Key Takeaways
- Inventory is one of the clearest indicators of market strength, buyer competition, pricing pressure, and negotiation leverage.
- Reliable market analysis requires professionals to examine the source, separate isolated outcomes from broader trends, and read beyond attention-grabbing headlines.
- Technology can improve efficiency, but local expertise, human judgment, and personal trust remain essential when guiding people through complex property decisions.
The REI Agent with Jonathan Miller
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Hosted by Mattias Clymer, an agent and investor, alongside his wife Erica Clymer, a licensed therapist, the show features guests who strive to live bold and fulfilled lives through business and real estate investing.
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When Better Questions Create Better Decisions
Every real estate professional eventually faces a moment when the market stops making sense.
A listing receives plenty of attention but only one offer. A property sells far above its asking price. Mortgage rates rise, yet certain neighborhoods continue moving with surprising strength.
Headlines declare that the market is booming while agents on the ground feel as though everything has slowed to a crawl.
Those moments can create uncertainty, but Jonathan Miller believes they can also create opportunity.
As the president and CEO of Miller Samuel Inc., Miller has spent decades studying housing markets, analyzing complex properties, and explaining market behavior to professionals, journalists, government institutions, and the public.
During his conversation with Mattias Clymer on The REI Agent Podcast, he revealed that dependable market knowledge does not begin with predictions.
It begins with curiosity, context, and the courage to look beyond the easiest explanation.
A Career Built by Seeing What Others Could Not See
From Hospital Management to Manhattan
Miller did not begin his professional life with a perfectly designed plan to become one of the country’s most respected real estate analysts.
He started as a hospital executive in Chicago. Although his father had a background in real estate, Miller initially pursued hospital management. It did not take long for him to realize that the career was not right for him.
He left that position, became a real estate agent in suburban Chicago, and quickly became one of the office’s leading listing agents. He later moved to New York City and talked his way into a sales position at a newly constructed Manhattan condominium building.
That move exposed him to a problem that would shape the rest of his career.
Manhattan did not have the kind of traditional multiple listing system that agents in many other markets relied upon. Public sales information was limited, co-op transactions were difficult to track, and appraisers often entered buildings without having access to dependable market data.
Instead of accepting the confusion, Miller saw an opening.
He began organizing pricing information, studying transactions, and building systems that could bring greater clarity to an unusually complicated market. That work eventually led to the creation of Miller Samuel, an appraisal and market research company that would become deeply connected to the evolution of New York City real estate.
Scarcity Can Reveal an Opportunity
The absence of reliable information could have been viewed as an impossible disadvantage. Miller viewed it as an unmet need.
His experience offers an important lesson for agents, investors, and entrepreneurs. The most valuable opportunities are not always found in markets where everything is already organized. They are often hiding inside confusing systems, incomplete information, and problems that everyone else has learned to tolerate.
Miller did not wait for the market to provide a perfect database. He helped build one.
That decision transformed a frustrating limitation into a career-defining advantage.
Truth Is More Valuable Than Optimism
Why Market Reports Must Remain Independent
In the 1990s, Miller was approached about producing a recurring Manhattan market report. He agreed under one essential condition. The brokerage firm could never tell him what conclusions to publish.
The report could not become a marketing brochure disguised as research. If sales declined, the report would say sales declined. If inventory rose, the report would show that inventory rose. If the market faced difficulty, the analysis would not hide behind cheerful language.
That commitment to independence helped Miller build credibility over more than three decades.
His approach challenged a common temptation within commissioned industries. When professionals depend on transactions for their income, they can feel pressure to describe every market as a good market. Yet constant optimism can eventually weaken trust.
Clients do not need someone who pretends that every condition is ideal. They need someone who can accurately explain the conditions in front of them.
“Never ask a barber if you need a haircut.”
Miller used that familiar Warren Buffett observation to illustrate the importance of understanding a source’s incentives. A productive agent who has completed several recent transactions may see the market differently from an agent who has not closed a deal in months.
Neither person is necessarily dishonest. Each person is interpreting the market through personal experience.
The danger appears when personal experience is mistaken for the entire market.
Objectivity Creates Long-Term Authority
Real authority is not created by always delivering good news. It is created by delivering useful truth.
An agent who can calmly explain weakening demand, limited inventory, changing affordability, or shifting buyer behavior becomes more valuable during uncertain conditions. That professional is no longer simply promoting a transaction. That professional is helping a client make sense of reality.
Miller’s career demonstrates that credibility compounds. Every objective report, careful explanation, and properly sourced conclusion strengthens the next one.
Over time, people begin to trust not only the information but also the person interpreting it.
The Source Matters as Much as the Statistic
Data Without Context Can Still Mislead
Numbers can create the appearance of certainty. A chart can look authoritative. A percentage can seem precise. A headline can feel definitive.
None of those things guarantee that the conclusion is trustworthy.
Miller encouraged listeners to evaluate where information originated, who produced it, and what motivations might have shaped its presentation.
“Any chart or article that doesn’t have a source is a lie.”
The statement is intentionally dramatic, but its message is practical. Information should not be separated from its origin.
A press release from an interested company should be interpreted differently from an independent market study. A national headline should not automatically replace local evidence. One agent’s unusually successful month should not be treated as proof that an entire city is thriving.
Consumers are surrounded by information, but information without context can create more confusion rather than less.
Anecdotal Evidence Can Point Toward Tomorrow
Miller also explained why anecdotal information should not always be dismissed.
Closed sales show what happened in the past. Pending contracts offer a more current view. Conversations with trusted professionals working inside the market may reveal changes before those contracts are completed.
That does not mean every opinion should be treated as data. It means carefully gathered observations can provide an early signal.
The Federal Reserve uses this kind of trusted, ground-level information through its Beige Book. Local professionals describe what they are seeing before traditional economic statistics fully capture the shift.
For an attentive agent, that principle is powerful. Showing activity, buyer objections, financing concerns, repeated low offers, and changes in negotiation behavior may reveal a developing pattern.
The goal is not to replace data with stories. The goal is to understand how reliable stories and dependable data can work together.
