WEBVTT - Jonathan Miller on High Mortgage Rates 0:00:02.040 --> 0:00:06.000 This is Master's in Business with Barry rid Holds on 0:00:06.240 --> 0:00:07.320 Bloomberg Radio. 0:00:08.200 --> 0:00:11.400 This week on the podcast, our returning champion for the 0:00:11.440 --> 0:00:15.680 sixth time, my friend Jonathan Miller. He is founder and 0:00:15.960 --> 0:00:19.160 CEO of Miller Samuel, where he has been covering the 0:00:19.200 --> 0:00:22.040 real estate market for the better part of forty years. 0:00:22.800 --> 0:00:25.680 Not only is he an appraiser, he's pretty much been 0:00:25.720 --> 0:00:30.440 in every single penthouse in Manhattan. Some of the stories 0:00:30.680 --> 0:00:33.559 he tells. I couldn't get him to coax out stories 0:00:33.600 --> 0:00:36.720 about David Bowie and other celebrities, but I've heard them 0:00:36.760 --> 0:00:40.080 all over at beer and they're amazing. There are few 0:00:40.120 --> 0:00:43.880 people more knowledgeable about what's going on in the state 0:00:43.920 --> 0:00:47.320 of real estate, why it got to where it is today, 0:00:47.440 --> 0:00:50.840 how it's changing, and what you should know about prices 0:00:51.120 --> 0:00:55.000 and supply in the near future than Jonathan. He is 0:00:55.160 --> 0:00:57.880 just simply the go to guy when it comes to 0:00:58.080 --> 0:01:01.680 residential real estate. I found this conversation to be a 0:01:01.680 --> 0:01:03.960 lot of fun, and I think you will also. With 0:01:04.120 --> 0:01:09.000 no further ado, my conversation with Miller Samuels Jonathan Miller. 0:01:09.319 --> 0:01:11.840 Jonathan Miller, Welcome to Bloomberg. 0:01:11.959 --> 0:01:14.720 Oh great to be here. It feels like I've been 0:01:14.760 --> 0:01:15.959 here before. 0:01:15.959 --> 0:01:18.800 You're a returning champion. I think this is your fourth, 0:01:19.040 --> 0:01:24.040 fifth something, sixth, sixth. So every time there's tumults in 0:01:24.120 --> 0:01:27.640 the real estate market, my instinct is always to say, 0:01:28.080 --> 0:01:31.319 let's get Jonathan in here and talk about what's going 0:01:31.360 --> 0:01:35.160 on in the real estate world. To talk about what's 0:01:35.200 --> 0:01:37.680 going on in real estate before we get to that. 0:01:37.760 --> 0:01:39.679 For the people who might not have listened to the 0:01:39.680 --> 0:01:43.720 previous five conversations we've had, why don't we just delve 0:01:43.720 --> 0:01:47.080 a little bit into your background, starting with you said 0:01:47.120 --> 0:01:51.280 you stumbled into a praising in real estate. Tell us 0:01:51.320 --> 0:01:51.920 what that means. 0:01:52.080 --> 0:01:56.520 Well, Actually, I moved to New York in the mid eighties, 0:01:56.840 --> 0:02:00.960 and because my parents had moved here and my sister 0:02:01.000 --> 0:02:03.720 had moved here, and they're saying this is incredible. I 0:02:03.760 --> 0:02:08.240 grew up in the DC area and was living in 0:02:08.280 --> 0:02:11.680 the Midwest, and my wife and I came to a 0:02:11.720 --> 0:02:15.440 wedding here and were completely hooked. Within three weeks, we 0:02:15.560 --> 0:02:18.280 sold our cars and moved and slept on my parents' 0:02:18.720 --> 0:02:24.639 apartment one bedroom apartment floor. Within three weeks of our 0:02:24.720 --> 0:02:28.080 visit here. We just wanted to be here, and there's 0:02:28.080 --> 0:02:29.320 no regrets. We love it. 0:02:29.440 --> 0:02:33.639 The nineteen eighties New York area was kind of transitioning 0:02:33.760 --> 0:02:37.760 from yes, the really dumpy seventies to hey, the eighties 0:02:37.760 --> 0:02:40.320 and the nineties were kind of a boomy are you yeah? 0:02:40.400 --> 0:02:40.600 Yeah? 0:02:40.760 --> 0:02:41.919 What was that transition like? 0:02:42.120 --> 0:02:47.320 Well, when we moved and we went through we basically 0:02:47.440 --> 0:02:49.720 you got the ideas of family to start a real 0:02:49.800 --> 0:02:55.400 estate appraisal