Jonathan Miller on High Mortgage Rates

This is Master's in Business with Barry rid Holds on Bloomberg Radio.

This week on the podcast, our returning champion for the sixth time, my friend Jonathan Miller. He is founder and CEO of Miller Samuel, where he has been covering the real estate market for the better part of forty years. Not only is he an appraiser, he's pretty much been in every single penthouse in Manhattan. Some of the stories he tells. I couldn't get him to coax out stories about David Bowie and other celebrities, but I've heard them

Oh great to be here. It feels like I've been here before.

You're a returning champion. I think this is your fourth, fifth something, sixth, sixth. So every time there's tumults in the real estate market, my instinct is always to say, let's get Jonathan in here and talk about what's going on in the real estate world. To talk about what's going on in real estate before we get to that. For the people who might not have listened to the previous five conversations we've had, why don't we just delve a little bit into your background, starting with you said

Well, Actually, I moved to New York in the mid eighties, and because my parents had moved here and my sister had moved here, and they're saying this is incredible. I grew up in the DC area and was living in the Midwest, and my wife and I came to a wedding here and were completely hooked. Within three weeks, we sold our cars and moved and slept on my parents' apartment one bedroom apartment floor. Within three weeks of our visit here. We just wanted to be here, and there's no regrets. We love it.

The nineteen eighties New York area was kind of transitioning from yes, the really dumpy seventies to hey, the eighties and the nineties were kind of a boomy are you yeah?

Yeah?

What was that transition like?

Well, when we moved and we went through we basically you got the ideas of family to start a real estate appraisal business. We'd actually raised money from Japanese investors through an attorney to start a real estate brokerage firm and got to the bottom of the form where you had to sign the dotted line and said no, let's do appraisal. It was just like it was, you know, just this sort of odd moment where we really didn't want to become real estate brokers, and we had real

Wow, that's amazing. So before we get to the pandemic, which obviously had an enormous outsized effect on real estate, let's talk a little bit about the financial crisis in the mid two thousands. A lot of real estate companies crashed and burned. Then how did you manage through the GFC and what sort of world were we existing in back then?

Well, actually I thought leading up to the Great Financial Crisis, I thought to myself, we're going to be out of business within a couple of years because nobody wanted an independent valuation. Everybody knew the number but the appraiser, and so the system incentivized mortgage brokers to hire the appraisers that made the numbers for them because they wouldn't get paid until the deal closed. And we weren't morally flexible,

It just sometimes takes a while for people to realize that the painful thing they're hearing. You know, when there's a lot of pushback, it's because you're telling people things they don't.

Don't want to hear, and they're invested in old way. And in fact, when I started going negative on the market, I remember being in a New York Times front page story about prices dropping x percent, and I remember a real estate brokerage CEO to remain nameless, called me and said, what are you doing? You know, and you know this is wrong? You know you can't talk, and I said,

It's always a great time to buy or sell, right. Do you remember that ad the association.

He wrote a piece about I might have Yeah, where there was like one month out of like the last twenty years that it wasn't a good time to buy. It was.

It was great. Listen. It's always a good time to generate a commission if you're a commission real estate agent, which course, and my mom was a real estate agent, so this was always dinner table conversation. Like you, she wasn't afraid to call people out. The fascinating thing is we'll talk a little bit more about the appraisal industry in a bit. But back then appraisers were not really helping the buyers. They were just helping the brokers get a bank loan through the process.

Well yeah, sort of. I mean essentially, what no one understood in the industry and still don't understand today in the real estate industry is that the when appraiser is doing an appraisal for the buyer that's getting a mortgage, their client is actually the bank. And so now there's all kinds of restrictions post DoD Frank introduction to the to the process, where you know, people can't talk to you like they could.

Back in the day. Hey I have we're paying this, and here's how much my mortgage is.

This is what I need right?

Keep it fits like Rodney and Caddyshack. Well I just keep it.

I The term back then was here's a good apprais or good in air quotes, and good translated into making the number.

So I was always shocked at the idea of quote unquote comparables. If you're in an upward price spiral that is essentially a mortgage driven bubble, what good are comparables? Hey, this house down the street is overpriced thirty percent. Give these people a mortgage for a house that they pay thirty percent too much doesn't make a lot of sense.

Yeah, the challenge is that, you know, when we're looking at valuation of a property, we're looking more than price. Price is sort of the caboose at the end of the train. Leading indicators would be contract activity and listening inventory sort of transaction based rather than price based.

And so I would imagine that would tell a bank, hey, if this buyer defaults on this mortgage down the road, the collateral looks.

Like the collateral won't be adequate in or of view or could would. There wouldn't be a perfect example. That is sort of the when you apply like the Greater Fool theory to South Florida real estate in the eighties, where it was all about carpenters and nurses flipping, you know, quitting their jobs and flipping real estate and becoming you know, making a lot of money, and then they would turn around and sell it to somebody else for double and

In fact, in five and six people don't you know, people were not familiar with the history of the financial crisis. Price is peaked in i want to say summer of six, and volume peaked in five, correct, But the market didn't start to stumble. Market peaked in October seven, so you still had a full the stock market. So you had a full year or two after housing topped before it started to show. And really the heavy stuff didn't start in Toil eight.

The answer to that question is always consumers when there's when they they're uncertain, they pause, and so you see the transaction volume drop, but the pricing that's the greater full theory, right, continue until there's no more buyers, and then the price is correct.

So now let's flip that question and talk about the sellers, because we're only in a little bit of a challenging market for both buyers and sellers. Not enough inventory, mortgage rates are much higher. It seems like sellers are always operating at a six to twelve month leg, maybe even longer one to two years, one to two years, so they're always a year or two behind the price, which when things start to slow down and prices start.

To roll over, they don't adjust quickly.

They really don't. And I'm genuinely shocked at when I look at some prices, I'm like, hey, that was the right price in December twenty twenty one, right, but that ship is sales.

Well it's funny you say that because in the beginning of this year, when people said, what do you think twenty twenty three is going to be, Like I dubbed twenty twenty three the Year of disappointment because people weren't going to get their twenty twenty one price. The sellers weren't, but the buyers weren't going to see a substantial savings

How many of those transactions were cash transactions where mortgage rates are relevant.

Right, So, so in Manhattan, the second quarter had the highest market share of cash transactions in history. Two thirds of the transactions, about sixty five percent.

Amazing.

Now, what's interesting if you dig a little deeper, is that the it's not that the whole world is just paying cash. It's that the number of transactions for cash bures and financed buyers both fell sharply year over year. The aggregate total was about forty percent year every year. Wow. But and I'm sort of making this simplistic, but cash buyers fell twenty percent and finance buyers fell fifty percent. And so what it meant was there's a lot less

So there's normally a chain of sales the starter home you was about to move up, right, there's a whole run of this. But during the pandemic, make a lot of people just said I'm going to go buy a second home or a third home of vacation property, so I'm not stuck in a city where I can't do anything in a tiny apartment, and that really sucked up a lot of supply.