One Strange Deal Does Not Define the Market
Separating an Outlier From a Real Shift
Mattias shared examples of listings that performed differently than expected. One attractive property received numerous showings but only one offer. Another home was located in a desirable area and priced aggressively, yet its small size and unique characteristics limited demand.
Those experiences could easily lead an agent to conclude that the entire market had weakened.
Miller offered a simple warning.
“One sale doesn’t make a market.”
A single property can contain unusual features that affect its performance. A tiny lot, an awkward layout, an uncommon location, deferred maintenance, or an overly ambitious price can produce a result that says more about the property than the broader market.
Professionals must learn to separate the signal from the noise.
At the same time, they cannot dismiss every unexpected result as an isolated event. When agents across multiple neighborhoods begin reporting the same buyer behavior, the market may truly be establishing a new price level.
Miller described how, following the financial crisis, Manhattan agents began receiving offers roughly 30 percent below previous expectations. Because the pattern appeared across numerous properties and neighborhoods, it was no longer a collection of random low offers.
It was the market changing.
Keep Eyes and Ears Open
Strong analysis requires humility. Professionals must be willing to question their first interpretation.
One disappointing listing does not prove that the market is collapsing. One bidding war does not prove that every property will receive multiple offers. One record-breaking sale does not redefine an entire neighborhood.
The professional advantage comes from watching for repetition.
When a behavior appears once, it may be an exception. When it appears consistently across properties, agents, price points, and neighborhoods, it may be a trend.
Inventory Is the Market’s Most Important Story
Why Supply Shapes Nearly Everything Else
When Mattias asked which metric busy agents should follow most closely, Miller’s response was direct.
“The number one metric of all housing metrics is inventory.”
Inventory influences competition, pricing power, bidding wars, days on market, negotiation leverage, and affordability. It helps explain why high mortgage rates may slow one region while another region continues to experience intense competition.
During the period of extremely low interest rates, many homeowners either purchased homes or refinanced existing mortgages at historically favorable rates. When rates later increased, those owners became reluctant to sell and replace their low-rate loans with more expensive financing.
The result was a severe shortage of existing homes in many parts of the country.
Miller explained that the Northeast and Midwest remained particularly constrained, while parts of the Sunbelt experienced more available inventory because builders responded rapidly to pandemic-era migration.
This illustrates why national housing narratives can be misleading. The United States does not operate as one single housing market.
Every region, city, neighborhood, property type, and price range can behave differently.
Manhattan’s Unusual Market Structure
Manhattan followed a different path from many suburban markets.
During the pandemic, New York City was viewed as a global center of the crisis. Apartment showings slowed dramatically, and the city did not experience the same immediate inventory depletion seen in surrounding suburbs.
The market also contains an unusually high percentage of cash purchases. Miller noted that roughly 65 percent of Manhattan transactions were being completed with cash, making the market less sensitive to mortgage rates than many traditional suburban areas.
That does not mean interest rates are irrelevant. Lower-priced properties remain more dependent on financing, while higher-priced segments can be supported by Wall Street compensation, technology industry growth, and affluent cash buyers.
The lesson extends far beyond Manhattan. A market cannot be understood by looking at only one statistic.
Inventory, financing, employment, property type, buyer profile, and local economic conditions must be considered together.
The Asking Price Is Not the Market Value
Why Buyers Must Look Beyond the Listing Number
Miller shared the story of purchasing a home after competing against approximately 30 other buyers. He and his wife ultimately paid substantially above the asking price.
On the surface, that might sound like an obvious overpayment. Yet Miller believed the property had been intentionally underpriced to generate competition.
This reveals one of the most important distinctions in a competitive market. The asking price is a marketing decision. It is not automatically the property’s true value.
A buyer who believes every successful purchase must close below asking may miss excellent opportunities. A property listed at $500,000 may be overpriced, fairly priced, or intentionally underpriced. The number alone does not answer the question.
Agents create value by helping clients evaluate comparable sales, current competition, property condition, and likely demand.
Winning is not defined by paying less than the asking price. Winning is defined by making a thoughtful decision that supports the buyer’s needs, financial position, and long-term goals.
Automation Cannot Replace Every Human Judgment
The Coming Transformation of Appraisals
Miller expects the traditional mortgage appraisal process to change dramatically. Automated valuation models are becoming more influential, and major housing finance institutions are increasingly exploring processes that require less direct involvement from human appraisers.
The appeal is easy to understand. Automation promises speed, consistency, and lower costs.
The danger appears when an automated model is asked to understand something that cannot be reduced to a clean set of data points.
Miller described unusual valuation assignments involving shared hallways, combined apartments, poorly vented commercial spaces, litigation, and highly localized differences in value. These situations require investigation, interpretation, and judgment.
An algorithm may recognize square footage, bedrooms, and recent sales. It may struggle to recognize why a specific hallway matters, why one block commands a premium, or why a luxury apartment loses value when the commercial space below fills it with persistent odors.
Complex properties are not simply collections of measurements. They are physical spaces shaped by location, condition, design, use, perception, and human behavior.
Technology Should Strengthen Expertise
Miller did not argue that technology should be rejected. He argued that its limitations must be understood.
The same principle applies to real estate agents.
Artificial intelligence can help professionals organize information, create drafts, review documents, automate routine communication, and analyze large data sets. Those abilities can make an agent more efficient.
They do not automatically make an agent more trustworthy.
Technology becomes most powerful when it strengthens human expertise instead of attempting to disguise its absence.
Trust Remains the Ultimate Competitive Advantage
People Still Need People
Mattias and Miller discussed the growing presence of artificial intelligence in client communication. Voice cloning, automated messages, chatbots, and generated content can make businesses appear constantly available.
Yet clients often recognize when communication feels impersonal.
Buying or selling a home is not a simple data transaction. It involves fear, uncertainty, family decisions, financial pressure, timing, negotiation, and major life changes.
Clients do not only need information. They need someone they believe understands what the decision means to them.
“You establish trust through personal connections.”
Miller described real estate as a people business. That reality has survived every previous wave of automation.