business. We'd actually raised money from Japanese investors 0:02:55.800 --> 0:02:58.360 through an attorney to start a real estate brokerage firm 0:02:59.160 --> 0:03:03.320 and got to the bottom of the form where you 0:03:03.360 --> 0:03:05.800 had to sign the dotted line and said no, let's 0:03:05.800 --> 0:03:09.240 do appraisal. It was just like it was, you know, 0:03:09.400 --> 0:03:12.800 just this sort of odd moment where we really didn't 0:03:12.800 --> 0:03:16.640 want to become real estate brokers, and we had real 0:03:16.720 --> 0:03:20.880 estate expertise. We had a lot of technology that we 0:03:20.880 --> 0:03:25.799 were playing with. I used to sell units in an 0:03:25.840 --> 0:03:31.440 on site sales condo new development on the Upper east Side, 0:03:31.919 --> 0:03:35.080 and I literally put the entire schedule A, which is 0:03:35.120 --> 0:03:38.800 the pricing square footage unit numbers in a Hewlett Packard 0:03:38.840 --> 0:03:42.480 forty one B using bitmapping, and we could walk around 0:03:42.560 --> 0:03:44.840 and instead of having you know, when people had asked me, 0:03:44.880 --> 0:03:46.520 what are the common chargers, what are the you know, 0:03:47.200 --> 0:03:50.839 I'd literally have it in my handheld and we sort 0:03:50.880 --> 0:03:55.480 of turned that into a valuation business. And it's been 0:03:55.680 --> 0:03:59.320 since eighty six that we've been in a praising property 0:03:59.360 --> 0:04:01.240 about five a year in Manhattan. 0:04:01.320 --> 0:04:04.760 Wow, that's amazing. So before we get to the pandemic, 0:04:04.800 --> 0:04:08.520 which obviously had an enormous outsized effect on real estate, 0:04:08.840 --> 0:04:11.400 let's talk a little bit about the financial crisis in 0:04:11.480 --> 0:04:15.280 the mid two thousands. A lot of real estate companies 0:04:15.320 --> 0:04:18.120 crashed and burned. Then how did you manage through the 0:04:18.279 --> 0:04:22.680 GFC and what sort of world were we existing in 0:04:22.800 --> 0:04:23.160 back then? 0:04:23.279 --> 0:04:27.320 Well, actually I thought leading up to the Great Financial Crisis, 0:04:27.360 --> 0:04:31.000 I thought to myself, we're going to be out of 0:04:31.040 --> 0:04:35.240 business within a couple of years because nobody wanted an 0:04:35.240 --> 0:04:39.640 independent valuation. Everybody knew the number but the appraiser, and 0:04:40.080 --> 0:04:45.960 so the system incentivized mortgage brokers to hire the appraisers 0:04:46.040 --> 0:04:49.240 that made the numbers for them because they wouldn't get 0:04:49.240 --> 0:04:53.240 paid until the deal closed. And we weren't morally flexible, 0:04:54.480 --> 0:05:00.440 and so that was really a lean period. And remember 0:05:00.440 --> 0:05:07.080 I was interviewed in some national TV program interviewed me 0:05:07.160 --> 0:05:10.200 and said, you know what's the you know, what do 0:05:10.279 --> 0:05:13.120 we not know, And I said, most of the appraisals 0:05:13.160 --> 0:05:16.280 being done through mortgage brokers aren't worth the paper they're 0:05:16.320 --> 0:05:20.200 written on. And I'd say seventy five percent of them. Wow. 0:05:20.320 --> 0:05:24.200 And then I was sort of attacked by my industry 0:05:24.520 --> 0:05:27.600 that at least the local competitors who were very morallly 0:05:27.680 --> 0:05:31.680 flexible and were really doing well. And in two thousand 0:05:31.680 --> 0:05:34.359 and eight, that same journalist came to me and said, 0:05:34.480 --> 0:05:36.839 this is the guy who told us three years ago 0:05:37.360 --> 0:05:41.920 that this was going to happen. And I ever since then, 0:05:41.960 --> 0:05:44.560 apparently I got a lot smarter. You know, I was 0:05:44.600 --> 0:05:47.080 saying the same thing, but I was right. 