Posted by Jonathan J. Miller -Thursday, February 16, 2012, 12:18 PM
I was originally going to call this post: When Pundits Have No Idea What They Are Talking About but changed it to be more direct.
I have been a long time reader of City Journal and have been a fan of Nicole Gelinas’ writing. That’s why I was surprised to read a slanted rant-fest in the Winter 2012 edition called: The Rental Mania That Wasn’t. It’s inaccurate real estate stereotyping at its worst.
She writes a cynical critique of last weekend’s New York Times real estate story by Vivian Toy, a solid veteran reporter and friend of mine.
Gelinas demonstrates a lack of understanding with the Manhattan rental market, inconsistent with her long established writing credentials. She pontificates that the article was hyperbole and concludes the housing (rental) market has peaked because the New York Times said there was plenty of room to go:
If the Times thinks there’s no ceiling in sight, you can almost bet that the ceiling has already been reached. The paper of record has a track record on this. In 2005, the Times Sunday magazine ran a nearly 9,000-word story on the nation’s real-estate boom.
Remember the Time Magazine cover on housing?
Well the rental market still has plenty of wiggle room if we are talking peak. We are currently 27% below the inflation adjusted rental peak reached at the end of 2006. In other words we are not in uncharted territory as a rental market.
The Manhattan sales market didn’t peak until mid-2008. And the reference to Bob Toll confuses the national housing market with Manhattan market. The national market peaked in mid-2006, 2 years before Manhattan did.
The rental market is up 9.5% year over year and continues to rise. Why? Because credit remains tight and likely will remain tight for the next several years driving many people to rent rather than purchase.
And then there is the issue of “froth”:
Toy further notes that “to compete for top rents, some landlords are undertaking expensive apartment renovations in older rental buildings. Even 10-year-old properties are being subjected to face-lifts.” That points to landlord worry, not complacency. You don’t plunk down tens of thousands of dollars in free cash flow to overhaul an apartment unless you’re nervous that newly built apartments are going to pose a threat. In a sizzling rental market, nobody insists on a washing machine or a hardwood floor.
This logic also shows a lack of understanding with the current dynamics of the market. The renovations are being done because the cost of renovations are far less than the resulting increase in achievable rent. There is a premium on upgraded space. You can see it in the market.
And the closing snipe is hypocritical since Ms. Gelinas is held to the same standard as Ms. Toy.
Neither Toy nor the Times editors did their job here—unless their job is to sell real-estate advertising.
My recommendation to Ms. Gelinas is to be more responsible with your platform and actually understand the issue you are writing about. I live and breath housing metrics every day and was offended by the inaccuracy and mischaracterization of your writing.
The Rental Mania That Wasn’t [City Journal
For Rentals, No Ceiling in Sight [NY Times]
Posted by Jonathan J. Miller -Monday, November 28, 2011, 4:30 PM
Reading to keep you from thinking about how much weight you put on over Thanksgiving:
- Is American dream fragile? History says it’s strong. [CSM]
- Lost in Krappetown [City Journal]
- Worst. Congress. Ever. [Foreign Policy]
- Mortgage Principal Can Be Cut Without Moral Hazard [BankThink]
- Turn On the Server. It’s Cold Inside. [NY Times]
- Penzance lands Watergate offices for $76 million [WaPo]
- Is home ownership really a smart investment? [Toronto Star/Moneyville]
- Buzzonomics: Why a housing bubble won’t surface until at least 2013 (Canada) [Buzz Home]
- Utah among highest home-ownership rates in the country [Deseret News]
Posted by Jonathan J. Miller -Friday, September 9, 2011, 6:30 AM
Here’s a few before and after photos we took while inspecting properties for appraisals in downtown Manhattan. I got the idea to share these from Curbed’s post on this (and was taken aback by the unusually nasty reader comments) and from this interesting piece on City Journal called The Vanished Skyline.
< - BEFORE | AFTER ->
[click on any photo to expand]
I took the “before” photo from outside the World Financial Center in Battery Park City. I looked up and was blown away with the scale of the towers and the light. I made it a page on my fledgling web site and embedded the graphic in it. The pink “millersamuel.com” logo on the “after” photo was embedded on all our digital photos back in the day. It was really disorienting to take that photo.
We took this photo from the terrace of a downtown apartment a few weeks before and after.
Taken during an appraisal near the UN looking south on 9/10/01 and then a month later I believe.
