1
00:00:02,040 --> 00:00:06,000
Speaker 1: This is Master's in Business with Barry rid Holds on

2
00:00:06,240 --> 00:00:07,320
Speaker 1: Bloomberg Radio.

3
00:00:08,200 --> 00:00:11,400
Speaker 2: This week on the podcast, our returning champion for the

4
00:00:11,440 --> 00:00:15,680
Speaker 2: sixth time, my friend Jonathan Miller. He is founder and

5
00:00:15,960 --> 00:00:19,160
Speaker 2: CEO of Miller Samuel, where he has been covering the

6
00:00:19,200 --> 00:00:22,040
Speaker 2: real estate market for the better part of forty years.

7
00:00:22,800 --> 00:00:25,680
Speaker 2: Not only is he an appraiser, he's pretty much been

8
00:00:25,720 --> 00:00:30,440
Speaker 2: in every single penthouse in Manhattan. Some of the stories

9
00:00:30,680 --> 00:00:33,559
Speaker 2: he tells. I couldn't get him to coax out stories

10
00:00:33,600 --> 00:00:36,720
Speaker 2: about David Bowie and other celebrities, but I've heard them

11
00:00:36,760 --> 00:00:40,080
Speaker 2: all over at beer and they're amazing. There are few

12
00:00:40,120 --> 00:00:43,880
Speaker 2: people more knowledgeable about what's going on in the state

13
00:00:43,920 --> 00:00:47,320
Speaker 2: of real estate, why it got to where it is today,

14
00:00:47,440 --> 00:00:50,840
Speaker 2: how it's changing, and what you should know about prices

15
00:00:51,120 --> 00:00:55,000
Speaker 2: and supply in the near future than Jonathan. He is

16
00:00:55,160 --> 00:00:57,880
Speaker 2: just simply the go to guy when it comes to

17
00:00:58,080 --> 00:01:01,680
Speaker 2: residential real estate. I found this conversation to be a

18
00:01:01,680 --> 00:01:03,960
Speaker 2: lot of fun, and I think you will also. With

19
00:01:04,120 --> 00:01:09,000
Speaker 2: no further ado, my conversation with Miller Samuels Jonathan Miller.

20
00:01:09,319 --> 00:01:11,840
Speaker 2: Jonathan Miller, Welcome to Bloomberg.

21
00:01:11,959 --> 00:01:14,720
Speaker 1: Oh great to be here. It feels like I've been

22
00:01:14,760 --> 00:01:15,959
Speaker 1: here before.

23
00:01:15,959 --> 00:01:18,800
Speaker 2: You're a returning champion. I think this is your fourth,

24
00:01:19,040 --> 00:01:24,040
Speaker 2: fifth something, sixth, sixth. So every time there's tumults in

25
00:01:24,120 --> 00:01:27,640
Speaker 2: the real estate market, my instinct is always to say,

26
00:01:28,080 --> 00:01:31,319
Speaker 2: let's get Jonathan in here and talk about what's going

27
00:01:31,360 --> 00:01:35,160
Speaker 2: on in the real estate world. To talk about what's

28
00:01:35,200 --> 00:01:37,680
Speaker 2: going on in real estate before we get to that.

29
00:01:37,760 --> 00:01:39,679
Speaker 2: For the people who might not have listened to the

30
00:01:39,680 --> 00:01:43,720
Speaker 2: previous five conversations we've had, why don't we just delve

31
00:01:43,720 --> 00:01:47,080
Speaker 2: a little bit into your background, starting with you said

32
00:01:47,120 --> 00:01:51,280
Speaker 2: you stumbled into a praising in real estate. Tell us

33
00:01:51,320 --> 00:01:51,920
Speaker 2: what that means.

34
00:01:52,080 --> 00:01:56,520
Speaker 1: Well, Actually, I moved to New York in the mid eighties,

35
00:01:56,840 --> 00:02:00,960
Speaker 1: and because my parents had moved here and my sister

36
00:02:01,000 --> 00:02:03,720
Speaker 1: had moved here, and they're saying this is incredible. I

37
00:02:03,760 --> 00:02:08,240
Speaker 1: grew up in the DC area and was living in

38
00:02:08,280 --> 00:02:11,680
Speaker 1: the Midwest, and my wife and I came to a

39
00:02:11,720 --> 00:02:15,440
Speaker 1: wedding here and were completely hooked. Within three weeks, we

40
00:02:15,560 --> 00:02:18,280
Speaker 1: sold our cars and moved and slept on my parents'

41
00:02:18,720 --> 00:02:24,639
Speaker 1: apartment one bedroom apartment floor. Within three weeks of our

42
00:02:24,720 --> 00:02:28,080
Speaker 1: visit here. We just wanted to be here, and there's

43
00:02:28,080 --> 00:02:29,320
Speaker 1: no regrets. We love it.

44
00:02:29,440 --> 00:02:33,639
Speaker 2: The nineteen eighties New York area was kind of transitioning

45
00:02:33,760 --> 00:02:37,760
Speaker 2: from yes, the really dumpy seventies to hey, the eighties

46
00:02:37,760 --> 00:02:40,320
Speaker 2: and the nineties were kind of a boomy are you yeah?

47
00:02:40,400 --> 00:02:40,600
Speaker 1: Yeah?

48
00:02:40,760 --> 00:02:41,919
Speaker 2: What was that transition like?

49
00:02:42,120 --> 00:02:47,320
Speaker 1: Well, when we moved and we went through we basically

50
00:02:47,440 --> 00:02:49,720
Speaker 1: you got the ideas of family to start a real

51
00:02:49,800 --> 00:02:55,400
Speaker 1: estate appraisal business. We'd actually raised money from Japanese investors

52
00:02:55,800 --> 00:02:58,360
Speaker 1: through an attorney to start a real estate brokerage firm

53
00:02:59,160 --> 00:03:03,320
Speaker 1: and got to the bottom of the form where you

54
00:03:03,360 --> 00:03:05,800
Speaker 1: had to sign the dotted line and said no, let's

55
00:03:05,800 --> 00:03:09,240
Speaker 1: do appraisal. It was just like it was, you know,

56
00:03:09,400 --> 00:03:12,800
Speaker 1: just this sort of odd moment where we really didn't

57
00:03:12,800 --> 00:03:16,640
Speaker 1: want to become real estate brokers, and we had real

58
00:03:16,720 --> 00:03:20,880
Speaker 1: estate expertise. We had a lot of technology that we

59
00:03:20,880 --> 00:03:25,799
Speaker 1: were playing with. I used to sell units in an

60
00:03:25,840 --> 00:03:31,440
Speaker 1: on site sales condo new development on the Upper east Side,

61
00:03:31,919 --> 00:03:35,080
Speaker 1: and I literally put the entire schedule A, which is

62
00:03:35,120 --> 00:03:38,800
Speaker 1: the pricing square footage unit numbers in a Hewlett Packard

63
00:03:38,840 --> 00:03:42,480
Speaker 1: forty one B using bitmapping, and we could walk around

64
00:03:42,560 --> 00:03:44,840
Speaker 1: and instead of having you know, when people had asked me,

65
00:03:44,880 --> 00:03:46,520
Speaker 1: what are the common chargers, what are the you know,

66
00:03:47,200 --> 00:03:50,839
Speaker 1: I'd literally have it in my handheld and we sort

67
00:03:50,880 --> 00:03:55,480
Speaker 1: of turned that into a valuation business. And it's been

68
00:03:55,680 --> 00:03:59,320
Speaker 1: since eighty six that we've been in a praising property

69
00:03:59,360 --> 00:04:01,240
Speaker 1: about five a year in Manhattan.

70
00:04:01,320 --> 00:04:04,760
Speaker 2: Wow, that's amazing. So before we get to the pandemic,

71
00:04:04,800 --> 00:04:08,520
Speaker 2: which obviously had an enormous outsized effect on real estate,

72
00:04:08,840 --> 00:04:11,400
Speaker 2: let's talk a little bit about the financial crisis in

73
00:04:11,480 --> 00:04:15,280
Speaker 2: the mid two thousands. A lot of real estate companies

74
00:04:15,320 --> 00:04:18,120
Speaker 2: crashed and burned. Then how did you manage through the

75
00:04:18,279 --> 00:04:22,680
Speaker 2: GFC and what sort of world were we existing in

76
00:04:22,800 --> 00:04:23,160
Speaker 2: back then?

77
00:04:23,279 --> 00:04:27,320
Speaker 1: Well, actually I thought leading up to the Great Financial Crisis,

78
00:04:27,360 --> 00:04:31,000
Speaker 1: I thought to myself, we're going to be out of

79
00:04:31,040 --> 00:04:35,240
Speaker 1: business within a couple of years because nobody wanted an

80
00:04:35,240 --> 00:04:39,640
Speaker 1: independent valuation. Everybody knew the number but the appraiser, and

81
00:04:40,080 --> 00:04:45,960
Speaker 1: so the system incentivized mortgage brokers to hire the appraisers

82
00:04:46,040 --> 00:04:49,240
Speaker 1: that made the numbers for them because they wouldn't get

83
00:04:49,240 --> 00:04:53,240
Speaker 1: paid until the deal closed. And we weren't morally flexible,

84
00:04:54,480 --> 00:05:00,440
Speaker 1: and so that was really a lean period. And remember

85
00:05:00,440 --> 00:05:07,080
Speaker 1: I was interviewed in some national TV program interviewed me

86
00:05:07,160 --> 00:05:10,200
Speaker 1: and said, you know what's the you know, what do

87
00:05:10,279 --> 00:05:13,120
Speaker 1: we not know, And I said, most of the appraisals

88
00:05:13,160 --> 00:05:16,280
Speaker 1: being done through mortgage brokers aren't worth the paper they're

89
00:05:16,320 --> 00:05:20,200
Speaker 1: written on. And I'd say seventy five percent of them. Wow.

90
00:05:20,320 --> 00:05:24,200
Speaker 1: And then I was sort of attacked by my industry

91
00:05:24,520 --> 00:05:27,600
Speaker 1: that at least the local competitors who were very morallly

92
00:05:27,680 --> 00:05:31,680
Speaker 1: flexible and were really doing well. And in two thousand

93
00:05:31,680 --> 00:05:34,359
Speaker 1: and eight, that same journalist came to me and said,

94
00:05:34,480 --> 00:05:36,839
Speaker 1: this is the guy who told us three years ago

95
00:05:37,360 --> 00:05:41,920
Speaker 1: that this was going to happen. And I ever since then,

96
00:05:41,960 --> 00:05:44,560
Speaker 1: apparently I got a lot smarter. You know, I was

97
00:05:44,600 --> 00:05:47,080
Speaker 1: saying the same thing, but I was right.

98
00:05:47,320 --> 00:05:50,520
Speaker 2: It just sometimes takes a while for people to realize

99
00:05:50,880 --> 00:05:53,760
Speaker 2: that the painful thing they're hearing. You know, when there's

100
00:05:53,800 --> 00:05:57,080
Speaker 2: a lot of pushback, it's because you're telling people things

101
00:05:57,120 --> 00:05:57,880
Speaker 2: they don't.

102
00:05:57,640 --> 00:06:00,760
Speaker 1: Don't want to hear, and they're invested in old way.

103
00:06:01,279 --> 00:06:05,400
Speaker 1: And in fact, when I started going negative on the market,

104
00:06:06,160 --> 00:06:09,600
Speaker 1: I remember being in a New York Times front page

105
00:06:09,640 --> 00:06:13,400
Speaker 1: story about prices dropping x percent, and I remember a

106
00:06:13,440 --> 00:06:19,240
Speaker 1: real estate brokerage CEO to remain nameless, called me and said,

107
00:06:19,240 --> 00:06:22,479
Speaker 1: what are you doing? You know, and you know this

108
00:06:22,680 --> 00:06:24,880
Speaker 1: is wrong? You know you can't talk, and I said,

109
00:06:26,040 --> 00:06:28,960
Speaker 1: you got to be transparent. And what's really interesting to

110
00:06:29,080 --> 00:06:32,400
Speaker 1: the industry's credit is there's a lot of market studies

111
00:06:32,440 --> 00:06:38,560
Speaker 1: out like we publish, but the brokerage community has, you know,

112
00:06:38,640 --> 00:06:41,599
Speaker 1: compared to what it was in the eighties and nineties,

113
00:06:42,040 --> 00:06:48,359
Speaker 1: is dramatically more transparent, even though not perfect about what's happening,

114
00:06:48,839 --> 00:06:51,760
Speaker 1: as opposed to you know, in the dark days of

115
00:06:52,000 --> 00:06:56,120
Speaker 1: Lehman collapsing and you know, brokers at Panels I was

116
00:06:56,160 --> 00:06:58,240
Speaker 1: on was saying, this is just going to last a

117
00:06:58,240 --> 00:06:59,839
Speaker 1: couple of weeks. Everything's great.

118
00:07:00,760 --> 00:07:03,800
Speaker 2: It's always a great time to buy or sell, right.

119
00:07:03,839 --> 00:07:06,440
Speaker 2: Do you remember that ad the association.

120
00:07:06,040 --> 00:07:10,480
Speaker 1: He wrote a piece about I might have Yeah, where

121
00:07:10,520 --> 00:07:13,360
Speaker 1: there was like one month out of like the last

122
00:07:13,400 --> 00:07:15,720
Speaker 1: twenty years that it wasn't a good time to buy.

123
00:07:16,360 --> 00:07:16,680
Speaker 1: It was.

124
00:07:16,800 --> 00:07:19,240
Speaker 2: It was great. Listen. It's always a good time to

125
00:07:19,320 --> 00:07:22,400
Speaker 2: generate a commission if you're a commission real estate agent,

126
00:07:22,480 --> 00:07:25,200
Speaker 2: which course, and my mom was a real estate agent,

127
00:07:25,280 --> 00:07:29,400
Speaker 2: so this was always dinner table conversation. Like you, she

128
00:07:29,560 --> 00:07:33,720
Speaker 2: wasn't afraid to call people out. The fascinating thing is

129
00:07:34,040 --> 00:07:36,320
Speaker 2: we'll talk a little bit more about the appraisal industry

130
00:07:36,320 --> 00:07:41,920
Speaker 2: in a bit. But back then appraisers were not really

131
00:07:42,000 --> 00:07:46,720
Speaker 2: helping the buyers. They were just helping the brokers get

132
00:07:46,760 --> 00:07:48,880
Speaker 2: a bank loan through the process.

133
00:07:49,560 --> 00:07:53,240
Speaker 1: Well yeah, sort of. I mean essentially, what no one

134
00:07:53,320 --> 00:07:56,040
Speaker 1: understood in the industry and still don't understand today in

135
00:07:56,040 --> 00:07:58,280
Speaker 1: the real estate industry is that the when appraiser is

136
00:07:58,280 --> 00:08:01,880
Speaker 1: doing an appraisal for the buyer that's getting a mortgage,

137
00:08:02,160 --> 00:08:07,360
Speaker 1: their client is actually the bank. And so now there's

138
00:08:07,440 --> 00:08:11,160
Speaker 1: all kinds of restrictions post DoD Frank introduction to the

139
00:08:11,520 --> 00:08:15,920
Speaker 1: to the process, where you know, people can't talk to

140
00:08:16,000 --> 00:08:17,440
Speaker 1: you like they could.

141
00:08:17,520 --> 00:08:19,840
Speaker 2: Back in the day. Hey I have we're paying this,

142
00:08:19,880 --> 00:08:21,240
Speaker 2: and here's how much my mortgage is.

143
00:08:21,360 --> 00:08:22,640
Speaker 1: This is what I need right?

144
00:08:23,480 --> 00:08:25,960
Speaker 2: Keep it fits like Rodney and Caddyshack. Well I just

145
00:08:26,000 --> 00:08:26,240
Speaker 2: keep it.

146
00:08:26,640 --> 00:08:29,880
Speaker 1: I The term back then was here's a good apprais

147
00:08:30,000 --> 00:08:33,400
Speaker 1: or good in air quotes, and good translated into making

148
00:08:33,440 --> 00:08:33,960
Speaker 1: the number.

149
00:08:34,440 --> 00:08:37,360
Speaker 2: So I was always shocked at the idea of quote

150
00:08:37,440 --> 00:08:41,360
Speaker 2: unquote comparables. If you're in an upward price spiral that

151
00:08:42,040 --> 00:08:47,560
Speaker 2: is essentially a mortgage driven bubble, what good are comparables? Hey,

152
00:08:47,720 --> 00:08:50,760
Speaker 2: this house down the street is overpriced thirty percent. Give

153
00:08:50,800 --> 00:08:52,880
Speaker 2: these people a mortgage for a house that they pay

154
00:08:52,960 --> 00:08:55,240
Speaker 2: thirty percent too much doesn't make a lot of sense.

155
00:08:55,400 --> 00:08:58,480
Speaker 1: Yeah, the challenge is that, you know, when we're looking

156
00:08:58,520 --> 00:09:02,200
Speaker 1: at valuation of a property, we're looking more than price.

157
00:09:02,280 --> 00:09:04,000
Speaker 1: Price is sort of the caboose at the end of

158
00:09:04,000 --> 00:09:10,120
Speaker 1: the train. Leading indicators would be contract activity and listening

159
00:09:10,120 --> 00:09:14,320
Speaker 1: inventory sort of transaction based rather than price based.

160
00:09:14,760 --> 00:09:18,240
Speaker 2: And so I would imagine that would tell a bank, hey,

161
00:09:18,280 --> 00:09:21,760
Speaker 2: if this buyer defaults on this mortgage down the road,

162
00:09:22,240 --> 00:09:23,679
Speaker 2: the collateral looks.

163
00:09:23,480 --> 00:09:26,839
Speaker 1: Like the collateral won't be adequate in or of view

164
00:09:27,240 --> 00:09:30,439
Speaker 1: or could would. There wouldn't be a perfect example. That

165
00:09:30,760 --> 00:09:33,000
Speaker 1: is sort of the when you apply like the Greater

166
00:09:33,120 --> 00:09:36,640
Speaker 1: Fool theory to South Florida real estate in the eighties,

167
00:09:37,800 --> 00:09:41,959
Speaker 1: where it was all about carpenters and nurses flipping, you know,

168
00:09:42,080 --> 00:09:45,520
Speaker 1: quitting their jobs and flipping real estate and becoming you know,

169
00:09:46,040 --> 00:09:48,160
Speaker 1: making a lot of money, and then they would turn

170
00:09:48,200 --> 00:09:50,160
Speaker 1: around and sell it to somebody else for double and

171
00:09:50,200 --> 00:09:52,960
Speaker 1: double and double and double. And if you actually stood

172
00:09:53,000 --> 00:09:55,439
Speaker 1: back and looked at a chart of what was happening,

173
00:09:55,480 --> 00:10:00,200
Speaker 1: prices were going straight up and sales are going straight down.

174
00:10:00,360 --> 00:10:03,560
Speaker 1: And you can see it because sales actually lead price

175
00:10:03,640 --> 00:10:07,320
Speaker 1: direction by you know, a year in many cases.

176
00:10:07,080 --> 00:10:10,880
Speaker 2: In fact, in five and six people don't you know,

177
00:10:10,920 --> 00:10:13,719
Speaker 2: people were not familiar with the history of the financial crisis.

178
00:10:14,480 --> 00:10:18,440
Speaker 2: Price is peaked in i want to say summer of six,

179
00:10:19,200 --> 00:10:22,680
Speaker 2: and volume peaked in five, correct, But the market didn't

180
00:10:22,679 --> 00:10:26,000
Speaker 2: start to stumble. Market peaked in October seven, so you

181
00:10:26,080 --> 00:10:28,520
Speaker 2: still had a full the stock market. So you had

182
00:10:28,920 --> 00:10:32,640
Speaker 2: a full year or two after housing topped before it

183
00:10:32,800 --> 00:10:35,360
Speaker 2: started to show. And really the heavy stuff didn't start

184
00:10:35,400 --> 00:10:36,600
Speaker 2: in Toil eight.

185
00:10:36,760 --> 00:10:41,079
Speaker 1: The answer to that question is always consumers when there's

186
00:10:41,200 --> 00:10:45,600
Speaker 1: when they they're uncertain, they pause, and so you see

187
00:10:45,600 --> 00:10:49,120
Speaker 1: the transaction volume drop, but the pricing that's the greater

188
00:10:49,200 --> 00:10:53,880
Speaker 1: full theory, right, continue until there's no more buyers, and

189
00:10:53,920 --> 00:10:55,040
Speaker 1: then the price is correct.

190
00:10:55,160 --> 00:10:58,640
Speaker 2: So now let's flip that question and talk about the sellers,

191
00:10:59,160 --> 00:11:02,880
Speaker 2: because we're only in a little bit of a challenging

192
00:11:02,920 --> 00:11:07,280
Speaker 2: market for both buyers and sellers. Not enough inventory, mortgage

193
00:11:07,360 --> 00:11:11,520
Speaker 2: rates are much higher. It seems like sellers are always

194
00:11:11,600 --> 00:11:14,840
Speaker 2: operating at a six to twelve month leg, maybe even

195
00:11:14,880 --> 00:11:16,800
Speaker 2: longer one to two years, one to two years, so

196
00:11:17,320 --> 00:11:21,400
Speaker 2: they're always a year or two behind the price, which

197
00:11:22,240 --> 00:11:24,840
Speaker 2: when things start to slow down and prices start.

198
00:11:24,720 --> 00:11:26,440
Speaker 1: To roll over, they don't adjust quickly.

199
00:11:26,600 --> 00:11:30,000
Speaker 2: They really don't. And I'm genuinely shocked at when I

200
00:11:30,000 --> 00:11:32,560
Speaker 2: look at some prices, I'm like, hey, that was the

201
00:11:32,640 --> 00:11:36,120
Speaker 2: right price in December twenty twenty one, right, but that

202
00:11:36,559 --> 00:11:37,320
Speaker 2: ship is sales.

203
00:11:37,400 --> 00:11:40,959
Speaker 1: Well it's funny you say that because in the beginning

204
00:11:40,960 --> 00:11:42,840
Speaker 1: of this year, when people said, what do you think

205
00:11:42,920 --> 00:11:45,560
Speaker 1: twenty twenty three is going to be, Like I dubbed

206
00:11:45,600 --> 00:11:49,600
Speaker 1: twenty twenty three the Year of disappointment because people weren't

207
00:11:49,600 --> 00:11:53,480
Speaker 1: going to get their twenty twenty one price. The sellers weren't,

208
00:11:53,480 --> 00:11:59,160
Speaker 1: but the buyers weren't going to see a substantial savings

209
00:11:57,320 --> 00:12:02,360
Speaker 1: in price. Seeing that prices prices weren't going to correct,

210
00:12:02,400 --> 00:12:06,040
Speaker 1: and you know, into and we we have this collapse

211
00:12:06,080 --> 00:12:10,760
Speaker 1: of inventory that is now sort of when you think

212
00:12:10,760 --> 00:12:16,160
Speaker 1: about the home valuation or just market trends, you know,

213
00:12:16,240 --> 00:12:19,559
Speaker 1: typically when there's a negative external event, like you know,

214
00:12:19,720 --> 00:12:21,800
Speaker 1: spike in interest rates. So if you saw interest rates,

215
00:12:21,840 --> 00:12:23,600
Speaker 1: you know the thirty year fixes more than double what

216
00:12:23,679 --> 00:12:26,320
Speaker 1: it was a little over a year ago, you expect

217
00:12:26,400 --> 00:12:30,560
Speaker 1: sales to slow down. They did, and you expect inventory

218
00:12:30,600 --> 00:12:33,880
Speaker 1: to pile high to the sky, and that didn't happen.

219
00:12:33,960 --> 00:12:38,120
Speaker 1: And in fact, right now, new inventory is falling. New

220
00:12:38,160 --> 00:12:42,000
Speaker 1: inventory meaning inventory is coming in right now, is actually

221
00:12:42,040 --> 00:12:46,800
Speaker 1: going negative. And it should yeah, it should be going negative,

222
00:12:47,600 --> 00:12:50,320
Speaker 1: and it's I mean, it should be rising and it's not.

223
00:12:50,559 --> 00:12:54,720
Speaker 1: And the the and so what that does that you're

224
00:12:54,760 --> 00:12:57,920
Speaker 1: not seeing prices fall because we're actually seeing right now

225
00:12:57,960 --> 00:13:00,400
Speaker 1: in the second quarter, just looking at the suburbs around

226
00:13:00,400 --> 00:13:05,040
Speaker 1: New York City, like Westchester, NASA County, Fairfield County, the

227
00:13:05,080 --> 00:13:10,280
Speaker 1: market share of properties that closed in this recently completed quarter,

228
00:13:11,200 --> 00:13:14,920
Speaker 1: the market share of all closed sales was depending on

229
00:13:14,960 --> 00:13:18,920
Speaker 1: the location, typically about forty five percent of the transactions

230
00:13:19,400 --> 00:13:22,640
Speaker 1: went to a bidding war, meaning that they closed higher

231
00:13:22,679 --> 00:13:26,680
Speaker 1: than the last asking price of the transaction. And that

232
00:13:26,720 --> 00:13:29,840
Speaker 1: doesn't happen when mortgage rates double. Right, it makes your

233
00:13:29,840 --> 00:13:33,520
Speaker 1: brain crack thinking about it because it's so contrary. And

234
00:13:33,520 --> 00:13:37,800
Speaker 1: that's because the inventory factor is what is throwing all

235
00:13:37,880 --> 00:13:39,120
Speaker 1: the modeling off.

236
00:13:39,640 --> 00:13:42,760
Speaker 2: How many of those transactions were cash transactions where mortgage

237
00:13:42,840 --> 00:13:44,280
Speaker 2: rates are relevant.

238
00:13:43,920 --> 00:13:48,800
Speaker 1: Right, So, so in Manhattan, the second quarter had the

239
00:13:48,880 --> 00:13:53,280
Speaker 1: highest market share of cash transactions in history. Two thirds

240
00:13:53,320 --> 00:13:56,240
Speaker 1: of the transactions, about sixty five percent.

241
00:13:56,440 --> 00:13:56,880
Speaker 2: Amazing.

242
00:13:57,000 --> 00:14:00,960
Speaker 1: Now, what's interesting if you dig a little deeper, is

243
00:14:01,000 --> 00:14:04,960
Speaker 1: that the it's not that the whole world is just

244
00:14:04,960 --> 00:14:09,640
Speaker 1: paying cash. It's that the number of transactions for cash

245
00:14:09,679 --> 00:14:14,360
Speaker 1: bures and financed buyers both fell sharply year over year.

246
00:14:14,400 --> 00:14:18,120
Speaker 1: The aggregate total was about forty percent year every year. Wow.

247
00:14:18,160 --> 00:14:21,400
Speaker 1: But and I'm sort of making this simplistic, but cash

248
00:14:21,480 --> 00:14:24,960
Speaker 1: buyers fell twenty percent and finance buyers fell fifty percent.