The tools will continue changing. The need for trust will not.
Agents who combine technological efficiency with genuine attention, local knowledge, and honest communication will have an advantage over professionals who rely entirely on automation.
Market Analysis Is the Ability to Tell the Truth Clearly
Turning Statistics Into a Story Clients Can Understand
Many professionals believe market analysis means memorizing every statistic.
Miller offered a more useful definition.
“Market analysis is being able to tell a story about the market.”
The best market explanation feels less like a lecture and more like a trusted conversation. It connects the numbers to the client’s actual decision.
Why are homes receiving multiple offers? Why are some listings sitting longer? Why are prices rising even though sales volume is flat? Why does one price range behave differently from another?
A capable agent does not overwhelm the client with disconnected statistics. The agent organizes the evidence into a clear and honest explanation.
That ability can be developed.
Professionals can track inventory, study contract activity, observe showing feedback, compare price segments, follow local employment trends, and maintain conversations with other trusted people in the market.
Over time, they begin to recognize how those elements fit together.
Slow Down Long Enough to Understand
The Golden Nugget Hidden Beyond the Headline
Near the end of the conversation, Miller shared one of his simplest recommendations.
“Read the whole thing.”
In an era of shortened attention spans, many people form opinions after reading a headline, social media post, or opening paragraph. They react before understanding the evidence or nuance behind the story.
Miller reminded listeners that journalists often do not write their own headlines. Editors may shape headlines around search visibility, urgency, or audience attention. The headline’s purpose may differ from the purpose of the article itself.
Reading carefully is not merely an academic habit. It is a professional advantage.
The person willing to spend an extra minute understanding the full argument will often make a better decision than the person who reacts immediately.
Critical thinking may feel slower at the beginning, but it prevents costly confusion later.
Clarity Becomes Confidence
A Better Way to Move Forward
Jonathan Miller’s journey demonstrates that market confidence does not come from pretending to know the future.
It comes from building a disciplined process for understanding the present.
That process includes checking the source, studying inventory, distinguishing an outlier from a trend, recognizing local differences, reading beyond the headline, and remaining honest when the evidence challenges a comfortable assumption.
Most importantly, it includes preserving the human connection at the center of every major decision.
Markets will continue changing. Technology will continue advancing. New tools will emerge, old systems will disappear, and today’s accepted methods will eventually be questioned.
The professionals who endure will not necessarily be the ones with the loudest predictions. They will be the ones who can calmly examine the evidence, explain it clearly, and help others move forward with confidence.
When knowledge is paired with humility, information becomes insight. When insight is paired with genuine care, it becomes trust.
That is how a professional stops merely reacting to the market and begins becoming a reliable guide through it.
Stay tuned for more inspiring stories on The REI Agent podcast, your go-to source for insights, inspiration, and strategies from top agents and investors who are living their best lives through real estate.
For more content and episodes, visit reiagent.com.
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Contact Jonathan Miller
Mentioned References
Transcript
[Mattias]
Welcome back to the REI Agent. My guest today is Jonathan Miller, President and CEO of Miller Samuel Inc, New York City’s most cited real estate appraisal and market research firm. Jonathan was the author of element reports for 32 years and has recently formed a partnership with The Real Deal.
Jonathan is widely considered the most authoritative source of Manhattan and luxury market data in the country. And he is a go-to voice for CNBC, Bloomberg and the Wall Street Journal whenever the market needs explaining. He does not just track what is happening in real estate, he builds the frameworks that the rest of the industry uses to understand it.
Jonathan, welcome to the REI Agent podcast.
[Jonathan Miller]
Great to be here.
[Mattias]
Jonathan, I wanna hear how you got started, but I just have to say really quickly, you said offline that you’re boring, but you’re talking about markets and data and all this kind of stuff, but honestly, I love it. I feel like I’ve been interested in the analysis side of real estate ever since getting started. And I think it’s such an important thing that if you’re not thrilled by that kind of numbers and the stuff to begin with, you have to understand that your clients probably, there’s gonna be a section of your clients that are definitely gonna be very interested and having something to talk about is definitely important.
So Jonathan, thanks so much for being on the show. What got you started in real estate?
[Jonathan Miller]
Well, Mattias, it’s one of those questions that is really hard to trace where it started. I actually was a hospital executive in Chicago and my father had a real estate background in the DC metro area. And so I was always interested, but I tried the hospital management thing.
I did that for about three years, hated every second of it, quit and became a real estate agent in suburban Chicago and became the number two performing listing agent within my first six months there. I ended up moving to New York, talked myself into being a sales agent on a newly built condo in Manhattan and saw some success there. I did a lot of sort of analytics.
I literally took the offering plan and the Schedule A, which is all the pricing of all the apartments and our units in the building and put it into a Hewlett Packard 41C. So I could walk around with this sort of space age. This is in the 80s, a long time ago before the technology of now.
And then I saw a bunch of appraisers coming into the building, not having any information. New York City or Manhattan specifically does not have a multiple listing system. So it’s very antiquated.
Public record at the time did not exist. And we thought, hey, in this really murky data world, we could start a appraisal company. And we did, and that was about 40 years ago.
[Mattias]
Wow, so I would imagine that is no longer true that there is a MLS in Manhattan?
[Jonathan Miller]
So what we have, we have, when I say no MLS, I mean, really, I mean, no traditional MLS. There is the Real Estate Board of New York known as REBNY. And they have tried to set up a partnership with HomeSnap, but it’s called CitySnap.
But we sort of have a de facto MLS now called StreetEasy, which is owned by Zillow, and it has lots of problems. But so, like I said, like the idea of being in New York, in many ways, it feels like the 1950s. For being the financial capital of the world, it seems like it’s very primitive in a real estate data management sense.
And I think people that are new to this market find that surprising.
[Mattias]
Yeah, that is very surprising. I can’t believe I haven’t actually heard that before. And it clearly creates a need for you.
And any kind of data you can get is really important then, for sure.
[Jonathan Miller]
Well, early on, one of the things as an appraiser, you have to get sales data. And up until about 15 years ago, it wasn’t public record. So our housing stock in Manhattan specifically is about 75% co-ops, which are technically not real estate.