0:05:47.320 --> 0:05:50.520 It just sometimes takes a while for people to realize 0:05:50.880 --> 0:05:53.760 that the painful thing they're hearing. You know, when there's 0:05:53.800 --> 0:05:57.080 a lot of pushback, it's because you're telling people things 0:05:57.120 --> 0:05:57.880 they don't. 0:05:57.640 --> 0:06:00.760 Don't want to hear, and they're invested in old way. 0:06:01.279 --> 0:06:05.400 And in fact, when I started going negative on the market, 0:06:06.160 --> 0:06:09.600 I remember being in a New York Times front page 0:06:09.640 --> 0:06:13.400 story about prices dropping x percent, and I remember a 0:06:13.440 --> 0:06:19.240 real estate brokerage CEO to remain nameless, called me and said, 0:06:19.240 --> 0:06:22.479 what are you doing? You know, and you know this 0:06:22.680 --> 0:06:24.880 is wrong? You know you can't talk, and I said, 0:06:26.040 --> 0:06:28.960 you got to be transparent. And what's really interesting to 0:06:29.080 --> 0:06:32.400 the industry's credit is there's a lot of market studies 0:06:32.440 --> 0:06:38.560 out like we publish, but the brokerage community has, you know, 0:06:38.640 --> 0:06:41.599 compared to what it was in the eighties and nineties, 0:06:42.040 --> 0:06:48.359 is dramatically more transparent, even though not perfect about what's happening, 0:06:48.839 --> 0:06:51.760 as opposed to you know, in the dark days of 0:06:52.000 --> 0:06:56.120 Lehman collapsing and you know, brokers at Panels I was 0:06:56.160 --> 0:06:58.240 on was saying, this is just going to last a 0:06:58.240 --> 0:06:59.839 couple of weeks. Everything's great. 0:07:00.760 --> 0:07:03.800 It's always a great time to buy or sell, right. 0:07:03.839 --> 0:07:06.440 Do you remember that ad the association. 0:07:06.040 --> 0:07:10.480 He wrote a piece about I might have Yeah, where 0:07:10.520 --> 0:07:13.360 there was like one month out of like the last 0:07:13.400 --> 0:07:15.720 twenty years that it wasn't a good time to buy. 0:07:16.360 --> 0:07:16.680 It was. 0:07:16.800 --> 0:07:19.240 It was great. Listen. It's always a good time to 0:07:19.320 --> 0:07:22.400 generate a commission if you're a commission real estate agent, 0:07:22.480 --> 0:07:25.200 which course, and my mom was a real estate agent, 0:07:25.280 --> 0:07:29.400 so this was always dinner table conversation. Like you, she 0:07:29.560 --> 0:07:33.720 wasn't afraid to call people out. The fascinating thing is 0:07:34.040 --> 0:07:36.320 we'll talk a little bit more about the appraisal industry 0:07:36.320 --> 0:07:41.920 in a bit. But back then appraisers were not really 0:07:42.000 --> 0:07:46.720 helping the buyers. They were just helping the brokers get 0:07:46.760 --> 0:07:48.880 a bank loan through the process. 0:07:49.560 --> 0:07:53.240 Well yeah, sort of. I mean essentially, what no one 0:07:53.320 --> 0:07:56.040 understood in the industry and still don't understand today in 0:07:56.040 --> 0:07:58.280 the real estate industry is that the when appraiser is 0:07:58.280 --> 0:08:01.880 doing an appraisal for the buyer that's getting a mortgage, 0:08:02.160 --> 0:08:07.360 their client is actually the bank. And so now there's 0:08:07.440 --> 0:08:11.160 all kinds of restrictions post DoD Frank introduction to the 0:08:11.520 --> 0:08:15.920 to the process, where you know, people can't talk to 0:08:16.000 --> 0:08:17.440 you like they could. 0:08:17.520 --> 0:08:19.840 Back in the day. Hey I have we're paying this, 0:08:19.880 --> 0:08:21.240 and here's how much my mortgage is. 0:08:21.360 --> 0:08:22.640 This is what I need right? 0:08:23.480 --> 0:08:25.960 Keep it fits like Rodney and Caddyshack. Well I just 0:08:26.000 --> 0:08:26.240 keep it. 0:08:26.640 --> 0:08:29.880 I The term back then was here's a good apprais 0:08:30.000 --> 0:08:33.400 or good in air quotes, and good translated into making 0:08:33.440 --> 0:08:33.960 the number. 