249
00:14:25,520 --> 00:14:28,120
Speaker 1: And so what it meant was there's a lot less

250
00:14:28,160 --> 00:14:31,160
Speaker 1: resistance to your point of cash bures. The other thing

251
00:14:31,200 --> 00:14:35,960
Speaker 1: it says is that cash buyers skew higher in the

252
00:14:36,080 --> 00:14:39,240
Speaker 1: sort of price strata. So, you know, one of the

253
00:14:39,320 --> 00:14:44,280
Speaker 1: stories before the pandemic was Manhattan had almost eight and

254
00:14:44,320 --> 00:14:49,280
Speaker 1: a half years of unsold supply, and that's including active

255
00:14:49,280 --> 00:14:54,600
Speaker 1: inventory for new development. You know, unsold kind of miniums,

256
00:14:54,640 --> 00:14:59,520
Speaker 1: whether actively listed for sale or in shadow inventory that

257
00:14:59,600 --> 00:15:02,000
Speaker 1: the develop could sort of dip into when they ran

258
00:15:02,080 --> 00:15:06,560
Speaker 1: low of sales after the pandemic. And because of this

259
00:15:06,680 --> 00:15:11,840
Speaker 1: sort of the pandemic sort of introduced strength to the

260
00:15:11,960 --> 00:15:22,920
Speaker 1: high end market. The share of or the activity continued

261
00:15:22,960 --> 00:15:25,800
Speaker 1: to favor the high end of the market. So instead

262
00:15:25,800 --> 00:15:28,160
Speaker 1: of being a market that was sort of the low

263
00:15:28,320 --> 00:15:30,600
Speaker 1: end was where all the action was. It became a

264
00:15:30,640 --> 00:15:35,720
Speaker 1: market with a high end was strong because this share

265
00:15:36,000 --> 00:15:40,880
Speaker 1: of unsold condos fell from eight point three years to

266
00:15:41,560 --> 00:15:44,440
Speaker 1: about just over three years, meaning it fell by more

267
00:15:44,480 --> 00:15:47,440
Speaker 1: than half, you know, in terms of what it would

268
00:15:47,440 --> 00:15:50,800
Speaker 1: take to sell off the supply in New York its dramatic.

269
00:15:51,080 --> 00:15:56,000
Speaker 2: So there's normally a chain of sales the starter home

270
00:15:56,320 --> 00:15:58,280
Speaker 2: you was about to move up, right, there's a whole

271
00:15:58,360 --> 00:16:00,360
Speaker 2: run of this. But during the pandemic, make a lot

272
00:16:00,360 --> 00:16:02,280
Speaker 2: of people just said I'm going to go buy a

273
00:16:02,280 --> 00:16:05,200
Speaker 2: second home or a third home of vacation property, so

274
00:16:05,440 --> 00:16:07,960
Speaker 2: I'm not stuck in a city where I can't do

275
00:16:08,000 --> 00:16:11,840
Speaker 2: anything in a tiny apartment, and that really sucked up

276
00:16:11,880 --> 00:16:12,600
Speaker 2: a lot of supply.

277
00:16:13,000 --> 00:16:18,200
Speaker 1: Yeah, the way I look at it is in the

278
00:16:18,240 --> 00:16:22,920
Speaker 1: city itself, in Manhattan and most urban centers, sales activity

279
00:16:23,200 --> 00:16:28,280
Speaker 1: didn't you know, fell by half, And it fell by

280
00:16:28,320 --> 00:16:31,960
Speaker 1: half because during a global pandemic and a multi family building,

281
00:16:31,960 --> 00:16:35,720
Speaker 1: are you going to let strangers into your apartment? Right?

282
00:16:36,000 --> 00:16:42,200
Speaker 1: The thinking was no, But in reality the buyers that

283
00:16:42,920 --> 00:16:47,000
Speaker 1: zoomed out to the suburbs were largely from the rental market.

284
00:16:47,440 --> 00:16:51,120
Speaker 1: Because they weren't anchored to another asset.

285
00:16:51,400 --> 00:16:53,200
Speaker 2: They didn't have to sell the affluent.

286
00:16:53,280 --> 00:16:55,920
Speaker 1: Yeah, they bought in the Hampton's, you know, a second

287
00:16:55,960 --> 00:16:59,080
Speaker 1: primary home. I called it co primary at the time.

288
00:17:00,480 --> 00:17:04,840
Speaker 1: And high end markets in you know, the county surrounding

289
00:17:04,880 --> 00:17:09,960
Speaker 1: New York definitely did better. And and people moved farther.

290
00:17:10,119 --> 00:17:12,200
Speaker 1: I mean, my wife and I moved half an hour

291
00:17:12,320 --> 00:17:17,960
Speaker 1: farther from the city because we figured we weren't going

292
00:17:18,000 --> 00:17:20,000
Speaker 1: to be going into the city five days a week.

293
00:17:20,680 --> 00:17:22,280
Speaker 2: And you get a lot more bang for your buck

294
00:17:22,320 --> 00:17:26,400
Speaker 2: the further away, you are, correct, So more property you

295
00:17:26,440 --> 00:17:29,080
Speaker 2: live on a compound with how many different buildings that

296
00:17:29,200 --> 00:17:33,120
Speaker 2: on that property in Connecticut three that's a lot of buildings.

297
00:17:33,119 --> 00:17:36,560
Speaker 2: So you couldn't get that in Darien, right, We couldn't

298
00:17:36,560 --> 00:17:39,800
Speaker 2: get that on the near the water or near a

299
00:17:39,840 --> 00:17:42,679
Speaker 2: commuter line into the city, at least not for a

300
00:17:42,720 --> 00:17:45,560
Speaker 2: reasonable price. So we'll come back to a lot of

301
00:17:45,560 --> 00:17:47,119
Speaker 2: what's going on in New York and the rest of

302
00:17:47,160 --> 00:17:49,840
Speaker 2: the real estate market. I just want to touch on

303
00:17:49,840 --> 00:17:53,320
Speaker 2: one more aspect of your background. You're a professor at

304
00:17:53,320 --> 00:17:57,240
Speaker 2: Columbia Business School teaching a course on commercial real estate.

305
00:17:57,720 --> 00:18:00,879
Speaker 2: Tell us a little bit about that experience. What's the

306
00:18:01,040 --> 00:18:03,760
Speaker 2: course like and what are the students like at at

307
00:18:04,400 --> 00:18:05,480
Speaker 2: Columbia Business School.

308
00:18:05,640 --> 00:18:09,439
Speaker 1: Well, it's it's their architecture school. It's the Masters in

309
00:18:09,480 --> 00:18:09,880
Speaker 1: real Estate.

310
00:18:10,160 --> 00:18:12,120
Speaker 2: So not business school, architecture.

311
00:18:11,680 --> 00:18:16,600
Speaker 1: Architecture school. It's Masters in real Estate Development. And so

312
00:18:17,480 --> 00:18:21,280
Speaker 1: my students are mostly in there, you know, twenty three

313
00:18:21,359 --> 00:18:27,800
Speaker 1: to twenty nine, super smart and very eager to get

314
00:18:27,840 --> 00:18:31,920
Speaker 1: into the business. And so what it has allowed me

315
00:18:32,040 --> 00:18:36,080
Speaker 1: as a venue. I teach every summer. It's not year round.

316
00:18:37,080 --> 00:18:39,240
Speaker 1: I usually have about one hundred and fifty students. During

317
00:18:39,440 --> 00:18:41,720
Speaker 1: when we were zooming, during the pandemic, I had like

318
00:18:41,760 --> 00:18:45,000
Speaker 1: one hundred and ninety. Which there's a lot of icons

319
00:18:45,080 --> 00:18:46,200
Speaker 1: on your zoom screen.

320
00:18:46,040 --> 00:18:48,240
Speaker 2: Right you go five or panels in.

321
00:18:48,480 --> 00:18:53,399
Speaker 1: But the program is fantastic and I I'm one of

322
00:18:53,440 --> 00:18:54,920
Speaker 1: those people that run up and down the.

323
00:18:54,880 --> 00:18:57,720
Speaker 2: Aisles, you know, high five students.

324
00:18:57,880 --> 00:19:02,240
Speaker 1: Yeah, talking. And the other sort of secret passion is

325
00:19:02,280 --> 00:19:05,120
Speaker 1: I get to tell the same dad jokes every year

326
00:19:05,720 --> 00:19:08,080
Speaker 1: because they haven't heard them before or they have, but

327
00:19:08,119 --> 00:19:08,600
Speaker 1: not for me.

328
00:19:08,840 --> 00:19:11,320
Speaker 2: It's a whole new crop of new audience.

329
00:19:11,119 --> 00:19:15,880
Speaker 1: Victims, well students, right, and uh and and and what

330
00:19:15,920 --> 00:19:19,919
Speaker 1: it's what there's nothing better than talking about a topic

331
00:19:19,960 --> 00:19:24,000
Speaker 1: that you're really comfortable with and really smart people ask

332
00:19:24,119 --> 00:19:27,880
Speaker 1: you questions that cause you to maybe, you know, think

333
00:19:27,880 --> 00:19:30,959
Speaker 1: a little bit differently about the solution or whatever. I

334
00:19:31,080 --> 00:19:33,840
Speaker 1: just I just love the experience. Columbia has been very

335
00:19:33,840 --> 00:19:37,200
Speaker 1: good to me, and you know, and and I appreciate it.

336
00:19:37,280 --> 00:19:41,719
Speaker 1: And the thing that I like most about it is,

337
00:19:43,200 --> 00:19:45,520
Speaker 1: you know, by the end of the class and you're asking,

338
00:19:45,600 --> 00:19:49,040
Speaker 1: you're asking questions like they'll answer in Unison, you know,

339
00:19:49,040 --> 00:19:51,800
Speaker 1: one hundred and fifty students like like it's like locked

340
00:19:51,800 --> 00:19:55,359
Speaker 1: into their brain and there's not It's totally.

341
00:19:55,000 --> 00:19:56,160
Speaker 2: Satisfying that sounds.

342
00:19:56,320 --> 00:19:59,000
Speaker 1: And I've been doing it for about five years. And

343
00:20:00,200 --> 00:20:03,760
Speaker 1: my ritual was and they wooed me for like they

344
00:20:03,840 --> 00:20:05,399
Speaker 1: spent like a year and a half, like taking me

345
00:20:05,480 --> 00:20:07,560
Speaker 1: out to lunch and say you'd be perfect and say

346
00:20:07,600 --> 00:20:09,960
Speaker 1: you have sure you have the right Jonathan Miller. And

347
00:20:11,840 --> 00:20:16,399
Speaker 1: then I did it. And I remember I used to

348
00:20:17,040 --> 00:20:18,719
Speaker 1: call my father when he was alive. I'd call him

349
00:20:18,720 --> 00:20:20,560
Speaker 1: in the beginning of the class and say, hey, Dad,

350
00:20:20,600 --> 00:20:23,880
Speaker 1: I just taught my class and he said, Jonathan, you're

351
00:20:23,960 --> 00:20:26,880
Speaker 1: so respectable, And I'm like, what do you mean, wasn't

352
00:20:26,920 --> 00:20:29,720
Speaker 1: I respectable before like, is this like put me over

353
00:20:29,760 --> 00:20:30,040
Speaker 1: the top.

354
00:20:30,200 --> 00:20:34,840
Speaker 2: The official im premature of society is, oh, a professor

355
00:20:34,840 --> 00:20:38,199
Speaker 2: in an ivy League school, you have to be respectable, right,

356
00:20:38,760 --> 00:20:42,159
Speaker 2: fun stuff. So, what's the state of real estate in

357
00:20:42,200 --> 00:20:43,840
Speaker 2: the United States? What's going on?

358
00:20:44,080 --> 00:20:47,240
Speaker 1: Well, what I wanted to sort of comes to mind

359
00:20:47,320 --> 00:20:52,240
Speaker 1: is something that hasn't really happened in a significant way

360
00:20:52,480 --> 00:20:56,600
Speaker 1: in the real estate industry. But there is multiple listing

361
00:20:56,680 --> 00:20:59,879
Speaker 1: systems across the United States which are essentially a a

362
00:21:00,600 --> 00:21:05,760
Speaker 1: database for real estate agents and you know, for managing listings.

363
00:21:05,920 --> 00:21:07,920
Speaker 2: Who controls that monopoly.

364
00:21:08,200 --> 00:21:10,600
Speaker 1: The real estate brokerage community.

365
00:21:10,320 --> 00:21:12,560
Speaker 2: National Association realtors they own.

366
00:21:12,560 --> 00:21:16,439
Speaker 1: They control about fifty percent of them. There's also a

367
00:21:16,480 --> 00:21:19,960
Speaker 1: contingent that are anti uh you know, but but it

368
00:21:20,000 --> 00:21:23,640
Speaker 1: is it is a product of the brokerage community and

369
00:21:23,680 --> 00:21:28,560
Speaker 1: it is an essential tool to them. And so this

370
00:21:29,000 --> 00:21:33,800
Speaker 1: recently one of the big there's three or four major

371
00:21:33,880 --> 00:21:38,040
Speaker 1: software companies that drive the MLS systems. Core Logic is

372
00:21:38,040 --> 00:21:42,119
Speaker 1: one of them, with Matrix, there's Flex MLS and a

373
00:21:42,119 --> 00:21:48,159
Speaker 1: big one is also Rapatoni and Rapatoni uh just had

374
00:21:47,280 --> 00:21:53,120
Speaker 1: a ransomware attack and they power MLS systems. Like in

375
00:21:53,280 --> 00:21:58,440
Speaker 1: the Midwest, like Cincinnati and San Francisco and a few

376
00:21:58,440 --> 00:22:03,040
Speaker 1: other markets, and they can't you know, they're stuck sort

377
00:22:03,040 --> 00:22:06,000
Speaker 1: of like what happened in I think it was Suffolk County,

378
00:22:06,359 --> 00:22:10,840
Speaker 1: the ransomware attack on public records, where these people make

379
00:22:10,880 --> 00:22:14,280
Speaker 1: a living out of using MLS systems and they don't

380
00:22:14,320 --> 00:22:17,359
Speaker 1: have access or there's lots of problems. And I just

381
00:22:17,400 --> 00:22:20,520
Speaker 1: thought about you know, you know, big data and the

382
00:22:20,560 --> 00:22:23,399
Speaker 1: real estate community, and then you start seeing the you know,

383
00:22:23,440 --> 00:22:27,120
Speaker 1: there's more things go online, you're more vulnerable to attack,

384
00:22:27,320 --> 00:22:30,200
Speaker 1: and and that's a real problem for.

385
00:22:30,560 --> 00:22:34,359
Speaker 2: So I imagine things like Zillow and Redfinn are almost

386
00:22:34,480 --> 00:22:35,600
Speaker 2: powered by MLS.

387
00:22:35,640 --> 00:22:40,520
Speaker 1: Is that like they get their data you know, various ways,

388
00:22:40,560 --> 00:22:43,920
Speaker 1: but yeah, you know, like it could create who knows

389
00:22:43,960 --> 00:22:49,439
Speaker 1: how long this this will go go on, and and

390
00:22:49,480 --> 00:22:53,000
Speaker 1: it's you know, the MLS looks bad because hey, you

391
00:22:53,080 --> 00:22:54,840
Speaker 1: got you know, shut down.

392
00:22:54,640 --> 00:22:55,640
Speaker 2: But anybody could get hacked.

393
00:22:55,680 --> 00:22:59,040
Speaker 1: But anybody could get hacked, right, So there's no real

394
00:22:59,080 --> 00:23:01,560
Speaker 1: answer yet what they're going to do. And I just

395
00:23:01,640 --> 00:23:06,639
Speaker 1: I've never heard of a situation where you know, you know,

396
00:23:06,720 --> 00:23:11,080
Speaker 1: that's going to really impact the transactional volume in these markets.

397
00:23:11,160 --> 00:23:15,000
Speaker 2: Huh, amazing we're talking with Jonathan Miller about the state

398
00:23:15,400 --> 00:23:19,520
Speaker 2: of US real estate. So, so Jonathan, tell us what's

399
00:23:19,560 --> 00:23:22,840
Speaker 2: going on in the United States with residential real estate

400
00:23:23,280 --> 00:23:23,840
Speaker 2: right now.

401
00:23:23,880 --> 00:23:27,520
Speaker 1: The focus has been, you know, the the inventory challenge

402
00:23:27,640 --> 00:23:31,840
Speaker 1: and the doubling of mortgage rates. I remember in the

403
00:23:31,880 --> 00:23:34,520
Speaker 1: beginning of the FED pivot now a little over a

404
00:23:34,600 --> 00:23:36,920
Speaker 1: year ago now, where you know, we started to see

405
00:23:36,960 --> 00:23:41,400
Speaker 1: rates go up. There was this thinking within the real

406
00:23:41,440 --> 00:23:45,359
Speaker 1: estate community or just people that sort of you know,

407
00:23:45,560 --> 00:23:49,480
Speaker 1: tracked real estate, weren't necessarily brokers, that we were going

408
00:23:49,560 --> 00:23:52,840
Speaker 1: to see, you know, when rates fall again, then everything

409
00:23:52,880 --> 00:23:54,520
Speaker 1: is just going to go back to normal. And it's like,

410
00:23:56,119 --> 00:23:58,600
Speaker 1: you know, that doesn't seem to be on the horizon.

411
00:23:59,560 --> 00:24:03,240
Speaker 1: Golvin's acxious came out and said, you know, maybe we'll

412
00:24:03,240 --> 00:24:07,000
Speaker 1: see rate cuts by the second quarter of next year,

413
00:24:08,359 --> 00:24:11,439
Speaker 1: but they're not rate cuts that bring it from seven

414
00:24:11,520 --> 00:24:14,720
Speaker 1: to three. They're rate cuts that bring it from seven

415
00:24:14,920 --> 00:24:17,920
Speaker 1: to maybe six or high fives.

416
00:24:18,240 --> 00:24:23,240
Speaker 2: That's assuming Goldman is right correct. Everybody's been forecasting incorrectly

417
00:24:23,280 --> 00:24:26,840
Speaker 2: about recessions about rate cuts. So let's talk a bit

418
00:24:26,960 --> 00:24:29,480
Speaker 2: about I want to talk about rates, and I want

419
00:24:29,520 --> 00:24:33,320
Speaker 2: to talk about supply. Let's start with rates. So two

420
00:24:33,440 --> 00:24:35,160
Speaker 2: years ago, not even a year and a half ago,

421
00:24:35,280 --> 00:24:38,280
Speaker 2: mortgages thirty or fixed you could get as low as

422
00:24:38,320 --> 00:24:41,560
Speaker 2: two point seventy five. Now they're about seven and a

423
00:24:41,600 --> 00:24:45,960
Speaker 2: half percent. How big of an impact has this had

424
00:24:46,400 --> 00:24:50,920
Speaker 2: on prices, on transaction volume, and on inventory for sale?

425
00:24:51,359 --> 00:24:57,600
Speaker 1: So the idea that a rapid slowdown in sales, that's

426
00:24:57,640 --> 00:25:00,520
Speaker 1: the first. You know, sales, generally, depending on the markets,

427
00:25:00,560 --> 00:25:04,080
Speaker 1: are down twenty to forty percent every year, but transaction

428
00:25:04,200 --> 00:25:07,840
Speaker 1: volume units that's sold. But it's important to remember that

429
00:25:07,920 --> 00:25:10,119
Speaker 1: a year ago was a rocket ship. You know it was.

430
00:25:10,240 --> 00:25:12,240
Speaker 1: It was an anomal historical anomaly.

431
00:25:12,400 --> 00:25:14,960
Speaker 2: It wasn't in anticipation of rising rates. A lot of

432
00:25:14,960 --> 00:25:17,480
Speaker 2: people bought and sold property.

433
00:25:17,359 --> 00:25:22,320
Speaker 1: In a significantly higher volume than would be considered a

434
00:25:22,400 --> 00:25:26,639
Speaker 1: normal volume in every market. And and so we're coming

435
00:25:26,680 --> 00:25:30,199
Speaker 1: off of that high. So year year comparisons make it

436
00:25:30,240 --> 00:25:32,560
Speaker 1: look like, you know, you're down forty percent, but you

437
00:25:32,600 --> 00:25:36,639
Speaker 1: were up fifty eighty percent a year ago over the

438
00:25:36,680 --> 00:25:37,199
Speaker 1: prior year.

439
00:25:37,240 --> 00:25:39,320
Speaker 2: Rue, So what does this look like compared to the

440
00:25:39,359 --> 00:25:40,879
Speaker 2: pre pandemic average?

441
00:25:41,000 --> 00:25:44,640
Speaker 1: Where are we We're depending on the market, we're generally

442
00:25:44,720 --> 00:25:49,760
Speaker 1: about compared to say, second quarter nineteen compared to second

443
00:25:49,840 --> 00:25:52,840
Speaker 1: quarter of this year, we're down about, you know, in

444
00:25:52,920 --> 00:25:57,160
Speaker 1: the twenty to thirty percent range from normal. What's really

445
00:25:57,280 --> 00:26:01,639
Speaker 1: interesting in what is so different is, yes, you have

446
00:26:02,080 --> 00:26:06,119
Speaker 1: sales drop, so normally you'd expect inventory to rise. If

447
00:26:06,160 --> 00:26:09,840
Speaker 1: you look across Florida inventory compared to pre pandemic, which

448
00:26:09,920 --> 00:26:14,560
Speaker 1: became my alternative metric to year over year because the

449
00:26:14,760 --> 00:26:19,320
Speaker 1: distortion that has occurred in twenty twenty one two and

450
00:26:19,960 --> 00:26:25,159
Speaker 1: early well really early twenty three has been significant. So

451
00:26:25,840 --> 00:26:30,360
Speaker 1: in Florida and almost almost every market, inventory is more

452
00:26:30,400 --> 00:26:35,640
Speaker 1: than sixty percent less than pre pandemic. Amazing, And as

453
00:26:35,680 --> 00:26:38,600
Speaker 1: a result, you can argue, well, sales are down twenty

454
00:26:38,640 --> 00:26:42,320
Speaker 1: five percent, so you say, you know, hey, it's mortgage

455
00:26:42,400 --> 00:26:45,359
Speaker 1: rates have doubled. Well, it's also because you have dramatically

456
00:26:45,440 --> 00:26:49,760
Speaker 1: less product. And then on an anecdotal level, just in

457
00:26:49,880 --> 00:26:53,320
Speaker 1: sort of ground level chatter and various markets that I

458
00:26:53,440 --> 00:26:58,080
Speaker 1: connect with that the product that's coming in back to

459
00:26:58,200 --> 00:27:00,159
Speaker 1: your like, how long does it take a sell or

460
00:27:00,200 --> 00:27:03,879
Speaker 1: to capitulate to market conditions? The product that's coming in

461
00:27:04,000 --> 00:27:08,239
Speaker 1: is priced like it's still the boom, and so you know,

462
00:27:08,760 --> 00:27:11,199
Speaker 1: and it takes one to two years for a seller

463
00:27:11,280 --> 00:27:15,000
Speaker 1: typically or a developer to capitulate to the current market,

464
00:27:15,200 --> 00:27:17,359
Speaker 1: you know, because what do they do? They just don't sell?

465
00:27:17,400 --> 00:27:19,200
Speaker 1: They wait, it's going to get better.

466
00:27:19,240 --> 00:27:21,399
Speaker 2: There are no signs of capitulation out there, are they.

467
00:27:21,520 --> 00:27:26,040
Speaker 1: There's we're starting to see a little bit, but not

468
00:27:26,040 --> 00:27:29,040
Speaker 1: not in any significant way. I'd say, you know, we

469
00:27:29,040 --> 00:27:32,280
Speaker 1: were a year in, so I'd say we're going to

470
00:27:32,359 --> 00:27:36,040
Speaker 1: start seeing it in terms of better pricing over this

471
00:27:36,160 --> 00:27:38,920
Speaker 1: next year. But nothing dramatic would be my guess.

472
00:27:39,080 --> 00:27:42,520
Speaker 2: So let's come back to this inventory question. There are

473
00:27:42,520 --> 00:27:45,239
Speaker 2: two issues there I want to go over. One is

474
00:27:47,760 --> 00:27:54,200
Speaker 2: the footprint of people with you know, golden handcuff mortgages.

475
00:27:54,640 --> 00:27:57,960
Speaker 2: The data point I read recently sixty one percent of

476
00:27:58,000 --> 00:28:01,520
Speaker 2: homeowners with a house with a mortgage have a rate

477
00:28:01,600 --> 00:28:05,760
Speaker 2: that's at four percent or under correct. What does that

478
00:28:05,800 --> 00:28:08,320
Speaker 2: mean These people just aren't putting their houses up for

479
00:28:08,359 --> 00:28:09,040
Speaker 2: sealing a well?

480
00:28:09,359 --> 00:28:11,359
Speaker 1: I think first of all, the first thing that tells

481
00:28:11,400 --> 00:28:15,199
Speaker 1: you is that if mortgage rates drift meaningfully lower, and

482
00:28:15,200 --> 00:28:18,000
Speaker 1: by meaningful I mean you know in the high fives

483
00:28:18,480 --> 00:28:21,520
Speaker 1: certainly I'm not talking about fours or three percent range,

484
00:28:22,280 --> 00:28:24,439
Speaker 1: then you're going to see inventory enter the market.

485
00:28:24,960 --> 00:28:26,679
Speaker 2: Which would be good for inflation, and good.

486
00:28:26,560 --> 00:28:30,520
Speaker 1: For good for inflation, good for you know, pricing for

487
00:28:30,800 --> 00:28:36,600
Speaker 1: new homeowners because there'll be more competition, and and frankly,

488
00:28:36,800 --> 00:28:40,680
Speaker 1: at this time, the only thing I see of bringing

489
00:28:41,080 --> 00:28:45,320
Speaker 1: rates down, you know, besides a recession, which you know,

490
00:28:45,360 --> 00:28:48,000
Speaker 1: we've been forecasting a recession in the next six months

491
00:28:48,000 --> 00:28:51,720
Speaker 1: for the last couple of years, is you know, the

492
00:28:51,800 --> 00:28:54,800
Speaker 1: idea that we're going to see you know, the FED

493
00:28:54,840 --> 00:29:00,240
Speaker 1: at some point, perhaps soon, is going to stop, you know,

494
00:29:00,800 --> 00:29:03,720
Speaker 1: pushing rates higher. And when they do, and if they

495
00:29:03,760 --> 00:29:07,880
Speaker 1: stay still for you know, three four months, I think

496
00:29:07,920 --> 00:29:12,720
Speaker 1: you're going to see mortgage rates drift lower, but not correct,

497
00:29:12,880 --> 00:29:15,920
Speaker 1: not drop sharply. And I think that's going to bring

498
00:29:16,280 --> 00:29:19,920
Speaker 1: more inventory into the market, but still it'll be far inadequate.