They’re shares of stock in a private corporation. And we used to collect that stuff. Early on, we’d get from managing agents that would manage apartment buildings, they would have lists of co-op sales, and then we would put them into our database.
And we ended up having the largest collection of co-op sales at one point before it became public record in 2006. So the last 20 years, there’s been more transparency, but we still don’t have really this traditional MLS system that I think most real estate agents are used to.
[Mattias]
Yeah, and so for my market, we’re a tertiary market, like I mentioned, off-air, but we don’t really have a unified source for rental data. And that’s extremely annoying if you’re an agent, if you’re an investor, you wanna figure out what’s the financial possibilities of this property from a marketing standpoint, from wanting to invest in it standpoint, and you just don’t have a unified source, and it’s really annoying.
[Jonathan Miller]
Yeah, and it becomes, it’s like manual labor when a good part of the real estate world has that in some form of a database that there’s consistency in data entry, error checking, all that kind of stuff. And instead, there’s still some markets, sounds like what you talked about, which is consistent with our struggle, is just getting a large quantity of data to do your analysis, to make an informed decision.
[Mattias]
Yeah, yeah, 100%. So you were then, at some point, you got in with this Element Reports, and you were their main author for 32 years, and you had a lot of notoriety, you’ve spoken in a lot of CNBC, Bloomberg, et cetera. Tell us about how that kind of evolved, and then the transition must have been a pretty big deal to go kind of more independent and with a partnership deal.
[Jonathan Miller]
So in, I think it was about 1994, I was speaking at a sales meeting at Douglas Elliman, which at the time was not a national firm, and I was sort of the guy that knew everything about Manhattan. And they basically approached me to write a report, and I said, I’m happy to do it, but under, I have one specific rule, and if you violate that rule once, I leave. And that is you can never, ever, ever tell me what to say, that this is not a marketing brochure, this is a research piece.
And to their credit, I did this for 32 years, and they never once sort of breached that line, that demarcation in the sand, because the most of the market studies that are put out by real estate brokerage firms are sunny and rosy and happy, and yet they’re not giving credit to the agents in the market. They’re agents that thrive in tougher conditions than others, that you can’t just assume that in a tougher market if you speak happy news. And I’m not talking about me being gloom and doom, it’s, hey, when sales dropped, I say sales dropped, right?
I don’t hide that data from the report, and I see that a lot. And what I found is, all of a sudden, when I started doing this in 1994, the Fed breached out to me. I’ve been talking, I’m interviewed every six or so weeks for the Beige Book about what’s going on in New York City metro area, in the housing market.
It’s an anecdotal survey that’s invaluable to your readers. There’s 12 Federal Reserve Banks around the country, and all them write about all aspects of the economy in plain, simple English. There’s no stats, it’s anecdotal.
And I used to have this dad joke, oh, I have this dad joke, when everyone uses the word anecdotal, I would say, the plural of anecdotal is not data, which has its moment in a conversation. But on the other hand, one thing that is clear, the Fed uses anecdotal for the data that’s in front of the actual data. So think of, I’m going down a rabbit hole real quick, but if you think about closed data, right?
And then you think about contracts. So you think about contracts as being more current, even though they haven’t necessarily closed. And if you’re in a volatile market, they’re probably going to be more reliable in terms of price than a closed sale because of the lag.
Well, now you have to wait for a contract, right? To have that as a data point or a pending sale, whatever you want to call it. So contracts, in front of contracts, are anecdotal experiences.
So the Fed has sort of reached out to people they trust on the ground, and it’s like talking to your best friend at a Starbucks. You’re sitting down and they ask you, hey, what’s going on in the market? And it’s your friend and the friend trusts you.
And it’s like this whole level of quality that isn’t the same as me just going up to somebody in a parking lot and said, hey, how’s the housing market? And so in many ways, anecdotal is in front of contracts, which are in front of closing data. And it’s just an interesting way to look at the housing market.
[Mattias]
No, absolutely, that’s really fascinating. You had said something, I don’t know if this is a good time to say it again, before we got on air about how you see agents’ perspectives on the market and what is typically, I thought that really rang true.
[Jonathan Miller]
Yeah, so there’s one saying when I think about it is real estate agents are, by definition, tend to be optimistic and they’re paid on commission. And I was a real estate agent for six months, I don’t claim to be an expert on the topic, but I interact for a living with the real estate community in New York City. And what I find, there’s a Warren Buffett saying, never ask a barber if you need a haircut.
And I say that because someone that’s involved, they’re paid on commission, it’s not a salary, they’re paid on commission for the property to close and then they get paid. So what I found in my own career is that when you talk to real estate agents about how the market’s doing, if you talk to somebody who is a super productive, always just generating like a machine, just generating sales, you ask them how the market’s doing, or you ask somebody that hasn’t sold something in three or four months or a year or whatever length of time it is, in the same sub-market of that market you’re talking about, they’re gonna have very different responses because the one that’s sort of lighting the market on fire, really selling stuff over and over again, they’re gonna have a different take than somebody who hasn’t done a deal in a long period of time. And so one thing that I learned, and this is maybe another rabbit hole, but this applies to reading real estate stories, real estate information, seeing a chart in a newspaper. Before you do anything, you think about the source.
So there’s a Yale professor, I think he’s an emeritus professor called, I’m trying to remember his name offhand, but anyway, he’s very big about how to envision information, how to present information in a way that’s credible. And what he says, and I look every day, I think about this, is any chart or article that doesn’t have a source is a lie. And you really wanna, it’s not about the data, it’s about the source and the data.
So, and that’s the same thing with media consumption. Pay attention to the source. If it’s a press release, probably shouldn’t give too much weight to it.
And I actually teach market analysis at Columbia University and for their grad school program and on their future real estate developers. And one of the things that I hark to them over and over again is the source of information is just as important as the information itself and never, never shortchange that concept, it’s so important. Think about you’re in a sales meeting as a broker and the one agent says how great everything is and they give a couple of examples of their deals, but everybody else in the room hasn’t sold anything in three or four months, like it’s dead, but that one agent.
