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Speaker 1: This is a real treat for us. It could be

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Speaker 1: a three hour conversation with Jonathan Miller. He's president and

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Speaker 1: CEO of Miller Samuel And all you got to know

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Speaker 1: is when he wanders down Madison Avenue and he goes

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Speaker 1: in three guys up by the Carlisle, the place comes

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Speaker 1: to a complete hall. He is the most important person

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Speaker 1: on real estate in this New York City, and I

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Speaker 1: might add Miami and the rest of the country as well.

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Speaker 1: Do we have a housing crisis in America? And do

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Speaker 1: we see it in an inflation in housing that's thirty

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Speaker 1: percent of the statistic we're going to see in twenty

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Speaker 1: ten minutes.

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Speaker 2: Absolutely, it is a crisis. It's a crisis of affordability

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Speaker 2: at all levels. If you think about the FED pivot

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Speaker 2: a year and a half ago, it's probably had a

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Speaker 2: disproportionate impact on housing because mortgage rates are such a

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Speaker 2: big driver of the housing market itself. Markets like New

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Speaker 2: York are sort of you know, it's cash or sixty

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Speaker 2: percent two almost two thirds cash buyers. But those cash

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Speaker 2: buyers are still looking at the financial markets. It's not

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Speaker 2: that they're not impacted by rising rates. They're impacted by

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Speaker 2: FED policy and as a result, what we've seen is

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Speaker 2: a sharp drop in sales over the last year and

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Speaker 2: a half, both in cash sales and in finance sales.

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Speaker 2: Cash shales are down about twenty percent and finance sales

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Speaker 2: are down between forty and fifty percent.

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Speaker 3: Let's do tell this into nine minutes from now, when

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Speaker 3: we get CPI and we get the sense of inflation.

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Speaker 3: How do you see rents and home ownership just generally

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Speaker 3: feeding into the inflation narrative next year? Do you think

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Speaker 3: that we're going to disinflate or reinflate some of the discussions.

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Speaker 2: I think the rental market is going to probably continue

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Speaker 2: to disinflate, using your parlance. They've peaked. They peak in

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Speaker 2: the summer seasonally, generally in New York anyway, and we're

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Speaker 2: seeing rents come down, but they're coming down nominally, like

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Speaker 2: you know, the opposite of rising rents. As I've told

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Speaker 2: you before, it isn't falling rents, it's stabilizing rents. And

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Speaker 2: I think we're looking at rents lower than peak, but

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Speaker 2: not low, meaning that affordability is not materially improved.

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Speaker 3: Some people would argue that for rates to go back

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Speaker 3: to even close to where they were before the pandemic.

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Speaker 3: You would have to see a real decline in house prices.

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Speaker 3: You'd have to see a real material shift in one

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Speaker 3: of the biggest costs for Americans. Do you foresee that

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Speaker 3: anywhere on the horizon?

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Speaker 2: No, simply because inventory is at closer at all time

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Speaker 2: lows in many of the markets around most of the

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Speaker 2: markets around the country. That is the housing metric that

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Speaker 2: has been the story.

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Speaker 1: Help us here, a wise one. We're going to get

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Speaker 1: this report in seven minutes. McKee's going to go months

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Speaker 1: over months, year over year. We're all living, our listeners,

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Speaker 1: our viewers are living pre pandemic. You have published the

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Speaker 1: Miller rent inflation statistic is we're up thirty percent since

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Speaker 1: pre pandemic, since twenty nineteen. How long is it going

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Speaker 1: to take us to lose that pain?

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Speaker 2: I would think two three years, even with rate cuts,

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Speaker 2: I think it's a while. Rental markets have momentum of

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Speaker 2: being sustained at a very high level for a long

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Speaker 2: period of time.

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Speaker 1: So we're going to be miserable here. Seriously, I'm let

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Speaker 1: me get a joke, folks, till twenty twenty seven.

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Speaker 2: I would think, so that there's not going to be

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Speaker 2: at least based on what we know now, there's not

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Speaker 2: going to be a rental price or purchase price correction.

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Speaker 2: Unemployment is too low, wages are elevated. It's hard to imagine.

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Speaker 2: I mean, you know, if you look at a FED

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Speaker 2: rate cut in the second half of twenty four, that's

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Speaker 2: a year from now, so you know, and that's not

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Speaker 2: going to change overnight. One sort of positive component to

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Speaker 2: this is I think that any kind of rate cut

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Speaker 2: on the set for sale market is going to have

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Speaker 2: a disproportionately high reaction in terms of sales activity. That

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Speaker 2: there's some sort of you know, the rate pivot interrupted.

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Speaker 2: What was this rocket ship of demand. So I think

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Speaker 2: any minor cut is probably going to you know, we're

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Speaker 2: not talking going to four or three percent at all.

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Speaker 2: What we're talking and maybe going in the sixes from

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Speaker 2: the mid sevens.

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Speaker 3: That's enough to grease the whales.

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Speaker 2: I think that's enough to grease the wheels, at least

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Speaker 2: in the near term. Remember, right now, in the most

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Speaker 2: suburban markets we're looking at bidding more market share of

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Speaker 2: forty to fifty percent of closings are still in a

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Speaker 2: big Absolutely, we had a lull in the summer the

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Speaker 2: suburbs that surround New York are. You're looking at forty

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Speaker 2: to fifty five percent of the closings in the third

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Speaker 2: quarter where we're bidding war.

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Speaker 1: Could you see John like you know out on Larchmont

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Speaker 1: or you know up and up in Bronxville, Brian Bronxville time.

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Speaker 3: There's no supply, you know, there's no supply, Johnathan coming

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Speaker 3: online at all.

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Speaker 1: It's the same old houses.

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Speaker 2: It's much tighter than suburbs. And it is in the

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Speaker 2: city if you're at a I'm not saying it's more affordable,

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Speaker 2: but the city, the city, relative to most markets because

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Speaker 2: it was late to the party, actually has more supply.

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Speaker 1: It's just still not you know, hang in the sixty seventies.

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Speaker 1: For John, he's you know, you.

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Speaker 3: Know everything, he's looking at five houses city.

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Speaker 2: I feel like that's the only reason I'm brought on

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Speaker 2: is to give you house hunning.

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Speaker 1: Is you got that right?

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Speaker 2: Good?

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Speaker 1: John? John Miller Hill there, John Miller there.

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Speaker 3: I have mist of Samuel. John's going to show it's

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Speaker 3: going to see it