Yeah, the way I look at it is in the city itself, in Manhattan and most urban centers, sales activity didn't you know, fell by half, And it fell by half because during a global pandemic and a multi family building, are you going to let strangers into your apartment? Right? The thinking was no, But in reality the buyers that zoomed out to the suburbs were largely from the rental market. Because they weren't anchored to another asset.

They didn't have to sell the affluent.

Yeah, they bought in the Hampton's, you know, a second primary home. I called it co primary at the time. And high end markets in you know, the county surrounding New York definitely did better. And and people moved farther. I mean, my wife and I moved half an hour farther from the city because we figured we weren't going to be going into the city five days a week.

And you get a lot more bang for your buck the further away, you are, correct, So more property you live on a compound with how many different buildings that on that property in Connecticut three that's a lot of buildings. So you couldn't get that in Darien, right, We couldn't get that on the near the water or near a commuter line into the city, at least not for a reasonable price. So we'll come back to a lot of what's going on in New York and the rest of

Well, it's it's their architecture school. It's the Masters in real Estate.

So not business school, architecture.

Architecture school. It's Masters in real Estate Development. And so my students are mostly in there, you know, twenty three to twenty nine, super smart and very eager to get into the business. And so what it has allowed me as a venue. I teach every summer. It's not year round. I usually have about one hundred and fifty students. During when we were zooming, during the pandemic, I had like one hundred and ninety. Which there's a lot of icons on your zoom screen.

Right you go five or panels in.

But the program is fantastic and I I'm one of those people that run up and down the.

Aisles, you know, high five students.

Yeah, talking. And the other sort of secret passion is I get to tell the same dad jokes every year because they haven't heard them before or they have, but not for me.

It's a whole new crop of new audience.

Victims, well students, right, and uh and and and what it's what there's nothing better than talking about a topic that you're really comfortable with and really smart people ask you questions that cause you to maybe, you know, think a little bit differently about the solution or whatever. I just I just love the experience. Columbia has been very good to me, and you know, and and I appreciate it.

Satisfying that sounds.

And I've been doing it for about five years. And my ritual was and they wooed me for like they spent like a year and a half, like taking me out to lunch and say you'd be perfect and say you have sure you have the right Jonathan Miller. And then I did it. And I remember I used to

The official im premature of society is, oh, a professor in an ivy League school, you have to be respectable, right, fun stuff. So, what's the state of real estate in the United States? What's going on?

Well, what I wanted to sort of comes to mind is something that hasn't really happened in a significant way in the real estate industry. But there is multiple listing systems across the United States which are essentially a a database for real estate agents and you know, for managing listings.

Who controls that monopoly.

The real estate brokerage community.

National Association realtors they own.

They control about fifty percent of them. There's also a contingent that are anti uh you know, but but it is it is a product of the brokerage community and it is an essential tool to them. And so this recently one of the big there's three or four major software companies that drive the MLS systems. Core Logic is one of them, with Matrix, there's Flex MLS and a big one is also Rapatoni and Rapatoni uh just had

So I imagine things like Zillow and Redfinn are almost powered by MLS.

Is that like they get their data you know, various ways, but yeah, you know, like it could create who knows how long this this will go go on, and and it's you know, the MLS looks bad because hey, you got you know, shut down.

But anybody could get hacked.

But anybody could get hacked, right, So there's no real answer yet what they're going to do. And I just I've never heard of a situation where you know, you know, that's going to really impact the transactional volume in these markets.

Huh, amazing we're talking with Jonathan Miller about the state of US real estate. So, so Jonathan, tell us what's going on in the United States with residential real estate right now.

The focus has been, you know, the the inventory challenge and the doubling of mortgage rates. I remember in the beginning of the FED pivot now a little over a year ago now, where you know, we started to see rates go up. There was this thinking within the real estate community or just people that sort of you know, tracked real estate, weren't necessarily brokers, that we were going to see, you know, when rates fall again, then everything

That's assuming Goldman is right correct. Everybody's been forecasting incorrectly about recessions about rate cuts. So let's talk a bit about I want to talk about rates, and I want to talk about supply. Let's start with rates. So two years ago, not even a year and a half ago, mortgages thirty or fixed you could get as low as two point seventy five. Now they're about seven and a half percent. How big of an impact has this had on prices, on transaction volume, and on inventory for sale?

So the idea that a rapid slowdown in sales, that's the first. You know, sales, generally, depending on the markets, are down twenty to forty percent every year, but transaction volume units that's sold. But it's important to remember that a year ago was a rocket ship. You know it was. It was an anomal historical anomaly.

It wasn't in anticipation of rising rates. A lot of people bought and sold property.

In a significantly higher volume than would be considered a normal volume in every market. And and so we're coming off of that high. So year year comparisons make it look like, you know, you're down forty percent, but you were up fifty eighty percent a year ago over the prior year.

Rue, So what does this look like compared to the pre pandemic average?

Where are we We're depending on the market, we're generally about compared to say, second quarter nineteen compared to second quarter of this year, we're down about, you know, in the twenty to thirty percent range from normal. What's really interesting in what is so different is, yes, you have

There are no signs of capitulation out there, are they.

There's we're starting to see a little bit, but not not in any significant way. I'd say, you know, we were a year in, so I'd say we're going to start seeing it in terms of better pricing over this next year. But nothing dramatic would be my guess.

So let's come back to this inventory question. There are two issues there I want to go over. One is the footprint of people with you know, golden handcuff mortgages. The data point I read recently sixty one percent of homeowners with a house with a mortgage have a rate that's at four percent or under correct. What does that mean These people just aren't putting their houses up for sealing a well?

I think first of all, the first thing that tells you is that if mortgage rates drift meaningfully lower, and by meaningful I mean you know in the high fives certainly I'm not talking about fours or three percent range, then you're going to see inventory enter the market.

Which would be good for inflation, and good.

For good for inflation, good for you know, pricing for new homeowners because there'll be more competition, and and frankly, at this time, the only thing I see of bringing rates down, you know, besides a recession, which you know, we've been forecasting a recession in the next six months for the last couple of years, is you know, the idea that we're going to see you know, the FED at some point, perhaps soon, is going to stop, you know,

Right, So let's talk about new inventory because that's something I've been railing about for a while. Post Great Financial Crisis, home builders were felt burnt because they were building a lot of houses, they were speculating. A lot of them got caught leaning the wrong way and they kind of pivoted to away from single family homes towards multi family

Yeah, millions, millions, And.

So the National Socition and Realtors have a number. Of the National Association of home Builders, they're like four or five. The Architectural Group, I forget the name, they all have thrown out numbers two, three, four, five million home short for that seems huge.

But it's actually probably worse than that.

In the population growth.

