Transcript: Jonathan Miller



The transcript from this week’s, MiB: Jonathan Miller, Appraiser Extraordinaire, is below.

You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.





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VOICEOVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: This week on the podcast, I have an extra special guest, Jonathan Miller, returning champion returns for his fourth appearance to talk about housing and all the craziness that is going on. We discussed “Is housing in a bubble”” “Are we looking at the death of cities?” “What’s going to happen with urban real estate from both a residential and a commercial perspective?” just everything involving real estate.

And we talk about something that you may not be aware of but as someone who runs one of the larger real estate appraisal and data analytics firms, he’s been very influential in the space discussing systemic racism that’s built into the real estate market both from a realtor and an appraisal basis, how a lot of the industry groups are in his terms, like me, he said, they are White, they are male, they’re older, they have not been appealing to a more diverse crowd and a lot of people in those industries are aging out.

And so the why the appraisal groups and why the realty groups have been so far behind the curve that they are starting to be subject to a whole lot of external pressure to become more diverse, to bring in more women, more people of color onto the groups that oversee the industry.

And Jonathan’s been very influential in that space, has applied a lot of pressure both to the appraisal group in the real estate group and starting to see results. More media have been covering the subject and we actually discussed some crazy stories about African-American families who have learned that if you are going to do a refinance of your home and you want or you want to sell your home and get it appraised, take out all the photos of your family, put in photos of a White family and have one your friends or neighbor meet the appraiser and pretend it’s a White-owned home, it could be worth 40% more in the appraisal.

Crazy stuff that he’s been very, very critical of and the media is now just starting to pick up on it there been a few stories in the New York Times and Washington Post about this. Anyway this is just fascinating conversation about real estate with one of the most knowledgeable people about the industry.

So with no further ado, my conversation with Jonathan Miller.

VOICEOVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: My extra special guest this week is Jonathan Miller, this is our fourth interview and the first let’s call it, post pandemic edition. Jonathan is the founder and CEO of Miller Samuel, one of the largest real estate data analytics firm as well as being an expert appraiser.

In fact, he is the sought after, the go to appraiser for some of the most expensive penthouses in New York City. Their data powers a lot of the publication that many large brokerage firms use for their own analysis and media presence.

Jonathan Miller, welcome back to Bloomberg.

JONATHAN MILLER, FOUNDER AND CEO, MILLER SAMUEL: It’s great to be here, Barry, and I feel like every time, it’s a new adventure. So the fourth time can only be better.

RITHOLTZ: Right, so let’s start our adventure talking broadly about national housing. What is the state of the national residential real estate market here in the U.S.?

MILLER: Well, it depends on your perspective, if you’re a seller, it’s a robust market, not quite a bubble, but it is characterized by a chronic lack of supply across the entire country, and combined with record low mortgage rates, a little bit of an uptick recently, but that is creating this insatiable demand and it is a national condition, it is not, you know, pockets of the country, it is seemingly national and certainly doesn’t seem sustainable.


RITHOLTZ: So it’s interesting — it’s interesting you are saying it’s created by these low mortgage rates, but we’ve had very low mortgage rates for a couple years now. How much of this is driven by the pandemic. We heard a ton of stories about “Hey, I just got to get out of this tiny apartment with my family.” anyone who could afford to buy a house did. Is that still a driver here?

MILLER: Absolutely, so the way I looked at the pandemic is it is a great disruptor, you know, it has — it made Zoom, the remote office technology ubiquitous in 24 hours, it also caused a lot of people to sort of think about their living conditions and fantasize about moving or going somewhere, in many ways it made things like the federal law called – nicknamed the SALT tax, job — cuts and recovery act that really fueled a lot of – a good part of the migration to Florida.

There has been a whole bunch of things that have been triggered and I think it just was triggered by the pandemic in terms of being over-the-top, and what is surprising, especially in a lot of our contract data, we cover about three dozen housing markets for Douglas Elliman Real Estate nationwide and the contract activity is not slowing down.

In other words, sales activity in many of the markets we cover like Southern California and Florida are seeing new signed contracts that are double last year’s level or more and we are starting to see, you know, a lot of that surplus inventory that Florida was known for be eroded to, not saying that there’s a dearth of supply but nowhere near the levels that we saw pre-pandemic. So you could blame it on the pandemic or you know, claim at the pandemic but I see the pandemic is more of a you know, the disruptor that made these things, accelerated these phenomenon.

RITHOLTZ: So why is there such a shortage of houses for sale and how long will it take for supply to catch up with this big demand?

