For the second quarter in a row, we pinged Jonathan Miller?real estate appraiser, Curbed graph guy, blogger and the man who makes Elliman's market reports sing?for a chat about the latest Manhattan numbers. What follows is an edited account of that IM conversation, in an attempt to make it less boring.
JMillzInDaHouse: I am in a packed Starbucks that is blasting starbucktunes - oh the pressure.
CurbedWire: Even though the numbers in these reports largely reflect deals negotiated many moons ago, were you still surprised the reports didn't show a bigger drop in sales prices?
JMillzInDaHouse: Well, the trend in transactions has been declining for about a year and this pattern nearly always leads a price decline. when you parse out the market by re-sale and new dev, the decline began, based on closed sales, this quarter.
CurbedWire: so the fact that the median price of re-sales dropped a bit is the big flashing red light here?
JMillzInDaHouse: it is something to focus on, thats for sure - the overall numbers that include new dev include a slew of sales of from 12-18 months ago - thats why I separate them. incidentally, your graphic is pretty funny - David Lereah just admitted that he was aggressively sugar coating the housing market condition during his tenure at NAR
CurbedWire: yes, sometimes Curbed can be subtle! do you still think that your estimate that deals being done RIGHT NOW are off 20% in value from the summer holds true, or is that even a conservative estimate?
JMillzInDaHouse: the 20% figure is an average...we are seeing above and below that - for sure. the september events - bailouts of Fannie, Freddie, AIG, run on the oldest money market fund and Lehman bankruptcy over a 2 week period provided the "switch" if you will.
CurbedWire: last time we interviewed you, you were predicting big things for the Jets and Favre, so why should we believe you?
JMillzInDaHouse: Good point - Go Giants!
CurbedWire: if Eli Manning felt like ditching Hoboken and moving across the river, would you advise him to wait a bit longer, or is now the time to pounce?
JMillzInDaHouse: who knows? Thats up to the individual. I only care about presenting the market as clearly as I can and the consumer has to figure out what they want to do on their own. I heard a very funny comment by the Dallas Fed president - he was watching tv and an investor asked what position to take in real estate - the pundit answered "somewhere between cash and fetal."
CurbedWire: What do you think are the most shocking/telling results in your report?
JMillzInDaHouse: nothing too shocking, really, the market has been moving in this direction for the past year+ after thew summer '07 credit crunch. I suppose if I had to pick something it would be the speed of the change in conditions.
CurbedWire: so is the first quarter of '01 going to bring the pain?
JMillzInDaHouse: I am fairly sure it will show more negative results than 4Q did based on the contract activity right now in 4Q.
CurbedWire: but will it BRING THE PAIN?!
JMillzInDaHouse: I really like when you speak in ALL CAPS - it drowns out the starbucks music.
CurbedWire: was your nickname in college High Life?
JMillzInDaHouse: nope. It was Jon
CurbedWire: when you go to a bar and you want a beer, do you just ask for a Me or a Me Lite?
JMillzInDaHouse: you sound desperate
CurbedWire: what do you think is scarier, the decline in re-sale prices or the drop in number of sales?
JMillzInDaHouse: the number of sales is more important and they suggest more declines in the near term - lower activity generates more inventory/competition, leads to weaker price trends. The real wild card here is how quick or if all these trillions in debt and exposure jump start the economy and more importantly to housing, improve mortgage market liquidity. Falling mortgage rates are nice but fewer people qualify for them.
CurbedWire: on a scale of one to ten, how screwed is Manhattan real estate?
JMillzInDaHouse: philips or flathead?
CurbedWire: stop your games, miller! we want blood. BLOOD!!!
JMillzInDaHouse: Its going to get weaker before it gets better. how's that?
CurbedWire: yawn. anyway, what advice do you have for the kids out there, who want to grow up and one day become real estate appraisers?
JMillzInDaHouse: Don't. My kids would rather be a fireman. some correlation I suppose.
CurbedWire: any parting thoughts/words of inspiration/little prayers?
JMillzInDaHouse: housing forecasts mean nothing today until credit is stabilized - that comes first. ok gotta go make a living.
· Fourth Quarter Market Reports: Calm Before the Storm [Curbed]