Yes, well, no, it's it's more more because if you look at the product that is being built in all the national home builders in the last ten years, they've really there's been a lot of pivoting to higher end homes, luxury homes, and so when you look at just raw units, they're skewed higher end. So I'd say there's a much more severe inventory challenge for starter homes first time buyers. Then we really give credit for it that it's the

I'm shocked when I play around with Zillo. Everybody loves the Zillo surf, and the percentage of homes for sales are essentially lots with new construction on ye and it's not you know, and they'll they'll build it to suit, but you're not buying a house, You're buying a piece of land and a builder, right, And that seems to be especially in parts of Florida. The Hampton's that that seems to be a wildly disproportionate amount of.

It's not of inventory, it's it's not conducive for a first time home buyer environment, you know, to do that because of lending challenges. The other thing I thought was, you know, the numbers that have come out, I may, I don't know if I have this exactly right, but that the number of homeowners in the US with a without a mortgage is like thirty five percent.

Pretty big. It's so it's everybody who does cash purchase and every.

Which towards investors and then long term homeowners where they've paid down the mortgage. But you know, so you think about transactional volume is being restrained by high mortgage rates. But you you do have a large cohort of the housing inventory that is or a potential inventory that doesn't have a mortgage issue with it, which I think is something that's probably not understood.

So so how many new homes have to be built to sort of stabilize demand for both starter homes and move up homes versus the inventory.

That well, it's funny I interface a lot with the affordable housing industry here in New York because our research is you know, open market. It's not you know, we're not looking at subsidized housing or anything along that line. And uh, the mantra when you talk about like how many more to build, the answer across the board is I don't know, but a ton.

More like literally millions of new homes.

Yes, like you know that that this is this is the this is the problem.

So let's talk about a specific new home building problem. How difficult are zoning regulations, Health Department, Department of Environmental Conversation, conservation, just general nimby to the ability to put up a decent number of houses.

It's significantly challenging. What I find, just maybe as a sidebar to this is on top of that, when you think of things like flood insurance and the cost of flood insurance, FEMA prices flood insurance basically at a level that the private market can't compete. And so in many ways, the federal government is encouraging development in in flood zones. In flood zones, and flood zones are not just on

Uh what just happened in Vermont and Hampshire. They got slaughtered up there.

Yeah. So I know, I see ads on TV for FEMA and it's cheap, and I'm like that that seems counter to sort of public safety. You know, a dozen or almost a dozen years ago, when we had Superstorm Sandy hit, you know, one of the by products I know, I'm going off on a tangent.

Well a decade ago that was a that destroyed huge swaths of Jersey and New York and just up and down.

All the Long Island, the south shore, and uh, what came out of that is a lot of product that was destroyed was middle class housing and so the resulting product on the waterline. And they rewrote the the FEMA maps for the New York City metro area, making them much much bigger coverage area. And politically it was shot

What I've noticed on the south shore of Long Island, both in Nassau County and out in the Hampton's is when you are rebuilding a destroyed house, seems the rules are you have to elevate that house, yes, ten or thirteen like substantial, like a whole flight of stairs up and every that's underneath that is just outdoor storage essentially correct with breakaway walls, but cement pilings holding the house up on the assumption that there's going to be another storm that will raise water levels five.

And that's how they can continue to get flood insurance. So neighborhood where I used to live, the neighborhood next to me in the next town over was on the water. We kept our boat there and you'd see a house that was, you know, normally just sitting where it was sitting before sandy, and then you saw the houses on either side were like on ten foot pilings. Imagine the garage now on the second floor right.

Well, a lot of these houses, no basements, no garages, right, but there's a like a car port, right, the assumption that if your car gets washed away, Hey.

It is what it is. It just but it was almost comical to see all these garages on the second floor and you can't really get your car up there. So it's obviously going to be redesigned and made into some of these.

So these are existing houses, Like think.

Of a raised ranch with a two car garage on the side. Now the whole thing gets raised up to the second floor, so it's really a three story structure, right, pilings and place to park your car the first floor which is now the second floor, which is where the

Huh, that's amazing that there's a house near by. When my in laws live out in the Hampton's and I'm like, I'd like to take a look at that house. So Saturday morning, I call the agent and or I do an online request I'd like to see the house, and the text comes back the seller requires twenty four hours notice. And I just remember my mom saying, Hey, a buyer wants to come look at your house. I don't care if you haven't a wedding. Send everybody their story over

Correct.

And I was like, well, you know, we could try tomorrow, but you know, let us know. They get back to us on Wednesday. Yeah, and I'm like, we already have an offer in on another house, but thanks.

Yeah for the call. And yeah, because because really, especially even more so today than a year or two ago, you have to be bend over backwards in a position as a seller to be accommodating. You don't control well, I shouldn't say that you do, because there's a short of of listings. You still have control of the transaction in that sense, but it's you don't have the same level of control you had a year year and a half ago, but not a that as your mother was

It evinces the wrong attitude for a seal listen. I've owned a bunch of property in and about New York over the years. I've had some terrible sellers we've purchased from walked away from deals. There are other sellers that but from my wife, the deal never would have gone through. And there have been other sellers who've been and buyers who've been a pleasure to deal with, Like I wish I had another house to sell. You. You've been a delight. And so when the first like it just rubbed me

Well, it's funny, you know, in this in this market, like we sold right as the market pivoted. I remember, and my wife always kids me about being overly eager to pay full retail. And so we went into the house that we ended up buying. We ended up paying that we beat thirty people.

You paid way over ass only.

Thirty six percent.

Although I did they price it low to yes, I think frenzy and you you gave it a straight up appraisal.

Yeah, I thought it was about fifteen percent underpriced and.

You overpaid by fifteen percent.

Right, right, And but I don't really care.

Is the house you're going to live in for the rest of your life, You're done.

It's just giving me a long time. And also too, we just absolutely love it. And I've never looked at it as an investment vehicle housing itself. It's just a slow moving asset. And right, I in fact, the last three houses I haven't paid under the ask we had interesting yeah, yeah, because of the timing that it came on, and it was like, you know, I always seem to we're ready to move, like we became empty nesters. That's

And over the court. Here's the crazy thing, especially if you're rolling out of a similarly priced house. Yeah in the and I've had this argument with my kid brother, who you know, he just looks at the transit. It looks at a very transactional yeah, and every dollars and cents and I'm like, think about it. If you're in that house for twenty years and you overpaid twenty percent in the grand scheme of.

Things, does it matter.

It's really not seeing people have a very hard time wrapping their head around that. Nobody wants to overpay for anything. But this isn't a car or a piece of furniture that right, This is where you're going to live, where your homestead is going to be, where your heart is for you know, the next couple of decades, a couple of bucks one way or another. And I know that sounds flippant, but it isn't.

No, I mean that's how we thought about it. It was perfect. And we were joking because our old house was built in eighteen twenty five and this one's built in seventeen fifty five.

You're running out of centuries to buy house, right, we wanted to take. Next one is sixteen.

We really wanted to get something that was built before the US was a country.