Posted by Jonathan J. Miller -Monday, May 23, 2011, 12:14 PM
Here’s a sobering City Journal (love the pub and iPad app!) article on the state of the “The Tappan Zee Is Falling Down” – the replacement of the Tappan Zee Bridge crossing the Hudson River and connecting Westchester and Rockland County New York.
The Tappan Zee exemplifies the state of America’s infrastructure in 2011. We rely on it more than ever: each year, 51 million cars, trucks, and buses traverse the seven-lane “Tap,” as locals call it. More people commute over it than through the Lincoln or the Holland Tunnel, both of which cross the river to the south. Yet New York outgrew the bridge decades ago, with today’s traffic far exceeding the structure’s designed capacity. Worse, the Tappan Zee is a disaster in slow motion.
The bridge has several decades too old and undergoes continuous renovations. I thought the stimulus package would accelerate construction of roads and bridges but alas, the process is bogged down by the same federal government that brought us the stimulus package.
Its a key regional asset that impacts the economy and as an extension, the housing market.
Bridge naming: Tappan Indian tribe, + Dutch word for “sea”.
Posted by Jonathan J. Miller -Tuesday, November 23, 2010, 10:33 PM
A little more than 24 years ago we launched Miller Samuel (October 1986), just one year before the October 1987 stock market crash, as NYC was about to fall into a severe economic and housing downturn, culminating in the 1990-91 recession – mild for the US but severe for NYC. As a small business owner in NYC we are seeing our tax burden rise and our health care costs see double digit annual growth for more than decade.
Harvard economist Edward Glaeser writes an interesting piece in City Journal: Start-Up City: Entrepreneurs are the heroes of New York’s past and the key to its future. It’s about the entrepreneur as an economic engine that needs to be nurtured during periods of economic retrenchment and boy, do we have a structural disfunctional doozy.
Most within the residential real estate industry are by their very nature, entrepreneurs, whether or not they work for a large firm: real estate brokers, real estate agents, real estate appraisers et al.
studies have shown that all over the country, entrepreneurship—along with January temperature and education—is one of the three great predictors of urban success. But nowhere is that more the case than in Gotham, whose very history is a tale of entrepreneurship. To survive, New York must continue to bring forth innovators who will reinvent the city—with luck, making it more economically diverse. If they succeed, it will change as much between 2010 and 2050 as it did between 1970 and today.
Think about past industries that dominated the NYC economy:
- Financial Services
The Department of Labor statistics show that the No.1 employer by this year will be “self-employment.” Approximately, 10.5 million workers were self-employed in 2007, and that number is expected to jump markedly, according to the DOL. Self-owned businesses now make up about 80 percent of the GDP.
Not to get all preachy but government walks a fine line trying to turn this economy around: different regulations and oversight is probably needed to reduce the odds of what just happened from happening again in our lifetime – but too much regulation and oversight will delay the economy from getting traction for many years.
Let’s at least make sure we give entrepreneurs some breathing room. And plenty of sugar.
Posted by Jonathan Miller -Wednesday, April 28, 2010, 10:21 AM
I’m a big fan of the work of Harvard Economics Professor Edward Glaeser’s work, especially that related to Manhattan. This week we are hit broadside with two compelling pieces to read.
[click image to open article]
The first is yesterday’s Cities Do It Better article in the NYT Economix section where he asks the question:
What makes dense megacities like New York so successful?
Economic geography was one of my favorite courses in college because it was so applicable to understanding the logic of how a city evolved and operated. Access to natural resources, transportion, labor, etc. He references Jed Kolko’s essay in “Agglomeration Economics” that he edited.
A key point as far as I’m concerned:
In a multi-industry city, like New York, workers could readily find some other employer. The young Chester Carlson was laid off from Bell Labs during the Great Depression, then moved to a law office as a patent clerk and then joined the electronics company that would make Duracell batteries and then invented the Xerox copier.
It’s sort of like my assumption that it is much more likely you will run into someone you know from another state or went to high school with in Manhattan than you would if you lived a mid-sized city. High density brings opportunity.
But there is more risk in cities like Detroit whose economy has always been one-dimensional. Pittsburgh and Houston are examples of smaller cities that learned to diversify after hovering near insolvency in prior decades.