So imagine the sort of misunderstanding of a market if you only talk to that one person. Anyway, I’m belaboring the point versus everything.
[Mattias]
I agree, I had an interesting take on that. I was thinking about earlier this year, I had a couple of listings back to back that didn’t perform the way that I thought they would necessarily, or they would get a lot of activity and not a lot of offers. So I had a very well staged, really charming home, really good price and it was a lot of things going really good for it.
We had 17 showings in a weekend, which is good for our market, but it was on a postage size stamp lot. And so it was a very teeny lot, there wasn’t really much in a yard and the setting was a bit odd for our market. And at the end of the day, we only got one offer on it.
And typically when you have 17 showings in a matter of a couple of days, you’re gonna get a lot more than just one. And then I had another, one of our most popular spots in our town, close to downtown, a very nice street, very well known street, et cetera. A very small fixer-upper that we priced aggressively on that street, so very, very cheap for that street.
A number and then street name that should have elicited a lot more activity, I thought. But again, it was only 700 square feet and there’s just some outside factors. But I had that perception that this market is, that what is going on with this market, I would have expected more from these listings.
And talking to some colleagues that they’re like, I think you just had a couple weird ones. You had a couple ones that were just unique outliers, right? And you shouldn’t base your whole data set or your whole outlook about the market because of these outlier properties.
So 100%.
[Jonathan Miller]
I think that’s an excellent point. And when I think of that, one of my old-timey favorite sayings is, one sale doesn’t make a market. And you can have crazy, like a low ball, like foreclosure and the whole neighborhood is panicked because it could influence lower valuations for their properties.
But one sale doesn’t make a market. And that’s, if half the sales in the neighborhood are foreclosures and they’re all selling for half of what they did three years ago, well, maybe it’s, the market has changed dramatically. We had that situation in Manhattan after the financial crisis when Lehman went under and AIG and all that like collapse.
Our housing market, I had a bunch of agents come up to me. I was speaking at an event and a bunch of agents came up to me and said, hey, we’re just getting a bunch of low ballers. And I go, they’re just offering these ridiculous numbers.
And I go, are they everybody doing that? And they said, yeah, everybody. And I said, how much are they?
And said, it’s all about 30%. And I said, well, there’s a good chance that the market after this event corrected. And a lot of people see price change as this like slanted gradual line.
But in many times, it’s really a series of steps down or up. And sure enough, I mean, a new price point had been established. And within about a year and a half, the prices recovered, but it was like overnight, and it was not one agent.
I talked to about a dozen in different neighborhoods of Manhattan. And they were all saying the same thing. And that was, so you have to be careful about not, you wanna think, you wanna keep your eyes and your ears open for changes like that.
[Mattias]
Sure, I mean, this is a great segue to ask you about what you’re seeing in Manhattan now, data-wise, what you see, what repulses on the market, strength, and kind of forecasting in Manhattan. And then also, if you can talk about the rest of the country.
[Jonathan Miller]
Sure, so what’s interesting about Manhattan is, first of all, when I was growing, I grew up in the DC metro area, and my grandfather was up in Connecticut. And he told me, you know, Jonathan, if you’re not working in New York City, then you’re just camping out. And somehow I ended up in New York City.
I’m not a native New Yorker, but I’ve been here since the mid 80s. And so when we look at what’s going on in the market here, what happened here that didn’t happen in almost every suburban market in the country, including the suburbs that surround New York City, is that actually New York City was never stripped of inventory like the rest of the country. What we learned coming out of the pandemic was that when interest rates are too low for too long, it actually makes housing more expensive because it wipes inventory off the face of the earth.
And that’s what happened. It’s not like we can build our way out of it. If you tripled new development, new construction across the country, the problem is existing property is just very limited.
And there’s certain regions of the country that it’s softer or tight, you know, like, you know, housing is local, obviously. But in the Northeast and the Midwest, inventory is very tight, extremely tight. But if we’re talking the Sunbelt, like Florida and Texas, inventory is not tight.
And that’s because they responded so quickly to the outbound migration from the Northeastern California. Anyway, I bring this up. This is a long-winded way of getting around to what’s happened in Manhattan.
What happened in Manhattan is we never were gutted of supply because Manhattan during the COVID was seen as the COVID global hotspot. And so we just didn’t, you know, everybody was sort of in lockdown. And really we were very, I had friends, colleagues all across the country asking me if I’m okay and all that, because, you know, we’re in multifamily market.
It’s co-ops and condos are 98% of Manhattan’s transaction volume. And you don’t walk in during a global pandemic and inspect an apartment or a condo unit. You know, everything was sort of shut down.
So as a result, we didn’t have the complete, you know, sales boom that happened in the suburbs, you know, across the US, including the suburbs surrounding New York City. You know, everybody, you know, fled to the suburbs. Inventory was wiped clean.
And it’s still about 20% of what normal inventory should be in the suburbs around New York City. So as a result, inventory in New York City has, Manhattan specifically, but the other boroughs as well, was not gutted. But right now it’s on the low side.
And what’s been happening with New York City is the Manhattan market is 65% cash now. And so I don’t wanna say that mortgage rates don’t matter, but you have 65% of the market when the rest of the country is like 20%, 25%. So we’re not as sort of, you know, it’s not when mortgage rates go up or down.
Yeah, it has impact on the market here, but not as much as say, a traditional suburban housing market would. And also we’re, you know, our core business is Wall Street. And the securities industry accounts for about 20% of the wages in New York City, and only employs about 3% of the people, right?
So they’re high wage earners. And guess what? Wall Street for the last couple of years has had record profits and record compensation.
And so guess what those people do? Well, they buy stuff. And one of the things they do is buy higher end, they tend to buy higher end, not necessarily the top of the market.
So as a result, we have a market that is weaker, I’ll be cavalier and say, if you think about plus above a million and below a million, just to make it simple, above a million, very strong, faster inventory declines because there’s money. And not only Wall Street, but now we’re finding that the tech industry is booming here. They don’t make as much as Wall Street, but they make a lot more than the average private sector.