So let's talk a little bit about the rethink that the pandemic caused, how it changed our relationship with real estate, work price. This is where to even begin. It's just such a giant topic. Is it safe to say the pandemic caused us to rethink everything about real estate?

I think that's a fair description. In fact, I think the easiest way to sort of start talking about the sub subject is the idea that zoom became ubiquitous within twenty four hours after the lockdown. Suddenly everybody in the world knew what zooming was, and you'd probably never heard of the software beforehand. While there had certainly been there's other video products, this was far easier to navigate and

Not the work, and it's not even the office. It seems to be the commute. It's the kid the biggest problem. And I think the pandemic kind of made us realize a lot of us have a too long commute and

It's time out of your life that you can't get back.

That's gone.

The other thing I think right away, uh, the the sort of stereotypical description of work from home was suburb to city. You know, people moved out of the city, they bought you know, they they lived with relatives, or they you know, bought houses or rented and then commuted via zoom into their their job in the city. The problem with that, first of all, it's completely misleading. Uh there's I contend there's just as many people in the Upper East Side of Manhattan that were we're doing work

A lot more flexibility, a lot, a lot easier feel, and at least in the beginning of the pandemic, it felt like, and maybe I'm projecting my own experience, it felt like I was working more hours than I normally would because I gave up, I gave up the commute, I gave up bathing, I gave up getting dressed, roll out of bed. You sit at your desk and my wife would say, hey, you've been there for fourteen hours. Time time and it's like we used to joke we

Yeah.

Right, And it's just we we don't have the sort of mass trends that they have in Europe.

Yeah, and I think, you know, there's there's people that have the opinion that we're going to revert back to let's call it four and a half days a week, you know, where like you know, weekend schedules, people work half days on Friday, but just you know, call it four and a half days a week. And I contend that, you know, we're probably you know, if I had to make up a number, I'd say we're at two and a half to three days a week as an average.

So. Let's talk about some other impacts of the pandemic. You you were one of the first people who wrote about, Hey, the death of New York City has been greatly exaggerated. And you know, every time there's a sale. I actually just shared a silly article with you from the New

Well, that New York Post is one that had that article. That was just a brilliant move, you know, forgetting you know, attention, because it was so you know, you have a nightclub owner saying not only saying New York is dead, they added new York is dead forever, right, like you know proclamation.

He'd say his name James Altoucher, Yeah, which ultimately led to Jerry Seinfeld's counter argument and between al Tooscher and Seinfeld. I'm in Seinfeld's camp absolutely. But now let's talk specifics and let's put some meat on the bone. You discussed how there's been a huge influx of purchasers and renters, yes, of young people coming from other parts of the country, other cities. What's going on in the in the New York City real estate market.

Well, it's really interesting if you look at the census data, because you know, I think you know, the term migration can take, you know, all kinds of connotations in the in the context of New York City. The concept of net migration. You know, what's the what's the difference between inbound and outbound? And in twenty twenty two, according to Census, Manhattan had a net inbound matan Manhattan, other Burroughs had a sharply a sharp drop in the outbounds, meaning that

So only there was a solution to be worked out.

Right, right, So you know, the solution's talked about a lot is this idea of converting unused office space to rentals.

Which post nine to eleven down in the Wall Street area of New York. It took a couple of years, but there was a massive conversion office to Now those were older buildings.

Right, Class B or C.

Right now you have just so you have Midtown South, you have Hudson Yards, you have the High Line, you have Midtown proper. There's a ton of new office buildings that you put up in the past decade.

But the numbers don't work like to convert them to residential. Any developer will pretty much say that's not possible.

But on the marginal to me, after the bankruptcy sale, see if it.

Makes more, Okay, So that's the next stage. So so when you think about it, and you know, my company was looking for new office space, we ended up staying in the same space, got a great deal, build out and all that. But what we found when we were looking at we're looking at Class B. You know, there's a B and C for those that aren't familiar, and really the upper half of class A isn't going to be impacted in significant way. It's the bottom half of A and B and C. It's all bets are off right.

And to keep in mind the people are concerned about this being a systemic threat. I keep seeing these clickbait headlines. Every one of these buildings is its own LLC, its own corporation. Right, So if you're a giant real estate trust and you own a thousand buildings and one building is in trouble, well, if that building goes belly up, it's like oops, sorry, and on to the next. So now you're down to nine hundred and ninety nine buildings

To strong and that's where you could see you know, more creative you know, adaptive reuse where the you know, the new owner is able because they don't have the same level of debt service.

So prices can come down or.

Coming down to market and you know, you can you know, you know, think of other reuses of the property. What I uh, you know what. Also a lot of people don't realize don't think of it when they think of this challenge is especially in midtown Manhattan where you have these very big office buildings. The floor plates.

Too far from the windows to be right unless they replace all those elevators with like interior courtyard.

Right right, or you know, they they they create you know a court, you know, sort of like an al you know, a center. They dig, they cut out, cut through the floorest but that's very expensive, right, so so there's ways around it. But it is not like one of these hey, let's flip the switch. It because of the debt service. It's gonna this is going to take four or five years at a minimum to sort of see it.

But it'll eventually. One assumes market forces will eventually rebalance the demand for office space correct is falling, and the demand for residential, which seems to be strong paining.

Yeah. Actually, the joke during the pandemic is Manhattan's just becoming all residential, right, Everything's going to convert to residential. That was sort of the thinking.

Think about how crazy it is how much new office space hit the New York market right before the pandemic. Hudson Yard Yards is millions and millions of square feet. And by the way, if you haven't been there, it's it's spectacular. Yeah, it's fantastic. It's like the new version of Rockefeller Center. And every time I see a new building going up somewhere, you're like, wow, that's huge. I walk by the JP Morgan Chase building all the time, and they seem to not care about the excess office space.

I think part of that, though, too, is that there's like a four year five.

Year leads started in twenty eighteen.

Exactly right, So, but that's part of it. Yeah, like the long term view, but I look at it as when so the big problem or big challenges New York City's budget, over fifty percent of revenues are real estate related, really, and so I don't know what the division is the breakout is for commercial specifically, but it is it is inherent in our revenue structure for real estate to succeed. And even before the pandemic, we had changes in laws like the mansion tax, the rent law changed so that

Right back when we had Deblasio and Cuomo, they both despised each other, yes, and there was no cooperation. One would hope that the new mayors and the new governor get along a little better and would allow us to make some rule changes. So let's talk about you mentioned and migration. There has been a general shift lasting decades towards the sun Belt. I think it was Steve Johnson wrote about how air conditioning made this possible, Like people don't want to live in Louisiana without AC or at

Yeah. The way to think of Florida, the way I think of it without sounding like I work for the tourism bord of Florida is the real estate industry down there because of work from home is undergoing restructuring that it's sort of evolving from a place you go to vacation or visit to a place that you live. And what is remarkable about some of the towns or cities in Florida is they now hire employees specifically to recruit CEOs from the Northeast who then will bring their companies