[click image to open article]
His second article was released in City Journal called Preservation Follies which warns against excessive landmarking which serves to make Manhattan less affordable. He’s not anti-preservation, but he makes a case for excessive landmarking which has including buildings that don’t deserve it. His approach was novel to me, in the way that he tracks acres as the metric of landmarking:
He also looks at the addition of housing units within landmark districts:
During the 1980s, the mostly historic tracts added an average of 48 housing units apiece—noticeably fewer than the 280 units added in the partly historic tracts and the 258 units added in the nonhistoric tracts. In the 1990s, the mostly historic tracts lost an average of 94 housing units (thanks to unit consolidation or conversion to other uses), while the partly historic tracts lost an average of 46 units and the nonhistoric tracts added an average of 89 units.
…and its impact on housing prices…
From 1980 through 1991, the average price of a midsize condominium (between 800 and 1,200 square feet) sold in a historic district was $494,043 in today’s dollars. From 1991 through 2002, that price was $582,671—an 18 percent increase. The average price of a midsize condo outside a historic district, meanwhile, barely rose in real dollars, from $581,865 in the first decade to just $583,352 in the second.
Posted by Jonathan J. Miller -Tuesday, July 21, 2009, 9:12 AM
One of the untold stories of the success of the NYC housing market of the last decade (obviously separate and apart from the credit boom) was the attention to detail. In the early 1990s my relatives in the midwest saw NYC as a scary place with tourists getting stabbed on the subway, graffiti, homeless everywhere, city services a mess and public spaces in disrepair. I grew weary of “New York Bashing” in the media. In 1991, my father was mugged twice in broad daylight on a weekday afternoon outside of my old office on 45th and Fifth Avenue.
There is a great article by George L. Kelling in City Journal called: How New York Became Safe: The Full Story A citywide effort, involving many agencies and institutions, helped restore order.
New York City figured its way out of a seemingly hopeless situation. Young families were fleeing to the suburbs in droves. I always viewed this success through the lens of the efforts by NYC government, but thats only a party of the story. Many individual organizations focused on their own turf and made a difference.
I feel that this laid the ground work to stem the exodus from the city, improve city revenues and encourage residential development.
In sum, a diverse set of organizations in the cityâ€”pursuing their own interests and using various tactics and programsâ€”all began trying to restore order to their domains.
My concern now is that severe budget cutbacks and a weak economy could undo many of the gains in the improvement in the quality of life many living in the city have experienced. This was a phenomenon also seen in other metro areas, but in my limited travels, more of the improvements of the past decade were a result of the credit boom whereas the boom in NYC began in the late 1990s.
Posted by Jonathan J. Miller -Sunday, May 17, 2009, 11:06 PM
The City Journal, a quarterly must-read urban affairs journal published a terrific article on the cycle of Washington’s efforts to encourage homeownership called Obsessive Housing Disorder by Steven Malanga.
The author suggests our troubles began in the 1922 with Herbert Hoover’s Own Your Own Home Campaign and was seen in nearly all of the following decades.
The author suggests it’s based on an unsubstantiated political premise without empirical data – a “cliche of political discourse” that:
Homeowners make better citizens.
As a result, homeownership continues to be pushed and the view is myopic:
In December, the New York Times published a 5,100-word article charging that the Bush administrationâ€™s housing policies had â€œstokedâ€ the foreclosure crisisâ€”and thus the financial meltdown. By pushing for lax lending standards, encouraging government enterprises to make mortgages more available, and leaning on private lenders to come up with innovative ways to lend to ever more Americansâ€”using â€œthe mighty muscle of the federal government,â€ as the president himself put itâ€”Bush had lured millions of people into bad mortgages that they ultimately couldnâ€™t afford, the Times said.
When I think back to our recent housing boom and the mantra of Fannie Mae and the former administration, we paid a significant price for a 5% boost in homeownership from 64% to 69% in a decade. The resulting economic damage render moot the effort – we got the ownership numbers boosted through artificial financial means.
Although I tend to believe that owner occupied housing is better cared for by its occupants (speaking as a former renter), I had never considered the idea of history repeating itself in this economic sector, in such a specific way.
A good read.
UPDATE: Another excellent article in the same publication: Spendthrift Sunbelt States
Arizona, Florida, and Nevada have run through the riches of their boom and are starting to look more like cash-strapped New York.
Posted by Jonathan J. Miller -Thursday, May 10, 2007, 7:50 AM
With 4 kids, 3 businesses, the Yankees and a lot of things going on in between, I still wonder why I haven’t been reading as many books as I used to. My wife is a voracious book reader, but over the past few years, I haven’t kept pace.