0:08:34.440 --> 0:08:37.360 So I was always shocked at the idea of quote 0:08:37.440 --> 0:08:41.360 unquote comparables. If you're in an upward price spiral that 0:08:42.040 --> 0:08:47.560 is essentially a mortgage driven bubble, what good are comparables? Hey, 0:08:47.720 --> 0:08:50.760 this house down the street is overpriced thirty percent. Give 0:08:50.800 --> 0:08:52.880 these people a mortgage for a house that they pay 0:08:52.960 --> 0:08:55.240 thirty percent too much doesn't make a lot of sense. 0:08:55.400 --> 0:08:58.480 Yeah, the challenge is that, you know, when we're looking 0:08:58.520 --> 0:09:02.200 at valuation of a property, we're looking more than price. 0:09:02.280 --> 0:09:04.000 Price is sort of the caboose at the end of 0:09:04.000 --> 0:09:10.120 the train. Leading indicators would be contract activity and listening 0:09:10.120 --> 0:09:14.320 inventory sort of transaction based rather than price based. 0:09:14.760 --> 0:09:18.240 And so I would imagine that would tell a bank, hey, 0:09:18.280 --> 0:09:21.760 if this buyer defaults on this mortgage down the road, 0:09:22.240 --> 0:09:23.679 the collateral looks. 0:09:23.480 --> 0:09:26.839 Like the collateral won't be adequate in or of view 0:09:27.240 --> 0:09:30.439 or could would. There wouldn't be a perfect example. That 0:09:30.760 --> 0:09:33.000 is sort of the when you apply like the Greater 0:09:33.120 --> 0:09:36.640 Fool theory to South Florida real estate in the eighties, 0:09:37.800 --> 0:09:41.959 where it was all about carpenters and nurses flipping, you know, 0:09:42.080 --> 0:09:45.520 quitting their jobs and flipping real estate and becoming you know, 0:09:46.040 --> 0:09:48.160 making a lot of money, and then they would turn 0:09:48.200 --> 0:09:50.160 around and sell it to somebody else for double and 0:09:50.200 --> 0:09:52.960 double and double and double. And if you actually stood 0:09:53.000 --> 0:09:55.439 back and looked at a chart of what was happening, 0:09:55.480 --> 0:10:00.200 prices were going straight up and sales are going straight down. 0:10:00.360 --> 0:10:03.560 And you can see it because sales actually lead price 0:10:03.640 --> 0:10:07.320 direction by you know, a year in many cases. 0:10:07.080 --> 0:10:10.880 In fact, in five and six people don't you know, 0:10:10.920 --> 0:10:13.719 people were not familiar with the history of the financial crisis. 0:10:14.480 --> 0:10:18.440 Price is peaked in i want to say summer of six, 0:10:19.200 --> 0:10:22.680 and volume peaked in five, correct, But the market didn't 0:10:22.679 --> 0:10:26.000 start to stumble. Market peaked in October seven, so you 0:10:26.080 --> 0:10:28.520 still had a full the stock market. So you had 0:10:28.920 --> 0:10:32.640 a full year or two after housing topped before it 0:10:32.800 --> 0:10:35.360 started to show. And really the heavy stuff didn't start 0:10:35.400 --> 0:10:36.600 in Toil eight. 0:10:36.760 --> 0:10:41.079 The answer to that question is always consumers when there's 0:10:41.200 --> 0:10:45.600 when they they're uncertain, they pause, and so you see 0:10:45.600 --> 0:10:49.120 the transaction volume drop, but the pricing that's the greater 0:10:49.200 --> 0:10:53.880 full theory, right, continue until there's no more buyers, and 0:10:53.920 --> 0:10:55.040 then the price is correct. 0:10:55.160 --> 0:10:58.640 So now let's flip that question and talk about the sellers, 0:10:59.160 --> 0:11:02.880 because we're only in a little bit of a challenging 0:11:02.920 --> 0:11:07.280 market for both buyers and sellers. Not enough inventory, mortgage 0:11:07.360 --> 0:11:11.520 rates are much higher. It seems like sellers are always 0:11:11.600 --> 0:11:14.840 operating at a six to twelve month leg, maybe even 0:11:14.880 --> 0:11:16.800 longer one to two years, one to two years, so 0:11:17.320 --> 0:11:21.400 they're always a year or two behind the price, which 0:11:22.240 --> 0:11:24.840 when things start to slow down and prices start. 0:11:24.720 --> 0:11:26.440 To roll over, they don't adjust quickly. 