I had a buddy who runs a bond shop, and about fifteen years ago he relocated to Sarasota, Florida, and he said John Corzine, then governor of Florida, of Newton, New Jersey. He said, John Corzine bought me a house in Florida, meaning his taxes had gone up so much moving there was was pless transaction. Although that said that

It's a tough balancing act. You know. You can certainly see in housing prices that there's even with all the building that's going on, there's inadequate supply. The focus seems to be on other institutions that create employment, like healthcare, you know medical, you know tech medical type services. There's been a lot of emphasis on sort of competing with

So there's been chatter about you have this big surge down to Florida, and now some of that's begun to reverse and people have come back. There was a hilarious article in Bloomberg where they were quoting a trader who had relocated temporarily to Florida, and the line that stood out was the only problem with living in Florida is all the Floridians, right, And I thought that was hilarious. And some of these folks have been coming back to

I don't. I think it is real. It's probably exaggerated. Well, it is exaggerated a bit, but it's clearly something that changed during the pandemic. And the reason why I say that is in two thousand January first of twenty eighteen, the federal salt tax was initiated. It's you know, I used to think salt stood for state and this would be like one of my local tax Mike Columbia student jokes. You know, I used to think salt tax stood for assault,

Was well, the takeaway about what does that do to the so called high tax blue states? Yeah, and is the jiu jitsu that benefits the low tax red states?

Right? So the thinking was when that law went into effect January first of twenty eighteen, that you know it was going to be like the Beverly Hillbillies packing up and like going to Florida. And the brokerage community was all telling me, you know, we're sitting there, we're waiting, and it it didn't happen at scale. It was definitely noticeable, but it wasn't this mad gold rush. When the pandemic hit, that was what really stimulated the migration, whether it was temporary or full time.

So where a price is stabilizing, I look around, I see Florida isn't the bargain. It once was cheaper than New York but not as cheap as it once was. And when you look at so Florida loves Homeowners Association fees between the state real estate tax and hoa's, Florida doesn't seem like much of a bargain where a price is stabilizing and where's some value left.

So I would what's a little different. And why I call Florida going undergoing this restructure rather than it being some sort of fluke or high moment in price and then it's going to go down, is because of work from home, as I said, And part of what's happening is the market is maturing, it's pivoted into there's a

And you used to used to put out a chart tracking yeah yeah, fifteen million, yeah.

Yeah yeah. And you know I put into my newsletter periodically, and you know it used to be something, you know, over fifty million dollars was like La and Manhattan and the Hampton's and maybe an occasional sale in Palm Beach. Now it's you know, dozens of markets in in Florida in general are seeing these transactions. It's much more I'm just thinking of that as a proxy for sort of sort of this discovery of Florida is much more broad based than Hey, Miami in Palm Beach. That's that's it.

Although if you've ever been in Florida in July, you would question, question.

I do have one of my my oldest son, got a great job offer and he works in Fort Lauderdale, coming from Connecticut, and he likes the heat.

So so it's August. What is he saying, now, did you realize that photons have so much mass when they hit you it beats your sun?

Feel it right?

Yeah?

It has w Yeah, No, it's you know, he's still an enthusiast, so so I guess you know.

I used to jokingly say, Florida in the summer, you run from air conditions house the air conditioned car. Like New York in the winter, you run from heated house to heated.

And the same idea.

Right, it's just but it hasn't been getting much cold to hear. But you know parts of the southwest Texas and now parts of Florida. You see what's going on in the ocean off of so that I wasn't planning on asking you a climate change question, but it certainly raises a question. At what point do does these like wildfires and persistent heat and water shortages. And I'm not asking this as a left or right argument, at what

Yeah, and actually, you know, we're seeing a you know, climate change. I think of it as just bringing a higher frequency of disasters and larger scale disasters.

So bigger and more other than that other a hoax, it's exactly.

But you know it's interesting, you know. And so first of all, you know, A, it adds to your cost of home ownership. B. You have the insurance industry sort of grappling with can they continue at the premium even close to the premiums that they're with When you think of there's already insurance crisis in Florida.

I mean, it's crazy what's going on there. You can't it's very hard to get in show.

And that was my point before, is that you know, FEMA, a federal program, is basically cutting out by having such low pricing relative the private markets, is cutting out the private markets. So it's just bringing on more risk onto the taxpayer for these locations. Yeah, wildfires in California, all this just means a higher cost of home ownership and eventually some markets not being suitable for occupancy. And you know, I mean that's that's really what it comes to.

Phoenix been triple digits for like twenty one days in a row. Yeah, I mean that's hot. Yeah, we have, but at least it's a dry oven, right, it's a dry one hundred and twelve degree exactly. I mean they've had crazy, crazy Yeah.

Yeah, it's it's interesting because I just as a kid, and you know, as an adult with kids, I always went north for vacation like skiing or cold weather, and the idea of that heat. My relatives that have moved to Florida, all you adjust to it, Yeah, I guess I'm just not willing to.

So it's certainly an unusual thing. So so if Florida isn't a bargain anymore, what parts of the country still are. I know, people look in the Carolinas, in Virginia. There are parts of the West, Montana and Utah and Colorado that seems to be interesting.

I you know, it's funny. We have good friends in Montana and I look at the housing prices of things that are praising.

Right, and I mean the five thousand acre ranch.

No, no, no, no, I mean single family houses?

Have they gone up? Also?

Absolutely?

The way still California exodus.

Yes, that's part of it, with more Idaho, but yeah. Absolutely. The way I think that we should look at housing prices in the US during this pandemic is virtually every housing market was impacted, and we saw dramatic price growth in a very short people period of time because you know, the FED, I believe, kept rates too low for too long and now have to undo the damage by making

Huh. Really fascinating. So let's talk a little bit about what's going on in the world of appraisal. You've been appraiser for decades. The space seems to be going through a little bit of turmoil these days. What's going on in appraiserville.

Praiserville is what it is. Yeah, So, you know in the residential appraisal world, where you know, you buy a house or refinance your house, your mortgage on your house, you know, appraiser comes out values the property and then and then gives the appraisal to the bank, and then the bank decides how much money they're going to give you, and then you close. This industry is if you think about the numbers of people, there's about seventy five thousand

And let me just annotate that you have been humiliating those guys on a regular basis, just embarrassing them for not doing their jobs. Am I overstating that you called them on the carpet repeatedly.

Yeah, it's began during the pandemic and it's just an endless array of problems, which I'll sort of explain in a second, but what it led to is this idea, and it's one of the platforms of the Biden's White House in terms of removing racial bias from the appraisal industry,

Wow.

And this, you know, it fluctuates a couple percentage points up and down every year. But the structure of the industry and how new people to get in is was created by the Praisal Foundation and they have basically refused to take any action. They set up committees and councils as if that is action, but they don't actually do anything, and so it's become more and more heated to the point where the Appraisal Subcommittee, which is allowed to monitor

To be fair, Dubai is where all the best appraisers go for you know content.

