Page 2 - NY Cooperator December 2019

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2 THE COOPERATOR —
DECEMBER 2019
COOPERATOR.COM
The Reality
Jonathan Miller is the president of $10,000. It slowed down New York and its inevitably fall.
Miller-Samuel Inc., a real estate appraisal suburbs before anywhere else. In general,
and consulting firm located in New York. California tends to run a year behind New the past year have mitigated damage from
Miller is a national expert on both com-
mercial and residential markets, and pub-
lishes annual and quarterly reports for
markets throughout the United States in-
cluding New York, Boston, southeast and sales markets is the price of money itself. but that’s sort of low-hanging fruit when
western Florida, California, and select Most buyers (though not all) borrow sub-
markets in Texas and Colorado, among stantially to purchase a home, especially sales activity and inventory first. Offer-
others. According to him, “2019 has been in the starter market. When interest rates ing prices take 12 to 24 months to show a
about taxes, especially in New York City – aka the cost of money – rise, month-
and other high tax areas. The change in ly carrying costs become higher. That
the SALT deduction that went into effect change in financing cost can depress or
last year played havoc in the purchase inflate a market. When rates fall, buyers
market because it caps deductions at can afford more; when they rise, prices
York in trends, and we are seeing similar the effect of the reduction in SALT de-
trends pick up there now.”
Sensitivity to Interest Rates
Another major factor in real estate is that most people look at prices first,
“Mortgage rates falling a full point over
ductions,” says Miller. “What’s really im-
portant when we look at housing trends
it comes to trends. One should look at
pattern after sales and inventory do their
thing. We saw inventory rise in 2018. In
2019, we saw prices begin to slide. In
2020 we will see more of that. But ulti-
mately, the effects of the SALT reductions
were skewed by the drop in interest rates
for home mortgages. Overall, the situa-
tion is not as bad as it could have been.”
The Deepest Cut
The most pronounced change, accord-
ing to Miller, has come at the top of the
market – the so-called luxury sector – in
all areas of the nation. In places like New
York City and Miami, the top end of the
market was overbuilt to begin with, and
there was far too much inventory. Many
of these units are not moving.
Miller notes that inventory in New
York’s Westchester and Fairfield counties
is more stable, mostly due to low interest
rates, but their high end is still off. The
area overall is slowing, and pricing are
slipping.
Not all segments are showing the same
softening: in the aggregate sales are down
and prices are up – though the starter
market for first home purchases is still
strong due to lower interest rates. Miller
believes the overall market will stay like
this for a couple of years, unless there is a
sudden rise in interest rates, which might
cause a short-term burst with buyers get-
ting in to beat the rising rates.
“The bottom line,” says Miller, “is that
sellers still haven’t gotten the memo.”
They are still clinging to the price they
thought they would get a couple years
ago. It takes sellers longer than the rest
of the market to adjust to new forces and
factors.
Boston
Of the market in and around Boston,
Miller says, “The downtown market is
still booming – it’s one of the fastest mov-
ing markets in the country.” The condo
and townhouse market there continues
to show low inventory and high sales. It
does fluctuate over the years, but for the
most part affordability is the main issue.
According to Bobby Woofter, princi-
pal agent for My Boston Condo, “Lower
interest rates have buoyed the market in
2019. But sales are lower, and inventory
is up nonetheless. Prices rose quickly
over the past decade, and today’s buyers
aren’t finding deals as good as they once
did. There is also lots of stock in the lux-
ury market, which is a bit overbuilt.”
Woofter continues, explaining that,
“Boston still has a housing shortage over-
all. In 2020, we are nearing an all-time
population high. The real challenge is
affordable housing. Middle-market units
are the only place where we don’t see in-
ventory increasing. I expect 2020 will
continue at the current pace.”
Politics
Non-market considerations are also
affecting the housing market. The main
2019-2020...
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