499
00:29:20,400 --> 00:29:24,320
Speaker 1: The interesting thing about the state of inventory today is

500
00:29:25,920 --> 00:29:30,400
Speaker 1: you know, normally new construction accounts for ten to fifteen

501
00:29:30,480 --> 00:29:34,040
Speaker 1: percent of total inventory. That's true for Manhattan, it's true

502
00:29:34,040 --> 00:29:40,040
Speaker 1: for the nation. And now you have sub markets where

503
00:29:40,680 --> 00:29:44,720
Speaker 1: new construction is like fifty percent of inventory because there's

504
00:29:44,760 --> 00:29:47,480
Speaker 1: no there's there's and fifty percent existing because the existing

505
00:29:47,520 --> 00:29:48,200
Speaker 1: has collapsed.

506
00:29:48,280 --> 00:29:52,920
Speaker 2: Right, So let's talk about new inventory because that's something

507
00:29:52,960 --> 00:29:57,920
Speaker 2: I've been railing about for a while. Post Great Financial Crisis,

508
00:29:58,440 --> 00:30:01,520
Speaker 2: home builders were felt burnt because they were building a

509
00:30:01,560 --> 00:30:03,880
Speaker 2: lot of houses, they were speculating. A lot of them

510
00:30:03,920 --> 00:30:06,440
Speaker 2: got caught leaning the wrong way and they kind of

511
00:30:06,440 --> 00:30:10,160
Speaker 2: pivoted to away from single family homes towards multi family

512
00:30:10,200 --> 00:30:13,880
Speaker 2: and apartments. And if you look at a chart on

513
00:30:14,840 --> 00:30:18,080
Speaker 2: new home sales going back to the two thousands, it's

514
00:30:18,120 --> 00:30:22,960
Speaker 2: pretty apparent new home construction collapsed for the better part

515
00:30:23,000 --> 00:30:27,320
Speaker 2: of the decade that followed the financial crisis, which raises

516
00:30:27,400 --> 00:30:33,080
Speaker 2: the question, how short are we of new homes relative

517
00:30:33,120 --> 00:30:35,959
Speaker 2: to where we would have been without all the craziness

518
00:30:35,960 --> 00:30:41,680
Speaker 2: in the two thousands following the financial crisis? What is

519
00:30:41,720 --> 00:30:45,040
Speaker 2: the shortfall of homes that should have been built in

520
00:30:45,120 --> 00:30:45,959
Speaker 2: the twenty tens?

521
00:30:46,280 --> 00:30:48,280
Speaker 1: Yeah, millions, millions, And.

522
00:30:48,200 --> 00:30:51,880
Speaker 2: So the National Socition and Realtors have a number. Of

523
00:30:51,920 --> 00:30:55,320
Speaker 2: the National Association of home Builders, they're like four or five.

524
00:30:55,400 --> 00:30:58,240
Speaker 2: The Architectural Group, I forget the name, they all have

525
00:30:58,360 --> 00:31:02,720
Speaker 2: thrown out numbers two, three, four, five million home short

526
00:31:02,760 --> 00:31:05,000
Speaker 2: for that seems huge.

527
00:31:04,840 --> 00:31:07,320
Speaker 1: But it's actually probably worse than that.

528
00:31:07,680 --> 00:31:09,160
Speaker 2: In the population growth.

529
00:31:10,280 --> 00:31:15,080
Speaker 1: Yes, well, no, it's it's more more because if you

530
00:31:15,120 --> 00:31:17,360
Speaker 1: look at the product that is being built in all

531
00:31:17,360 --> 00:31:20,400
Speaker 1: the national home builders in the last ten years, they've

532
00:31:20,440 --> 00:31:23,600
Speaker 1: really there's been a lot of pivoting to higher end homes,

533
00:31:23,680 --> 00:31:26,720
Speaker 1: luxury homes, and so when you look at just raw units,

534
00:31:27,600 --> 00:31:30,880
Speaker 1: they're skewed higher end. So I'd say there's a much

535
00:31:31,080 --> 00:31:37,600
Speaker 1: more severe inventory challenge for starter homes first time buyers.

536
00:31:37,640 --> 00:31:41,640
Speaker 1: Then we really give credit for it that it's the

537
00:31:41,720 --> 00:31:45,840
Speaker 1: product mix has skewed higher end. Why has that happened

538
00:31:45,880 --> 00:31:50,760
Speaker 1: because primarily land sales, right, I mean, you know, land

539
00:31:50,800 --> 00:31:54,280
Speaker 1: appreciates and improvements depreciate, right, the way you should think

540
00:31:54,320 --> 00:31:58,600
Speaker 1: of it, land is what appreciates, and I think we're

541
00:31:58,640 --> 00:32:02,360
Speaker 1: now seeing a lot of home builders gobble up land

542
00:32:03,240 --> 00:32:05,440
Speaker 1: to sort of anticipate the next wave.

543
00:32:05,840 --> 00:32:08,760
Speaker 2: I'm shocked when I play around with Zillo. Everybody loves

544
00:32:08,800 --> 00:32:12,520
Speaker 2: the Zillo surf, and the percentage of homes for sales

545
00:32:13,120 --> 00:32:17,360
Speaker 2: are essentially lots with new construction on ye and it's

546
00:32:17,520 --> 00:32:19,800
Speaker 2: not you know, and they'll they'll build it to suit,

547
00:32:20,320 --> 00:32:23,320
Speaker 2: but you're not buying a house, You're buying a piece

548
00:32:23,320 --> 00:32:26,000
Speaker 2: of land and a builder, right, And that seems to

549
00:32:26,000 --> 00:32:29,920
Speaker 2: be especially in parts of Florida. The Hampton's that that

550
00:32:29,960 --> 00:32:33,480
Speaker 2: seems to be a wildly disproportionate amount of.

551
00:32:34,360 --> 00:32:37,479
Speaker 1: It's not of inventory, it's it's not conducive for a

552
00:32:37,520 --> 00:32:40,239
Speaker 1: first time home buyer environment, you know, to do that

553
00:32:41,560 --> 00:32:44,680
Speaker 1: because of lending challenges. The other thing I thought was,

554
00:32:45,240 --> 00:32:48,040
Speaker 1: you know, the numbers that have come out, I may,

555
00:32:48,160 --> 00:32:50,080
Speaker 1: I don't know if I have this exactly right, but

556
00:32:51,080 --> 00:32:53,880
Speaker 1: that the number of homeowners in the US with a

557
00:32:54,120 --> 00:32:56,360
Speaker 1: without a mortgage is like thirty five percent.

558
00:32:57,000 --> 00:32:59,959
Speaker 2: Pretty big. It's so it's everybody who does cash purchase

559
00:33:00,080 --> 00:33:00,480
Speaker 2: and every.

560
00:33:00,320 --> 00:33:05,720
Speaker 1: Which towards investors and then long term homeowners where they've

561
00:33:05,760 --> 00:33:10,200
Speaker 1: paid down the mortgage. But you know, so you think

562
00:33:10,240 --> 00:33:15,240
Speaker 1: about transactional volume is being restrained by high mortgage rates.

563
00:33:15,320 --> 00:33:18,000
Speaker 1: But you you do have a large cohort of the

564
00:33:18,120 --> 00:33:23,280
Speaker 1: housing inventory that is or a potential inventory that doesn't

565
00:33:23,280 --> 00:33:27,000
Speaker 1: have a mortgage issue with it, which I think is

566
00:33:28,480 --> 00:33:30,360
Speaker 1: something that's probably not understood.

567
00:33:30,800 --> 00:33:32,960
Speaker 2: So so how many new homes have to be built

568
00:33:33,000 --> 00:33:38,560
Speaker 2: to sort of stabilize demand for both starter homes and

569
00:33:39,120 --> 00:33:41,360
Speaker 2: move up homes versus the inventory.

570
00:33:41,000 --> 00:33:46,280
Speaker 1: That well, it's funny I interface a lot with the

571
00:33:46,760 --> 00:33:51,800
Speaker 1: affordable housing industry here in New York because our research

572
00:33:52,400 --> 00:33:56,000
Speaker 1: is you know, open market. It's not you know, we're

573
00:33:56,000 --> 00:33:58,800
Speaker 1: not looking at subsidized housing or anything along that line.

574
00:33:59,600 --> 00:34:02,360
Speaker 1: And uh, the mantra when you talk about like how

575
00:34:02,360 --> 00:34:05,440
Speaker 1: many more to build, the answer across the board is

576
00:34:05,520 --> 00:34:06,800
Speaker 1: I don't know, but a ton.

577
00:34:06,720 --> 00:34:09,080
Speaker 2: More like literally millions of new homes.

578
00:34:09,239 --> 00:34:12,239
Speaker 1: Yes, like you know that that this is this is

579
00:34:12,280 --> 00:34:13,839
Speaker 1: the this is the problem.

580
00:34:14,080 --> 00:34:18,680
Speaker 2: So let's talk about a specific new home building problem.

581
00:34:18,840 --> 00:34:25,759
Speaker 2: How difficult are zoning regulations, Health Department, Department of Environmental Conversation, conservation,

582
00:34:26,719 --> 00:34:30,520
Speaker 2: just general nimby to the ability to put up a

583
00:34:30,560 --> 00:34:31,800
Speaker 2: decent number of houses.

584
00:34:31,920 --> 00:34:36,319
Speaker 1: It's significantly challenging. What I find, just maybe as a

585
00:34:36,360 --> 00:34:39,400
Speaker 1: sidebar to this is on top of that, when you

586
00:34:39,440 --> 00:34:41,920
Speaker 1: think of things like flood insurance and the cost of

587
00:34:41,960 --> 00:34:47,560
Speaker 1: flood insurance, FEMA prices flood insurance basically at a level

588
00:34:47,600 --> 00:34:51,480
Speaker 1: that the private market can't compete. And so in many ways,

589
00:34:51,480 --> 00:34:55,400
Speaker 1: the federal government is encouraging development in in flood zones.

590
00:34:55,440 --> 00:34:59,000
Speaker 1: In flood zones, and flood zones are not just on

591
00:34:59,160 --> 00:35:02,480
Speaker 1: the coastline. You know, we're seeing dramatic where we were

592
00:35:02,480 --> 00:35:05,320
Speaker 1: seeing dramatic flooding problems in the northeast Inland.

593
00:35:06,080 --> 00:35:09,680
Speaker 2: Uh what just happened in Vermont and Hampshire. They got

594
00:35:09,719 --> 00:35:10,480
Speaker 2: slaughtered up there.

595
00:35:10,520 --> 00:35:13,080
Speaker 1: Yeah. So I know, I see ads on TV for

596
00:35:13,320 --> 00:35:18,400
Speaker 1: FEMA and it's cheap, and I'm like that that seems

597
00:35:18,520 --> 00:35:23,120
Speaker 1: counter to sort of public safety. You know, a dozen

598
00:35:23,320 --> 00:35:26,480
Speaker 1: or almost a dozen years ago, when we had Superstorm

599
00:35:26,560 --> 00:35:29,759
Speaker 1: Sandy hit, you know, one of the by products I know,

600
00:35:29,800 --> 00:35:31,000
Speaker 1: I'm going off on a tangent.

601
00:35:31,160 --> 00:35:33,840
Speaker 2: Well a decade ago that was a that destroyed huge

602
00:35:33,920 --> 00:35:36,759
Speaker 2: swaths of Jersey and New York and just up and down.

603
00:35:36,680 --> 00:35:40,880
Speaker 1: All the Long Island, the south shore, and uh, what

604
00:35:41,120 --> 00:35:43,400
Speaker 1: came out of that is a lot of product that

605
00:35:43,560 --> 00:35:48,840
Speaker 1: was destroyed was middle class housing and so the resulting

606
00:35:48,960 --> 00:35:55,320
Speaker 1: product on the waterline. And they rewrote the the FEMA

607
00:35:55,360 --> 00:35:59,040
Speaker 1: maps for the New York City metro area, making them

608
00:35:59,280 --> 00:36:03,200
Speaker 1: much much bigger coverage area. And politically it was shot

609
00:36:03,280 --> 00:36:08,879
Speaker 1: down because it would make it more expensive. And what

610
00:36:08,920 --> 00:36:11,920
Speaker 1: we saw in parallel to that is that, you know,

611
00:36:12,000 --> 00:36:16,560
Speaker 1: say you had two modest houses on the shore south

612
00:36:16,560 --> 00:36:20,799
Speaker 1: shore of Long Island that were destroyed, investors who come

613
00:36:20,840 --> 00:36:23,520
Speaker 1: in and buy both lots and build one big house.

614
00:36:24,160 --> 00:36:28,840
Speaker 1: And that's that's been you know, after significant flooding events

615
00:36:28,920 --> 00:36:32,720
Speaker 1: like in Fort Myers. You know, that's what you're seeing

616
00:36:32,760 --> 00:36:37,600
Speaker 1: come back. It's you know, the existing sort of middle class,

617
00:36:37,640 --> 00:36:42,560
Speaker 1: modest housing is destroyed and those homeowners can't build.

618
00:36:42,840 --> 00:36:45,279
Speaker 2: What I've noticed on the south shore of Long Island,

619
00:36:45,320 --> 00:36:48,880
Speaker 2: both in Nassau County and out in the Hampton's is

620
00:36:48,920 --> 00:36:52,400
Speaker 2: when you are rebuilding a destroyed house, seems the rules

621
00:36:52,480 --> 00:36:55,120
Speaker 2: are you have to elevate that house, yes, ten or

622
00:36:55,160 --> 00:36:58,200
Speaker 2: thirteen like substantial, like a whole flight of stairs up

623
00:36:58,760 --> 00:37:03,840
Speaker 2: and every that's underneath that is just outdoor storage essentially

624
00:37:03,880 --> 00:37:08,320
Speaker 2: correct with breakaway walls, but cement pilings holding the house

625
00:37:08,400 --> 00:37:11,080
Speaker 2: up on the assumption that there's going to be another

626
00:37:12,080 --> 00:37:15,000
Speaker 2: storm that will raise water levels five.

627
00:37:15,040 --> 00:37:17,640
Speaker 1: And that's how they can continue to get flood insurance.

628
00:37:17,640 --> 00:37:22,239
Speaker 1: So neighborhood where I used to live, the neighborhood next

629
00:37:22,280 --> 00:37:24,480
Speaker 1: to me in the next town over was on the water.

630
00:37:25,200 --> 00:37:29,280
Speaker 1: We kept our boat there and you'd see a house

631
00:37:29,400 --> 00:37:32,600
Speaker 1: that was, you know, normally just sitting where it was

632
00:37:32,640 --> 00:37:35,880
Speaker 1: sitting before sandy, and then you saw the houses on

633
00:37:35,920 --> 00:37:39,120
Speaker 1: either side were like on ten foot pilings. Imagine the

634
00:37:39,200 --> 00:37:41,960
Speaker 1: garage now on the second floor right.

635
00:37:42,040 --> 00:37:45,759
Speaker 2: Well, a lot of these houses, no basements, no garages, right,

636
00:37:45,840 --> 00:37:48,640
Speaker 2: but there's a like a car port, right, the assumption

637
00:37:48,719 --> 00:37:50,600
Speaker 2: that if your car gets washed away, Hey.

638
00:37:50,600 --> 00:37:52,759
Speaker 1: It is what it is. It just but it was

639
00:37:52,800 --> 00:37:55,319
Speaker 1: almost comical to see all these garages on the second

640
00:37:55,360 --> 00:37:57,160
Speaker 1: floor and you can't really get your car up there.

641
00:37:57,840 --> 00:38:00,920
Speaker 1: So it's obviously going to be redesigned and made into

642
00:38:01,080 --> 00:38:01,480
Speaker 1: some of these.

643
00:38:01,560 --> 00:38:04,440
Speaker 2: So these are existing houses, Like think.

644
00:38:04,320 --> 00:38:06,719
Speaker 1: Of a raised ranch with a two car garage on

645
00:38:06,760 --> 00:38:09,799
Speaker 1: the side. Now the whole thing gets raised up to

646
00:38:09,920 --> 00:38:14,480
Speaker 1: the second floor, so it's really a three story structure, right,

647
00:38:14,560 --> 00:38:17,719
Speaker 1: pilings and place to park your car the first floor

648
00:38:17,760 --> 00:38:19,400
Speaker 1: which is now the second floor, which is where the

649
00:38:19,400 --> 00:38:24,360
Speaker 1: garage was. And uh so you got to think the

650
00:38:24,520 --> 00:38:27,759
Speaker 1: data is not definitive yet, but the house that's in

651
00:38:27,840 --> 00:38:32,920
Speaker 1: between these two properties is going to be punished in

652
00:38:33,000 --> 00:38:37,200
Speaker 1: value because the buyer, you know, if they want to

653
00:38:37,239 --> 00:38:39,840
Speaker 1: have flood coverage, they have to elevate or raise the house.

654
00:38:40,200 --> 00:38:44,359
Speaker 2: Huh, that's amazing that there's a house near by. When

655
00:38:44,440 --> 00:38:47,360
Speaker 2: my in laws live out in the Hampton's and I'm like,

656
00:38:47,680 --> 00:38:49,480
Speaker 2: I'd like to take a look at that house. So

657
00:38:49,800 --> 00:38:54,680
Speaker 2: Saturday morning, I call the agent and or I do

658
00:38:54,800 --> 00:38:57,799
Speaker 2: an online request I'd like to see the house, and

659
00:38:57,920 --> 00:39:01,840
Speaker 2: the text comes back the seller requires twenty four hours notice.

660
00:39:02,320 --> 00:39:06,040
Speaker 2: And I just remember my mom saying, Hey, a buyer

661
00:39:06,080 --> 00:39:07,680
Speaker 2: wants to come look at your house. I don't care

662
00:39:07,719 --> 00:39:12,040
Speaker 2: if you haven't a wedding. Send everybody their story over

663
00:39:12,120 --> 00:39:14,120
Speaker 2: the house show. Of course, you don't know if that's

664
00:39:14,160 --> 00:39:15,440
Speaker 2: the right buyer for your house.

665
00:39:15,480 --> 00:39:15,840
Speaker 1: Correct.

666
00:39:15,840 --> 00:39:18,840
Speaker 2: And I was like, well, you know, we could try tomorrow,

667
00:39:18,920 --> 00:39:21,799
Speaker 2: but you know, let us know. They get back to

668
00:39:21,880 --> 00:39:24,880
Speaker 2: us on Wednesday. Yeah, and I'm like, we already have

669
00:39:24,920 --> 00:39:27,120
Speaker 2: an offer in on another house, but thanks.

670
00:39:27,000 --> 00:39:31,480
Speaker 1: Yeah for the call. And yeah, because because really, especially

671
00:39:32,680 --> 00:39:35,080
Speaker 1: even more so today than a year or two ago,

672
00:39:35,680 --> 00:39:40,240
Speaker 1: you have to be bend over backwards in a position

673
00:39:40,480 --> 00:39:45,040
Speaker 1: as a seller to be accommodating. You don't control well,

674
00:39:45,280 --> 00:39:48,839
Speaker 1: I shouldn't say that you do, because there's a short

675
00:39:48,880 --> 00:39:53,040
Speaker 1: of of listings. You still have control of the transaction

676
00:39:53,160 --> 00:39:56,319
Speaker 1: in that sense, but it's you don't have the same

677
00:39:56,480 --> 00:39:58,640
Speaker 1: level of control you had a year year and a

678
00:39:58,680 --> 00:40:01,759
Speaker 1: half ago, but not a that as your mother was

679
00:40:02,320 --> 00:40:06,399
Speaker 1: very very accurate in her assessment. You shouldn't think that way,

680
00:40:06,840 --> 00:40:07,719
Speaker 1: you know, unless.

681
00:40:07,680 --> 00:40:10,839
Speaker 2: It evinces the wrong attitude for a seal listen. I've

682
00:40:10,880 --> 00:40:13,120
Speaker 2: owned a bunch of property in and about New York

683
00:40:13,160 --> 00:40:17,120
Speaker 2: over the years. I've had some terrible sellers we've purchased

684
00:40:17,120 --> 00:40:20,080
Speaker 2: from walked away from deals. There are other sellers that

685
00:40:20,640 --> 00:40:23,040
Speaker 2: but from my wife, the deal never would have gone through.

686
00:40:23,600 --> 00:40:26,160
Speaker 2: And there have been other sellers who've been and buyers

687
00:40:26,200 --> 00:40:28,399
Speaker 2: who've been a pleasure to deal with, Like I wish

688
00:40:28,480 --> 00:40:31,400
Speaker 2: I had another house to sell. You. You've been a delight.

689
00:40:32,200 --> 00:40:35,920
Speaker 2: And so when the first like it just rubbed me

690
00:40:35,960 --> 00:40:39,560
Speaker 2: the wrong way. They require twenty four hours notice. Yeah,

691
00:40:39,560 --> 00:40:44,000
Speaker 2: that's to show a house on a weekend. Hey tell

692
00:40:44,000 --> 00:40:47,400
Speaker 2: you what, Let's have this conversation again in six months,

693
00:40:47,400 --> 00:40:49,880
Speaker 2: and maybe I'm wrong and you'll get more than the

694
00:40:49,920 --> 00:40:53,960
Speaker 2: three million ask, which is crazy for this house, or

695
00:40:54,400 --> 00:40:57,520
Speaker 2: maybe you'll realize you made a mistake. But the process

696
00:40:57,600 --> 00:40:59,879
Speaker 2: is just like, oh, from right out of the gate,

697
00:41:00,000 --> 00:41:02,640
Speaker 2: you're going to be difficult. I don't have time for

698
00:41:02,680 --> 00:41:03,239
Speaker 2: seal that.

699
00:41:03,360 --> 00:41:05,520
Speaker 1: Well, it's funny, you know, in this in this market,

700
00:41:05,680 --> 00:41:08,480
Speaker 1: like we sold right as the market pivoted. I remember,

701
00:41:08,880 --> 00:41:14,320
Speaker 1: and my wife always kids me about being overly eager

702
00:41:14,360 --> 00:41:18,719
Speaker 1: to pay full retail. And so we went into the

703
00:41:18,760 --> 00:41:23,920
Speaker 1: house that we ended up buying. We ended up paying

704
00:41:24,520 --> 00:41:26,040
Speaker 1: that we beat thirty people.

705
00:41:26,719 --> 00:41:28,840
Speaker 2: You paid way over ass only.

706
00:41:28,680 --> 00:41:29,760
Speaker 1: Thirty six percent.

707
00:41:31,040 --> 00:41:34,480
Speaker 2: Although I did they price it low to yes, I

708
00:41:34,480 --> 00:41:38,120
Speaker 2: think frenzy and you you gave it a straight up appraisal.

709
00:41:38,200 --> 00:41:42,160
Speaker 1: Yeah, I thought it was about fifteen percent underpriced and.

710
00:41:42,080 --> 00:41:44,359
Speaker 2: You overpaid by fifteen percent.

711
00:41:44,320 --> 00:41:49,360
Speaker 1: Right, right, And but I don't really care.

712
00:41:49,400 --> 00:41:50,520
Speaker 2: Is the house you're going to live in for the

713
00:41:50,520 --> 00:41:51,560
Speaker 2: rest of your life, You're done.

714
00:41:51,600 --> 00:41:54,200
Speaker 1: It's just giving me a long time. And also too,

715
00:41:54,200 --> 00:41:56,560
Speaker 1: we just absolutely love it. And I've never looked at

716
00:41:56,600 --> 00:42:00,600
Speaker 1: it as an investment vehicle housing itself. It's just a

717
00:42:00,640 --> 00:42:04,319
Speaker 1: slow moving asset. And right, I in fact, the last

718
00:42:04,360 --> 00:42:07,920
Speaker 1: three houses I haven't paid under the ask we had

719
00:42:08,400 --> 00:42:12,200
Speaker 1: interesting yeah, yeah, because of the timing that it came on,

720
00:42:12,360 --> 00:42:14,400
Speaker 1: and it was like, you know, I always seem to

721
00:42:15,320 --> 00:42:18,000
Speaker 1: we're ready to move, like we became empty nesters. That's

722
00:42:18,000 --> 00:42:20,080
Speaker 1: why we moved this last time. Our four kids are

723
00:42:20,120 --> 00:42:22,359
Speaker 1: all gainfully employed and you know, out of the house

724
00:42:22,400 --> 00:42:24,759
Speaker 1: and out of the house and uh, and we wanted

725
00:42:24,760 --> 00:42:26,920
Speaker 1: to live a little bit more in the country and

726
00:42:27,000 --> 00:42:30,360
Speaker 1: so it was just perfect. But it was like for

727
00:42:30,520 --> 00:42:32,920
Speaker 1: shock value always you know, I always own it. You

728
00:42:32,920 --> 00:42:35,239
Speaker 1: know and say, hey, you know, we overpaid.

729
00:42:35,320 --> 00:42:38,279
Speaker 2: And over the court. Here's the crazy thing, especially if

730
00:42:38,280 --> 00:42:42,160
Speaker 2: you're rolling out of a similarly priced house. Yeah in

731
00:42:42,239 --> 00:42:44,720
Speaker 2: the and I've had this argument with my kid brother,

732
00:42:44,840 --> 00:42:47,800
Speaker 2: who you know, he just looks at the transit. It

733
00:42:47,840 --> 00:42:50,960
Speaker 2: looks at a very transactional yeah, and every dollars and

734
00:42:51,040 --> 00:42:53,120
Speaker 2: cents and I'm like, think about it. If you're in

735
00:42:53,120 --> 00:42:56,920
Speaker 2: that house for twenty years and you overpaid twenty percent

736
00:42:57,520 --> 00:42:58,600
Speaker 2: in the grand scheme of.

737
00:42:58,560 --> 00:42:59,600
Speaker 1: Things, does it matter.

738
00:42:59,719 --> 00:43:03,240
Speaker 2: It's really not seeing people have a very hard time

739
00:43:03,840 --> 00:43:07,480
Speaker 2: wrapping their head around that. Nobody wants to overpay for anything.

740
00:43:08,040 --> 00:43:11,480
Speaker 2: But this isn't a car or a piece of furniture

741
00:43:11,640 --> 00:43:15,640
Speaker 2: that right, This is where you're going to live, where

742
00:43:15,680 --> 00:43:18,560
Speaker 2: your homestead is going to be, where your heart is

743
00:43:19,440 --> 00:43:22,440
Speaker 2: for you know, the next couple of decades, a couple

744
00:43:22,440 --> 00:43:24,040
Speaker 2: of bucks one way or another. And I know that

745
00:43:24,160 --> 00:43:26,600
Speaker 2: sounds flippant, but it isn't.

746
00:43:26,719 --> 00:43:29,680
Speaker 1: No, I mean that's how we thought about it. It

747
00:43:29,760 --> 00:43:34,319
Speaker 1: was perfect. And we were joking because our old house

748
00:43:34,400 --> 00:43:36,520
Speaker 1: was built in eighteen twenty five and this one's built

749
00:43:36,520 --> 00:43:37,919
Speaker 1: in seventeen fifty five.