Yeah, especially from like Iowa and you know, Montana.

So let's let's put some flesh on these bones so people understand what you're referring to. And there have been not one, but multiple stories about a black family in America owns a house they want to refinance, They want to take advantage of low rates. They have an appraiser come in. The appraisal comes in not only too low for them to do the refinance, but too low compared to the neighbor's house. So they request another appraiser, only this time, all the photos of the black family and moved.

Right.

That sounds like either a ridiculous sitcom or a made up story. But this is a real thing, isn't it.

It's it's largely yes, that's that's largely the way. We've seen a dozen or so of these stories, and they get recirculated and over and over again. What we're actually seeing now is so the logic is that, hey, you know, I think my home is worth five hundred thousand. You appraise for four hundred thousand, So you're a racist.

Well that's a little that's a little over the top in the other direction.

Correct, So, but that is that is a big part of the narrative. So so you have like two core parts of the appraisal world. You have. Now you have a whole sloth of people saying, hey, I'm not a racist, like I'm just assessing the value. And then you have people like me that are saying let's not you know, we don't have a leg to stand on as an industry.

Say hey, you're one hundred percent white and lo and behold, you're appraising black owned homes in white neighborhoods for less than the white on correct. So it's raising some question.

So you're sort of preaching to the choir when you say, hey, we're you know, we don't have this problem even though and listen, is there you know, unconscious bias in everyday life? Of course there is, right. So the other side is my focus is to force the foundation or remove the leadership of the foundation so that so that the regulatory world or you know, sort of the government side of the story, you know that there's a representative membership, you know,

So anybody could go to YouTube or c span find your testimony.

Yeah. Absolutely, And I was highly critical of the foundation, which there were five experts and two of them were from the foundation, and they one of them attacked me. You know, it's sort of named names because of the massive conflict this person has in her job with what her husband does for a living, which is what runs like the biggest online sort of continue ed credit thing.

And they have any deal corrupt.

Right, But they don't see it that way.

Just because you're giving the gig to your husband's business doesn't mean it's corrupt. Perhaps they're the best person for this.

Absolutely, then you shouldn't be the chairman of the committee that changes the regulations that causes changes that go into the class anyway, it's a it's convoluted, but like that's what we're dealing with, and it's a little fiefdom. Yeah, and I remember after it, you know, like I'm only in this to try to make it right and to make it fair. I don't get anything out of it other than like not taining our industry.

How dare you, sir?

I know, But anyway, it's sort of that's the kind of stuff I talk about.

And you know, we talked earlier about the National Association of Realtors and I used to be so in just infuriated by their monthly releases back in six seven eight, because the first paragraph would be the data, right, and then the next six paragraphs were just endless spin. And it's like, I understand you're a trade group, right, but if you're a trade group, maybe the government shouldn't rely on your data because you're not fair actors in the space.

So that's exactly right. And and actually, you know, if you look at the timeline, so NAR was like the what the FED used the like all the NAR data for like understanding the housing market, and you know, and you had the I can't remember that David Loay wasst and then it's been Lawrence you and ever since. And I remember, like in the beginning, it was like, you know,

A little more real time, a little more.

More more harder data, more data, and probably better.

So you brought up David lay Maria. I have a couple of blog posts on him, yes, but my favorite was the one that took the book he wrote and then just revised it cover year, just revised the cover. Yeah, and it's literally are you missing the real Estate Boom?

It was one of my favorite moments during the run up to the housing bubble was I was in the green room on a National TV special something. It was like it was about housing and it was a town hall and I was literally in the green room with David Lay, Robert Schiller, Susie Ormond, and Doddie Hermon no, some other I don't remember what. He wasn't a housing person. And I got to listen to them. I was listening to talk and I remember, I remember, this is really surreal.

Because wait, Larrea and Schiller Killer. Yeah, yeah, because he was pretty bearish.

Yeah, he actually, you know, was really calling for I did a thing with him, like a two years later at Lincoln Center, and uh, he was like predicting like a fifty percent correction in housing prices.

Which is a little aggressive, a.

Little aggressive, but but you know, not like a single digit decline. It was, you know, more in the the scope of happen.

I did a panel with him, so it was Schiller, myself, maybe it was Dottie Hermon and somebody else. So it was like real estate, real estate, stock market and then Schiller being the academic, and I referenced the who are the guys who wrote this time is different. I'm drawing a blank. R Rogoff, Yes, so Rhin Harden Rogoff had this wonderful paper, I want to say.

It was.

Like two thousand and six and they looked at five financial crises. It was Sweden, Mexico, Japan, the US, and twenty nine. I never remember what the fifth one was, and they found, on average, when you have a crisis that originates in the finance sector due to too much leverage, too much speculation, on average, markets get cut in half and real estate looses about thirty percent of its value.

Right, But also I would I would differ a little bit and say that we're not locked in on easy money. Banks during the called the pandemic or a housing boom, never lost their mind.

Right this time as opposed the last time, right, So, so and there is no there isn't the same amount of non bank lenders as we saw in six oh five or seven, right that where it was outside of Fanny Mayon, outside of Pew.

But but but in this cycle, like credit you know got easier during the boom, but it was still well below long term norms. And so you know, even with this, you know, the inventory sort of distortion, We're not looking at the banking world like collapsing at the end of this because on the lending itself, because the lending standards never really got crazy.

If anything, they got tighter.

They get yeah, especially after the last year after rates that they really clamped down. So lending is much tighter now than it was a year ago. But a year ago it was you know, significantly tighter than the last three decades excluding the housing bubble. You know, going back in time, it was banks just never lost their mind, which I think is a huge difference in the two eras.

So before we get to our favorite questions, let me throw you a couple of curveball questions. The first I should really just throw this one away. The article that described you as the most quotable trusted man in New York real estate also said you look like a middle aged Tom Hanks. I have to admit I don't see that.

Well, it's funny because no, I don't see that. But but uh, in the early days of my blogging, I think I started in five and you were, you know, several years ahead of me. You're my first interview on my podcast.

I recall that in your old office was renovated.

Yep, you know.

I've never walked into an office where every square into the walls is covered with newspaper clippings in frames. How many times have you been in the front page of the Times nineteen? That's insane?

Yeah, yeah, I about once a year is the last few. But uh, yeah, I what were Tom Hanks? Oh yeah, Tom Hanks. So a long time ago, a blogger in the Midwest said that I was a look alike of Bobby Flay, that I've.

Had Bobby Flay on the show. I could see some sense they did much more than Tom Hanks.

They they compared two pictures side by side and it did look pretty similar. Right, but that was like twenty years ago, so I haven't been able to generate any pr out of that.

No more celebrity. And then the other curveball, which I'm fascinated by. I think you've been into pretty much every penhouse in Manhattan. I mean maybe that's a slight exaggeration, but not much a lot. Yeah, what's the favorite apartment you've been into in your history of appraising these apartments? What's the one that really stands out? And they could be two different.

