signed above the asking price…Conclusion: High end co-op market may be faltering.
Some Condos Avoid Shoals [WSJ]In the upper stratosphere of the Manhattan real-estate market there are a few buildings that seem impervious to the downward drag of the economy. Fifteen Central Park West is one of these, if a recent deal involving a three-bedroom apartment there is any guide….Conclusion: 15 CPW is outperforming the rest of the high end market.
Large Apartments Are the Rage in New York City [New York Times]…Sales of three- and four-bedroom apartments swelled last year, even as sales of smaller places declined, and the trend has since persisted. The increased sales are another sign that New York City has become a more appealing place for families…Conclusion: Large apartments are doing better in the market than last year.
Sale of two cities [New York Post]…Despite the hefty price tag — which doesn’t include $35,445 a month in maintenance fees — an international set of moguls is flocking to see the new space. “There are a lot of billionaires around,” said Woodbrey, who shows the apartment about five times a week to moneybags from as far away as Texas and India. “For some of them, it’s their 10th home.”Conclusion: Buyers are plentiful for high end property.
Million-Dollar Bargain Homes [Forbes]…In hard-hit luxury markets, huge discounts are making mega-mansions more accessible.Conclusion: The discounts in the hard hit luxury market are attracting buyers now.
Posted by Jonathan J. Miller -Sunday, June 27, 2010, 10:53 PM Comments Off
A while back, Erica Ferencik cold-called me to pitch her self-published novel as blog-worthy for Matrix called Cracks in the Foundation, a humorous story of real estate broker who has listed an outhouse for sale. She is an active real estate broker in the Boston area (including the town I grew up in, the ‘ham). She was a stand-up comedienne for 12 years as she describes, “in a prior life.” She has ghost-written several novels, writes articles for magazines and websites, is a prizewinning screenwriter and has performed several radio pieces for WGBH (Boston NPR affiliate) for “Morning Stories.”
I thought it would be fun to have a conversation with her, and of course, it was.
Posted by Jonathan J. Miller -Saturday, June 26, 2010, 3:22 PM Comments Off
For each week’s Eye on Real Estate Show on WOR NewsTalk Radio 710, we include a segment called “The BlogCast” where I discuss several housing related (sometimes a stretch) posts from some of my favorite blogs. They cover topics that are current, funny or simply a “must read”.
Saturday’s BlogCast covered the following blog posts:
[WSJ/Real Time Economics]Economists React to Financial Overhaul Paul Ashworth of Capital Economics writes: Many of the provisions in the bill would help to reduce the risk of an identical crisis developing… Unfortunately, as the old gag goes, if you’ve seen one financial crisis you’ve seen one financial crisis… The financial overhaul bill will not prevent the future mispricing of assets nor will it prevent speculators of all types borrowing money. Nevertheless, the bill should help to ensure that in future commercial banks aren’t the ones taking the speculative risks. The concern is they are protecting us from something that already happened when next time it will likely be different.
[The Mess That Greenspan Made]Punish the Strategic Defaulters!It’s not hard to understand the motivation behind Fannie Mae’s announcement that they intend to punish homeowners who walk away from their underwater properties…The new direction seems to run counter to the Obama administration’s efforts to reinvigorate the housing market.
[Minyanville]Why Weathermen Get It Right More Often Than AnalystsNo problem in judgment and decision making is more prevalent and more potentially catastrophic than overconfidence…Although both groups of experts (weatherman and financial analysts) revealed the overconfidence effect, this effect was significantly higher among financial analysts than among the weather forecasters.
If you missed this past Saturday’s show or any prior show, you can listen to the podcast at any time or subscribe to it for free via iTunes to always get the latest show delivered automatically to your computer or handheld device. My Blogcast is usually in the first hour of the show.
Posted by Jonathan J. Miller -Friday, June 25, 2010, 12:25 AM 1 Comment
I “peel the apple” with Ana Maria Sencovici of The Apple, Peeled and end up having a great conversation about helping the real estate broker move from salesperson to trusted advisor. She and her business partner Marie Espinal launched their blog and newsletter at the beginning of the year. Their focus is to provide content that their clients, who are real estate agents, can use to help them stay connected with the issues of today to be more effective.
Ana Maria is passionate about their mission (and I am paraphrasing) to elevate the level of discourse in the world of Manhattan real estate covering markets trends, real estate topics and developments with a transparent and objective lens.
Posted by Jonathan J. Miller -Thursday, June 24, 2010, 12:28 AM 1 Comment
Here’s my interview covering the drop in new home sales. Hint: It’s all about jobs.
NEW YORK, NY June 23, 2010 —Sales of new homes sales fell nearly 33 percent in May, while sales of existing homes were off more than two percent. Guest: Jonathan Miller, president and CEO of Miller Samuel, a New York-based real estate appraisal firm, says the real worry now is what happens to the housing market in the months ahead.
Check it out:
Ok, since we’re embedding media, here’s a clip that’s a more fun than my take on new home sales numbers:
The index reached a record low, but I think the month over month analysis is basically meaningless. By looking at the chart it clearly shows there is tremendous improvement needed before the market can be characterized as “recovered.” The federal tax credit played an important role in new home sales this year but that merely stole sales from future months, incentivizing participants to purchaser earlier than the otherwise would have.
Sales of new single-family houses in May 2010 were at a seasonally adjusted annual rate of 300,000, according to
estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.
This is 32.7 percent (±9.9%) below the revised April rate of 446,000 and is 18.3 percent (±13.0%) below the May 2009
estimate of 367,000.
The median sales price of new houses sold in May 2010 was $200,900; the average sales price was $263,400. The
seasonally adjusted estimate of new houses for sale at the end of May was 213,000. This represents a supply of 8.5
months at the current sales rate.
This chart presents the United States New Residential Sales [non-seasonal monthly rate - census.gov]
The index captures the new home construction sales trends but doesn’t handle contract rescissions, something that dominated the sales process as the housing market corrected. Although I am wary of seasonal adjustments, my chart presents them including the annualized version since that is the way the numbers are reported. I also present the monthly version without annualized or seasonal adjustments (see above). Same idea just harder to read a trend from.
This index has some of the wildest margins of error ever presented. In the quote above, look at the ± adjustment that is applied to the m-o-m and y-o-y change. Its insanely high/low.
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