750
00:43:38,480 --> 00:43:41,080
Speaker 2: You're running out of centuries to buy house, right, we

751
00:43:41,120 --> 00:43:42,400
Speaker 2: wanted to take. Next one is sixteen.

752
00:43:43,080 --> 00:43:45,600
Speaker 1: We really wanted to get something that was built before

753
00:43:45,880 --> 00:43:48,040
Speaker 1: the US was a country.

754
00:43:47,600 --> 00:43:52,799
Speaker 2: So let's talk a little bit about the rethink that

755
00:43:52,960 --> 00:43:58,760
Speaker 2: the pandemic caused, how it changed our relationship with real estate,

756
00:43:58,880 --> 00:44:02,239
Speaker 2: work price. This is where to even begin. It's just

757
00:44:02,280 --> 00:44:06,279
Speaker 2: such a giant topic. Is it safe to say the

758
00:44:06,280 --> 00:44:09,400
Speaker 2: pandemic caused us to rethink everything about real estate?

759
00:44:09,600 --> 00:44:12,719
Speaker 1: I think that's a fair description. In fact, I think

760
00:44:12,760 --> 00:44:15,799
Speaker 1: the easiest way to sort of start talking about the

761
00:44:15,840 --> 00:44:21,239
Speaker 1: sub subject is the idea that zoom became ubiquitous within

762
00:44:21,320 --> 00:44:25,000
Speaker 1: twenty four hours after the lockdown. Suddenly everybody in the

763
00:44:25,040 --> 00:44:28,640
Speaker 1: world knew what zooming was, and you'd probably never heard

764
00:44:28,719 --> 00:44:32,239
Speaker 1: of the software beforehand. While there had certainly been there's

765
00:44:32,280 --> 00:44:37,839
Speaker 1: other video products, this was far easier to navigate and

766
00:44:37,880 --> 00:44:42,160
Speaker 1: it became part of our culture almost overnight. And so

767
00:44:42,280 --> 00:44:46,440
Speaker 1: as a result, it changed what I call I described

768
00:44:46,480 --> 00:44:50,520
Speaker 1: as the tether between work and home that normally, when

769
00:44:50,640 --> 00:44:53,680
Speaker 1: people majority of people that are buying homes and aren't

770
00:44:53,719 --> 00:44:59,000
Speaker 1: retired are thinking about the commute and how far away

771
00:44:59,400 --> 00:45:03,000
Speaker 1: and uh, and that all got thrown out and we're

772
00:45:03,040 --> 00:45:07,480
Speaker 1: rethinking it to the point where you know, we've seen

773
00:45:07,840 --> 00:45:10,239
Speaker 1: people move farther from the city. I'm one of those

774
00:45:10,280 --> 00:45:12,399
Speaker 1: people where I don't go into the city as much

775
00:45:12,440 --> 00:45:17,799
Speaker 1: as I did. There are people that that you know,

776
00:45:17,920 --> 00:45:20,560
Speaker 1: love still working five days a week, and there's people

777
00:45:20,600 --> 00:45:22,680
Speaker 1: that don't want to work at all in the city.

778
00:45:22,719 --> 00:45:25,280
Speaker 1: You know, in the in the office, it's not it's.

779
00:45:25,120 --> 00:45:28,560
Speaker 2: Not the work, and it's not even the office. It

780
00:45:28,680 --> 00:45:32,040
Speaker 2: seems to be the commute. It's the kid the biggest problem.

781
00:45:32,080 --> 00:45:36,359
Speaker 2: And I think the pandemic kind of made us realize

782
00:45:37,080 --> 00:45:39,719
Speaker 2: a lot of us have a too long commute and

783
00:45:39,760 --> 00:45:43,640
Speaker 2: an uncomfortable commute. And when you're shopping for a house,

784
00:45:43,680 --> 00:45:46,959
Speaker 2: she kind of imagined, well, I'm forty seven minutes away

785
00:45:46,960 --> 00:45:49,480
Speaker 2: from door to Then you actually do it day to

786
00:45:49,560 --> 00:45:51,920
Speaker 2: day and there are delays and there are misconnections all

787
00:45:52,000 --> 00:45:54,600
Speaker 2: this and what was supposed to be a forty seven

788
00:45:54,600 --> 00:45:57,399
Speaker 2: minute commute is really an hour and ten minutes and

789
00:45:57,719 --> 00:45:59,439
Speaker 2: that adds up ten times.

790
00:45:59,480 --> 00:46:02,040
Speaker 1: It's time out of your life that you can't get back.

791
00:46:02,280 --> 00:46:02,840
Speaker 2: That's gone.

792
00:46:03,719 --> 00:46:07,640
Speaker 1: The other thing I think right away, uh, the the

793
00:46:07,719 --> 00:46:11,200
Speaker 1: sort of stereotypical description of work from home was suburb

794
00:46:11,320 --> 00:46:13,520
Speaker 1: to city. You know, people moved out of the city,

795
00:46:14,280 --> 00:46:17,080
Speaker 1: they bought you know, they they lived with relatives, or

796
00:46:17,120 --> 00:46:20,759
Speaker 1: they you know, bought houses or rented and then commuted

797
00:46:21,320 --> 00:46:25,239
Speaker 1: via zoom into their their job in the city. The

798
00:46:25,320 --> 00:46:28,799
Speaker 1: problem with that, first of all, it's completely misleading. Uh

799
00:46:28,920 --> 00:46:31,520
Speaker 1: there's I contend there's just as many people in the

800
00:46:31,560 --> 00:46:35,040
Speaker 1: Upper East Side of Manhattan that were we're doing work

801
00:46:35,040 --> 00:46:37,480
Speaker 1: from home as people that live in Westchester. I mean,

802
00:46:37,560 --> 00:46:41,640
Speaker 1: you know that that that the city people are committing

803
00:46:41,880 --> 00:46:45,000
Speaker 1: commuting in the city the same way. So it wasn't

804
00:46:45,000 --> 00:46:47,640
Speaker 1: about like the you know, driving in or taking the

805
00:46:47,719 --> 00:46:51,200
Speaker 1: train into the city so much as it was just

806
00:46:51,360 --> 00:46:54,359
Speaker 1: physically not going to work and working in your pajamas

807
00:46:55,120 --> 00:46:57,239
Speaker 1: or you know, just you know, totally.

808
00:46:56,920 --> 00:47:00,480
Speaker 2: A lot more flexibility, a lot, a lot easier feel,

809
00:47:01,120 --> 00:47:03,400
Speaker 2: and at least in the beginning of the pandemic, it

810
00:47:03,600 --> 00:47:07,080
Speaker 2: felt like, and maybe I'm projecting my own experience, it

811
00:47:07,160 --> 00:47:11,200
Speaker 2: felt like I was working more hours than I normally

812
00:47:11,239 --> 00:47:14,840
Speaker 2: would because I gave up, I gave up the commute,

813
00:47:14,880 --> 00:47:19,279
Speaker 2: I gave up bathing, I gave up getting dressed, roll

814
00:47:19,280 --> 00:47:21,360
Speaker 2: out of bed. You sit at your desk and my

815
00:47:21,400 --> 00:47:24,000
Speaker 2: wife would say, hey, you've been there for fourteen hours.

816
00:47:24,360 --> 00:47:27,160
Speaker 2: Time time and it's like we used to joke we

817
00:47:27,280 --> 00:47:30,239
Speaker 2: shower Saturday night, whether we need one or not. And

818
00:47:30,480 --> 00:47:33,400
Speaker 2: at a certain point she would come into the office,

819
00:47:33,920 --> 00:47:37,359
Speaker 2: the office upstairs, and say, listen, you got to open

820
00:47:37,400 --> 00:47:41,120
Speaker 2: some windows and add this room atcos it's getting ranking here.

821
00:47:41,400 --> 00:47:46,840
Speaker 2: I just picture that replayed all across the country. So listen.

822
00:47:46,880 --> 00:47:49,200
Speaker 2: I love going into I love being in the office.

823
00:47:49,520 --> 00:47:54,480
Speaker 2: I like work, but everything that takes you to listen,

824
00:47:54,520 --> 00:47:56,880
Speaker 2: I know people who commute from the Upper East Side

825
00:47:57,239 --> 00:47:59,279
Speaker 2: down to Wall Street, and it takes them about as

826
00:47:59,320 --> 00:48:01,760
Speaker 2: long to get to work as it does me coming

827
00:48:01,760 --> 00:48:02,600
Speaker 2: in from the burps.

828
00:48:02,880 --> 00:48:03,120
Speaker 1: Yeah.

829
00:48:03,280 --> 00:48:06,160
Speaker 2: Right, And it's just we we don't have the sort

830
00:48:06,200 --> 00:48:08,520
Speaker 2: of mass trends that they have in Europe.

831
00:48:08,680 --> 00:48:12,000
Speaker 1: Yeah, and I think, you know, there's there's people that

832
00:48:12,600 --> 00:48:16,719
Speaker 1: have the opinion that we're going to revert back to

833
00:48:17,160 --> 00:48:18,919
Speaker 1: let's call it four and a half days a week,

834
00:48:18,960 --> 00:48:21,960
Speaker 1: you know, where like you know, weekend schedules, people work

835
00:48:21,960 --> 00:48:24,880
Speaker 1: half days on Friday, but just you know, call it

836
00:48:24,920 --> 00:48:27,960
Speaker 1: four and a half days a week. And I contend that,

837
00:48:29,320 --> 00:48:31,279
Speaker 1: you know, we're probably you know, if I had to

838
00:48:31,480 --> 00:48:33,360
Speaker 1: make up a number, I'd say we're at two and

839
00:48:33,400 --> 00:48:35,920
Speaker 1: a half to three days a week as an average.

840
00:48:36,920 --> 00:48:39,120
Speaker 1: That's what we are in our company, and most of

841
00:48:39,120 --> 00:48:41,319
Speaker 1: the people I interact with, you know, it's it's it's

842
00:48:41,440 --> 00:48:45,520
Speaker 1: like a little less than three days. And the argument is,

843
00:48:46,560 --> 00:48:49,280
Speaker 1: first of all, that can vary by you know, industries

844
00:48:49,280 --> 00:48:53,440
Speaker 1: that are more collaborative. You know. The challenge is you can't.

845
00:48:54,000 --> 00:48:58,480
Speaker 1: It's harder to build corporate culture and to train new talent.

846
00:48:59,200 --> 00:49:01,320
Speaker 1: You kids, right, So that's a chance to do that

847
00:49:01,680 --> 00:49:04,680
Speaker 1: zone you can't. And so that is what's going to

848
00:49:04,719 --> 00:49:06,879
Speaker 1: be figured out over the next five to ten years.

849
00:49:06,880 --> 00:49:09,960
Speaker 1: I don't think that's there's a quick solution. And you

850
00:49:10,080 --> 00:49:13,040
Speaker 1: definitely have you know, some industries or some companies that

851
00:49:13,320 --> 00:49:16,759
Speaker 1: you know, want five days a week right now. And

852
00:49:16,880 --> 00:49:19,759
Speaker 1: so the idea is that you know, what I've heard

853
00:49:19,880 --> 00:49:22,000
Speaker 1: is like, hey, you're in a you know, we're going

854
00:49:22,040 --> 00:49:24,560
Speaker 1: into a recession or a week economic period. So therefore

855
00:49:24,560 --> 00:49:26,200
Speaker 1: everybody's going to go into work four and a half

856
00:49:26,239 --> 00:49:28,920
Speaker 1: days a week because they want FaceTime with their boss.

857
00:49:29,600 --> 00:49:35,160
Speaker 1: And you know, I just don't think that's it's not

858
00:49:35,200 --> 00:49:38,400
Speaker 1: realistic in my mind. I don't care whether the economy

859
00:49:38,480 --> 00:49:40,440
Speaker 1: is strong or weak, it's not going to be the same.

860
00:49:40,560 --> 00:49:45,400
Speaker 1: But you know, again, I think probably we're at a

861
00:49:45,960 --> 00:49:48,279
Speaker 1: period of time right now where it's you know, the

862
00:49:48,400 --> 00:49:51,000
Speaker 1: default is going to be more time in the office

863
00:49:51,040 --> 00:49:53,919
Speaker 1: than we have right now, but not much more.

864
00:49:54,000 --> 00:49:57,279
Speaker 2: So. Let's talk about some other impacts of the pandemic.

865
00:49:57,360 --> 00:50:02,319
Speaker 2: You you were one of the first people who wrote about, Hey,

866
00:50:02,360 --> 00:50:05,680
Speaker 2: the death of New York City has been greatly exaggerated.

867
00:50:05,920 --> 00:50:09,600
Speaker 2: And you know, every time there's a sale. I actually

868
00:50:09,600 --> 00:50:12,520
Speaker 2: just shared a silly article with you from the New

869
00:50:12,560 --> 00:50:15,680
Speaker 2: York Post earlier. Okay, all right, So there's a little

870
00:50:15,960 --> 00:50:18,320
Speaker 2: there's a town adjacent to where I live called Center Island,

871
00:50:18,880 --> 00:50:21,600
Speaker 2: small town, a couple of a couple of you know,

872
00:50:21,640 --> 00:50:24,120
Speaker 2: there's a few hundred houses on it, and the New

873
00:50:24,200 --> 00:50:26,040
Speaker 2: York Posts and Billy Joel lives there, and he just

874
00:50:26,040 --> 00:50:28,960
Speaker 2: listed his house for sale for forty nine million dollars

875
00:50:29,480 --> 00:50:34,120
Speaker 2: and it says just mass sales of houses on Center Island.

876
00:50:35,120 --> 00:50:38,800
Speaker 2: Who are they selling this way? Isn't this a mass

877
00:50:38,960 --> 00:50:43,000
Speaker 2: purchase of homes? Like every time I see see that

878
00:50:43,080 --> 00:50:45,200
Speaker 2: sort of argument. And we have a similar argument in

879
00:50:45,239 --> 00:50:48,160
Speaker 2: the stock market, all this cash on the sidelines. What

880
00:50:48,200 --> 00:50:50,440
Speaker 2: do you mean I sold the stock for one hundred dollars?

881
00:50:50,920 --> 00:50:52,919
Speaker 2: Somebody had to buy the stock for one hundred dollars

882
00:50:53,000 --> 00:50:55,600
Speaker 2: this exact same amount of cash as it was beforehand.

883
00:50:56,080 --> 00:50:58,680
Speaker 2: So how could there be massive selling if there isn't

884
00:50:58,840 --> 00:51:00,480
Speaker 2: a match of massive by.

885
00:51:00,760 --> 00:51:04,760
Speaker 1: Well, that New York Post is one that had that article.

886
00:51:04,880 --> 00:51:10,480
Speaker 1: That was just a brilliant move, you know, forgetting you know, attention,

887
00:51:10,640 --> 00:51:13,320
Speaker 1: because it was so you know, you have a nightclub

888
00:51:13,360 --> 00:51:16,600
Speaker 1: owner saying not only saying New York is dead, they

889
00:51:16,600 --> 00:51:21,080
Speaker 1: added new York is dead forever, right, like you know proclamation.

890
00:51:21,160 --> 00:51:25,879
Speaker 2: He'd say his name James Altoucher, Yeah, which ultimately led

891
00:51:25,960 --> 00:51:30,560
Speaker 2: to Jerry Seinfeld's counter argument and between al Tooscher and Seinfeld.

892
00:51:30,960 --> 00:51:35,200
Speaker 2: I'm in Seinfeld's camp absolutely. But now let's talk specifics

893
00:51:35,239 --> 00:51:38,839
Speaker 2: and let's put some meat on the bone. You discussed

894
00:51:39,560 --> 00:51:44,840
Speaker 2: how there's been a huge influx of purchasers and renters, yes,

895
00:51:45,560 --> 00:51:48,360
Speaker 2: of young people coming from other parts of the country,

896
00:51:48,400 --> 00:51:51,640
Speaker 2: other cities. What's going on in the in the New

897
00:51:51,719 --> 00:51:52,960
Speaker 2: York City real estate market.

898
00:51:53,000 --> 00:51:55,840
Speaker 1: Well, it's really interesting if you look at the census data,

899
00:51:55,880 --> 00:51:58,440
Speaker 1: because you know, I think you know, the term migration

900
00:51:59,480 --> 00:52:03,200
Speaker 1: can take, you know, all kinds of connotations in the

901
00:52:03,400 --> 00:52:06,360
Speaker 1: in the context of New York City. The concept of

902
00:52:06,440 --> 00:52:09,880
Speaker 1: net migration. You know, what's the what's the difference between

903
00:52:09,880 --> 00:52:14,000
Speaker 1: inbound and outbound? And in twenty twenty two, according to Census,

904
00:52:15,160 --> 00:52:21,000
Speaker 1: Manhattan had a net inbound matan Manhattan, other Burroughs had

905
00:52:21,040 --> 00:52:24,920
Speaker 1: a sharply a sharp drop in the outbounds, meaning that

906
00:52:25,160 --> 00:52:28,400
Speaker 1: everything got a lot better. The narrative is, and I

907
00:52:28,440 --> 00:52:34,279
Speaker 1: remember in the early days of the lockdown where if

908
00:52:34,320 --> 00:52:37,960
Speaker 1: I read and took every headline to heart, you know,

909
00:52:38,200 --> 00:52:41,759
Speaker 1: because the keywords, like you had told me years ago,

910
00:52:41,840 --> 00:52:45,200
Speaker 1: like if you put gold in your post title, you're

911
00:52:45,239 --> 00:52:48,080
Speaker 1: gonna get a lot of traffic, right, And the words

912
00:52:48,280 --> 00:52:54,279
Speaker 1: during the pandemic were exodus and the phrase fleeing the city, right,

913
00:52:54,360 --> 00:52:58,600
Speaker 1: And so I took it. As you know, this was

914
00:52:58,760 --> 00:53:02,239
Speaker 1: in the spring of twenty I was thinking, boy, if

915
00:53:02,280 --> 00:53:04,640
Speaker 1: all this is true, there's gonna be eleven people left

916
00:53:04,640 --> 00:53:07,480
Speaker 1: in Manhattan in the by the fall, which of course

917
00:53:07,600 --> 00:53:11,560
Speaker 1: was not the story. And we've seen it, you know,

918
00:53:11,640 --> 00:53:15,680
Speaker 1: And it creates this really confusing narrative because we have

919
00:53:16,160 --> 00:53:21,280
Speaker 1: office buildings that are fifty percent or less than fifty

920
00:53:21,280 --> 00:53:26,560
Speaker 1: percent used according to Castle card swipe data as sort

921
00:53:26,560 --> 00:53:29,680
Speaker 1: of a proxy for that, and then we have record

922
00:53:29,800 --> 00:53:32,399
Speaker 1: rental prices right where people are.

923
00:53:32,360 --> 00:53:34,680
Speaker 2: So only there was a solution to be worked out.

924
00:53:34,760 --> 00:53:37,880
Speaker 1: Right, right, So you know, the solution's talked about a

925
00:53:37,920 --> 00:53:43,120
Speaker 1: lot is this idea of converting unused office space to rentals.

926
00:53:43,360 --> 00:53:46,960
Speaker 2: Which post nine to eleven down in the Wall Street

927
00:53:47,000 --> 00:53:50,040
Speaker 2: area of New York. It took a couple of years,

928
00:53:50,480 --> 00:53:55,040
Speaker 2: but there was a massive conversion office to Now those

929
00:53:55,040 --> 00:53:56,680
Speaker 2: were older buildings.

930
00:53:56,320 --> 00:53:57,520
Speaker 1: Right, Class B or C.

931
00:53:57,840 --> 00:54:01,240
Speaker 2: Right now you have just so you have Midtown South,

932
00:54:01,680 --> 00:54:04,319
Speaker 2: you have Hudson Yards, you have the High Line, you

933
00:54:04,320 --> 00:54:08,400
Speaker 2: have Midtown proper. There's a ton of new office buildings

934
00:54:08,680 --> 00:54:10,920
Speaker 2: that you put up in the past decade.

935
00:54:10,680 --> 00:54:15,120
Speaker 1: But the numbers don't work like to convert them to residential.

936
00:54:16,800 --> 00:54:20,759
Speaker 1: Any developer will pretty much say that's not possible.

937
00:54:21,160 --> 00:54:24,000
Speaker 2: But on the marginal to me, after the bankruptcy sale,

938
00:54:24,080 --> 00:54:24,480
Speaker 2: see if it.

939
00:54:24,480 --> 00:54:27,719
Speaker 1: Makes more, Okay, So that's the next stage. So so

940
00:54:28,080 --> 00:54:30,600
Speaker 1: when you think about it, and you know, my company

941
00:54:30,719 --> 00:54:33,399
Speaker 1: was looking for new office space, we ended up staying

942
00:54:33,440 --> 00:54:35,399
Speaker 1: in the same space, got a great deal, build out

943
00:54:35,400 --> 00:54:38,680
Speaker 1: and all that. But what we found when we were

944
00:54:38,719 --> 00:54:40,839
Speaker 1: looking at we're looking at Class B. You know, there's

945
00:54:40,920 --> 00:54:43,520
Speaker 1: a B and C for those that aren't familiar, and

946
00:54:44,160 --> 00:54:46,960
Speaker 1: really the upper half of class A isn't going to

947
00:54:46,960 --> 00:54:50,239
Speaker 1: be impacted in significant way. It's the bottom half of

948
00:54:50,320 --> 00:54:53,000
Speaker 1: A and B and C. It's all bets are off right.

949
00:54:53,600 --> 00:54:57,080
Speaker 1: And the one thing that I didn't fully appreciate until

950
00:54:57,120 --> 00:55:00,120
Speaker 1: I went through sort of looking for space is that

951
00:55:00,400 --> 00:55:03,560
Speaker 1: many you know, we were talking about sellers capitulating to

952
00:55:03,880 --> 00:55:08,439
Speaker 1: the weaken market conditions in the office environment. Landlords, Many

953
00:55:08,520 --> 00:55:14,319
Speaker 1: landlords can't capitulate because the debt service. They can't cover

954
00:55:14,400 --> 00:55:17,600
Speaker 1: the debt service. So I think the way this is

955
00:55:17,640 --> 00:55:19,759
Speaker 1: going to play out, and it's already starting. You can

956
00:55:19,800 --> 00:55:22,200
Speaker 1: read about you read San Francisco, you can read in

957
00:55:22,239 --> 00:55:26,000
Speaker 1: New York City. What's happening is that we're going to

958
00:55:26,040 --> 00:55:29,880
Speaker 1: see a lot of a tremendous amount of office space

959
00:55:29,960 --> 00:55:32,360
Speaker 1: move from weak hands to strong hands.

960
00:55:32,560 --> 00:55:36,520
Speaker 2: And to keep in mind the people are concerned about

961
00:55:36,520 --> 00:55:40,440
Speaker 2: this being a systemic threat. I keep seeing these clickbait headlines.

962
00:55:40,840 --> 00:55:44,040
Speaker 2: Every one of these buildings is its own LLC, its

963
00:55:44,080 --> 00:55:47,880
Speaker 2: own corporation. Right, So if you're a giant real estate

964
00:55:47,920 --> 00:55:51,040
Speaker 2: trust and you own a thousand buildings and one building

965
00:55:51,120 --> 00:55:53,560
Speaker 2: is in trouble, well, if that building goes belly up,

966
00:55:53,560 --> 00:55:56,719
Speaker 2: it's like oops, sorry, and on to the next. So

967
00:55:56,760 --> 00:55:58,920
Speaker 2: now you're down to nine hundred and ninety nine buildings

968
00:55:58,920 --> 00:56:01,719
Speaker 2: and you don't have the troubles building. This can take

969
00:56:01,760 --> 00:56:08,000
Speaker 2: place in a very managed process where one building after

970
00:56:08,080 --> 00:56:10,240
Speaker 2: another moves from weekends.

971
00:56:09,760 --> 00:56:13,080
Speaker 1: To strong and that's where you could see you know,

972
00:56:13,200 --> 00:56:18,480
Speaker 1: more creative you know, adaptive reuse where the you know,

973
00:56:18,520 --> 00:56:21,719
Speaker 1: the new owner is able because they don't have the

974
00:56:21,760 --> 00:56:23,520
Speaker 1: same level of debt service.

975
00:56:24,600 --> 00:56:26,160
Speaker 2: So prices can come down or.

976
00:56:26,120 --> 00:56:29,000
Speaker 1: Coming down to market and you know, you can you know,

977
00:56:29,760 --> 00:56:33,880
Speaker 1: you know, think of other reuses of the property. What

978
00:56:34,040 --> 00:56:36,880
Speaker 1: I uh, you know what. Also a lot of people

979
00:56:36,880 --> 00:56:38,719
Speaker 1: don't realize don't think of it when they think of

980
00:56:38,760 --> 00:56:43,279
Speaker 1: this challenge is especially in midtown Manhattan where you have

981
00:56:43,360 --> 00:56:47,360
Speaker 1: these very big office buildings. The floor plates.

982
00:56:46,880 --> 00:56:50,279
Speaker 2: Too far from the windows to be right unless they

983
00:56:50,360 --> 00:56:54,239
Speaker 2: replace all those elevators with like interior courtyard.

984
00:56:53,840 --> 00:56:57,360
Speaker 1: Right right, or you know, they they they create you

985
00:56:57,360 --> 00:56:59,959
Speaker 1: know a court, you know, sort of like an al

986
00:57:00,520 --> 00:57:03,200
Speaker 1: you know, a center. They dig, they cut out, cut

987
00:57:03,200 --> 00:57:06,120
Speaker 1: through the floorest but that's very expensive, right, so so

988
00:57:06,400 --> 00:57:08,839
Speaker 1: there's ways around it. But it is not like one

989
00:57:08,880 --> 00:57:12,360
Speaker 1: of these hey, let's flip the switch. It because of

990
00:57:12,400 --> 00:57:15,799
Speaker 1: the debt service. It's gonna this is going to take

991
00:57:16,560 --> 00:57:19,720
Speaker 1: four or five years at a minimum to sort of

992
00:57:19,800 --> 00:57:20,200
Speaker 1: see it.

993
00:57:20,480 --> 00:57:26,200
Speaker 2: But it'll eventually. One assumes market forces will eventually rebalance

994
00:57:26,320 --> 00:57:29,440
Speaker 2: the demand for office space correct is falling, and the

995
00:57:29,520 --> 00:57:32,760
Speaker 2: demand for residential, which seems to be strong paining.

996
00:57:33,040 --> 00:57:37,040
Speaker 1: Yeah. Actually, the joke during the pandemic is Manhattan's just

997
00:57:37,040 --> 00:57:41,360
Speaker 1: becoming all residential, right, Everything's going to convert to residential.

998
00:57:41,440 --> 00:57:43,120
Speaker 1: That was sort of the thinking.

999
00:57:44,560 --> 00:57:47,840
Speaker 2: Think about how crazy it is how much new office

1000
00:57:47,880 --> 00:57:52,120
Speaker 2: space hit the New York market right before the pandemic.