I took on this self-loathing view point after attending Daniel Gross‘ book launch last night for Pop! Why bubbles are good for the economy. I spoke with him at his book launch party last night as well as met Barry Ritholtz, who, along with Dan, are among the smartest and most acessible writers and interpreters of economics out there.
I read a large portion of Dan’s new book on my train commute home. Really good…enjoyable. When I got home, I decided to take a look at my magazine and newspaper subscription list and I realized how large it has become. To examine my list…
I am not including papers I pick up for my commute home including the NY Post, NY Sun, NY Daily News or Newsday, or count copies of Metro or AM New York for the subway.
I am not includimg the 119 rss feeds coming into my bloglines account, the email blasts I subscribe to, nor the sites like Slate, Salon, CNN/Money, Curbed, TheStreet.com, Inman, WashingtonPost.com, SFGate.com (SF Chronicle), Bankrate.com, PIMCO, Forbes.com, Seeking Alpha and quite a few others I like to check in with every day.
Now there are a few on the list that are simply impossible to read everything or I choose not to (namely the New Yorker and The Economist because they are weekly and chock full of stories although I admit I look at every cartoon in the New Yorker.) I definitely don’t read all of these publications front to back. I included non-real estate subscriptions because, well, you never know.
Its apparent that anyone can get so involved in reading news, it could become a full time job. Where’s Evelyn Wood when I need her?
I feel like a sieve, with a slew of these publications going through my brain and the parts that stick, end up in my blog and in my understanding of the real estate market, the economy, and of course, make intelligent picks for next year’s March Madness tourney.
I suspect I am missing a few but don’t have time to check…too many to things to read. Here are the subscriptions I can think of and these are in no particular order.
new york times
wall street journal
new york observer
new york magazine
new york living
time out new york
the real deal
hemmings muscle car
real estate weekly
2 local weekly newspapers
The quantity has cut into my book reading time, that’s for sure. Its a good thing I have invented more time in the day (no time to explain). Suggestions for additions are welcome (no lesson learned from this exercise).
Hey did you hear about that new magazine that came out the other day….?
UPDATE: Here’s a few I forgot to mention:
new york home
real estate valuation magazine
Posted by Jonathan J. Miller -Thursday, December 22, 2005, 12:01 AM
In Nicole Gelina’s article for City Journal Theyâ€™re Taking Away Your Property for What? covers the backlash of the controversial Kelo v. City of New London eminent domain [Wikipedia] ruling last summer that rattled the concept of private property.
…what critics havenâ€™t noticed is that the decision
simply expands the Courtâ€™s approval of a practice
that state and local governments have long used
to bring about urban renewal or economic
development. More important, they have also
failed to notice that, over its long history, this
practice has almost never worked. The Courtâ€™s
decision fails not just on moral but also on
“50 years ago the Court replaced the â€œpublic useâ€ rationale for eminent domain with a more nebulous concept of â€œpublic purpose,â€ in order to allow cities to condemn slums to remove urban blight. “
In Kelo, the 5-4 majority went a step further,
ruling that governments donâ€™t need to show
that property they condemn is even nominally
“the vague promise of higher tax revenues and the hope of private-sector jobs through planned development are no less public goods than a road or a water-treatment plant. And so the Court allowed New London, Connecticut, to condemn a middle-class waterfront neighborhood and to parcel it out to private developers who would make more lucrative use of the property, including building luxury condos.”
Big-box retailers to acquire properties [CNN] for development in prime locations.
Limits on Eminent Domain May Go Too Far, Experts Warn [NPR]
In the post Concern over the Kelo case has also inspired a flurry of legislation at the national and local level. [Gotham Gazette]
“In Congress, a bill, dubbed the â€œPrivate Property Rights Protection Act of 2005, has already passed the House and is awaiting a vote in the Senate. It would withhold federal aid from states that Congress believes abuse eminent domain.
In New York, there are several bills being considered in Albany, including a package of legislation drafted by Assemblymember Richard Brodsky which would slow down local eminent domain proceedings, create an ombudsman to oversee the use of the law, and require 150 percent of market value be paid for private property that the government takes over. This week, the New York City Council will hold hearings on the subject.
And recently opponents of eminent domain claimed victory when the U.S. Court of Appeals ruled that the city of Port Chester, New York failed to properly alert a businessman of his right to challenge an eminent domain decision before the government seized his four buildings to make way for a convenience store. The courtâ€™s decision, some said, was a warning to local governments who may be tempted to take private property without properly notifying the people who own it.”