0:11:26.600 --> 0:11:30.000 They really don't. And I'm genuinely shocked at when I 0:11:30.000 --> 0:11:32.560 look at some prices, I'm like, hey, that was the 0:11:32.640 --> 0:11:36.120 right price in December twenty twenty one, right, but that 0:11:36.559 --> 0:11:37.320 ship is sales. 0:11:37.400 --> 0:11:40.959 Well it's funny you say that because in the beginning 0:11:40.960 --> 0:11:42.840 of this year, when people said, what do you think 0:11:42.920 --> 0:11:45.560 twenty twenty three is going to be, Like I dubbed 0:11:45.600 --> 0:11:49.600 twenty twenty three the Year of disappointment because people weren't 0:11:49.600 --> 0:11:53.480 going to get their twenty twenty one price. The sellers weren't, 0:11:53.480 --> 0:11:59.160 but the buyers weren't going to see a substantial savings 0:11:57.320 --> 0:12:02.360 in price. Seeing that prices prices weren't going to correct, 0:12:02.400 --> 0:12:06.040 and you know, into and we we have this collapse 0:12:06.080 --> 0:12:10.760 of inventory that is now sort of when you think 0:12:10.760 --> 0:12:16.160 about the home valuation or just market trends, you know, 0:12:16.240 --> 0:12:19.559 typically when there's a negative external event, like you know, 0:12:19.720 --> 0:12:21.800 spike in interest rates. So if you saw interest rates, 0:12:21.840 --> 0:12:23.600 you know the thirty year fixes more than double what 0:12:23.679 --> 0:12:26.320 it was a little over a year ago, you expect 0:12:26.400 --> 0:12:30.560 sales to slow down. They did, and you expect inventory 0:12:30.600 --> 0:12:33.880 to pile high to the sky, and that didn't happen. 0:12:33.960 --> 0:12:38.120 And in fact, right now, new inventory is falling. New 0:12:38.160 --> 0:12:42.000 inventory meaning inventory is coming in right now, is actually 0:12:42.040 --> 0:12:46.800 going negative. And it should yeah, it should be going negative, 0:12:47.600 --> 0:12:50.320 and it's I mean, it should be rising and it's not. 0:12:50.559 --> 0:12:54.720 And the the and so what that does that you're 0:12:54.760 --> 0:12:57.920 not seeing prices fall because we're actually seeing right now 0:12:57.960 --> 0:13:00.400 in the second quarter, just looking at the suburbs around 0:13:00.400 --> 0:13:05.040 New York City, like Westchester, NASA County, Fairfield County, the 0:13:05.080 --> 0:13:10.280 market share of properties that closed in this recently completed quarter, 0:13:11.200 --> 0:13:14.920 the market share of all closed sales was depending on 0:13:14.960 --> 0:13:18.920 the location, typically about forty five percent of the transactions 0:13:19.400 --> 0:13:22.640 went to a bidding war, meaning that they closed higher 0:13:22.679 --> 0:13:26.680 than the last asking price of the transaction. And that 0:13:26.720 --> 0:13:29.840 doesn't happen when mortgage rates double. Right, it makes your 0:13:29.840 --> 0:13:33.520 brain crack thinking about it because it's so contrary. And 0:13:33.520 --> 0:13:37.800 that's because the inventory factor is what is throwing all 0:13:37.880 --> 0:13:39.120 the modeling off. 0:13:39.640 --> 0:13:42.760 How many of those transactions were cash transactions where mortgage 0:13:42.840 --> 0:13:44.280 rates are relevant. 0:13:43.920 --> 0:13:48.800 Right, So, so in Manhattan, the second quarter had the 0:13:48.880 --> 0:13:53.280 highest market share of cash transactions in history. Two thirds 0:13:53.320 --> 0:13:56.240 of the transactions, about sixty five percent. 0:13:56.440 --> 0:13:56.880 Amazing. 0:13:57.000 --> 0:14:00.960 Now, what's interesting if you dig a little deeper, is 0:14:01.000 --> 0:14:04.960 that the it's not that the whole world is just 0:14:04.960 --> 0:14:09.640 paying cash. It's that the number of transactions for cash 0:14:09.679 --> 0:14:14.360 bures and financed buyers both fell sharply year over year. 0:14:14.400 --> 0:14:18.120 The aggregate total was about forty percent year every year. Wow. 0:14:18.160 --> 0:14:21.400 But and I'm sort of making this simplistic, but cash 0:14:21.480 --> 0:14:24.960 buyers fell twenty percent and finance buyers fell fifty percent. 