1001
00:57:52,440 --> 00:57:55,840
Speaker 2: Hudson Yard Yards is millions and millions of square feet.

1002
00:57:56,000 --> 00:57:58,760
Speaker 2: And by the way, if you haven't been there, it's

1003
00:57:58,920 --> 00:58:02,440
Speaker 2: it's spectacular. Yeah, it's fantastic. It's like the new version

1004
00:58:02,440 --> 00:58:05,320
Speaker 2: of Rockefeller Center. And every time I see a new

1005
00:58:05,360 --> 00:58:09,960
Speaker 2: building going up somewhere, you're like, wow, that's huge. I

1006
00:58:10,040 --> 00:58:13,040
Speaker 2: walk by the JP Morgan Chase building all the time,

1007
00:58:13,600 --> 00:58:18,000
Speaker 2: and they seem to not care about the excess office space.

1008
00:58:18,240 --> 00:58:21,720
Speaker 2: They're putting up a giant building on Park Avenue right right.

1009
00:58:21,760 --> 00:58:24,120
Speaker 1: I think part of that, though, too, is that there's

1010
00:58:24,200 --> 00:58:26,240
Speaker 1: like a four year five.

1011
00:58:26,160 --> 00:58:28,360
Speaker 2: Year leads started in twenty eighteen.

1012
00:58:28,200 --> 00:58:31,960
Speaker 1: Exactly right, So, but that's part of it. Yeah, like

1013
00:58:32,000 --> 00:58:35,400
Speaker 1: the long term view, but I look at it as

1014
00:58:36,760 --> 00:58:41,160
Speaker 1: when so the big problem or big challenges New York

1015
00:58:41,160 --> 00:58:46,520
Speaker 1: City's budget, over fifty percent of revenues are real estate related, really,

1016
00:58:46,920 --> 00:58:50,680
Speaker 1: and so I don't know what the division is the

1017
00:58:50,720 --> 00:58:56,480
Speaker 1: breakout is for commercial specifically, but it is it is

1018
00:58:56,720 --> 00:59:03,040
Speaker 1: inherent in our revenue structure for real estate to succeed.

1019
00:59:03,600 --> 00:59:06,800
Speaker 1: And even before the pandemic, we had changes in laws

1020
00:59:06,840 --> 00:59:11,240
Speaker 1: like the mansion tax, the rent law changed so that

1021
00:59:11,360 --> 00:59:18,080
Speaker 1: conversions of existing buildings are almost impossible. So you know,

1022
00:59:18,720 --> 00:59:22,160
Speaker 1: those sort of large scale revenues from residential real estate

1023
00:59:22,200 --> 00:59:25,680
Speaker 1: are severely challenged going forward to the city, and it's

1024
00:59:25,720 --> 00:59:29,200
Speaker 1: in the city's interest. The city sort of caught. You know,

1025
00:59:29,840 --> 00:59:33,000
Speaker 1: the state is the one that's driving these new laws,

1026
00:59:34,360 --> 00:59:37,160
Speaker 1: but the revenue is critical to the city for the

1027
00:59:37,200 --> 00:59:40,400
Speaker 1: city not to rely on the state. So it's sort

1028
00:59:40,440 --> 00:59:41,520
Speaker 1: of this catch twenty two.

1029
00:59:41,960 --> 00:59:45,640
Speaker 2: Right back when we had Deblasio and Cuomo, they both

1030
00:59:45,720 --> 00:59:48,840
Speaker 2: despised each other, yes, and there was no cooperation. One

1031
00:59:48,880 --> 00:59:52,720
Speaker 2: would hope that the new mayors and the new governor

1032
00:59:53,240 --> 00:59:55,560
Speaker 2: get along a little better and would allow us to

1033
00:59:56,480 --> 01:00:00,000
Speaker 2: make some rule changes. So let's talk about you mentioned

1034
01:00:00,000 --> 01:00:06,240
Speaker 2: and migration. There has been a general shift lasting decades

1035
01:00:07,000 --> 01:00:11,640
Speaker 2: towards the sun Belt. I think it was Steve Johnson

1036
01:00:11,680 --> 01:00:15,440
Speaker 2: wrote about how air conditioning made this possible, Like people

1037
01:00:15,440 --> 01:00:18,360
Speaker 2: don't want to live in Louisiana without AC or at

1038
01:00:18,440 --> 01:00:20,680
Speaker 2: least a lot of people don't. But this has been

1039
01:00:20,720 --> 01:00:25,640
Speaker 2: going on for quite a while. What's it look like now?

1040
01:00:25,960 --> 01:00:29,080
Speaker 2: I recall, so we looked in Florida in twenty nineteen

1041
01:00:29,680 --> 01:00:31,960
Speaker 2: on the West coast, and I didn't know, did I

1042
01:00:32,000 --> 01:00:34,160
Speaker 2: want a house? Did I want a condo? You don't

1043
01:00:34,160 --> 01:00:36,160
Speaker 2: have to worry about maintenance on the condo. But then

1044
01:00:36,200 --> 01:00:37,960
Speaker 2: you have neighbors and a house, you have a little more.

1045
01:00:38,480 --> 01:00:42,600
Speaker 2: And between then and two years later, like these little

1046
01:00:42,680 --> 01:00:48,640
Speaker 2: highs more than that double and it's no bargain. In

1047
01:00:48,720 --> 01:00:51,480
Speaker 2: terms of real estate taxes, Florida real estate taxes are

1048
01:00:51,840 --> 01:00:53,479
Speaker 2: like New York real estate tax Yeah.

1049
01:00:53,880 --> 01:00:57,040
Speaker 1: Yeah. The way to think of Florida, the way I

1050
01:00:57,080 --> 01:01:00,600
Speaker 1: think of it without sounding like I work for the

1051
01:01:00,600 --> 01:01:04,919
Speaker 1: tourism bord of Florida is the real estate industry down

1052
01:01:04,920 --> 01:01:08,600
Speaker 1: there because of work from home is undergoing restructuring that

1053
01:01:08,800 --> 01:01:11,320
Speaker 1: it's sort of evolving from a place you go to

1054
01:01:11,440 --> 01:01:14,440
Speaker 1: vacation or visit to a place that you live. And

1055
01:01:14,640 --> 01:01:20,320
Speaker 1: what is remarkable about some of the towns or cities

1056
01:01:20,360 --> 01:01:26,880
Speaker 1: in Florida is they now hire employees specifically to recruit

1057
01:01:28,160 --> 01:01:33,000
Speaker 1: CEOs from the Northeast who then will bring their companies

1058
01:01:33,760 --> 01:01:37,360
Speaker 1: to Florida. And they've had I'd say, you know, there's

1059
01:01:37,400 --> 01:01:40,840
Speaker 1: been some standout results. I wouldn't say it's you know,

1060
01:01:40,960 --> 01:01:45,400
Speaker 1: over the top successful, but it's certainly their population growth

1061
01:01:45,840 --> 01:01:48,960
Speaker 1: since the pandemic. Florida's up about seven percent. I mean

1062
01:01:49,000 --> 01:01:55,200
Speaker 1: the substantial, substantial. And so you know, New York State

1063
01:01:55,760 --> 01:01:58,000
Speaker 1: and the New York metro area has to think of

1064
01:01:58,080 --> 01:02:03,160
Speaker 1: themselves in competition with the areas, which is it is

1065
01:02:03,520 --> 01:02:05,360
Speaker 1: seemingly unable to do.

1066
01:02:05,720 --> 01:02:07,920
Speaker 2: I had a buddy who runs a bond shop, and

1067
01:02:08,040 --> 01:02:12,680
Speaker 2: about fifteen years ago he relocated to Sarasota, Florida, and

1068
01:02:12,760 --> 01:02:16,880
Speaker 2: he said John Corzine, then governor of Florida, of Newton,

1069
01:02:16,920 --> 01:02:19,560
Speaker 2: New Jersey. He said, John Corzine bought me a house

1070
01:02:19,600 --> 01:02:23,360
Speaker 2: in Florida, meaning his taxes had gone up so much

1071
01:02:23,880 --> 01:02:30,240
Speaker 2: moving there was was pless transaction. Although that said that

1072
01:02:30,440 --> 01:02:35,280
Speaker 2: seven percent boost isn't evenly distributed. And there's lots of

1073
01:02:35,320 --> 01:02:40,520
Speaker 2: stories about these areas in Florida, particularly on the East coast,

1074
01:02:40,640 --> 01:02:44,080
Speaker 2: but parts of the southern west coast that have just

1075
01:02:44,120 --> 01:02:48,360
Speaker 2: been overrun. The infrastructure can't handle it. You bring all

1076
01:02:48,400 --> 01:02:51,720
Speaker 2: the Northeast problems, so there's a lot of traffic, the

1077
01:02:51,720 --> 01:02:56,840
Speaker 2: school's lack capacity, even the water and electrical grid and

1078
01:02:56,880 --> 01:03:01,439
Speaker 2: sewage grid can't handle it. Are these areas ready for

1079
01:03:01,560 --> 01:03:03,360
Speaker 2: this influx of migrants.

1080
01:03:04,080 --> 01:03:07,400
Speaker 1: It's a tough balancing act. You know. You can certainly

1081
01:03:07,440 --> 01:03:11,720
Speaker 1: see in housing prices that there's even with all the

1082
01:03:11,720 --> 01:03:15,720
Speaker 1: building that's going on, there's inadequate supply. The focus seems

1083
01:03:15,760 --> 01:03:19,640
Speaker 1: to be on other institutions that create employment, like healthcare,

1084
01:03:20,760 --> 01:03:26,760
Speaker 1: you know medical, you know tech medical type services. There's

1085
01:03:26,800 --> 01:03:29,480
Speaker 1: been a lot of emphasis on sort of competing with

1086
01:03:29,560 --> 01:03:33,280
Speaker 1: New York bringing financial services there. You know, there's been

1087
01:03:33,280 --> 01:03:36,480
Speaker 1: a lot of marquee announcements like Citadel and others that

1088
01:03:36,560 --> 01:03:40,200
Speaker 1: have artists, Yeah, the ones that they're going to move their.

1089
01:03:40,760 --> 01:03:44,400
Speaker 2: So there's been chatter about you have this big surge

1090
01:03:44,440 --> 01:03:47,600
Speaker 2: down to Florida, and now some of that's begun to

1091
01:03:47,680 --> 01:03:51,280
Speaker 2: reverse and people have come back. There was a hilarious

1092
01:03:51,480 --> 01:03:55,280
Speaker 2: article in Bloomberg where they were quoting a trader who

1093
01:03:55,400 --> 01:03:59,360
Speaker 2: had relocated temporarily to Florida, and the line that stood

1094
01:03:59,360 --> 01:04:04,280
Speaker 2: out was the only problem with living in Florida is

1095
01:04:04,400 --> 01:04:08,160
Speaker 2: all the Floridians, right, And I thought that was hilarious.

1096
01:04:09,240 --> 01:04:11,760
Speaker 2: And some of these folks have been coming back to

1097
01:04:11,840 --> 01:04:17,840
Speaker 2: New York. How exaggerated is the migration to away from

1098
01:04:18,040 --> 01:04:22,840
Speaker 2: California into Texas, away from New York and Massachusetts into Florida.

1099
01:04:23,400 --> 01:04:26,040
Speaker 2: I mean, it looks like it's real, But are are

1100
01:04:26,080 --> 01:04:28,160
Speaker 2: the numbers hyped up? No?

1101
01:04:28,280 --> 01:04:32,120
Speaker 1: I don't. I think it is real. It's probably exaggerated. Well,

1102
01:04:32,160 --> 01:04:35,840
Speaker 1: it is exaggerated a bit, but it's clearly something that

1103
01:04:36,040 --> 01:04:40,200
Speaker 1: changed during the pandemic. And the reason why I say

1104
01:04:40,240 --> 01:04:44,840
Speaker 1: that is in two thousand January first of twenty eighteen,

1105
01:04:45,040 --> 01:04:48,520
Speaker 1: the federal salt tax was initiated. It's you know, I

1106
01:04:48,640 --> 01:04:51,040
Speaker 1: used to think salt stood for state and this would

1107
01:04:51,040 --> 01:04:54,160
Speaker 1: be like one of my local tax Mike Columbia student jokes.

1108
01:04:54,160 --> 01:04:56,520
Speaker 1: You know, I used to think salt tax stood for assault,

1109
01:04:56,560 --> 01:05:02,280
Speaker 1: stood for stateon served for Strategic Arms Limitation treaty. But

1110
01:05:03,000 --> 01:05:07,800
Speaker 1: you know state and local tax where the deduction on

1111
01:05:08,360 --> 01:05:11,120
Speaker 1: the combination of your state and local taxes and your

1112
01:05:11,600 --> 01:05:15,440
Speaker 1: property taxes. The deduction was only was capped at ten

1113
01:05:15,480 --> 01:05:18,800
Speaker 1: thousand dollars. When you have houses in Westchester with the annual

1114
01:05:18,880 --> 01:05:21,280
Speaker 1: estate taxes of one hundred and seventy five thousand dollars,

1115
01:05:21,560 --> 01:05:27,200
Speaker 1: you know that's a tremendous cost hit. So I don't

1116
01:05:27,240 --> 01:05:28,000
Speaker 1: know what point.

1117
01:05:27,960 --> 01:05:32,040
Speaker 2: Was well, the takeaway about what does that do to

1118
01:05:32,320 --> 01:05:36,080
Speaker 2: the so called high tax blue states? Yeah, and is

1119
01:05:36,800 --> 01:05:41,000
Speaker 2: the jiu jitsu that benefits the low tax red states?

1120
01:05:41,240 --> 01:05:45,560
Speaker 1: Right? So the thinking was when that law went into

1121
01:05:45,640 --> 01:05:50,160
Speaker 1: effect January first of twenty eighteen, that you know it

1122
01:05:50,200 --> 01:05:52,360
Speaker 1: was going to be like the Beverly Hillbillies packing up

1123
01:05:52,360 --> 01:05:56,200
Speaker 1: and like going to Florida. And the brokerage community was

1124
01:05:56,240 --> 01:05:58,160
Speaker 1: all telling me, you know, we're sitting there, we're waiting,

1125
01:05:59,160 --> 01:06:04,800
Speaker 1: and it it didn't happen at scale. It was definitely noticeable,

1126
01:06:04,880 --> 01:06:08,960
Speaker 1: but it wasn't this mad gold rush. When the pandemic hit,

1127
01:06:09,400 --> 01:06:15,920
Speaker 1: that was what really stimulated the migration, whether it was

1128
01:06:15,960 --> 01:06:17,400
Speaker 1: temporary or full time.

1129
01:06:18,120 --> 01:06:22,000
Speaker 2: So where a price is stabilizing, I look around, I

1130
01:06:22,000 --> 01:06:25,439
Speaker 2: see Florida isn't the bargain. It once was cheaper than

1131
01:06:25,640 --> 01:06:29,400
Speaker 2: New York but not as cheap as it once was.

1132
01:06:30,080 --> 01:06:34,200
Speaker 2: And when you look at so Florida loves Homeowners Association

1133
01:06:34,360 --> 01:06:40,200
Speaker 2: fees between the state real estate tax and hoa's, Florida

1134
01:06:40,280 --> 01:06:43,600
Speaker 2: doesn't seem like much of a bargain where a price

1135
01:06:43,640 --> 01:06:46,480
Speaker 2: is stabilizing and where's some value left.

1136
01:06:46,720 --> 01:06:50,240
Speaker 1: So I would what's a little different. And why I

1137
01:06:50,360 --> 01:06:55,200
Speaker 1: call Florida going undergoing this restructure rather than it being

1138
01:06:55,240 --> 01:06:58,680
Speaker 1: some sort of fluke or high moment in price and

1139
01:06:58,720 --> 01:07:01,800
Speaker 1: then it's going to go down, is because of work

1140
01:07:01,840 --> 01:07:05,520
Speaker 1: from home, as I said, And part of what's happening

1141
01:07:05,880 --> 01:07:11,280
Speaker 1: is the market is maturing, it's pivoted into there's a

1142
01:07:11,320 --> 01:07:13,360
Speaker 1: lot more high end. So one of the things that

1143
01:07:13,760 --> 01:07:16,760
Speaker 1: I noticed, you know, like as a hobby, I collect,

1144
01:07:17,240 --> 01:07:19,240
Speaker 1: because I'm a dull and boring numbers guy, I collect

1145
01:07:19,320 --> 01:07:23,000
Speaker 1: fifty million plus closings across the US.

1146
01:07:23,120 --> 01:07:25,400
Speaker 2: And you used to used to put out a chart

1147
01:07:25,480 --> 01:07:27,520
Speaker 2: tracking yeah yeah, fifteen million, yeah.

1148
01:07:27,400 --> 01:07:31,160
Speaker 1: Yeah yeah. And you know I put into my newsletter periodically,

1149
01:07:31,840 --> 01:07:33,920
Speaker 1: and you know it used to be something, you know,

1150
01:07:34,120 --> 01:07:39,120
Speaker 1: over fifty million dollars was like La and Manhattan and

1151
01:07:39,160 --> 01:07:42,720
Speaker 1: the Hampton's and maybe an occasional sale in Palm Beach.

1152
01:07:43,480 --> 01:07:48,320
Speaker 1: Now it's you know, dozens of markets in in Florida

1153
01:07:48,360 --> 01:07:52,600
Speaker 1: in general are seeing these transactions. It's much more I'm

1154
01:07:52,680 --> 01:07:54,960
Speaker 1: just thinking of that as a proxy for sort of

1155
01:07:55,920 --> 01:07:58,440
Speaker 1: sort of this discovery of Florida is much more broad

1156
01:07:58,440 --> 01:08:01,800
Speaker 1: based than Hey, Miami in Palm Beach. That's that's it.

1157
01:08:01,800 --> 01:08:04,320
Speaker 1: It's a lot more spread out than it was, and

1158
01:08:04,360 --> 01:08:07,520
Speaker 1: I think that says a lot about how the economy

1159
01:08:07,600 --> 01:08:10,880
Speaker 1: is expanding into this sort of year round living.

1160
01:08:11,680 --> 01:08:14,280
Speaker 2: Although if you've ever been in Florida in July, you

1161
01:08:14,320 --> 01:08:15,680
Speaker 2: would question, question.

1162
01:08:15,920 --> 01:08:18,280
Speaker 1: I do have one of my my oldest son, got

1163
01:08:18,280 --> 01:08:20,720
Speaker 1: a great job offer and he works in Fort Lauderdale,

1164
01:08:20,840 --> 01:08:23,800
Speaker 1: coming from Connecticut, and he likes the heat.

1165
01:08:24,280 --> 01:08:28,840
Speaker 2: So so it's August. What is he saying, now, did

1166
01:08:28,840 --> 01:08:32,080
Speaker 2: you realize that photons have so much mass when they

1167
01:08:32,120 --> 01:08:34,360
Speaker 2: hit you it beats your sun?

1168
01:08:34,479 --> 01:08:35,200
Speaker 1: Feel it right?

1169
01:08:35,280 --> 01:08:35,479
Speaker 2: Yeah?

1170
01:08:35,560 --> 01:08:39,120
Speaker 1: It has w Yeah, No, it's you know, he's still

1171
01:08:39,160 --> 01:08:42,640
Speaker 1: an enthusiast, so so I guess you know.

1172
01:08:42,760 --> 01:08:46,600
Speaker 2: I used to jokingly say, Florida in the summer, you

1173
01:08:46,680 --> 01:08:50,720
Speaker 2: run from air conditions house the air conditioned car. Like

1174
01:08:50,840 --> 01:08:52,760
Speaker 2: New York in the winter, you run from heated house

1175
01:08:52,800 --> 01:08:53,480
Speaker 2: to heated.

1176
01:08:54,160 --> 01:08:56,200
Speaker 1: And the same idea.

1177
01:08:56,360 --> 01:09:00,000
Speaker 2: Right, it's just but it hasn't been getting much cold

1178
01:09:00,120 --> 01:09:04,080
Speaker 2: to hear. But you know parts of the southwest Texas

1179
01:09:04,320 --> 01:09:06,280
Speaker 2: and now parts of Florida. You see what's going on

1180
01:09:06,360 --> 01:09:09,479
Speaker 2: in the ocean off of so that I wasn't planning

1181
01:09:09,479 --> 01:09:12,679
Speaker 2: on asking you a climate change question, but it certainly

1182
01:09:12,760 --> 01:09:17,800
Speaker 2: raises a question. At what point do does these like

1183
01:09:18,280 --> 01:09:22,599
Speaker 2: wildfires and persistent heat and water shortages. And I'm not

1184
01:09:22,640 --> 01:09:27,320
Speaker 2: asking this as a left or right argument, at what

1185
01:09:27,360 --> 01:09:30,920
Speaker 2: point does this affect property values? Has become harder to

1186
01:09:30,960 --> 01:09:34,920
Speaker 2: get insurance, Like, what are the economic costs of what's

1187
01:09:35,000 --> 01:09:39,040
Speaker 2: going on with all of these climate related disasters we

1188
01:09:39,120 --> 01:09:39,559
Speaker 2: keep seeing?

1189
01:09:39,800 --> 01:09:42,680
Speaker 1: Yeah, and actually, you know, we're seeing a you know,

1190
01:09:43,000 --> 01:09:46,080
Speaker 1: climate change. I think of it as just bringing a

1191
01:09:46,160 --> 01:09:50,679
Speaker 1: higher frequency of disasters and larger scale disasters.

1192
01:09:50,280 --> 01:09:54,120
Speaker 2: So bigger and more other than that other a hoax,

1193
01:09:54,560 --> 01:09:55,920
Speaker 2: it's exactly.

1194
01:09:57,320 --> 01:10:01,280
Speaker 1: But you know it's interesting, you know. And so first

1195
01:10:01,320 --> 01:10:03,880
Speaker 1: of all, you know, A, it adds to your cost

1196
01:10:03,920 --> 01:10:07,760
Speaker 1: of home ownership. B. You have the insurance industry sort

1197
01:10:07,800 --> 01:10:12,080
Speaker 1: of grappling with can they continue at the premium even

1198
01:10:12,080 --> 01:10:14,439
Speaker 1: close to the premiums that they're with When you think

1199
01:10:14,479 --> 01:10:17,360
Speaker 1: of there's already insurance crisis in Florida.

1200
01:10:17,520 --> 01:10:19,840
Speaker 2: I mean, it's crazy what's going on there. You can't

1201
01:10:19,880 --> 01:10:21,120
Speaker 2: it's very hard to get in show.

1202
01:10:21,320 --> 01:10:25,799
Speaker 1: And that was my point before, is that you know, FEMA,

1203
01:10:25,960 --> 01:10:30,439
Speaker 1: a federal program, is basically cutting out by having such

1204
01:10:30,479 --> 01:10:33,800
Speaker 1: low pricing relative the private markets, is cutting out the

1205
01:10:33,800 --> 01:10:36,840
Speaker 1: private markets. So it's just bringing on more risk onto

1206
01:10:36,880 --> 01:10:44,200
Speaker 1: the taxpayer for these locations. Yeah, wildfires in California, all

1207
01:10:44,280 --> 01:10:48,840
Speaker 1: this just means a higher cost of home ownership and

1208
01:10:48,880 --> 01:10:54,240
Speaker 1: eventually some markets not being suitable for occupancy. And you know,

1209
01:10:54,479 --> 01:10:56,320
Speaker 1: I mean that's that's really what it comes to.

1210
01:10:56,560 --> 01:10:59,600
Speaker 2: Phoenix been triple digits for like twenty one days in

1211
01:10:59,600 --> 01:11:02,120
Speaker 2: a row. Yeah, I mean that's hot. Yeah, we have,

1212
01:11:02,160 --> 01:11:04,880
Speaker 2: but at least it's a dry oven, right, it's a

1213
01:11:04,960 --> 01:11:07,760
Speaker 2: dry one hundred and twelve degree exactly. I mean they've

1214
01:11:07,760 --> 01:11:09,439
Speaker 2: had crazy, crazy Yeah.

1215
01:11:10,120 --> 01:11:14,240
Speaker 1: Yeah, it's it's interesting because I just as a kid,

1216
01:11:14,439 --> 01:11:17,400
Speaker 1: and you know, as an adult with kids, I always

1217
01:11:17,400 --> 01:11:21,400
Speaker 1: went north for vacation like skiing or cold weather, and

1218
01:11:22,200 --> 01:11:25,880
Speaker 1: the idea of that heat. My relatives that have moved

1219
01:11:25,920 --> 01:11:29,240
Speaker 1: to Florida, all you adjust to it, Yeah, I guess

1220
01:11:29,280 --> 01:11:30,280
Speaker 1: I'm just not willing to.

1221
01:11:30,880 --> 01:11:35,679
Speaker 2: So it's certainly an unusual thing. So so if Florida

1222
01:11:35,800 --> 01:11:38,840
Speaker 2: isn't a bargain anymore, what parts of the country still are.

1223
01:11:39,160 --> 01:11:43,840
Speaker 2: I know, people look in the Carolinas, in Virginia. There

1224
01:11:43,840 --> 01:11:48,840
Speaker 2: are parts of the West, Montana and Utah and Colorado

1225
01:11:49,240 --> 01:11:50,360
Speaker 2: that seems to be interesting.

1226
01:11:50,640 --> 01:11:53,160
Speaker 1: I you know, it's funny. We have good friends in

1227
01:11:53,200 --> 01:11:56,880
Speaker 1: Montana and I look at the housing prices of things

1228
01:11:56,880 --> 01:11:58,000
Speaker 1: that are praising.

1229
01:11:58,000 --> 01:12:01,720
Speaker 2: Right, and I mean the five thousand acre ranch.

1230
01:12:01,520 --> 01:12:03,400
Speaker 1: No, no, no, no, I mean single family houses?

1231
01:12:03,520 --> 01:12:04,519
Speaker 2: Have they gone up? Also?

1232
01:12:04,800 --> 01:12:05,360
Speaker 1: Absolutely?

1233
01:12:05,360 --> 01:12:07,680
Speaker 2: The way still California exodus.

1234
01:12:07,280 --> 01:12:11,320
Speaker 1: Yes, that's part of it, with more Idaho, but yeah. Absolutely.

1235
01:12:11,680 --> 01:12:15,000
Speaker 1: The way I think that we should look at housing

1236
01:12:15,080 --> 01:12:20,160
Speaker 1: prices in the US during this pandemic is virtually every

1237
01:12:20,240 --> 01:12:24,200
Speaker 1: housing market was impacted, and we saw dramatic price growth

1238
01:12:24,600 --> 01:12:27,920
Speaker 1: in a very short people period of time because you know,

1239
01:12:27,960 --> 01:12:31,160
Speaker 1: the FED, I believe, kept rates too low for too

1240
01:12:31,200 --> 01:12:37,759
Speaker 1: long and now have to undo the damage by making

1241
01:12:37,840 --> 01:12:41,280
Speaker 1: rates a lot higher. But prices aren't really falling because

1242
01:12:41,320 --> 01:12:47,080
Speaker 1: the rapid change in rates has basically kept inventory frozen.