And then below a million is mortgage rate dependent, tends to be. And so, as mortgage rates since the Iran war began have popped about a half a percent, that has taken some of the wind out of the sails for the lower priced properties. So when I think about the future, I think about that the Fed now is, even with a new Fed chair is talking about higher, at least one rate increase from the FOMC, the Open Market Committee for the Fed in 2026.
Prior to the Iran war, we were talking about two rate cuts in 2026. So the sort of the tables have turned significantly and that’s a headwind for housing nationally. It doesn’t mean the end of, but it takes a lot of the sort of wind out of the sails of the market.
And I think it’s gonna, I think the next couple of years are gonna be for that reason and tariffs are another reason that are keeping sort of inflation pressure high. So anyway, the long story short is, Manhattan is expecting flat sales, rising prices, falling inventory. And that’s the prognosis over the next year, at least.
[Mattias]
Okay. You had said that the Sunbelts area had responded more quickly. Do you mean that they just, they had a boom in new construction?
[Jonathan Miller]
Yes. They built a lot more and they anticipated, you know, this boom. And it’s interesting because after the tax, the, what do they call that?
The salt tax is the nickname from the federal government was passed in 2018. That was designed to tax, sort of create a penalty for higher tax states like that are found in the Northeast or California. And so Florida was anticipating, you know, rubbing the hands together, the brokerage community, that you’re gonna have a flood of New Yorkers leave New York to go to Florida.
And it didn’t happen. But then when the pandemic hit, COVID hit, it was bedlam, right? And, you know, Florida boomed.
I think that migration pattern is largely done. Now it’s more organic, normal migration. I’m not saying there aren’t people coming into Florida, but nowhere near the level that was happening.
And I have a lot of friends that, you know, that left New York and moved to Florida. But I think there’s been, New York’s, you know, this is sort of this image that New York is like, there’s no one here, no one coming. But actually our inbound migration, meaning we have more people coming in than going out.
And over the last year, our population has recovered to pre-pandemic levels. So there are people coming in but not, and not going out as much as sort of the storyline seems to suggest.
[Mattias]
Okay, that’s really interesting. And it tracks with the people that I have, you know, I have conversations with across the country, for sure. The definitely, I think to your point, there’s definitely the last past couple of deals that are infiltrating their brains as to their outlook of the market also.
[Jonathan Miller]
It’s human nature, I’m not blaming them. It’s just, you know, when you’re selling, you know, it’s all about like getting those nuggets of information that help make a sale. And so that creates like, you know, a persona that’s, you look on, you know, the glass is half full, right?
And the problem is being objective in like, you know, describing a market. You know, I always look at it as, and I used this analogy earlier, but this is sort of a different, a little bit different to take, but, you know, I always, what’s so important, you know, in what I think, when I think of market analysis, market analysis is being able to tell a story about the market. And so it is when your best friend you’re selling a house to, you sit down in a Starbucks, you know, you’re telling them objectively what you think is happening.
And that’s really market analysis. And the problem is that, you know, you can exaggerate maybe is the right word or, you know, overstate or understate just because that’s human nature. So it’s something always to be aware of.
[Mattias]
What if you’re, you know, if you’re an agent in a hurry or what are those books, like the history in a hurry for those in a rush or astrophysics in a rush or whatever, if you’re an agent that isn’t going to be, you know, just, you know, head in the stats constantly, but they do wanna have talking points that are not just anecdotal, not just based on their experience, where are you, what are the top metrics you suggest they look to, do they try to find days on market, that kind of stuff.
[Jonathan Miller]
Right, right, gotcha. So I think that, and this has been the story for the last few years, the number one metric of all housing metrics is inventory. Anything that, or it could be months of supply, anything that suggests how much is available, you know, out there for your customer or client.
So, for example, in Westchester County, which is a county just north of New York City, the market share of bidding wars, meaning when someone pays over the last asking price, that’s, we assume that’s a bidding war, that’s my proxy for someone paying over the last asking price, because people don’t voluntarily pay over the asking price, they’re in a battle with somebody else or five other people. In fact, when my wife and I in 2022 bought our house, we downsized, our four kids became gainfully employed and, you know, on their own and everything, we downsized our house and we won a 30-way bidding war. And it was either that or not buy a new house.
You know, that’s, the market is now instead of 30 people competing for the same house, now the market is eight people competing for the same house. So it’s still in balance. There’s still a lot of bidding wars, but it’s not at the same intensity that it was when we bought.
We have no, you know, buyer’s remorse or anything like that. I just happen to think the real estate agent underpriced, you know, as a technique. And we probably overpaid by 10 or 15%, but we actually paid about 30%, 36% over the asking price.
And I think it was underpriced by about 20%.
[Mattias]
Yeah, that’s something that I try to, you know, help my clients understand is, you know, you can’t base your success or a deal on the asking price. You can’t, you can’t, you know, go, if you, there’s definitely people that just have the mindset that if they go in, the house is being, you know, sold for $500,000, you have to get underneath that price. You’ve lost.
And that’s not the case at all. Like you could, the house could be worth $700,000 and, you know, you pay $100,000.
[Jonathan Miller]
Well, you also, you have people that just price wrong in the market, especially a FISBO or, you know, where somebody really isn’t, you know, engaged in the market. And the problem with incorrect pricing, you know, there’s a tendency now to price close or even a little bit below market value to create this bidding, this sort of frenzy to generate a higher price. The problem is when every home in your neighborhood sold at a bidding were close to it, right?
That becomes the new price, right? It’s not, the buyer isn’t actually overpaying. They’re paying what everybody else seems to be willing to pay because they’re all paying more than this sort of older list price thinking.
[Mattias]
Yeah, yeah, absolutely. And speaking of, you know, analysis and all that, how do you see appraisal, the appraisal landscape shifting now that there, you know, are, there’s a lot more data out there and there’s advances in AI and automations. How do you see the appraisal landscape shifting?