Yeah, yeah, yeah, So I thought, you know, forgetting the like the condition it was in and just like the look was one of my favorites was in the Sherry Netherland, which is a hotel co op on the corner of the southeast corner of the Park. H It was just spectacular. The view. You know, the thing that I don't get to do very much in my business is see these apartments at night, right in the night, you know, with

So you're outdoors.

I'm outdoors, and you're in the center of Central Park South looking north, and you see fifth in Central Park West on either side, and it just spectacular And many people don't get that opportunity, and that was an amazing experience. I may end up being hopefully it'll I'll be able to use it in my book someday as a cover.

All Right, So let's jump to our favorite questions, starting with what are you streaming these days? What's keeping you entertained?

So every year every time you ask me this, because I know you you you're a big fan of you know, you've called this the golden age of television.

Is it not? I mean, it's just I was never never watched television as a kid, and I'm making up for lost time.

It is the strangest thing. But I hardly watch any TV. I know that, and I don't stream anything regularly. Podcasts I listen to Masters in Business.

I sucking up not necessary.

But but it's true. I uh. I listen to one of the One of my favorite new podcasts is called hard Fork.

Hard Fork.

It's a New York Times podcast about technology.

Huh.

And it's the guys laugh throughout the whole show. It's they're serious writers. It's it's highly entertaining, especially following the Elon Musk and Twitter escapades over the last six months. It's been incredible, but really good stuff I listened to. I really like Professor Galloway his stuff. He does a podcast called Pivot.

He he also is locked out of his Twitter account as a why And it's just now I have a couple of hundred thousand, he's got half a million followers. Yeah, they're like, yeah, we don't care. Yeah, just just like the competency is mind blowing.

It's my next level, right, It's it's it's like how to devalue an asset without even trying.

And normally no one's around to pick up the pieces and take advantage. It looks like Threads might have a shot, considering that that was built with you know, a dozen or so engineers, very quick.

And leveraging off of the technology of the platform for Instagram.

But if Facebook, which is a giant company, which is an eight hundred billion dollar company, if they throw one hundred people at it, they could to me, wait, you wouldn't hire one hundred people to steal a forty billion dollar business? Yeah, forty four. I mean it's there for the taking. Just I'm I'm not a big Instagram fan, and I'm certainly not a Facebook fan, but I'm I'm on Threads waiting for compliance to give me approval to start.

Yeah three tweeting.

I don't even know what you yell.

I call it, Yeah, I call it threading. But yeah, I'm on it every day, just playing around and not by Twitter yet. No, there's not enough engagement yet, But that the engagement on Twitter is collapsed, you know, it's completely closed, like there's hardly any engagement.

Now. I thought that's because I have two hundred followers in my backup account, right as opposed to two hundred thousand. Right, But my buddy Dave Nadick has said they he has a friend who tracks in twit activity and he said, if you look at the top five hundred one thousand accounts, everything's just fallen off a cliff.

Yeah. Yeah, it's sad. That was my social media of choice, Yes, same same years.

And the DM side of it was really interesting to like I could slip into a DM with Dick Taylor and say, hey, have you seen this paper? And I'm not going to bother him on his phone with that, and an email seems too formal, so I miss that, and I've kicked it up the chain at Bloomberg to try and you know, figure, hey, they're a big client and there's like eleven people left there and it's the same phone number that I set the account up with

Yeah. The first one was before it got into real estate. Actually was a food service director of a of a hospital in Chicago.

I kind of knew that, didn't I.

Yeah, I ended up and my first boss out of college gentleman named John Nelson really just taught me how to navigate the politics and how to get stuff done. He was fascinated with post it notes. But I always felt a really good you know, I always had a really good feeling. I'd have to say. In sort of the modern era, my It's It's was was Dottie Herman, who was basically the person that put Douglas Almon together.

She's wildly she was wildly successful in real estate. I've met her a couple of times. She kind of reminded me of my mom, who was one of these like just my mind right, classic real estate agent, but knew the area, knew the neighborhood. No bs. Hey, we'll find you a house that'll fit you, and we'll do whatever we We'll show you a million houses if that's what it takes. She sort of like tough Broad grew up in the Bronx. My mom Dotty Harmon kind of reminded me of that in the same way.

I always felt like, you know, she recognized, you know, what I could do, and she pushed and protected and nurtured and made it happen. Some forever appreciative of that.

And you've been doing these reports for Douglas Ellman for a long time.

Ninety four is when we began.

So you're coming up on your thirtieth year. That's amazing.

It's it's a lot, but it's, uh, I don't know, it's it's it's it's fascinating because on one hand, you're looking at all these different markets markets, but they they draw you know, you can look at very similar metrics and tell different stories by the sort of combination of the metrics and guess what, there's median price trends in Orange County, California, just like there are in Manhattan. What

Your reports are about putting them into context.

The right, it's usable, right, so so I interact with a lot of media. I probably get six interactions by email or phone call every day. I don't have I don't have any pr and and it's just because I I'm accessible. That's the biggest thing about the.

Media that's really interesting. Let's talk about everybody's favorite question, which is what are you reading? Tell us about your favorite books and what you're reading right now.

So, I uh, just finished two books. One was A Billionaire's Row, which was written by a friend of mine, a reporter named Kathy Clark. And if you ever want to know like what the how insane the development world is, this is the book.

Because this is about these pencil thin, right, twenty story buildings, toller than the Empire State Building, right, but but on like a smaller footprint.

That would have been possible fifteen years ago.

It's it's all the material materials.

And the engineering has changed dramatically, but they're more expensive to build, right And yeah, and to see you know, you know, you have a condo that's fifteen hundred and fifty feet tall, tallest condo in the world, one.

Hundred million dollars, some crazy number.

Well, the Penthouse is for sale for two hundred and fifty million dollars.

Good aspirational pricing a term that you coined.

Yes, actually on the air during a Bloomberg interview on a TV interview. I don't remember, like two thousand and fifteen or sixteen, but you know that you have one eleven West fifty seventh on billion Billionaire's Row is really sort of west and east fifty seventh Street to Park Avenue on the east and probably eighth Avenue on the west. But then in the book she includes two twenty Central Park South, which has the two hundred and thirty nine million dollars sale.

By this a bargain fifty right, exactly save yourself eleven minute? Right?

Is it?

Is it true these buildings are essentially half sold.

I think the numbers now is that they're about in aggregate about sixty p sen sold. But there are buildings that are have done, you know, sold out, like four thirty two Park, and then buildings that are you know, having trouble. I mean this is you know, the miscalculation of Billionaire's Row was that the market, the global market wasn't as wide and as deep as everybody thought. You know.

Right, It's just they're just self storage.

Right, right, and anyway, So, but I can't say enough about this book. The other book I'm reading, I just read wait.