1243
01:12:47,320 --> 01:12:51,200
Speaker 2: Huh. Really fascinating. So let's talk a little bit about

1244
01:12:51,200 --> 01:12:55,720
Speaker 2: what's going on in the world of appraisal. You've been

1245
01:12:55,800 --> 01:12:59,680
Speaker 2: appraiser for decades. The space seems to be going through

1246
01:12:59,720 --> 01:13:03,479
Speaker 2: a little bit of turmoil these days. What's going on

1247
01:13:03,560 --> 01:13:04,560
Speaker 2: in appraiserville.

1248
01:13:05,040 --> 01:13:09,400
Speaker 1: Praiserville is what it is. Yeah, So, you know in

1249
01:13:09,439 --> 01:13:12,439
Speaker 1: the residential appraisal world, where you know, you buy a

1250
01:13:12,479 --> 01:13:16,240
Speaker 1: house or refinance your house, your mortgage on your house,

1251
01:13:16,360 --> 01:13:20,880
Speaker 1: you know, appraiser comes out values the property and then

1252
01:13:21,240 --> 01:13:24,360
Speaker 1: and then gives the appraisal to the bank, and then

1253
01:13:24,400 --> 01:13:27,519
Speaker 1: the bank decides how much money they're going to give you,

1254
01:13:27,600 --> 01:13:36,840
Speaker 1: and then you close. This industry is if you think

1255
01:13:36,840 --> 01:13:39,839
Speaker 1: about the numbers of people, there's about seventy five thousand

1256
01:13:39,920 --> 01:13:47,240
Speaker 1: appraisers nationwide. There's organizations and trade groups that are active,

1257
01:13:47,320 --> 01:13:50,840
Speaker 1: but really the whole industry has been asleep at the

1258
01:13:51,040 --> 01:13:55,120
Speaker 1: switch for the changes that have been coming. I have

1259
01:13:55,320 --> 01:14:01,839
Speaker 1: been publicly highly critical of an organization called the Appraisal Foundation.

1260
01:14:02,760 --> 01:14:06,000
Speaker 2: And let me just annotate that you have been humiliating

1261
01:14:06,040 --> 01:14:10,519
Speaker 2: those guys on a regular basis, just embarrassing them for

1262
01:14:10,720 --> 01:14:14,360
Speaker 2: not doing their jobs. Am I overstating that you called

1263
01:14:14,360 --> 01:14:15,920
Speaker 2: them on the carpet repeatedly.

1264
01:14:16,160 --> 01:14:20,760
Speaker 1: Yeah, it's began during the pandemic and it's just an

1265
01:14:20,960 --> 01:14:24,680
Speaker 1: endless array of problems, which I'll sort of explain in

1266
01:14:24,720 --> 01:14:30,360
Speaker 1: a second, but what it led to is this idea,

1267
01:14:30,680 --> 01:14:36,160
Speaker 1: and it's one of the platforms of the Biden's White

1268
01:14:36,160 --> 01:14:42,040
Speaker 1: House in terms of removing racial bias from the appraisal industry,

1269
01:14:42,120 --> 01:14:48,479
Speaker 1: residential and commercial. And for context, the Bureau of Labor

1270
01:14:48,520 --> 01:14:53,760
Speaker 1: Statistics tracks four hundred industries in the US, and on

1271
01:14:53,800 --> 01:14:58,440
Speaker 1: the matter of diversity, in twenty twenty one, the appraisal

1272
01:14:58,479 --> 01:15:02,160
Speaker 1: industry was four hundredth out of four hundred in diversity.

1273
01:15:02,760 --> 01:15:05,560
Speaker 1: We were less diverse than farmers and ranchers.

1274
01:15:05,760 --> 01:15:05,960
Speaker 2: Wow.

1275
01:15:06,360 --> 01:15:10,559
Speaker 1: And this, you know, it fluctuates a couple percentage points

1276
01:15:10,640 --> 01:15:14,559
Speaker 1: up and down every year. But the structure of the

1277
01:15:14,680 --> 01:15:19,559
Speaker 1: industry and how new people to get in is was

1278
01:15:19,600 --> 01:15:24,560
Speaker 1: created by the Praisal Foundation and they have basically refused

1279
01:15:25,400 --> 01:15:28,440
Speaker 1: to take any action. They set up committees and councils

1280
01:15:28,920 --> 01:15:31,879
Speaker 1: as if that is action, but they don't actually do anything,

1281
01:15:32,640 --> 01:15:37,680
Speaker 1: and so it's become more and more heated to the

1282
01:15:37,720 --> 01:15:44,280
Speaker 1: point where the Appraisal Subcommittee, which is allowed to monitor

1283
01:15:44,360 --> 01:15:47,439
Speaker 1: and review the Appraisal Foundation. The Appraisal Foundation is basically

1284
01:15:48,240 --> 01:15:52,719
Speaker 1: to maintain the sort of the verbiage of our license,

1285
01:15:52,840 --> 01:15:56,400
Speaker 1: you know, our certification what we're supposed to do, and

1286
01:15:57,640 --> 01:16:01,519
Speaker 1: and you know, like the the appraisal subcommittee, which is

1287
01:16:02,240 --> 01:16:08,160
Speaker 1: basically provides no oversight. This, this appraisal Foundation, not for profit,

1288
01:16:08,400 --> 01:16:10,880
Speaker 1: literally has no oversight. They figured out a work around

1289
01:16:10,920 --> 01:16:16,599
Speaker 1: which I've exposed, and and they're flying to Dubai first

1290
01:16:16,680 --> 01:16:20,000
Speaker 1: class and they're going to you know, having meetings in

1291
01:16:20,080 --> 01:16:23,760
Speaker 1: Palm Springs and you know, within the highlighte which all

1292
01:16:23,800 --> 01:16:27,320
Speaker 1: could be on zoom and and it's a very sort

1293
01:16:27,360 --> 01:16:29,360
Speaker 1: of it's a monarchy.

1294
01:16:28,960 --> 01:16:32,720
Speaker 2: To be fair, Dubai is where all the best appraisers

1295
01:16:32,760 --> 01:16:34,280
Speaker 2: go for you know content.

1296
01:16:35,280 --> 01:16:39,000
Speaker 1: Yeah, especially from like Iowa and you know, Montana.

1297
01:16:39,240 --> 01:16:42,360
Speaker 2: So let's let's put some flesh on these bones so

1298
01:16:42,400 --> 01:16:46,240
Speaker 2: people understand what you're referring to. And there have been

1299
01:16:46,320 --> 01:16:50,840
Speaker 2: not one, but multiple stories about a black family in

1300
01:16:50,880 --> 01:16:53,760
Speaker 2: America owns a house they want to refinance, They want

1301
01:16:53,800 --> 01:16:56,320
Speaker 2: to take advantage of low rates. They have an appraiser

1302
01:16:56,439 --> 01:17:00,840
Speaker 2: come in. The appraisal comes in not only too low

1303
01:17:00,920 --> 01:17:04,240
Speaker 2: for them to do the refinance, but too low compared

1304
01:17:04,280 --> 01:17:08,599
Speaker 2: to the neighbor's house. So they request another appraiser, only

1305
01:17:08,640 --> 01:17:12,320
Speaker 2: this time, all the photos of the black family and moved.

1306
01:17:12,400 --> 01:17:16,400
Speaker 2: Dishia of African American home ownership goes away. They literally

1307
01:17:16,479 --> 01:17:19,840
Speaker 2: hang photos of the smiling white family. They have their

1308
01:17:19,880 --> 01:17:22,800
Speaker 2: neighbor greet the appraiser, the white woman from next door,

1309
01:17:23,160 --> 01:17:26,440
Speaker 2: so she greets them, and lo and behold, the appraisal

1310
01:17:26,520 --> 01:17:28,520
Speaker 2: comes in pretty much as expected.

1311
01:17:28,760 --> 01:17:28,920
Speaker 1: Right.

1312
01:17:29,000 --> 01:17:33,240
Speaker 2: That sounds like either a ridiculous sitcom or a made

1313
01:17:33,320 --> 01:17:36,720
Speaker 2: up story. But this is a real thing, isn't it.

1314
01:17:36,720 --> 01:17:41,280
Speaker 1: It's it's largely yes, that's that's largely the way. We've

1315
01:17:41,320 --> 01:17:46,160
Speaker 1: seen a dozen or so of these stories, and they

1316
01:17:46,160 --> 01:17:50,040
Speaker 1: get recirculated and over and over again. What we're actually

1317
01:17:50,120 --> 01:17:56,120
Speaker 1: seeing now is so the logic is that, hey, you know,

1318
01:17:56,400 --> 01:17:59,479
Speaker 1: I think my home is worth five hundred thousand. You

1319
01:17:59,520 --> 01:18:03,040
Speaker 1: appraise for four hundred thousand, So you're a racist.

1320
01:18:03,240 --> 01:18:05,760
Speaker 2: Well that's a little that's a little over the top

1321
01:18:05,800 --> 01:18:06,960
Speaker 2: in the other direction.

1322
01:18:06,800 --> 01:18:10,960
Speaker 1: Correct, So, but that is that is a big part

1323
01:18:11,000 --> 01:18:14,280
Speaker 1: of the narrative. So so you have like two core

1324
01:18:15,280 --> 01:18:18,080
Speaker 1: parts of the appraisal world. You have. Now you have

1325
01:18:18,160 --> 01:18:21,680
Speaker 1: a whole sloth of people saying, hey, I'm not a racist,

1326
01:18:21,960 --> 01:18:25,360
Speaker 1: like I'm just assessing the value. And then you have

1327
01:18:26,200 --> 01:18:30,280
Speaker 1: people like me that are saying let's not you know,

1328
01:18:30,360 --> 01:18:33,120
Speaker 1: we don't have a leg to stand on as an industry.

1329
01:18:33,160 --> 01:18:36,080
Speaker 2: Say hey, you're one hundred percent white and lo and behold,

1330
01:18:36,080 --> 01:18:40,080
Speaker 2: you're appraising black owned homes in white neighborhoods for less

1331
01:18:40,080 --> 01:18:42,880
Speaker 2: than the white on correct. So it's raising some question.

1332
01:18:42,960 --> 01:18:45,280
Speaker 1: So you're sort of preaching to the choir when you say, hey,

1333
01:18:45,320 --> 01:18:47,920
Speaker 1: we're you know, we don't have this problem even though

1334
01:18:48,600 --> 01:18:53,160
Speaker 1: and listen, is there you know, unconscious bias in everyday life?

1335
01:18:53,200 --> 01:18:56,439
Speaker 1: Of course there is, right. So the other side is

1336
01:18:56,520 --> 01:19:02,040
Speaker 1: my focus is to force the foundation or remove the

1337
01:19:02,120 --> 01:19:07,720
Speaker 1: leadership of the foundation so that so that the regulatory

1338
01:19:07,840 --> 01:19:15,160
Speaker 1: world or you know, sort of the government side of

1339
01:19:14,760 --> 01:19:19,720
Speaker 1: the story, you know that there's a representative membership, you know,

1340
01:19:20,320 --> 01:19:24,320
Speaker 1: not zero of people of color. Right, that's the first step,

1341
01:19:24,560 --> 01:19:28,840
Speaker 1: because this other step is just not effective. Right. So

1342
01:19:29,040 --> 01:19:31,719
Speaker 1: I've been talking about this for for like a couple

1343
01:19:31,800 --> 01:19:35,920
Speaker 1: of years. And then the Appraisal Subcommittee, which is made

1344
01:19:36,000 --> 01:19:38,840
Speaker 1: up of like the head the heads of you know

1345
01:19:39,000 --> 01:19:44,000
Speaker 1: of various organizations like fd I C and the g

1346
01:19:44,240 --> 01:19:49,320
Speaker 1: S S and you know, the Alpha the alphabet soup

1347
01:19:49,360 --> 01:19:53,799
Speaker 1: of Washington sort of anybody that really CFPB, like anybody

1348
01:19:53,840 --> 01:19:58,280
Speaker 1: that touches on like the mortgage process. And I was invited,

1349
01:20:00,240 --> 01:20:04,559
Speaker 1: uh back, testified for three hours, and it was my

1350
01:20:04,640 --> 01:20:08,320
Speaker 1: only first time on c SPAN. But it's three hours, and.

1351
01:20:08,439 --> 01:20:10,960
Speaker 2: So anybody could go to YouTube or c span find

1352
01:20:10,960 --> 01:20:11,640
Speaker 2: your testimony.

1353
01:20:11,680 --> 01:20:17,000
Speaker 1: Yeah. Absolutely, And I was highly critical of the foundation,

1354
01:20:17,280 --> 01:20:19,479
Speaker 1: which there were five experts and two of them were

1355
01:20:19,479 --> 01:20:24,280
Speaker 1: from the foundation, and they one of them attacked me.

1356
01:20:24,479 --> 01:20:27,200
Speaker 1: You know, it's sort of named names because of the

1357
01:20:27,280 --> 01:20:29,960
Speaker 1: massive conflict this person has in her job with what

1358
01:20:30,080 --> 01:20:33,400
Speaker 1: her husband does for a living, which is what runs

1359
01:20:33,479 --> 01:20:38,720
Speaker 1: like the biggest online sort of continue ed credit thing.

1360
01:20:38,760 --> 01:20:42,000
Speaker 2: And they have any deal corrupt.

1361
01:20:41,880 --> 01:20:44,200
Speaker 1: Right, But they don't see it that way.

1362
01:20:44,520 --> 01:20:47,160
Speaker 2: Just because you're giving the gig to your husband's business

1363
01:20:47,200 --> 01:20:51,200
Speaker 2: doesn't mean it's corrupt. Perhaps they're the best person for this.

1364
01:20:51,560 --> 01:20:54,800
Speaker 1: Absolutely, then you shouldn't be the chairman of the committee

1365
01:20:54,800 --> 01:20:59,280
Speaker 1: that changes the regulations that causes changes that go into

1366
01:20:59,320 --> 01:21:03,000
Speaker 1: the class anyway, it's a it's convoluted, but like that's

1367
01:21:03,000 --> 01:21:07,479
Speaker 1: what we're dealing with, and it's a little fiefdom. Yeah,

1368
01:21:07,760 --> 01:21:10,479
Speaker 1: and I remember after it, you know, like I'm only

1369
01:21:10,520 --> 01:21:14,360
Speaker 1: in this to try to make it right and to

1370
01:21:14,400 --> 01:21:17,519
Speaker 1: make it fair. I don't get anything out of it

1371
01:21:17,560 --> 01:21:20,120
Speaker 1: other than like not taining our industry.

1372
01:21:21,320 --> 01:21:22,400
Speaker 2: How dare you, sir?

1373
01:21:22,640 --> 01:21:25,800
Speaker 1: I know, But anyway, it's sort of that's the kind

1374
01:21:25,800 --> 01:21:26,880
Speaker 1: of stuff I talk about.

1375
01:21:26,880 --> 01:21:30,040
Speaker 2: And you know, we talked earlier about the National Association

1376
01:21:30,160 --> 01:21:34,960
Speaker 2: of Realtors and I used to be so in just

1377
01:21:35,400 --> 01:21:42,040
Speaker 2: infuriated by their monthly releases back in six seven eight,

1378
01:21:42,520 --> 01:21:46,519
Speaker 2: because the first paragraph would be the data, right, and

1379
01:21:46,560 --> 01:21:50,360
Speaker 2: then the next six paragraphs were just endless spin. And

1380
01:21:50,400 --> 01:21:55,040
Speaker 2: it's like, I understand you're a trade group, right, but

1381
01:21:55,120 --> 01:21:57,960
Speaker 2: if you're a trade group, maybe the government shouldn't rely

1382
01:21:58,040 --> 01:22:01,960
Speaker 2: on your data because you're not fair actors in the space.

1383
01:22:02,040 --> 01:22:05,519
Speaker 2: You're biased and self interested. I don't care what the

1384
01:22:05,600 --> 01:22:08,600
Speaker 2: data is. I just needed to be accurate so I

1385
01:22:08,640 --> 01:22:09,479
Speaker 2: could do my job.

1386
01:22:10,760 --> 01:22:14,960
Speaker 1: So that's exactly right. And and actually, you know, if

1387
01:22:14,960 --> 01:22:18,960
Speaker 1: you look at the timeline, so NAR was like the

1388
01:22:19,200 --> 01:22:22,559
Speaker 1: what the FED used the like all the NAR data

1389
01:22:22,680 --> 01:22:26,360
Speaker 1: for like understanding the housing market, and you know, and

1390
01:22:27,000 --> 01:22:31,040
Speaker 1: you had the I can't remember that David Loay wasst

1391
01:22:31,080 --> 01:22:33,840
Speaker 1: and then it's been Lawrence you and ever since. And

1392
01:22:33,880 --> 01:22:35,960
Speaker 1: I remember, like in the beginning, it was like, you know,

1393
01:22:36,040 --> 01:22:39,040
Speaker 1: the when Lehman happened, the leaning collapse. It was like,

1394
01:22:39,080 --> 01:22:42,679
Speaker 1: it's a bubble with a slow leak in the housing bubble,

1395
01:22:43,040 --> 01:22:47,640
Speaker 1: and uh, there are all kinds of housing bubble blogs,

1396
01:22:47,760 --> 01:22:50,200
Speaker 1: you know, just huge, you know, like you know, it's

1397
01:22:50,240 --> 01:22:52,120
Speaker 1: a black hole. We're all gonna die, We're going to

1398
01:22:52,200 --> 01:22:54,280
Speaker 1: follow on the edge of the abyss. So you get

1399
01:22:54,320 --> 01:22:56,920
Speaker 1: like the extremes. And then it was interesting the FED

1400
01:22:57,520 --> 01:23:03,519
Speaker 1: pivoted to case Shiller, you know, so academia for looking

1401
01:23:03,600 --> 01:23:07,000
Speaker 1: at the state of the housing market. But the problem

1402
01:23:07,040 --> 01:23:11,280
Speaker 1: with case Shiller is it's the equivalent and I've joked

1403
01:23:11,280 --> 01:23:15,639
Speaker 1: with you before about this, you know, highly respected Nobel laureate,

1404
01:23:17,200 --> 01:23:22,599
Speaker 1: but it's not really suitable for everyday use because it

1405
01:23:22,680 --> 01:23:26,479
Speaker 1: reflects the housing market five to seven months ago. So

1406
01:23:26,479 --> 01:23:28,640
Speaker 1: so like when you got up this morning, did you

1407
01:23:28,720 --> 01:23:31,240
Speaker 1: take the average temperature of five to seven months ago

1408
01:23:31,680 --> 01:23:34,439
Speaker 1: to decide what you're gonna wear today? Right, it's it

1409
01:23:34,520 --> 01:23:40,080
Speaker 1: was made for trading to hedge housing, and it never

1410
01:23:40,320 --> 01:23:43,000
Speaker 1: you know, there was no adoption of it, and then

1411
01:23:43,040 --> 01:23:44,920
Speaker 1: they they went from there, and then they went to

1412
01:23:45,000 --> 01:23:47,280
Speaker 1: core Logic because was more sort of.

1413
01:23:47,400 --> 01:23:49,520
Speaker 2: A little more real time, a little more.

1414
01:23:49,200 --> 01:23:54,000
Speaker 1: More more harder data, more data, and probably better.

1415
01:23:54,280 --> 01:24:00,040
Speaker 2: So you brought up David lay Maria. I have a

1416
01:24:00,080 --> 01:24:03,720
Speaker 2: couple of blog posts on him, yes, but my favorite

1417
01:24:04,280 --> 01:24:06,920
Speaker 2: was the one that took the book he wrote and

1418
01:24:06,960 --> 01:24:11,120
Speaker 2: then just revised it cover year, just revised the cover. Yeah,

1419
01:24:11,200 --> 01:24:14,520
Speaker 2: and it's literally are you missing the real Estate Boom?

1420
01:24:15,000 --> 01:24:18,160
Speaker 2: Was two thousand and five, and then the two thousand

1421
01:24:18,200 --> 01:24:22,400
Speaker 2: and six edition, same book, different cover, Why the real

1422
01:24:22,520 --> 01:24:25,839
Speaker 2: Estate Boom Will Not Bust and how you can profit

1423
01:24:25,920 --> 01:24:28,679
Speaker 2: from it now, And then the two thousand and seven

1424
01:24:28,960 --> 01:24:33,240
Speaker 2: version of the exact same book, All real Estate is Local, Yeah,

1425
01:24:33,680 --> 01:24:38,559
Speaker 2: and that right. And then he left in two thousand

1426
01:24:38,600 --> 01:24:43,360
Speaker 2: and nine. Yeah, and I had to change my title

1427
01:24:43,439 --> 01:24:47,640
Speaker 2: from one export of to a a more tolerable expot of,

1428
01:24:47,720 --> 01:24:51,799
Speaker 2: which I simply just called it former nar Economist David

1429
01:24:52,000 --> 01:24:57,799
Speaker 2: lore Is. But it's just about. It was just about

1430
01:24:57,840 --> 01:25:00,400
Speaker 2: an article I remember was the time, so the journal

1431
01:25:01,000 --> 01:25:06,000
Speaker 2: that working for realtors, David Lorea was famously optimistic. Not

1432
01:25:06,120 --> 01:25:09,680
Speaker 2: so much anymore was the headline. So so wait, you

1433
01:25:09,720 --> 01:25:14,200
Speaker 2: switched jobs and suddenly your entire belief system change that.

1434
01:25:14,200 --> 01:25:17,599
Speaker 2: That's a little and we all do it, but not

1435
01:25:17,680 --> 01:25:19,240
Speaker 2: one hundred and eighty degree. No. No.

1436
01:25:20,840 --> 01:25:24,040
Speaker 1: It was one of my favorite moments during the run

1437
01:25:24,120 --> 01:25:26,000
Speaker 1: up to the housing bubble was I was in the

1438
01:25:26,040 --> 01:25:32,240
Speaker 1: green room on a National TV special something. It was

1439
01:25:32,240 --> 01:25:34,719
Speaker 1: like it was about housing and it was a town

1440
01:25:34,800 --> 01:25:38,240
Speaker 1: hall and I was literally in the green room with

1441
01:25:38,360 --> 01:25:45,720
Speaker 1: David Lay, Robert Schiller, Susie Ormond, and Doddie Hermon no,

1442
01:25:46,840 --> 01:25:52,400
Speaker 1: some other I don't remember what. He wasn't a housing person.

1443
01:25:53,200 --> 01:25:55,800
Speaker 1: And I got to listen to them. I was listening

1444
01:25:55,840 --> 01:25:59,800
Speaker 1: to talk and I remember, I remember, this is really surreal.

1445
01:25:59,720 --> 01:26:03,800
Speaker 2: Because wait, Larrea and Schiller Killer. Yeah, yeah, because he

1446
01:26:03,840 --> 01:26:04,639
Speaker 2: was pretty bearish.

1447
01:26:05,360 --> 01:26:10,280
Speaker 1: Yeah, he actually, you know, was really calling for I

1448
01:26:10,320 --> 01:26:14,280
Speaker 1: did a thing with him, like a two years later

1449
01:26:15,400 --> 01:26:19,000
Speaker 1: at Lincoln Center, and uh, he was like predicting like

1450
01:26:19,040 --> 01:26:22,680
Speaker 1: a fifty percent correction in housing prices.

1451
01:26:22,360 --> 01:26:23,760
Speaker 2: Which is a little aggressive, a.

1452
01:26:23,760 --> 01:26:27,320
Speaker 1: Little aggressive, but but you know, not like a single

1453
01:26:27,320 --> 01:26:29,960
Speaker 1: digit decline. It was, you know, more in the the

1454
01:26:30,000 --> 01:26:30,880
Speaker 1: scope of happen.

1455
01:26:31,000 --> 01:26:34,840
Speaker 2: I did a panel with him, so it was Schiller, myself,

1456
01:26:35,320 --> 01:26:38,519
Speaker 2: maybe it was Dottie Hermon and somebody else. So it

1457
01:26:38,560 --> 01:26:43,240
Speaker 2: was like real estate, real estate, stock market and then

1458
01:26:43,280 --> 01:26:47,479
Speaker 2: Schiller being the academic, and I referenced the who are

1459
01:26:47,479 --> 01:26:49,599
Speaker 2: the guys who wrote this time is different. I'm drawing

1460
01:26:49,640 --> 01:26:52,720
Speaker 2: a blank. R Rogoff, Yes, so Rhin Harden Rogoff had

1461
01:26:52,720 --> 01:26:55,240
Speaker 2: this wonderful paper, I want to say.

1462
01:26:55,439 --> 01:26:56,000
Speaker 1: It was.

1463
01:26:57,840 --> 01:27:01,920
Speaker 2: Like two thousand and six and they looked at five

1464
01:27:02,120 --> 01:27:06,320
Speaker 2: financial crises. It was Sweden, Mexico, Japan, the US, and

1465
01:27:06,439 --> 01:27:08,880
Speaker 2: twenty nine. I never remember what the fifth one was,

1466
01:27:09,520 --> 01:27:12,479
Speaker 2: and they found, on average, when you have a crisis

1467
01:27:12,520 --> 01:27:16,719
Speaker 2: that originates in the finance sector due to too much leverage,

1468
01:27:16,760 --> 01:27:20,120
Speaker 2: too much speculation, on average, markets get cut in half

1469
01:27:20,160 --> 01:27:22,879
Speaker 2: and real estate looses about thirty percent of its value.

1470
01:27:23,200 --> 01:27:26,760
Speaker 2: Sometimes it's less, sometimes it's more. But when you look

1471
01:27:26,800 --> 01:27:31,919
Speaker 2: at right and so that, by the way, that paper,

1472
01:27:32,040 --> 01:27:35,200
Speaker 2: which was on fifteen pages long, became the basis for

1473
01:27:35,720 --> 01:27:38,200
Speaker 2: this time. It's different. Eight hundred years of financial folly

1474
01:27:39,320 --> 01:27:42,360
Speaker 2: and the numbers stayed the same. It's when you have

1475
01:27:42,439 --> 01:27:46,840
Speaker 2: a speculative bubble built on easy money and excess lending.

1476
01:27:47,400 --> 01:27:50,080
Speaker 2: Assume at the peak it's going to be a thirty

1477
01:27:50,080 --> 01:27:56,599
Speaker 2: percent drop in real estate prices, which goes to your statement,

1478
01:27:56,800 --> 01:28:00,360
Speaker 2: what we're seeing today is probably not going to have

1479
01:28:00,439 --> 01:28:03,360
Speaker 2: the same sort of drop as then, because this isn't

1480
01:28:03,360 --> 01:28:06,639
Speaker 2: based on easy money. This is based on where we've

1481
01:28:06,680 --> 01:28:08,719
Speaker 2: locked in easy money and we don't want to sell.