[Jonathan Miller]
So there are, the way to think about appraising in the, you know, your audience is gonna think of appraising as a bank appraiser. And I would think, you know, real estate agents thinking about, you know, who am I gonna interact with after it goes to contract on site, that sort of thing. The traditional appraisal sort of career position in the home buying process is basically within about five years of going away.
And it’s gonna be automated valuations like is estimate and not have a human being walk through. And the reason why I know this is first of all, because in my, I have a platform that I write a lot about. In fact, I’ve been writing about this topic so much over the years that there was a hearing called in Washington and by FHFA, the regulators over Fannie and Freddie.
And I was on my bucket list. I was on C-SPAN for three hours. And this was one of four sessions.
And basically it’s the catch 22 of the appraisal profession, which is we’re regulated like we’re medical doctors. This isn’t rocket science, but on the other hand, it’s a very subjective skill. And like one of my good friends in Oklahoma always tells me, you know, a drive by or something where you don’t go in the property, you don’t know if 250 feral cats are living there.
And what Fannie Mae and Freddie Mac who are doing about 70% of the mortgage, touch 50 to 70%, I’m sorry, touch 70% of the mortgages today are openly talking about pushing appraisers as just data collectors and they’re gonna automate all the analysis. Let me just tell you what that means. That means a financial crisis five, 10 years from now, not today.
We’ve all been down this road before for other reasons. But what’s really interesting about the Zestimate or that’s the consumer version, but there’s a lot of AVMs, Automated Valuation Models. And the problem with the Zestimate or that product is and why it’s very dependent on individuals and not just pressing a button and getting a number is because with an AVM like a Zestimate, they’re on their website, their median accuracy rate for a listing what it sells for is about 2%.
That means that 50% of its median, 50% of the time, the Zestimate is within 2% and 50% of the time it’s not. So that’s pretty much garbage, right? But it gets worse.
That’s if the property is listed. If the property isn’t listed, it’s just there and hasn’t sold recently. The median accuracy rate is 7%.
So that means 50% of the time that Zestimate is within 7% of what it actually sells for. And 50% of the time, it’s not within 7%. So the difference between listed and not listed is about 5%.
So the real estate community, their brokers and agents actually, because they’re doing the heavy lifting on the pricing, making the Zestimates more accurate, but they’re not accurate because it’s only 50. Their metrics on their website, people don’t understand what median means. It literally is only half the time that that 2% number is achieved if it’s on the market.
So it’s kind of silly, but that’s the future of Fannie Mae and Freddie Mac mortgages is it’s going to go automated. But then my firm, Miller Samuel in New York, we appraise crazy stuff like things that are not, we do a lot of litigation where we testify in court, divorce or whatever, but we also do a lot of crazy stuff like there’s a hallway at the end of a co-op building, a 10-story co-op building. The end of the hallway, there’s apartments across the hall from each other and the person that owns one apartment bought the other apartment and connect them.
So they want to buy that hallway space. That’s not market value because someone on the eighth floor is going to come down to the third floor and say, hey, I’d love to have a chunk of that hallway. It is a very specific value.
Interesting. And we do things like they don’t vent a Starbucks in the retail on the ground floor properly. So your second floor $4 million apartment now smells like Jamaican Blue Mountain blonde roast 24 seven.
And what’s the damage to that? So appraising is not just, hey, find three to five comps, put them on the form and you’re done. There’s a lot of other types of valuation as well.
[Mattias]
Yeah, a hundred percent. It’s not an exact science. And I think that’s something that I have, one of the hurdles of explaining to clients as well is that it’s not, it is subjective.
Like it is, and there’s an art to it and there’s times where it’s not done well.
[Jonathan Miller]
Absolutely, it’s a surprise waiting to happen for some real estate agents, especially if an appraiser, the way it’s happening now is, we have this sort of saying here in Manhattan that an appraiser in Albany, New York, our capital, like hours and hours and hours away by car wins the low bid on a bunch of appraisals comes into our market, doesn’t know anything, doesn’t know that the values change dramatically block to block and cranks out five to 10 appraisals in one day.
That’s a disaster, especially the valuations that are sales, that there’s a lot of thought going into the process. So we have a lot of that sort of thing happening, which hurts our profession as well.
[Mattias]
Yeah, that’s really fascinating. Why do you think that Fannie and Freddie are pushing for this to be more automated? It’s not, I don’t see, like the consumer’s- I’m their best entry, yeah.
[Jonathan Miller]
I think the reason is they have a long history. They have a culture, a very sort of, it’s really Fannie Mae, because Freddie Mac is sort of the awkward stepsister. They were brought in in the 60s to compete with Fannie Mae, but they really just mirror what Fannie Mae does.
Fannie Mae is like the leader. And Fannie Mae has a very, how do I call it? A very sort of can-do corporate culture where they can just do everything better than anybody else.
That’s basically when you work or talk to them, that’s basically how they think. And they are very arrogant about this, that it’s sort of doublespeak, but they’re basically making the moves. So for example, during the pandemic, appraisers, we were complaining because we were being forced by banks to go into apartments during a global pandemic.
There was no shots at the vaccines at the time. There was, it was just basically going harm’s way for 500 bucks for whatever the appraisal fee was and risk catching a disease. Remember, we’re multifamily.
We’re not like single family where it lives like hallways, narrow elevators. By definition, you’re closer to each other. That’s the takeaway.
It’s not like you’re out in the middle of nowhere. And the problem was, so they held, we could do like drive-bys. That sounds like a South Central sort of LA term, but we did a lot of that temporarily for probably nine months.
And then, and so their mortgage origination, Fannie Mae and Freddie Mac’s went to about over 60% of their mortgages. There was no inspection done. And then they reverted after the pandemic to about 10 or 11%, which is sort of the norm.
And so in my view, and people I’ve talked to, they were testing the waters for whether they would basically drop the appraiser. And everything that they’re saying basically suggests that. So I think within about five years, our industry will be, at least on the banking side, we will be gone unless there’s some other crisis before him.