0:14:25.520 --> 0:14:28.120 And so what it meant was there's a lot less 0:14:28.160 --> 0:14:31.160 resistance to your point of cash bures. The other thing 0:14:31.200 --> 0:14:35.960 it says is that cash buyers skew higher in the 0:14:36.080 --> 0:14:39.240 sort of price strata. So, you know, one of the 0:14:39.320 --> 0:14:44.280 stories before the pandemic was Manhattan had almost eight and 0:14:44.320 --> 0:14:49.280 a half years of unsold supply, and that's including active 0:14:49.280 --> 0:14:54.600 inventory for new development. You know, unsold kind of miniums, 0:14:54.640 --> 0:14:59.520 whether actively listed for sale or in shadow inventory that 0:14:59.600 --> 0:15:02.000 the develop could sort of dip into when they ran 0:15:02.080 --> 0:15:06.560 low of sales after the pandemic. And because of this 0:15:06.680 --> 0:15:11.840 sort of the pandemic sort of introduced strength to the 0:15:11.960 --> 0:15:22.920 high end market. The share of or the activity continued 0:15:22.960 --> 0:15:25.800 to favor the high end of the market. So instead 0:15:25.800 --> 0:15:28.160 of being a market that was sort of the low 0:15:28.320 --> 0:15:30.600 end was where all the action was. It became a 0:15:30.640 --> 0:15:35.720 market with a high end was strong because this share 0:15:36.000 --> 0:15:40.880 of unsold condos fell from eight point three years to 0:15:41.560 --> 0:15:44.440 about just over three years, meaning it fell by more 0:15:44.480 --> 0:15:47.440 than half, you know, in terms of what it would 0:15:47.440 --> 0:15:50.800 take to sell off the supply in New York its dramatic. 0:15:51.080 --> 0:15:56.000 So there's normally a chain of sales the starter home 0:15:56.320 --> 0:15:58.280 you was about to move up, right, there's a whole 0:15:58.360 --> 0:16:00.360 run of this. But during the pandemic, make a lot 0:16:00.360 --> 0:16:02.280 of people just said I'm going to go buy a 0:16:02.280 --> 0:16:05.200 second home or a third home of vacation property, so 0:16:05.440 --> 0:16:07.960 I'm not stuck in a city where I can't do 0:16:08.000 --> 0:16:11.840 anything in a tiny apartment, and that really sucked up 0:16:11.880 --> 0:16:12.600 a lot of supply. 0:16:13.000 --> 0:16:18.200 Yeah, the way I look at it is in the 0:16:18.240 --> 0:16:22.920 city itself, in Manhattan and most urban centers, sales activity 0:16:23.200 --> 0:16:28.280 didn't you know, fell by half, And it fell by 0:16:28.320 --> 0:16:31.960 half because during a global pandemic and a multi family building, 0:16:31.960 --> 0:16:35.720 are you going to let strangers into your apartment? Right? 0:16:36.000 --> 0:16:42.200 The thinking was no, But in reality the buyers that 0:16:42.920 --> 0:16:47.000 zoomed out to the suburbs were largely from the rental market. 0:16:47.440 --> 0:16:51.120 Because they weren't anchored to another asset. 0:16:51.400 --> 0:16:53.200 They didn't have to sell the affluent. 0:16:53.280 --> 0:16:55.920 Yeah, they bought in the Hampton's, you know, a second 0:16:55.960 --> 0:16:59.080 primary home. I called it co primary at the time. 0:17:00.480 --> 0:17:04.840 And high end markets in you know, the county surrounding 0:17:04.880 --> 0:17:09.960 New York definitely did better. And and people moved farther. 0:17:10.119 --> 0:17:12.200 I mean, my wife and I moved half an hour 0:17:12.320 --> 0:17:17.960 farther from the city because we figured we weren't going 0:17:18.000 --> 0:17:20.000 to be going into the city five days a week. 0:17:20.680 --> 0:17:22.280 And you get a lot more bang for your buck 0:17:22.320 --> 0:17:26.400 the further away, you are, correct, So more property you 0:17:26.440 --> 0:17:29.080 live on a compound with how many different buildings that 0:17:29.200 --> 0:17:33.120 on that property in Connecticut three that's a lot of buildings. 