1482
01:28:08,720 --> 01:28:12,360
Speaker 1: Right, But also I would I would differ a little

1483
01:28:12,400 --> 01:28:16,240
Speaker 1: bit and say that we're not locked in on easy money.

1484
01:28:17,280 --> 01:28:20,639
Speaker 1: Banks during the called the pandemic or a housing boom,

1485
01:28:20,800 --> 01:28:22,800
Speaker 1: never lost their mind.

1486
01:28:22,439 --> 01:28:24,920
Speaker 2: Right this time as opposed the last time, right, So,

1487
01:28:24,920 --> 01:28:27,360
Speaker 2: so and there is no there isn't the same amount

1488
01:28:27,439 --> 01:28:30,840
Speaker 2: of non bank lenders as we saw in six oh

1489
01:28:30,960 --> 01:28:33,600
Speaker 2: five or seven, right that where it was outside of

1490
01:28:33,640 --> 01:28:35,920
Speaker 2: Fanny Mayon, outside of Pew.

1491
01:28:36,760 --> 01:28:40,040
Speaker 1: But but but in this cycle, like credit you know

1492
01:28:41,280 --> 01:28:44,960
Speaker 1: got easier during the boom, but it was still well

1493
01:28:45,000 --> 01:28:50,000
Speaker 1: below long term norms. And so you know, even with this,

1494
01:28:50,240 --> 01:28:53,920
Speaker 1: you know, the inventory sort of distortion, We're not looking

1495
01:28:53,960 --> 01:28:58,200
Speaker 1: at the banking world like collapsing at the end of

1496
01:28:58,240 --> 01:29:03,480
Speaker 1: this because on the lending itself, because the lending standards

1497
01:29:03,680 --> 01:29:05,519
Speaker 1: never really got crazy.

1498
01:29:05,600 --> 01:29:06,799
Speaker 2: If anything, they got tighter.

1499
01:29:06,880 --> 01:29:10,280
Speaker 1: They get yeah, especially after the last year after rates

1500
01:29:10,360 --> 01:29:14,160
Speaker 1: that they really clamped down. So lending is much tighter

1501
01:29:14,160 --> 01:29:15,680
Speaker 1: now than it was a year ago. But a year

1502
01:29:15,680 --> 01:29:21,360
Speaker 1: ago it was you know, significantly tighter than the last

1503
01:29:21,439 --> 01:29:26,280
Speaker 1: three decades excluding the housing bubble. You know, going back

1504
01:29:26,320 --> 01:29:28,840
Speaker 1: in time, it was banks just never lost their mind,

1505
01:29:28,840 --> 01:29:33,120
Speaker 1: which I think is a huge difference in the two eras.

1506
01:29:33,520 --> 01:29:35,840
Speaker 2: So before we get to our favorite questions, let me

1507
01:29:35,840 --> 01:29:40,439
Speaker 2: throw you a couple of curveball questions. The first I

1508
01:29:40,479 --> 01:29:45,479
Speaker 2: should really just throw this one away. The article that

1509
01:29:45,600 --> 01:29:49,960
Speaker 2: described you as the most quotable trusted man in New

1510
01:29:50,040 --> 01:29:53,280
Speaker 2: York real estate also said you look like a middle

1511
01:29:53,320 --> 01:29:57,960
Speaker 2: aged Tom Hanks. I have to admit I don't see that.

1512
01:29:58,280 --> 01:30:02,880
Speaker 1: Well, it's funny because no, I don't see that. But

1513
01:30:02,880 --> 01:30:06,360
Speaker 1: but uh, in the early days of my blogging, I

1514
01:30:06,400 --> 01:30:09,680
Speaker 1: think I started in five and you were, you know,

1515
01:30:09,720 --> 01:30:12,560
Speaker 1: several years ahead of me. You're my first interview on

1516
01:30:12,600 --> 01:30:13,200
Speaker 1: my podcast.

1517
01:30:13,240 --> 01:30:16,240
Speaker 2: I recall that in your old office was renovated.

1518
01:30:16,280 --> 01:30:17,400
Speaker 1: Yep, you know.

1519
01:30:17,640 --> 01:30:20,000
Speaker 2: I've never walked into an office where every square into

1520
01:30:20,040 --> 01:30:23,880
Speaker 2: the walls is covered with newspaper clippings in frames. How

1521
01:30:23,880 --> 01:30:25,519
Speaker 2: many times have you been in the front page of

1522
01:30:25,520 --> 01:30:29,040
Speaker 2: the Times nineteen? That's insane?

1523
01:30:29,439 --> 01:30:33,920
Speaker 1: Yeah, yeah, I about once a year is the last few.

1524
01:30:36,600 --> 01:30:43,439
Speaker 1: But uh, yeah, I what were Tom Hanks? Oh yeah,

1525
01:30:43,479 --> 01:30:47,720
Speaker 1: Tom Hanks. So a long time ago, a blogger in

1526
01:30:47,760 --> 01:30:52,280
Speaker 1: the Midwest said that I was a look alike of

1527
01:30:52,400 --> 01:30:55,120
Speaker 1: Bobby Flay, that I've.

1528
01:30:54,960 --> 01:30:57,680
Speaker 2: Had Bobby Flay on the show. I could see some

1529
01:30:57,920 --> 01:30:59,880
Speaker 2: sense they did much more than Tom Hanks.

1530
01:30:59,840 --> 01:31:03,320
Speaker 1: They they compared two pictures side by side and it

1531
01:31:03,560 --> 01:31:06,479
Speaker 1: did look pretty similar. Right, but that was like twenty

1532
01:31:06,560 --> 01:31:10,559
Speaker 1: years ago, so I haven't been able to generate any

1533
01:31:11,040 --> 01:31:11,880
Speaker 1: pr out of that.

1534
01:31:12,040 --> 01:31:15,040
Speaker 2: No more celebrity. And then the other curveball, which I'm

1535
01:31:15,120 --> 01:31:21,160
Speaker 2: fascinated by. I think you've been into pretty much every

1536
01:31:21,200 --> 01:31:25,040
Speaker 2: penhouse in Manhattan. I mean maybe that's a slight exaggeration,

1537
01:31:25,240 --> 01:31:28,479
Speaker 2: but not much a lot. Yeah, what's the favorite apartment

1538
01:31:28,560 --> 01:31:33,120
Speaker 2: you've been into in your history of appraising these apartments?

1539
01:31:33,120 --> 01:31:37,720
Speaker 2: What's the one that really stands out? And they could

1540
01:31:37,720 --> 01:31:38,640
Speaker 2: be two different.

1541
01:31:38,479 --> 01:31:42,720
Speaker 1: Yeah, yeah, yeah, So I thought, you know, forgetting the

1542
01:31:44,160 --> 01:31:46,280
Speaker 1: like the condition it was in and just like the

1543
01:31:46,400 --> 01:31:52,720
Speaker 1: look was one of my favorites was in the Sherry Netherland,

1544
01:31:52,800 --> 01:31:56,080
Speaker 1: which is a hotel co op on the corner of

1545
01:31:56,200 --> 01:32:00,760
Speaker 1: the southeast corner of the Park. H It was just spectacular.

1546
01:32:00,880 --> 01:32:03,160
Speaker 1: The view. You know, the thing that I don't get

1547
01:32:03,160 --> 01:32:06,000
Speaker 1: to do very much in my business is see these

1548
01:32:06,000 --> 01:32:08,479
Speaker 1: apartments at night, right in the night, you know, with

1549
01:32:08,520 --> 01:32:10,639
Speaker 1: all the lights. Although you know, we used to live

1550
01:32:10,800 --> 01:32:12,759
Speaker 1: when we lived in Manhattan, we could see the park

1551
01:32:14,120 --> 01:32:17,120
Speaker 1: but I have to say, and I have a picture

1552
01:32:17,160 --> 01:32:20,519
Speaker 1: of myself standing on the there's a I think it's

1553
01:32:20,560 --> 01:32:24,280
Speaker 1: fifty Central Park South. It's not the penthouse. It was

1554
01:32:24,280 --> 01:32:26,559
Speaker 1: a penthouse that was going to be created inside the

1555
01:32:26,760 --> 01:32:31,040
Speaker 1: giant green roof that was you know, it looks like copper,

1556
01:32:31,200 --> 01:32:33,479
Speaker 1: even though it was fake. It was painted green to

1557
01:32:33,520 --> 01:32:36,599
Speaker 1: look like it was copper. But I literally climbed through

1558
01:32:36,680 --> 01:32:38,479
Speaker 1: like a porthole and stood on the roof. I have

1559
01:32:38,520 --> 01:32:40,200
Speaker 1: a picture of it of me.

1560
01:32:40,280 --> 01:32:41,200
Speaker 2: So you're outdoors.

1561
01:32:41,240 --> 01:32:44,559
Speaker 1: I'm outdoors, and you're in the center of Central Park

1562
01:32:44,640 --> 01:32:48,040
Speaker 1: South looking north, and you see fifth in Central Park

1563
01:32:48,080 --> 01:32:51,320
Speaker 1: West on either side, and it just spectacular And many

1564
01:32:51,320 --> 01:32:55,640
Speaker 1: people don't get that opportunity, and that was an amazing experience.

1565
01:32:56,160 --> 01:32:59,000
Speaker 1: I may end up being hopefully it'll I'll be able

1566
01:32:59,000 --> 01:33:01,880
Speaker 1: to use it in my book someday as a cover.

1567
01:33:02,080 --> 01:33:05,559
Speaker 2: All Right, So let's jump to our favorite questions, starting

1568
01:33:05,600 --> 01:33:08,920
Speaker 2: with what are you streaming these days? What's keeping you entertained?

1569
01:33:10,040 --> 01:33:13,920
Speaker 1: So every year every time you ask me this, because

1570
01:33:13,960 --> 01:33:17,479
Speaker 1: I know you you you're a big fan of you know,

1571
01:33:17,520 --> 01:33:20,200
Speaker 1: you've called this the golden age of television.

1572
01:33:20,240 --> 01:33:23,920
Speaker 2: Is it not? I mean, it's just I was never

1573
01:33:24,160 --> 01:33:27,000
Speaker 2: never watched television as a kid, and I'm making up

1574
01:33:27,040 --> 01:33:27,760
Speaker 2: for lost time.

1575
01:33:28,080 --> 01:33:31,080
Speaker 1: It is the strangest thing. But I hardly watch any TV.

1576
01:33:31,280 --> 01:33:35,800
Speaker 1: I know that, and I don't stream anything regularly. Podcasts

1577
01:33:36,400 --> 01:33:38,840
Speaker 1: I listen to Masters in Business.

1578
01:33:40,080 --> 01:33:43,000
Speaker 2: I sucking up not necessary.

1579
01:33:42,520 --> 01:33:47,519
Speaker 1: But but it's true. I uh. I listen to one

1580
01:33:47,560 --> 01:33:50,479
Speaker 1: of the One of my favorite new podcasts is called

1581
01:33:50,520 --> 01:33:51,160
Speaker 1: hard Fork.

1582
01:33:51,880 --> 01:33:52,639
Speaker 2: Hard Fork.

1583
01:33:52,760 --> 01:33:55,560
Speaker 1: It's a New York Times podcast about technology.

1584
01:33:55,880 --> 01:33:56,160
Speaker 2: Huh.

1585
01:33:56,200 --> 01:33:59,200
Speaker 1: And it's the guys laugh throughout the whole show. It's

1586
01:33:59,240 --> 01:34:04,600
Speaker 1: they're serious writers. It's it's highly entertaining, especially following the

1587
01:34:04,640 --> 01:34:08,960
Speaker 1: Elon Musk and Twitter escapades over the last six months.

1588
01:34:08,960 --> 01:34:13,160
Speaker 1: It's been incredible, but really good stuff I listened to.

1589
01:34:14,720 --> 01:34:19,800
Speaker 1: I really like Professor Galloway his stuff. He does a

1590
01:34:19,840 --> 01:34:21,440
Speaker 1: podcast called Pivot.

1591
01:34:21,200 --> 01:34:23,879
Speaker 2: He he also is locked out of his Twitter account

1592
01:34:24,000 --> 01:34:27,760
Speaker 2: as a why And it's just now I have a

1593
01:34:27,760 --> 01:34:30,439
Speaker 2: couple of hundred thousand, he's got half a million followers. Yeah,

1594
01:34:30,520 --> 01:34:33,160
Speaker 2: they're like, yeah, we don't care. Yeah, just just like

1595
01:34:33,520 --> 01:34:36,320
Speaker 2: the competency is mind blowing.

1596
01:34:36,320 --> 01:34:39,599
Speaker 1: It's my next level, right, It's it's it's like how

1597
01:34:39,600 --> 01:34:43,040
Speaker 1: to devalue an asset without even trying.

1598
01:34:43,520 --> 01:34:46,280
Speaker 2: And normally no one's around to pick up the pieces

1599
01:34:46,280 --> 01:34:50,720
Speaker 2: and take advantage. It looks like Threads might have a shot,

1600
01:34:51,240 --> 01:34:54,799
Speaker 2: considering that that was built with you know, a dozen

1601
01:34:55,080 --> 01:34:57,160
Speaker 2: or so engineers, very quick.

1602
01:34:57,000 --> 01:35:00,720
Speaker 1: And leveraging off of the technology of the platform for Instagram.

1603
01:35:00,760 --> 01:35:03,920
Speaker 2: But if Facebook, which is a giant company, which is

1604
01:35:03,960 --> 01:35:06,760
Speaker 2: an eight hundred billion dollar company, if they throw one

1605
01:35:06,840 --> 01:35:10,000
Speaker 2: hundred people at it, they could to me, wait, you

1606
01:35:10,000 --> 01:35:12,960
Speaker 2: wouldn't hire one hundred people to steal a forty billion

1607
01:35:13,000 --> 01:35:16,080
Speaker 2: dollar business? Yeah, forty four. I mean it's there for

1608
01:35:16,120 --> 01:35:20,920
Speaker 2: the taking. Just I'm I'm not a big Instagram fan,

1609
01:35:20,960 --> 01:35:24,360
Speaker 2: and I'm certainly not a Facebook fan, but I'm I'm

1610
01:35:24,400 --> 01:35:27,360
Speaker 2: on Threads waiting for compliance to give me approval to start.

1611
01:35:27,680 --> 01:35:29,040
Speaker 1: Yeah three tweeting.

1612
01:35:29,080 --> 01:35:30,360
Speaker 2: I don't even know what you yell.

1613
01:35:30,439 --> 01:35:34,200
Speaker 1: I call it, Yeah, I call it threading. But yeah,

1614
01:35:34,400 --> 01:35:38,320
Speaker 1: I'm on it every day, just playing around and not

1615
01:35:38,520 --> 01:35:41,800
Speaker 1: by Twitter yet. No, there's not enough engagement yet, But

1616
01:35:41,880 --> 01:35:45,400
Speaker 1: that the engagement on Twitter is collapsed, you know, it's

1617
01:35:45,400 --> 01:35:47,720
Speaker 1: completely closed, like there's hardly any engagement.

1618
01:35:48,080 --> 01:35:50,479
Speaker 2: Now. I thought that's because I have two hundred followers

1619
01:35:50,520 --> 01:35:54,160
Speaker 2: in my backup account, right as opposed to two hundred thousand. Right,

1620
01:35:54,439 --> 01:35:58,240
Speaker 2: But my buddy Dave Nadick has said they he has

1621
01:35:58,280 --> 01:36:02,960
Speaker 2: a friend who tracks in twit activity and he said,

1622
01:36:03,000 --> 01:36:05,679
Speaker 2: if you look at the top five hundred one thousand accounts,

1623
01:36:05,760 --> 01:36:07,160
Speaker 2: everything's just fallen off a cliff.

1624
01:36:07,240 --> 01:36:12,679
Speaker 1: Yeah. Yeah, it's sad. That was my social media of choice, Yes,

1625
01:36:12,720 --> 01:36:14,000
Speaker 1: same same years.

1626
01:36:14,600 --> 01:36:18,479
Speaker 2: And the DM side of it was really interesting to

1627
01:36:19,080 --> 01:36:22,280
Speaker 2: like I could slip into a DM with Dick Taylor

1628
01:36:22,320 --> 01:36:24,559
Speaker 2: and say, hey, have you seen this paper? And I'm

1629
01:36:24,560 --> 01:36:26,360
Speaker 2: not going to bother him on his phone with that,

1630
01:36:26,960 --> 01:36:31,160
Speaker 2: and an email seems too formal, so I miss that,

1631
01:36:31,920 --> 01:36:33,960
Speaker 2: and I've kicked it up the chain at Bloomberg to

1632
01:36:34,000 --> 01:36:36,080
Speaker 2: try and you know, figure, hey, they're a big client

1633
01:36:36,600 --> 01:36:41,040
Speaker 2: and there's like eleven people left there and it's the

1634
01:36:41,120 --> 01:36:43,280
Speaker 2: same phone number that I set the account up with

1635
01:36:43,360 --> 01:36:46,639
Speaker 2: years ago. I'm gonna stop whining about my and Scott

1636
01:36:46,720 --> 01:36:50,920
Speaker 2: Galloway's Twitter accounts and ask you tell us about your

1637
01:36:50,960 --> 01:36:53,320
Speaker 2: mentors who helped to shape your career.

1638
01:36:54,000 --> 01:36:59,000
Speaker 1: Yeah. The first one was before it got into real estate.

1639
01:36:59,439 --> 01:37:02,600
Speaker 1: Actually was a food service director of a of a

1640
01:37:02,680 --> 01:37:04,080
Speaker 1: hospital in Chicago.

1641
01:37:04,280 --> 01:37:05,960
Speaker 2: I kind of knew that, didn't I.

1642
01:37:06,200 --> 01:37:09,559
Speaker 1: Yeah, I ended up and my first boss out of

1643
01:37:09,640 --> 01:37:16,360
Speaker 1: college gentleman named John Nelson really just taught me how

1644
01:37:16,360 --> 01:37:20,120
Speaker 1: to navigate the politics and how to get stuff done.

1645
01:37:21,520 --> 01:37:26,479
Speaker 1: He was fascinated with post it notes. But I always

1646
01:37:26,520 --> 01:37:29,040
Speaker 1: felt a really good you know, I always had a

1647
01:37:29,040 --> 01:37:34,040
Speaker 1: really good feeling. I'd have to say. In sort of

1648
01:37:34,080 --> 01:37:38,160
Speaker 1: the modern era, my It's It's was was Dottie Herman,

1649
01:37:39,040 --> 01:37:43,799
Speaker 1: who was basically the person that put Douglas Almon together.

1650
01:37:44,800 --> 01:37:47,880
Speaker 1: She's not not active with the company these days, but

1651
01:37:48,960 --> 01:37:51,720
Speaker 1: she saw what I did with market studies, you know,

1652
01:37:51,960 --> 01:37:55,599
Speaker 1: what I could do, and she embraced it and pushed,

1653
01:37:55,840 --> 01:37:59,759
Speaker 1: you know, you know, encourage me, pushed me to expand

1654
01:37:59,760 --> 01:38:01,840
Speaker 1: my print out of side of New York City.

1655
01:38:02,000 --> 01:38:05,840
Speaker 2: She's wildly she was wildly successful in real estate. I've

1656
01:38:05,880 --> 01:38:08,680
Speaker 2: met her a couple of times. She kind of reminded

1657
01:38:08,680 --> 01:38:11,400
Speaker 2: me of my mom, who was one of these like

1658
01:38:11,600 --> 01:38:17,080
Speaker 2: just my mind right, classic real estate agent, but knew

1659
01:38:17,120 --> 01:38:20,599
Speaker 2: the area, knew the neighborhood. No bs. Hey, we'll find

1660
01:38:20,640 --> 01:38:24,280
Speaker 2: you a house that'll fit you, and we'll do whatever

1661
01:38:24,280 --> 01:38:26,479
Speaker 2: we We'll show you a million houses if that's what

1662
01:38:26,520 --> 01:38:30,280
Speaker 2: it takes. She sort of like tough Broad grew up

1663
01:38:30,320 --> 01:38:33,280
Speaker 2: in the Bronx. My mom Dotty Harmon kind of reminded

1664
01:38:33,360 --> 01:38:34,639
Speaker 2: me of that in the same way.

1665
01:38:34,720 --> 01:38:38,000
Speaker 1: I always felt like, you know, she recognized, you know,

1666
01:38:38,080 --> 01:38:41,160
Speaker 1: what I could do, and she pushed and protected and

1667
01:38:41,360 --> 01:38:45,880
Speaker 1: nurtured and made it happen. Some forever appreciative of that.

1668
01:38:46,000 --> 01:38:48,519
Speaker 2: And you've been doing these reports for Douglas Ellman for

1669
01:38:48,560 --> 01:38:49,200
Speaker 2: a long time.

1670
01:38:49,640 --> 01:38:50,960
Speaker 1: Ninety four is when we began.

1671
01:38:51,640 --> 01:38:54,160
Speaker 2: So you're coming up on your thirtieth year. That's amazing.

1672
01:38:54,439 --> 01:38:58,760
Speaker 1: It's it's a lot, but it's, uh, I don't know,

1673
01:38:59,000 --> 01:39:03,479
Speaker 1: it's it's it's it's fascinating because on one hand, you're

1674
01:39:03,520 --> 01:39:07,479
Speaker 1: looking at all these different markets markets, but they they

1675
01:39:07,640 --> 01:39:11,280
Speaker 1: draw you know, you can look at very similar metrics

1676
01:39:11,960 --> 01:39:15,479
Speaker 1: and tell different stories by the sort of combination of

1677
01:39:15,479 --> 01:39:19,240
Speaker 1: the metrics and guess what, there's median price trends in

1678
01:39:19,520 --> 01:39:22,720
Speaker 1: Orange County, California, just like there are in Manhattan. What

1679
01:39:23,280 --> 01:39:26,960
Speaker 1: do they say? And actually, I think what has really

1680
01:39:27,400 --> 01:39:32,479
Speaker 1: established the report series for Douglas Solomon is that it's

1681
01:39:32,800 --> 01:39:36,559
Speaker 1: anybody can spit out numbers. It's it's sort of you know,

1682
01:39:36,840 --> 01:39:41,519
Speaker 1: capturing the you know, what's actually happening.

1683
01:39:41,640 --> 01:39:44,519
Speaker 2: Your reports are about putting them into context.

1684
01:39:44,160 --> 01:39:47,600
Speaker 1: The right, it's usable, right, so so I interact with

1685
01:39:47,640 --> 01:39:52,000
Speaker 1: a lot of media. I probably get six interactions by

1686
01:39:52,080 --> 01:39:54,360
Speaker 1: email or phone call every day. I don't have I

1687
01:39:54,360 --> 01:40:00,799
Speaker 1: don't have any pr and and it's just because I

1688
01:40:00,800 --> 01:40:04,320
Speaker 1: I'm accessible. That's the biggest thing about the.

1689
01:40:04,439 --> 01:40:08,840
Speaker 2: Media that's really interesting. Let's talk about everybody's favorite question,

1690
01:40:09,040 --> 01:40:11,559
Speaker 2: which is what are you reading? Tell us about your

1691
01:40:11,600 --> 01:40:13,400
Speaker 2: favorite books and what you're reading right now.

1692
01:40:13,680 --> 01:40:17,400
Speaker 1: So, I uh, just finished two books. One was A

1693
01:40:17,640 --> 01:40:20,920
Speaker 1: Billionaire's Row, which was written by a friend of mine,

1694
01:40:20,960 --> 01:40:25,120
Speaker 1: a reporter named Kathy Clark. And if you ever want

1695
01:40:25,160 --> 01:40:33,200
Speaker 1: to know like what the how insane the development world is,

1696
01:40:34,040 --> 01:40:34,759
Speaker 1: this is the book.

1697
01:40:34,840 --> 01:40:39,839
Speaker 2: Because this is about these pencil thin, right, twenty story buildings,

1698
01:40:39,880 --> 01:40:42,600
Speaker 2: toller than the Empire State Building, right, but but on

1699
01:40:42,840 --> 01:40:44,600
Speaker 2: like a smaller footprint.

1700
01:40:44,160 --> 01:40:46,599
Speaker 1: That would have been possible fifteen years ago.

1701
01:40:46,680 --> 01:40:49,479
Speaker 2: It's it's all the material materials.

1702
01:40:48,920 --> 01:40:52,160
Speaker 1: And the engineering has changed dramatically, but they're more expensive

1703
01:40:52,200 --> 01:40:56,000
Speaker 1: to build, right And yeah, and to see you know,

1704
01:40:57,200 --> 01:40:59,720
Speaker 1: you know, you have a condo that's fifteen hundred and

1705
01:40:59,720 --> 01:41:03,880
Speaker 1: fifty feet tall, tallest condo in the world, one.

1706
01:41:03,840 --> 01:41:05,919
Speaker 2: Hundred million dollars, some crazy number.

1707
01:41:06,200 --> 01:41:08,000
Speaker 1: Well, the Penthouse is for sale for two hundred and

1708
01:41:08,000 --> 01:41:09,200
Speaker 1: fifty million dollars.

1709
01:41:09,080 --> 01:41:12,600
Speaker 2: Good aspirational pricing a term that you coined.

1710
01:41:12,360 --> 01:41:16,320
Speaker 1: Yes, actually on the air during a Bloomberg interview on

1711
01:41:16,360 --> 01:41:19,240
Speaker 1: a TV interview. I don't remember, like two thousand and

1712
01:41:20,320 --> 01:41:25,000
Speaker 1: fifteen or sixteen, but you know that you have one

1713
01:41:25,040 --> 01:41:28,360
Speaker 1: eleven West fifty seventh on billion Billionaire's Row is really

1714
01:41:28,760 --> 01:41:33,000
Speaker 1: sort of west and east fifty seventh Street to Park

1715
01:41:33,080 --> 01:41:35,799
Speaker 1: Avenue on the east and probably eighth Avenue on the west.

1716
01:41:36,600 --> 01:41:40,439
Speaker 1: But then in the book she includes two twenty Central

1717
01:41:40,439 --> 01:41:42,760
Speaker 1: Park South, which has the two hundred and thirty nine

1718
01:41:42,800 --> 01:41:45,200
Speaker 1: million dollars sale.

1719
01:41:45,240 --> 01:41:50,200
Speaker 2: By this a bargain fifty right, exactly save yourself eleven minute? Right?

1720
01:41:50,880 --> 01:41:51,240
Speaker 1: Is it?

1721
01:41:51,320 --> 01:41:54,559
Speaker 2: Is it true these buildings are essentially half sold.

1722
01:41:55,760 --> 01:41:58,679
Speaker 1: I think the numbers now is that they're about in

1723
01:41:58,720 --> 01:42:02,599
Speaker 1: aggregate about sixty p sen sold. But there are buildings

1724
01:42:02,600 --> 01:42:05,000
Speaker 1: that are have done, you know, sold out, like four

1725
01:42:05,040 --> 01:42:09,280
Speaker 1: thirty two Park, and then buildings that are you know,

1726
01:42:09,479 --> 01:42:15,560
Speaker 1: having trouble. I mean this is you know, the miscalculation

1727
01:42:15,880 --> 01:42:19,479
Speaker 1: of Billionaire's Row was that the market, the global market

1728
01:42:19,640 --> 01:42:23,680
Speaker 1: wasn't as wide and as deep as everybody thought. You know.

