The Real Deal New York

Cheap lobster, courtesy of subprime lending

To stats guru Jonathan Miller, lobster fishing has been food for (real estate) thought
By Katherine Clarke | October 31, 2011 06:45PM

Jonathan Miller shows off his catch.
Most New Yorkers know appraiser Jonathan Miller as the statistics guru who produces quarterly market reports for Prudential Douglas Elliman. Few realize that he’s also a lobster fisherman.

But Miller, the CEO of Miller Samuel Real Estate Appraisers, says the two vastly different specialties sometimes go hand in hand — or claw to claw, as it were.

It all started in 2005, when Miller decided lobster fishing would be a fun activity for his four sons while aboard the family boat, which is anchored on Long Island Sound near their home in Darien, Conn. So he got his lobstering license.

At first, “we were terrible,” Miller recalled. “We averaged about one actual lobster per summer, catching mostly spider crabs and flounder.”

The catch may not have been particularly successful, but it provided Miller with plenty of food for thought. And after reading the book “The Secret Life of Lobsters” by Trevor Corson, Miller began noticing connections between the U.S. lobster-fishing industry and the subprime lending crisis. He has since written about the industry on his housing blog, Matrix, and frequently uses this “lobster-infused market analysis” when discussing the financial crisis, he said.

For years, Miller explained, U.S. fishermen have ensured hefty harvests by releasing egg-bearing lobsters back into the wild. By the 1990s, they were catching more lobsters than the market could sustain, so they began selling part of their catch to Canadian processing plants for worldwide distribution.

But because these Canadian plants were financed by the Icelandic banking system, they were crippled when Iceland’s economy collapsed in 2008 as a result of the subprime lending crisis.

Ever since, the U.S. market has been flooded with excess lobster, Miller said. The wholesale price of lobsters crashed from a peak price of about $10 a pound in 2006 to a mere $2.25 today, according to data compiled by CNN. As a result, lobster mashed potatoes and lobster mac and cheese now appear on menus all over the country (not to mention the spate of new lobster roll joints in New York City), for much cheaper prices than before.

Unlike the crippled housing market, however, this now-affordable seafood is one of the few positive results of the financial crisis, he said.

Cheap lobsters, Miller said, are “one benefit of subprime lending.”

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