Before you go off of Billionaire's Row. I have to ask. So I've seen people try and extrapolate these sales and listings quarter billion dollars as if it's an actual marketplace. It's almost like, oh, there's one of eleven rem brands around for sale, and it comes up for sale every generation. In the other ten I've already been grabbed by right museums. How much can you really read into it? Considering there's a few dozen of these and maybe a few dozen

It is a so I think of it as a market of outliers and so I told you earlier that I I started in twenty fourteen tracking any sales that actually closed for a fifty million or higher then and I went back in time back to like two thousand and really that world began about twenty fourteen, where there were maybe seventeen or eighteen nationally sales fifty million or higher. And now and now, so twenty twenty one was the record, and it was in the low forties. I want to

Within in anyway.

In many ways, these transactions have nothing. You know, they get so many more eye balls through article coverage on high end transactions and titans of industry buying these places, but they really are this market a national international market. That's not like, Hey, these are New York City sales. Now these are you know, these are not that well connected to New York.

In the spring of twenty twenty two, I was speaking at the International Luxury real Estate Alliances Annual Conference, and at night we're having dinner in One of the people there as a real estate agent in Palm Beach, and she gets the confirm from her assistant. Hey, the one hundred million dollar house is now in contract. The deal went through, and I said, Wow, that has to be a hell of a house, and I'll never forget. Her

One hundred large, yeah.

You're telling me it's not the perfect house. Even one hundred million dollars is a bunch of compromises. And her answer was not a lot of inventory around. If you want that type of house in that part of the world, you're gonna have to make some compromises. And my answer would be, then I guess I'm gonna skip that part of the right right, one hundred million dollars. I want exactly what I want, and uh, I don't want the sea wall. I want the white sandy.

Beach right right. No, it's and it's what's interesting in New York is it's building by buildings. So so you have one fifty seven, which was I call Extel Development, uh, which I think they were originally. I read this in the Billionaires Roebook. They were originally called Intel Development, but they got sued for the name, so they changed your name to Extel. Right because but but sales you know, that closed from the sponsor, the developer in twenty sixteen.

No, you know, you have douses a lot more than everything else.

Right, well, also to yeah, the penthouse there sold for one hundred million Michael Dell bought it. That was the at the time, that was the highest for a short period of time. But my point is that you look at other buildings during the same era, like four thirty two Park, or you look at two twenty Central Park South. They didn't see it. They didn't see fifty percent discounts. In fact, two twenty Center Park South a Ornado Realty development.

So that the building itself matters, not not just the building, the size, the amenities, everything about it really makes a big differ, absolutely all right. So besides billionaire's row, what else?

What else? I just read a sort of fast and easy book just out of the blue called Easy Money, and it's basically a throttling of cryptocurrency. Who wrote it, I can't remember. I don't remember his name, but he it's very very clear and how he's going through it, and basically there's no you know that he contends there's no value to crypto. You know, it's just basically, you know, it's a rife with people, nefarious sort of types that most people lose money, you know, who knows.

But interesting though.

But it was an interesting take. And then the one I just I'm actually just started two books. Sometimes I read books. In parallel is a book called The Slip, which is about Kuent's I think that's how you pronounce it. Slip in downtown Manhattan was one of the first sort of artists enclaves like you would think of Soho or Tribeca in the seventies. This was more like in the forties and fifties. And I had no idea, you know, I'd never heard of this, but it's a really it

I had her on the show. I read the book. Yeah, really interesting. But by the way, we went to the Hopper exhibit down at the New Whitney at the end of the high Line, and apparently off of Washington Square Park was another one of those artists enclave where Hopper and a bunch of his you know, comy.

Like East Village, like Saint Mark's Place.

No, this is this is right off of West Fourth or off of Washington Square Park. At the show, there's a series of letters printed about him arguing with his landlord and him arguing with really he testified at the local zoning board because they wanted it was sort of zoned the way eventually, soho was that gave a good

Well, when I when I first moved to New York, the East Village or you know Alphabet City, you know the Avenue ABC as you go further east, I remember there was a condo conversion right on the park there that the neighborhood centers around, and it was it was spray painted on the front door of this conversion, Die Yeppie scum.

I remember that.

That became the battle cry, and.

That picture was in New York magazine or somewhere. I mean, that became a famous image.

Yeah, yeah, yeah, I was there. It was. It was, you know, it was a pretty rough neighborhood in terms of you know, a lot of you know, elevated crime and all that, but now you'd never know it.

Totally gentrificed.

Yeah, totally gentrified.

Amazing. Down to our last two questions, what sort of advice would you give to a recent college grad interested in a career in either real estate or data analytics or appraisal.

Yeah, so I'm sort of I think of it as I've seen my various four sons, you know, going through interview processes, and first of all, it's so different than when I began, So I don't know how relevant my advice would be, but we had you know, it's all through Zoom. They winnow it down, you know, and then you finally meet in person and you go through like multiple layers of interviews on Zoom. So it's very detached.

Know the secret to zoom, Right, turn your camera off and just surf through, bring a trailer and just you know, uh huh, just say frequently yep, yeah, right, Yeah, it's a big connection. I got no video, and well what.

I have got I do zoom, you know, because I always found it challenging to look up at like the top of the.

Mother So I have the cameras that hang out.

Yeah, I got the camera that hangs down in the center of the screen. It's very small so it doesn't block anything. That was like one during the pandemic. I bought them for one for home and one for the office through a Kickstarter startup. Now there's a bunch more of them. But it's the greatest thing ever for that because you can check emails and look at you know, if you're not nobody knows, nobody can tell. It's it's a it's a great invention.

That's hilarious. And our final question, what do you know about the world of real estate today? You wish you knew forty years or so ago when you were first getting started.

Uh, you know, I think to do everything I could to buy something earlier on. I didn't buy a house till my mid thirties because I was trying to grow my business, and I think if I had started, you know, the idea of you know, starting a little bit earlier is you know, when I think of the prices, even relative to my income at the time, there wasn't such a stretch, such a multiplier effect, even though mortgage rates are much higher.

So let me flip that answer on you and say, would you give your kids, who are now in their late twenties early thirties, right more or less? Would you give them the same advice, Hey, buy a house sooner rather than later.

Yeah. Three of my four sons are all homeowners, are multiple homeowners, and you know, have set up you know, they're they It's worked out great so so not that you know, I advise them in the negotiation a little bit and all that, but they really did it on their own and and got the homes that they love. My youngest, who just turned twenty five, is living his best life in Manhattan as a renter. But you know, he's got a completely different lifestyle than his brothers in the suburbs.

So they're all married and getting married.

In four grandkids and it's very odd.

Jonathan, thank you for being so generous with your time. Cheryl, thank you for coming in. I appreciate this. We have been speaking with Jonathan Miller. He is CEO of mir Samuel, one of the most respected appraisal and data analytics firm covering the world of residential real estate. If you enjoy this conversation, well be sure and check out any of our previous five hundred episodes we've had over the past nine years. You can find those at iTunes, Spotify, YouTube,