Where’s the homebuyer boom?

Appraiser Jonathan Miller, other industry experts discuss future of real estate

TRD New York /
Feb.February 28, 2012 01:30 PM

Why aren’t more people buying residential real estate? That was a question posed today by Jonathan Miller, CEO of the appraisal firm Miller Samuel, at the third annual breakfast forum organized by the New York Law School’s Center for Real Estate Studies.

Miller was one of four industry experts — along with Stuart Saft, chair of Dewey & LeBoeuf’s real estate department; Diane Ramirez, president of Halstead Property; and Lockhart Steele, founder of the blog Curbed — asked to whip out their crystal balls to discuss the future of New York City real estate at the law school’s campus at 185 West Broadway in Tribeca.

“Why aren’t we having the biggest boom in history right now?” Miller continued, noting that mortgage rates are at record lows and homes across the U.S. are more affordable than ever, as a S&P/Case Shiller report released today shows. Miller’s theory is that mortgage rates should be raised, since now they are too low to provide banks with an incentive to risk lending to homebuyers who are not “quadruple A.”

But to Saft, the problem is not mortgage rates — it’s that individuals lack the confidence to make such large purchases, partly because the value of residential properties is unclear. “The problem is that people are uncomfortable,” he said. “They’re nervous.”

Still, Saft didn’t appear to share their hesitancy. “All of you should leave this room immediately and go out and buy something,” he told the assembled crowd of about 185 law school students, attorneys and brokers.

When Ramirez took the podium, she took Saft’s encouragement a step further, playfully pointing out all the Halstead agents in the audience who could help them buy something. “I am extremely bullish on real estate,” she said.

Later, Ramirez told The Real Deal that individuals are, in fact, buying homes, but at a more normal pace than during the boom years. As for Miller’s suggestion that mortgage rates should be raised, she said they could go higher without impacting people’s buying choices, but that borrowing money should be cheap.

Steele was on hand to discuss the transparency that his fellow real estate bloggers have brought to the industry, arguing that his publication’s habit of posting numerous small news items over the course of a week allowed for a “richer narrative” than a single, longer report.

“Anyone who wants to be contributing can be contributing,” Steele said, echoing comments he made at The Real Deal’s seventh annual forum in November, when he debated Frederick Peters, the president of Warburg Realty. (Saft also appeared at the forum.)

While Ramirez acknowledged that she is friendly with Steele, she criticized the blogosphere’s widespread policy of allowing readers to comment anonymously. (The Real Deal recently instituted a new policy requiring commenters to log in before posting on the website.) “If they think that’s transparency, then gossiping behind someone’s back is transparency,” she told the audience. “That’s the one element I would like to see changed.”

Real estate blogs have also made already tricky debt restructurings that much more difficult, Saft said, although he added that his strategy is to ignore what gets printed, rather than fan the flames.

The event also gave the panelists a chance to look back on last year’s forum, when Miller apparently discussed shadow inventory.

Since the last event, much of those residential units have been re-priced or repurposed, including the many luxury condominiums converted to rentals, Miller said. But 2011 also saw an artificial reprieve for inventory levels since the so-called robosigning scandal halted many foreclosures, keeping up to a third of the available housing stock in the U.S. off the market.

Nationwide, sales activity is starting to rise but prices are falling, Miller said, meaning the market is better off than a year ago but still has a way to go to a full recovery.

“When I was growing up,” Miller said, “recovery meant getting better, and now recovery means not getting worse.”

In the city, the market is moving sideways, Miller said, and Sanford Weill’s sale of his penthouse at 15 Central Park West, which went into contract in December, reportedly for the full $88 million asking price, is not a benchmark.

“It’s a great, interesting story,” Miller said of the sale, “but we’re getting a lot of trophy sales over the last year and a half, and let’s be clear: a transaction like that represents not the top 10 percent of the market, not the top 1 percent of the market, [but] the top 0.25 percent of the market.”


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