0:17:33.119 --> 0:17:36.560 So you couldn't get that in Darien, right, We couldn't 0:17:36.560 --> 0:17:39.800 get that on the near the water or near a 0:17:39.840 --> 0:17:42.679 commuter line into the city, at least not for a 0:17:42.720 --> 0:17:45.560 reasonable price. So we'll come back to a lot of 0:17:45.560 --> 0:17:47.119 what's going on in New York and the rest of 0:17:47.160 --> 0:17:49.840 the real estate market. I just want to touch on 0:17:49.840 --> 0:17:53.320 one more aspect of your background. You're a professor at 0:17:53.320 --> 0:17:57.240 Columbia Business School teaching a course on commercial real estate. 0:17:57.720 --> 0:18:00.879 Tell us a little bit about that experience. What's the 0:18:01.040 --> 0:18:03.760 course like and what are the students like at at 0:18:04.400 --> 0:18:05.480 Columbia Business School. 0:18:05.640 --> 0:18:09.439 Well, it's it's their architecture school. It's the Masters in 0:18:09.480 --> 0:18:09.880 real Estate. 0:18:10.160 --> 0:18:12.120 So not business school, architecture. 0:18:11.680 --> 0:18:16.600 Architecture school. It's Masters in real Estate Development. And so 0:18:17.480 --> 0:18:21.280 my students are mostly in there, you know, twenty three 0:18:21.359 --> 0:18:27.800 to twenty nine, super smart and very eager to get 0:18:27.840 --> 0:18:31.920 into the business. And so what it has allowed me 0:18:32.040 --> 0:18:36.080 as a venue. I teach every summer. It's not year round. 0:18:37.080 --> 0:18:39.240 I usually have about one hundred and fifty students. During 0:18:39.440 --> 0:18:41.720 when we were zooming, during the pandemic, I had like 0:18:41.760 --> 0:18:45.000 one hundred and ninety. Which there's a lot of icons 0:18:45.080 --> 0:18:46.200 on your zoom screen. 0:18:46.040 --> 0:18:48.240 Right you go five or panels in. 0:18:48.480 --> 0:18:53.399 But the program is fantastic and I I'm one of 0:18:53.440 --> 0:18:54.920 those people that run up and down the. 0:18:54.880 --> 0:18:57.720 Aisles, you know, high five students. 0:18:57.880 --> 0:19:02.240 Yeah, talking. And the other sort of secret passion is 0:19:02.280 --> 0:19:05.120 I get to tell the same dad jokes every year 0:19:05.720 --> 0:19:08.080 because they haven't heard them before or they have, but 0:19:08.119 --> 0:19:08.600 not for me. 0:19:08.840 --> 0:19:11.320 It's a whole new crop of new audience. 0:19:11.119 --> 0:19:15.880 Victims, well students, right, and uh and and and what 0:19:15.920 --> 0:19:19.919 it's what there's nothing better than talking about a topic 0:19:19.960 --> 0:19:24.000 that you're really comfortable with and really smart people ask 0:19:24.119 --> 0:19:27.880 you questions that cause you to maybe, you know, think 0:19:27.880 --> 0:19:30.959 a little bit differently about the solution or whatever. I 0:19:31.080 --> 0:19:33.840 just I just love the experience. Columbia has been very 0:19:33.840 --> 0:19:37.200 good to me, and you know, and and I appreciate it. 0:19:37.280 --> 0:19:41.719 And the thing that I like most about it is, 0:19:43.200 --> 0:19:45.520 you know, by the end of the class and you're asking, 0:19:45.600 --> 0:19:49.040 you're asking questions like they'll answer in Unison, you know, 0:19:49.040 --> 0:19:51.800 one hundred and fifty students like like it's like locked 0:19:51.800 --> 0:19:55.359 into their brain and there's not It's totally. 0:19:55.000 --> 0:19:56.160 Satisfying that sounds. 0:19:56.320 --> 0:19:59.000 And I've been doing it for about five years. And 0:20:00.200 --> 0:20:03.760 my ritual was and they wooed me for like they 0:20:03.840 --> 0:20:05.399 spent like a year and a half, like taking me 0:20:05.480 --> 0:20:07.560 out to lunch and say you'd be perfect and say 0:20:07.600 --> 0:20:09.960 you have sure you have the right Jonathan Miller. And 0:20:11.840 --> 0:20:16.399 then I did it. And I remember I used to 0:20:17.040 --> 0:20:18.719 call my father when he was alive. I'd call him 0:20:18.720 --> 0:20:20.560 in the beginning of the class and say, hey, Dad, 0:20:20.600 --> 0:20:23.880 