1729
01:42:23,720 --> 01:42:27,040
Speaker 1: I used to joke that these buildings or the high

1730
01:42:27,120 --> 01:42:29,439
Speaker 1: end buildings in New York were like the world's most

1731
01:42:29,479 --> 01:42:33,240
Speaker 1: expensive bank safety deposit boxes where you put your valuables

1732
01:42:33,240 --> 01:42:36,000
Speaker 1: in and then you don't go there very often. And

1733
01:42:37,000 --> 01:42:39,320
Speaker 1: that's many what these are. Where the there was a

1734
01:42:39,360 --> 01:42:42,400
Speaker 1: New York Magazine article years ago one of these buildings

1735
01:42:42,400 --> 01:42:45,120
Speaker 1: where it's dark at night there's like one or two

1736
01:42:45,160 --> 01:42:46,519
Speaker 1: lights on because nobody's there.

1737
01:42:46,760 --> 01:42:49,680
Speaker 2: Right, It's just they're just self storage.

1738
01:42:49,240 --> 01:42:53,800
Speaker 1: Right, right, and anyway, So, but I can't say enough

1739
01:42:53,800 --> 01:42:55,720
Speaker 1: about this book. The other book I'm reading, I just

1740
01:42:55,800 --> 01:42:56,439
Speaker 1: read wait.

1741
01:42:56,360 --> 01:42:59,679
Speaker 2: Before you go off of Billionaire's Row. I have to ask.

1742
01:43:00,800 --> 01:43:04,720
Speaker 2: So I've seen people try and extrapolate these sales and

1743
01:43:04,800 --> 01:43:09,760
Speaker 2: listings quarter billion dollars as if it's an actual marketplace.

1744
01:43:09,960 --> 01:43:13,519
Speaker 2: It's almost like, oh, there's one of eleven rem brands

1745
01:43:13,640 --> 01:43:18,000
Speaker 2: around for sale, and it comes up for sale every generation.

1746
01:43:18,080 --> 01:43:21,040
Speaker 2: In the other ten I've already been grabbed by right museums.

1747
01:43:21,479 --> 01:43:25,360
Speaker 2: How much can you really read into it? Considering there's

1748
01:43:25,400 --> 01:43:28,439
Speaker 2: a few dozen of these and maybe a few dozen

1749
01:43:28,520 --> 01:43:32,519
Speaker 2: potential purchasers. This isn't like a true real estate market.

1750
01:43:33,080 --> 01:43:35,559
Speaker 1: It is a so I think of it as a

1751
01:43:35,600 --> 01:43:40,400
Speaker 1: market of outliers and so I told you earlier that

1752
01:43:40,840 --> 01:43:46,800
Speaker 1: I I started in twenty fourteen tracking any sales that

1753
01:43:47,720 --> 01:43:52,720
Speaker 1: actually closed for a fifty million or higher then and

1754
01:43:54,160 --> 01:43:56,719
Speaker 1: I went back in time back to like two thousand

1755
01:43:57,400 --> 01:44:03,720
Speaker 1: and really that world began about twenty fourteen, where there

1756
01:44:03,720 --> 01:44:09,040
Speaker 1: were maybe seventeen or eighteen nationally sales fifty million or higher.

1757
01:44:09,320 --> 01:44:14,639
Speaker 1: And now and now, so twenty twenty one was the record,

1758
01:44:14,760 --> 01:44:17,120
Speaker 1: and it was in the low forties. I want to

1759
01:44:17,160 --> 01:44:20,080
Speaker 1: say there were forty three sales. There were, you know,

1760
01:44:20,160 --> 01:44:22,599
Speaker 1: somewhere in the mid thirties and twenty two, and then

1761
01:44:22,680 --> 01:44:25,600
Speaker 1: this year looks like it's on track to be you know,

1762
01:44:25,880 --> 01:44:31,240
Speaker 1: probably in the mid twenties. And you know, you look

1763
01:44:31,280 --> 01:44:35,120
Speaker 1: at this and there's like a transaction like a week

1764
01:44:35,760 --> 01:44:40,200
Speaker 1: or you know, every other week. But in twenty twenty one,

1765
01:44:40,240 --> 01:44:42,680
Speaker 1: there was like a transaction every it felt like every day.

1766
01:44:42,720 --> 01:44:49,599
Speaker 1: It wasn't. It became a market that is detached from

1767
01:44:49,640 --> 01:44:52,360
Speaker 1: the local market that it sits.

1768
01:44:52,080 --> 01:44:53,360
Speaker 2: Within in anyway.

1769
01:44:53,720 --> 01:44:57,800
Speaker 1: In many ways, these transactions have nothing. You know, they

1770
01:44:57,840 --> 01:45:03,120
Speaker 1: get so many more eye balls through article coverage on

1771
01:45:03,280 --> 01:45:07,320
Speaker 1: high end transactions and titans of industry buying these places,

1772
01:45:07,840 --> 01:45:13,639
Speaker 1: but they really are this market a national international market.

1773
01:45:13,680 --> 01:45:16,479
Speaker 1: That's not like, Hey, these are New York City sales.

1774
01:45:16,560 --> 01:45:20,400
Speaker 1: Now these are you know, these are not that well

1775
01:45:20,439 --> 01:45:21,559
Speaker 1: connected to New York.

1776
01:45:22,240 --> 01:45:24,960
Speaker 2: In the spring of twenty twenty two, I was speaking

1777
01:45:25,000 --> 01:45:30,360
Speaker 2: at the International Luxury real Estate Alliances Annual Conference, and

1778
01:45:30,439 --> 01:45:32,439
Speaker 2: at night we're having dinner in One of the people

1779
01:45:33,439 --> 01:45:36,800
Speaker 2: there as a real estate agent in Palm Beach, and

1780
01:45:36,840 --> 01:45:39,840
Speaker 2: she gets the confirm from her assistant. Hey, the one

1781
01:45:39,920 --> 01:45:43,559
Speaker 2: hundred million dollar house is now in contract. The deal

1782
01:45:44,040 --> 01:45:46,360
Speaker 2: went through, and I said, Wow, that has to be

1783
01:45:46,439 --> 01:45:48,240
Speaker 2: a hell of a house, and I'll never forget. Her

1784
01:45:48,240 --> 01:45:51,960
Speaker 2: response was, Eh, don't really like it. It has a

1785
01:45:52,320 --> 01:45:54,840
Speaker 2: has a seawall, it doesn't have a beach, not the

1786
01:45:54,880 --> 01:45:58,080
Speaker 2: ideal part of Palm Beach. Like, oh, ho ho, pull

1787
01:45:58,200 --> 01:46:00,320
Speaker 2: that back. If I'm spending.

1788
01:46:00,280 --> 01:46:02,520
Speaker 1: One hundred large, yeah.

1789
01:46:02,240 --> 01:46:05,559
Speaker 2: You're telling me it's not the perfect house. Even one

1790
01:46:05,640 --> 01:46:09,120
Speaker 2: hundred million dollars is a bunch of compromises. And her

1791
01:46:09,479 --> 01:46:12,880
Speaker 2: answer was not a lot of inventory around. If you

1792
01:46:12,920 --> 01:46:15,360
Speaker 2: want that type of house in that part of the world,

1793
01:46:15,920 --> 01:46:19,080
Speaker 2: you're gonna have to make some compromises. And my answer

1794
01:46:19,080 --> 01:46:21,000
Speaker 2: would be, then I guess I'm gonna skip that part

1795
01:46:21,040 --> 01:46:23,080
Speaker 2: of the right right, one hundred million dollars. I want

1796
01:46:23,080 --> 01:46:25,800
Speaker 2: exactly what I want, and uh, I don't want the

1797
01:46:25,800 --> 01:46:27,640
Speaker 2: sea wall. I want the white sandy.

1798
01:46:27,360 --> 01:46:30,920
Speaker 1: Beach right right. No, it's and it's what's interesting in

1799
01:46:30,960 --> 01:46:34,680
Speaker 1: New York is it's building by buildings. So so you

1800
01:46:34,840 --> 01:46:40,880
Speaker 1: have one fifty seven, which was I call Extel Development, uh,

1801
01:46:41,439 --> 01:46:43,439
Speaker 1: which I think they were originally. I read this in

1802
01:46:43,479 --> 01:46:47,519
Speaker 1: the Billionaires Roebook. They were originally called Intel Development, but

1803
01:46:47,520 --> 01:46:49,640
Speaker 1: they got sued for the name, so they changed your

1804
01:46:49,680 --> 01:46:55,400
Speaker 1: name to Extel. Right because but but sales you know,

1805
01:46:55,760 --> 01:46:59,280
Speaker 1: that closed from the sponsor, the developer in twenty sixteen.

1806
01:47:00,320 --> 01:47:05,200
Speaker 1: By twenty seventeen, twenty eighteen, their values were fifty percent less.

1807
01:47:05,640 --> 01:47:08,720
Speaker 1: They were selling for fifty percent less. That seems to

1808
01:47:08,760 --> 01:47:11,160
Speaker 1: be about the marker. So you say, oh, that applies

1809
01:47:11,200 --> 01:47:12,320
Speaker 1: to all billionaires in a row.

1810
01:47:12,560 --> 01:47:15,880
Speaker 2: No, you know, you have douses a lot more than

1811
01:47:15,960 --> 01:47:16,559
Speaker 2: everything else.

1812
01:47:16,720 --> 01:47:19,760
Speaker 1: Right, well, also to yeah, the penthouse there sold for

1813
01:47:19,800 --> 01:47:23,040
Speaker 1: one hundred million Michael Dell bought it. That was the

1814
01:47:23,120 --> 01:47:25,000
Speaker 1: at the time, that was the highest for a short

1815
01:47:25,000 --> 01:47:28,639
Speaker 1: period of time. But my point is that you look

1816
01:47:28,640 --> 01:47:31,759
Speaker 1: at other buildings during the same era, like four thirty

1817
01:47:31,760 --> 01:47:35,200
Speaker 1: two Park, or you look at two twenty Central Park South.

1818
01:47:35,360 --> 01:47:37,920
Speaker 1: They didn't see it. They didn't see fifty percent discounts.

1819
01:47:38,160 --> 01:47:42,960
Speaker 1: In fact, two twenty Center Park South a Ornado Realty development.

1820
01:47:44,080 --> 01:47:48,439
Speaker 1: The resales, you know, after they were bought from the sponsor,

1821
01:47:48,479 --> 01:47:53,160
Speaker 1: we've had a resale sell for double what they bought

1822
01:47:53,200 --> 01:47:57,720
Speaker 1: from the sponsor, which is sort of crazy. And it's

1823
01:47:57,720 --> 01:47:59,200
Speaker 1: only two blocks away.

1824
01:48:00,200 --> 01:48:03,679
Speaker 2: So that the building itself matters, not not just the building,

1825
01:48:03,720 --> 01:48:06,560
Speaker 2: the size, the amenities, everything about it really makes a

1826
01:48:06,600 --> 01:48:10,040
Speaker 2: big differ, absolutely all right. So besides billionaire's row, what else?

1827
01:48:10,120 --> 01:48:12,519
Speaker 1: What else? I just read a sort of fast and

1828
01:48:12,560 --> 01:48:15,280
Speaker 1: easy book just out of the blue called Easy Money,

1829
01:48:15,360 --> 01:48:21,680
Speaker 1: and it's basically a throttling of cryptocurrency. Who wrote it,

1830
01:48:22,800 --> 01:48:25,479
Speaker 1: I can't remember. I don't remember his name, but he

1831
01:48:26,360 --> 01:48:30,519
Speaker 1: it's very very clear and how he's going through it,

1832
01:48:30,560 --> 01:48:33,280
Speaker 1: and basically there's no you know that he contends there's

1833
01:48:33,360 --> 01:48:37,600
Speaker 1: no value to crypto. You know, it's just basically, you know,

1834
01:48:37,640 --> 01:48:43,040
Speaker 1: it's a rife with people, nefarious sort of types that

1835
01:48:43,120 --> 01:48:45,599
Speaker 1: most people lose money, you know, who knows.

1836
01:48:46,560 --> 01:48:47,960
Speaker 2: But interesting though.

1837
01:48:47,800 --> 01:48:50,519
Speaker 1: But it was an interesting take. And then the one

1838
01:48:50,560 --> 01:48:54,640
Speaker 1: I just I'm actually just started two books. Sometimes I

1839
01:48:54,680 --> 01:48:58,640
Speaker 1: read books. In parallel is a book called The Slip,

1840
01:48:58,720 --> 01:49:03,519
Speaker 1: which is about Kuent's I think that's how you pronounce it.

1841
01:49:03,640 --> 01:49:07,040
Speaker 1: Slip in downtown Manhattan was one of the first sort

1842
01:49:07,080 --> 01:49:10,439
Speaker 1: of artists enclaves like you would think of Soho or

1843
01:49:10,520 --> 01:49:14,240
Speaker 1: Tribeca in the seventies. This was more like in the

1844
01:49:14,280 --> 01:49:19,200
Speaker 1: forties and fifties. And I had no idea, you know,

1845
01:49:19,320 --> 01:49:21,680
Speaker 1: I'd never heard of this, but it's a really it

1846
01:49:21,720 --> 01:49:23,680
Speaker 1: looks really good. I've read a little bit of it.

1847
01:49:23,720 --> 01:49:27,720
Speaker 1: And the other the other book is that Gretchen Morgenstern

1848
01:49:28,439 --> 01:49:31,800
Speaker 1: vas these are the Plunderers something about.

1849
01:49:32,240 --> 01:49:34,040
Speaker 2: I had her on the show. I read the book. Yeah,

1850
01:49:34,160 --> 01:49:36,599
Speaker 2: really interesting. But by the way, we went to the

1851
01:49:36,640 --> 01:49:40,439
Speaker 2: Hopper exhibit down at the New Whitney at the end

1852
01:49:40,479 --> 01:49:45,840
Speaker 2: of the high Line, and apparently off of Washington Square

1853
01:49:45,880 --> 01:49:49,519
Speaker 2: Park was another one of those artists enclave where Hopper

1854
01:49:49,560 --> 01:49:52,000
Speaker 2: and a bunch of his you know, comy.

1855
01:49:51,800 --> 01:49:54,040
Speaker 1: Like East Village, like Saint Mark's Place.

1856
01:49:54,439 --> 01:49:57,479
Speaker 2: No, this is this is right off of West Fourth

1857
01:49:57,600 --> 01:50:02,280
Speaker 2: or off of Washington Square Park. At the show, there's

1858
01:50:02,320 --> 01:50:05,600
Speaker 2: a series of letters printed about him arguing with his

1859
01:50:05,680 --> 01:50:09,519
Speaker 2: landlord and him arguing with really he testified at the

1860
01:50:09,600 --> 01:50:12,920
Speaker 2: local zoning board because they wanted it was sort of

1861
01:50:13,000 --> 01:50:17,400
Speaker 2: zoned the way eventually, soho was that gave a good

1862
01:50:17,439 --> 01:50:22,880
Speaker 2: advantage to artists? And before anyone really understood who he was,

1863
01:50:23,520 --> 01:50:26,400
Speaker 2: he was complaining and saying, you're going to change the

1864
01:50:26,439 --> 01:50:29,479
Speaker 2: whole character of the neighborhood from an artists enclave to

1865
01:50:30,200 --> 01:50:31,719
Speaker 2: just a commercial district.

1866
01:50:31,920 --> 01:50:33,960
Speaker 1: Well, when I when I first moved to New York,

1867
01:50:34,040 --> 01:50:37,240
Speaker 1: the East Village or you know Alphabet City, you know

1868
01:50:37,320 --> 01:50:41,479
Speaker 1: the Avenue ABC as you go further east, I remember

1869
01:50:41,520 --> 01:50:46,439
Speaker 1: there was a condo conversion right on the park there

1870
01:50:46,439 --> 01:50:49,559
Speaker 1: that the neighborhood centers around, and it was it was

1871
01:50:50,080 --> 01:50:53,320
Speaker 1: spray painted on the front door of this conversion, Die

1872
01:50:53,400 --> 01:50:54,080
Speaker 1: Yeppie scum.

1873
01:50:54,280 --> 01:50:55,240
Speaker 2: I remember that.

1874
01:50:55,240 --> 01:50:57,320
Speaker 1: That became the battle cry, and.

1875
01:50:57,760 --> 01:51:00,880
Speaker 2: That picture was in New York magazine or somewhere. I mean,

1876
01:51:00,920 --> 01:51:02,439
Speaker 2: that became a famous image.

1877
01:51:02,560 --> 01:51:04,920
Speaker 1: Yeah, yeah, yeah, I was there. It was. It was,

1878
01:51:05,160 --> 01:51:07,880
Speaker 1: you know, it was a pretty rough neighborhood in terms

1879
01:51:07,880 --> 01:51:10,920
Speaker 1: of you know, a lot of you know, elevated crime

1880
01:51:10,960 --> 01:51:13,320
Speaker 1: and all that, but now you'd never know it.

1881
01:51:13,400 --> 01:51:14,240
Speaker 2: Totally gentrificed.

1882
01:51:14,280 --> 01:51:15,320
Speaker 1: Yeah, totally gentrified.

1883
01:51:15,920 --> 01:51:19,600
Speaker 2: Amazing. Down to our last two questions, what sort of

1884
01:51:19,640 --> 01:51:23,160
Speaker 2: advice would you give to a recent college grad interested

1885
01:51:23,200 --> 01:51:27,000
Speaker 2: in a career in either real estate or data analytics

1886
01:51:27,120 --> 01:51:27,800
Speaker 2: or appraisal.

1887
01:51:28,720 --> 01:51:31,880
Speaker 1: Yeah, so I'm sort of I think of it as

1888
01:51:33,960 --> 01:51:37,599
Speaker 1: I've seen my various four sons, you know, going through

1889
01:51:37,640 --> 01:51:41,960
Speaker 1: interview processes, and first of all, it's so different than

1890
01:51:42,160 --> 01:51:44,559
Speaker 1: when I began, So I don't know how relevant my

1891
01:51:44,800 --> 01:51:47,639
Speaker 1: advice would be, but we had you know, it's all

1892
01:51:47,680 --> 01:51:50,240
Speaker 1: through Zoom. They winnow it down, you know, and then

1893
01:51:50,280 --> 01:51:52,760
Speaker 1: you finally meet in person and you go through like

1894
01:51:52,840 --> 01:51:56,360
Speaker 1: multiple layers of interviews on Zoom. So it's very detached.

1895
01:51:56,760 --> 01:51:59,520
Speaker 1: There's not a lot of sort of personal connecting. So

1896
01:51:59,520 --> 01:52:03,360
Speaker 1: so the first sort of base level advices really think

1897
01:52:03,400 --> 01:52:07,880
Speaker 1: about your appearance on Zoom. It sounds really you know,

1898
01:52:07,920 --> 01:52:10,759
Speaker 1: because I find Zoom to be sort of soul sucking,

1899
01:52:11,080 --> 01:52:13,479
Speaker 1: you know, if you do quite a you know, during

1900
01:52:13,520 --> 01:52:15,880
Speaker 1: the pandemic, I think I was doing like eight hours

1901
01:52:15,880 --> 01:52:21,000
Speaker 1: of Zoom a day. Yeah, and you're just completely drained.

1902
01:52:21,640 --> 01:52:22,960
Speaker 1: But but I think that that's you.

1903
01:52:22,920 --> 01:52:27,719
Speaker 2: Know the secret to zoom, Right, turn your camera off

1904
01:52:28,240 --> 01:52:33,680
Speaker 2: and just surf through, bring a trailer and just you know,

1905
01:52:33,920 --> 01:52:36,320
Speaker 2: uh huh, just say frequently yep, yeah, right, Yeah, it's

1906
01:52:36,320 --> 01:52:39,080
Speaker 2: a big connection. I got no video, and well what.

1907
01:52:39,120 --> 01:52:42,920
Speaker 1: I have got I do zoom, you know, because I

1908
01:52:42,960 --> 01:52:45,800
Speaker 1: always found it challenging to look up at like the

1909
01:52:45,840 --> 01:52:46,400
Speaker 1: top of the.

1910
01:52:46,320 --> 01:52:49,120
Speaker 2: Mother So I have the cameras that hang out.

1911
01:52:49,200 --> 01:52:51,680
Speaker 1: Yeah, I got the camera that hangs down in the

1912
01:52:51,720 --> 01:52:53,679
Speaker 1: center of the screen. It's very small so it doesn't

1913
01:52:53,720 --> 01:52:57,200
Speaker 1: block anything. That was like one during the pandemic. I

1914
01:52:57,280 --> 01:52:59,439
Speaker 1: bought them for one for home and one for the

1915
01:52:59,520 --> 01:53:03,400
Speaker 1: office through a Kickstarter startup. Now there's a bunch more

1916
01:53:03,439 --> 01:53:06,400
Speaker 1: of them. But it's the greatest thing ever for that

1917
01:53:06,520 --> 01:53:09,400
Speaker 1: because you can check emails and look at you know,

1918
01:53:09,400 --> 01:53:12,519
Speaker 1: if you're not nobody knows, nobody can tell. It's it's

1919
01:53:12,960 --> 01:53:14,280
Speaker 1: a it's a great invention.

1920
01:53:14,720 --> 01:53:17,519
Speaker 2: That's hilarious. And our final question, what do you know

1921
01:53:17,560 --> 01:53:20,519
Speaker 2: about the world of real estate today? You wish you

1922
01:53:20,600 --> 01:53:23,240
Speaker 2: knew forty years or so ago when you were first

1923
01:53:23,280 --> 01:53:24,040
Speaker 2: getting started.

1924
01:53:24,840 --> 01:53:29,360
Speaker 1: Uh, you know, I think to do everything I could

1925
01:53:29,760 --> 01:53:33,800
Speaker 1: to buy something earlier on. I didn't buy a house

1926
01:53:33,840 --> 01:53:36,559
Speaker 1: till my mid thirties because I was trying to grow

1927
01:53:36,600 --> 01:53:40,000
Speaker 1: my business, and I think if I had started, you know,

1928
01:53:40,080 --> 01:53:42,960
Speaker 1: the idea of you know, starting a little bit earlier

1929
01:53:44,760 --> 01:53:48,920
Speaker 1: is you know, when I think of the prices, even

1930
01:53:48,960 --> 01:53:52,679
Speaker 1: relative to my income at the time, there wasn't such

1931
01:53:52,720 --> 01:53:55,880
Speaker 1: a stretch, such a multiplier effect, even though mortgage rates

1932
01:53:55,920 --> 01:53:56,599
Speaker 1: are much higher.

1933
01:53:56,840 --> 01:53:59,679
Speaker 2: So let me flip that answer on you and say,

1934
01:54:00,400 --> 01:54:03,280
Speaker 2: would you give your kids, who are now in their

1935
01:54:03,520 --> 01:54:06,400
Speaker 2: late twenties early thirties, right more or less? Would you

1936
01:54:06,439 --> 01:54:08,519
Speaker 2: give them the same advice, Hey, buy a house sooner

1937
01:54:08,600 --> 01:54:09,280
Speaker 2: rather than later.

1938
01:54:09,520 --> 01:54:15,680
Speaker 1: Yeah. Three of my four sons are all homeowners, are

1939
01:54:15,720 --> 01:54:20,000
Speaker 1: multiple homeowners, and you know, have set up you know,

1940
01:54:20,000 --> 01:54:26,320
Speaker 1: they're they It's worked out great so so not that

1941
01:54:26,439 --> 01:54:28,920
Speaker 1: you know, I advise them in the negotiation a little

1942
01:54:28,920 --> 01:54:30,680
Speaker 1: bit and all that, but they really did it on

1943
01:54:30,760 --> 01:54:33,880
Speaker 1: their own and and got the homes that they love.

1944
01:54:34,080 --> 01:54:39,520
Speaker 1: My youngest, who just turned twenty five, is living his

1945
01:54:39,600 --> 01:54:43,680
Speaker 1: best life in Manhattan as a renter. But you know,

1946
01:54:43,720 --> 01:54:46,800
Speaker 1: he's got a completely different lifestyle than his brothers in

1947
01:54:46,840 --> 01:54:47,360
Speaker 1: the suburbs.

1948
01:54:47,440 --> 01:54:49,840
Speaker 2: So they're all married and getting married.

1949
01:54:49,600 --> 01:54:54,120
Speaker 1: In four grandkids and it's very odd.

1950
01:54:54,680 --> 01:54:58,320
Speaker 2: Jonathan, thank you for being so generous with your time. Cheryl,

1951
01:54:58,360 --> 01:55:01,600
Speaker 2: thank you for coming in. I appreciate this. We have

1952
01:55:01,840 --> 01:55:06,280
Speaker 2: been speaking with Jonathan Miller. He is CEO of mir Samuel,

1953
01:55:06,880 --> 01:55:11,040
Speaker 2: one of the most respected appraisal and data analytics firm

1954
01:55:11,200 --> 01:55:15,560
Speaker 2: covering the world of residential real estate. If you enjoy

1955
01:55:15,640 --> 01:55:18,680
Speaker 2: this conversation, well be sure and check out any of

1956
01:55:18,760 --> 01:55:22,360
Speaker 2: our previous five hundred episodes we've had over the past

1957
01:55:22,440 --> 01:55:26,880
Speaker 2: nine years. You can find those at iTunes, Spotify, YouTube,

1958
01:55:27,200 --> 01:55:30,680
Speaker 2: or wherever you find your favorite podcast. Sign up for

1959
01:55:30,800 --> 01:55:34,520
Speaker 2: my daily reading list at Ridholt's Follow me on threads

1960
01:55:34,680 --> 01:55:38,879
Speaker 2: at Rid Halts, which used to be my name on Twitter.

1961
01:55:39,160 --> 01:55:41,920
Speaker 2: Maybe one day I'll get that back. Follow all of

1962
01:55:41,960 --> 01:55:45,880
Speaker 2: the Bloomberg Family of podcasts on Twitter at podcasts. I

1963
01:55:45,920 --> 01:55:47,880
Speaker 2: would be remiss if I did not thank the crack

1964
01:55:47,960 --> 01:55:51,800
Speaker 2: team that helps put these conversations together each week. A

1965
01:55:51,880 --> 01:55:55,000
Speaker 2: teak of Val Bron is my project manager. Pariswold is

1966
01:55:55,000 --> 01:55:58,720
Speaker 2: my producer. Justin Milner is my audio engineer. Sean Russo

1967
01:55:58,840 --> 01:56:02,400
Speaker 2: is my head of research. I'm Barry Gerhelts. You've been

1968
01:56:02,440 --> 01:56:07,200
Speaker 2: listening to Masters in Business on Bloomberg Radio.