[Mattias]
Yeah, that seems really short-sighted. A parallel I can make as I’m thinking about it in our industry and real estate agent sales is, if we have the AI kind of overtaking a lot of things and making it seem easy to, you can have AI chatbots, you can have AI, you can clone your voice, you can have your AI voice answer the phone. You can send out AI emails, you can send out AI texts, create it, whatever.
All that to say is that I think that it seems easy and it sounds pretty good, right? But I think the danger there is that real human authenticity. And I think that is something that is gonna be, we’re gonna get through this, and I’m a huge, I like AI, I use computer nerd, don’t get me wrong here.
[Jonathan Miller]
We’re in the middle of a wild hype cycle.
[Mattias]
Yes, and I think it’s gonna be more and more clear that you want that human touch. Art, there is genuine connection with people that we cannot really get around. And I think that’s gonna be more and more clear as maybe the hype settles, if you will.
And just a quick plug to my CRM, since it’s kind of based on that principle, looking to connect with people in a real way using the four metrics, tracking people’s real things like their kids’ ages, their spouses, their occupation, their hobbies, all these things that you can then more systematically make genuine contact, genuine connection with people. And again, don’t think that there’s a great way to have AI do that for you. And I think as soon as people sense it, it just, it kind of cheapens everything.
And there’s so much noise that you’ve got.
[Jonathan Miller]
You establish trust through personal connections. And there are some things in life that are just people businesses. And I think this is one of them, being a toll collector on the parkway is not one of those.
But a real estate agent is absolutely one. And that’s just a key characteristic in why after the industry has just gone, at least in my career, just seemingly, there’s all these sort of automated approaches that have never been successful.
[Mattias]
I think what you just said is describing And I think to the same degree, when we have, we get into the nuances of really understanding a market. And like Manhattan, there’s nothing like it. I mean, that’s, I’ve been, my brother-in-law went to NYU and I was, I went to this weird one bedroom apartment that had like a window that you couldn’t open because there’s going to be a waterfall every so often.
And there’s nuances that I don’t think you can really program into software to understand. And I think that’s, we got to really, take advantage of technology. It’s not going to go away, but just like the dot-com bust, like obviously we still use the internet, but we have to know where its place is and how to use it and what it can’t replicate.
With that, I want to move into the golden nugget section. If you’ve given us a lot already, but Jonathan, what do you have for us for golden nuggets?
[Jonathan Miller]
So I think the first thing is read the whole thing is what I think about. A lot of people read the first, like whether it’s an article about the market or something that’s going on. I don’t, I think we’re all in such a hurry.
I think we need to invest a little bit more time in critical thinking. And I find this, yeah, I’m in a lot of meetings and I find that people, I’ll be at a conference and people say, hey, I saw your article on Bloomberg and it was all about this. And they’re telling me and I’m like, boy, that wasn’t what the article was about.
But they, I think when, I think there’s a little bit too, I think we pay short shrift to spending an extra 30 seconds and just read the whole thing is, it would be better.
[Mattias]
The, like taking the headline and kind of running with your own interpretation of what it probably was about.
[Jonathan Miller]
Right, it was about, you know, something completely different or very nuanced. Yeah. Oh, by the way, just on that topic is that when a journalist writes an article, the headline is not written by the journalist.
It’s written by the editor. And so sometimes the editor’s objective is maybe to get more SEO than the journalist who’s trying to get it right, right? So I’m not criticizing editors, I’m just saying like they have different objectives, right?
And so that’s why, you know, like when I read again, I don’t mean to be repetitious, but sourcing is important. So like in, when we cover the, we read about the real estate market, there are certain journalists that I just lock into that I read about, that I read their stuff. I don’t care what the title is, but I read their stuff because they’re always so accurate and insightful.
And again, it’s the source is the focus. I love it.
[Mattias]
What about a favorite book, one that you think is fundamental that everybody should read or just one that you’re currently really enjoying?
[Jonathan Miller]
So I, this is a book I read. It was one, you know how you have books laying around that you just never get to, and then you get to it, you’re like, oh my goodness, I should have read this a few years ago when it came out. There’s a book about Jack Welch, the, you know, he’s passed away, but the former CEO of GE Capital.
And it’s basically the title of the book is The Man Who Destroyed Capitalism. And it answers so many questions about corporate America and their relationship with employees. And I think in the real estate industry today, you know, with sort of the giants, you know, the mergers and all that’s going on, I really think it’s something to pay attention to.
I couldn’t put it down. It was spectacular. I can’t think of the author offhand, but it was The Man That Destroyed Capitalism, I think is the title.
It’s about Jack Welch, the CEO of GE Capital or GE.
[Mattias]
Well, Jonathan, this has been a fantastic conversation. If anybody out there wants to get, if they’re driving, et cetera, definitely go to our website, reiagent.com and sign up for the newsletter. We will send out a, you know, summary of the key points every week of the two episodes that air, including this one.
There will also be a blog written about this, including all of our past episodes. So you can get that in a different type of format. But also Jonathan, if anybody wants to read your current works, et cetera, where can they find you?
Our website, are you on social media?
[Jonathan Miller]
Sure, so I would say the best way to reach me or see what I’m doing, I’m unfortunately one of those people that is sort of, I push out a lot of content. So you’re not committed to read everything that I write, but I probably go over to housingnotes.com and I write about three to four pieces a year, except a week rather, except when I’m on vacation, I try to avoid that. And I’m touching on topics that affect or things to think about in real estate.
And there’s a lot going on right now. So I think you might get something out of it.
[Mattias]
Awesome. Well, Jonathan, again, thank you so much. People, please follow, like, subscribe, all those good things.
Anywhere you get your podcasts, definitely follow us there, leave us a review. We’d greatly appreciate it. And stay tuned for more awesome guests like Jonathan.
So Jonathan, again, thank you so much for being on the show. You bet, my pleasure.
[Erica]
Thanks for listening to the REI Agent.
[Mattias]
If you enjoyed this episode, hit subscribe to catch new shows every week.
[Erica]
Visit REIAgent.com for more content.
[Mattias]
Until next time, keep building the life you want.
[Erica]
All content in the show is not investment advice or mental health therapy. It is intended for entertainment purposes only.