I just taught my class and he said, Jonathan, you're 0:20:23.960 --> 0:20:26.880 so respectable, And I'm like, what do you mean, wasn't 0:20:26.920 --> 0:20:29.720 I respectable before like, is this like put me over 0:20:29.760 --> 0:20:30.040 the top. 0:20:30.200 --> 0:20:34.840 The official im premature of society is, oh, a professor 0:20:34.840 --> 0:20:38.199 in an ivy League school, you have to be respectable, right, 0:20:38.760 --> 0:20:42.159 fun stuff. So, what's the state of real estate in 0:20:42.200 --> 0:20:43.840 the United States? What's going on? 0:20:44.080 --> 0:20:47.240 Well, what I wanted to sort of comes to mind 0:20:47.320 --> 0:20:52.240 is something that hasn't really happened in a significant way 0:20:52.480 --> 0:20:56.600 in the real estate industry. But there is multiple listing 0:20:56.680 --> 0:20:59.879 systems across the United States which are essentially a a 0:21:00.600 --> 0:21:05.760 database for real estate agents and you know, for managing listings. 0:21:05.920 --> 0:21:07.920 Who controls that monopoly. 0:21:08.200 --> 0:21:10.600 The real estate brokerage community. 0:21:10.320 --> 0:21:12.560 National Association realtors they own. 0:21:12.560 --> 0:21:16.439 They control about fifty percent of them. There's also a 0:21:16.480 --> 0:21:19.960 contingent that are anti uh you know, but but it 0:21:20.000 --> 0:21:23.640 is it is a product of the brokerage community and 0:21:23.680 --> 0:21:28.560 it is an essential tool to them. And so this 0:21:29.000 --> 0:21:33.800 recently one of the big there's three or four major 0:21:33.880 --> 0:21:38.040 software companies that drive the MLS systems. Core Logic is 0:21:38.040 --> 0:21:42.119 one of them, with Matrix, there's Flex MLS and a 0:21:42.119 --> 0:21:48.159 big one is also Rapatoni and Rapatoni uh just had 0:21:47.280 --> 0:21:53.120 a ransomware attack and they power MLS systems. Like in 0:21:53.280 --> 0:21:58.440 the Midwest, like Cincinnati and San Francisco and a few 0:21:58.440 --> 0:22:03.040 other markets, and they can't you know, they're stuck sort 0:22:03.040 --> 0:22:06.000 of like what happened in I think it was Suffolk County, 0:22:06.359 --> 0:22:10.840 the ransomware attack on public records, where these people make 0:22:10.880 --> 0:22:14.280 a living out of using MLS systems and they don't 0:22:14.320 --> 0:22:17.359 have access or there's lots of problems. And I just 0:22:17.400 --> 0:22:20.520 thought about you know, you know, big data and the 0:22:20.560 --> 0:22:23.399 real estate community, and then you start seeing the you know, 0:22:23.440 --> 0:22:27.120 there's more things go online, you're more vulnerable to attack, 0:22:27.320 --> 0:22:30.200 and and that's a real problem for. 0:22:30.560 --> 0:22:34.359 So I imagine things like Zillow and Redfinn are almost 0:22:34.480 --> 0:22:35.600 powered by MLS. 0:22:35.640 --> 0:22:40.520 Is that like they get their data you know, various ways, 0:22:40.560 --> 0:22:43.920 but yeah, you know, like it could create who knows 0:22:43.960 --> 0:22:49.439 how long this this will go go on, and and 0:22:49.480 --> 0:22:53.000 it's you know, the MLS looks bad because hey, you 0:22:53.080 --> 0:22:54.840 got you know, shut down. 0:22:54.640 --> 0:22:55.640 But anybody could get hacked. 0:22:55.680 --> 0:22:59.040 But anybody could get hacked, right, So there's no real 0:22:59.080 --> 0:23:01.560 answer yet what they're going to do. And I just 0:23:01.640 --> 0:23:06.639 I've never heard of a situation where you know, you know, 0:23:06.720 --> 0:23:11.080 that's going to really impact the transactional volume in these markets. 0:23:11.160 --> 0:23:15.000 Huh, amazing we're talking with Jonathan Miller about the state 0:23:15.400 --> 0:23:19.520 of US real estate. So, so Jonathan, tell us what's 0:23:19.560 --> 0:23:22.840 going on in the United States with residential real estate 0:23:23.280 --> 0:23:23.840 right now. 0:23:23.880 --> 0:23:27.520