MILLER: Well so I think the question is how much more will prices rise before demand cools? We don’t have sort of institutional credit middleman that is enabling purchases. Credit conditions are still sort of you know, defaulting to more conservative than the historical norm in terms of mortgage underwriting. I’m not saying you know, we are not seeing wire loans and maybe things like that on the margin, but generally we’re seeing, you know, a little bit more conservative views taken by mortgage lenders than we crealry saw in the housing bubble where you just had to have a pulse…


MILLER: … a mirror to get a mortgage, we’re not seeing that.

RITHOLTZ: So at some point, things are going to — the demand will slow because of lack of affordability. One of the big challenges, I think over the last five or six years that was way before COVID is that inventory has been chronically low for a long time and basically since the financial crisis.

And one of the problems or the reasons for that is a lot of national homebuilders have pivoted to luxury, you know, I think luxury you know, high-end home building was the norm in most urban markets around the country, most suburban markets like it was all about that and one of the drivers of that has been you know, land prices haven’t had a chance to reset after the financial crisis.

You know, rates plummeted to the floor after, you know, the Lehman moment and, you know, various other issues and really fueled a frenzy which kept land prices high. So even today, we are just not seeing, you know, that component change and now with lower mortgage rates and the surge of demand, resources like labor and materials are off the chart. So it’s really difficult to build affordable housing.

So I think, you know, the outlook for that is not so great if you’re looking for housing activity to increase in a very large way, and I think – and then on top of that, we have a new layer of demand in the market which is investor homes which are, you know, a remnant of the foreclosure crisis about a decade ago where Wall Street came in like Blackstone and other groups and bought a ton of foreclosure properties and really thought it was an in and out strategy and apparently, you know, it’s not, and we’re probably going to see more of that.

It’s a whole new segment of the market that is going to end up competing with the everyday consumer homebuyer type.

RITHOLTZ: Yes, that’s one of the unintended consequences of making bond yields so low. anything that can be financially engineered to look like a bond yield and I would think middle-class rental homes probably can be massaged into that. That’s an issue ….

MILLER: Right, and…

RITHOLTZ: Go on, go on.

MILLER: No, I was just going to say, on top of that like that, now it is becoming a vehicle like – you know, to – for a family that wants to get their children to a better school district but they can’t afford to buy the house, they are renting a house. You know, there is a lot of and now with Zoom and the other sort of remote idea, I think the next big topic in housing is going to be you know where do you live.

And I know that is a sort of silly open-ended way to say it, but there’s a lot of rethinking that is going to go on, what human behavior is going to be like you know, in this next couple of years after hopefully the pandemic is brought under control or eradicated or whatever the scenario is because Zoom is the residual, it is still, you know, it’s not going away and its implementation into housing has an incredible – has and will have an incredible impact on rethinking the way we think about the relationship between work and home.

RITHOLTZ: Yes, that is kind of fascinating. You know, my wife and I, who we know each other socially, we know each other’s lives, we — early in the pandemic, we would just get in the car and go for a drive and look at different neighborhoods including houses — we — so I’ve been in this house I think September 7 years and we drove through neighborhoods that we had looked at and really liked but said you know that commute is just — it’s just 15 minutes too far to do five days a week.

Well, pre-pandemic I started working from home on Friday so it became four days a week and post pandemic, I wonder how many people are to be going into the office two or three days a week which means those more distant – I don’t want to call them suburbs, exurbs, the further …

MILLER: Right, almost exurbs. Right.

RITHOLTZ: Right, that next wing out that maybe it’s more than an hour commute maybe it’s a 90 minute commute, are people going to start looking at those as viable options for the magnet cities like New York or DC or San Francisco or Chicago or Miami or wherever, is the premium you are going to pay for being 30 minutes from Manhattan going to get arbitraged away and you are going to start seeing those 90 minute commute tick up in value?

MILLER: Absolutely, I think it’s already happening, we’re seeing in the suburbs, that — New York City, we’re seeing a hotbed of activity as you move farther out and part of that is affordability.

So you know you can get more as you further away from the city because I think the way to think of it is and this is sort of a generic application is you have right now, you have the big office towers in New York and likely most other cities are 80% to 90% empty and they will, you know, fill back up as everybody start to feel safer which with the rapid vaccine adoption, that seems to be happening faster than what everybody anticipated.

But, you know pre-COVID, about five% of the workforce was 100% remote and you know, there is a lot of talk about doubling or tripling or even more so it ends up being 10% or 15% not huge increase relative to the total workforce.

However more than 50% of the remaining employees are going to be in this scenario that you’re talking about where you know maybe they work five days a week, now they work in the office, now they work four, or three, or two and I think what you are going to end up seeing is you are going to see a trade off of fewer – commuter, fewer miles traveled for commuting, but the average length of a commute is going to be longer.

And in fact, one of the — one of the terms I have used to describe this and have made great effort to get this into the urban dictionary is the term called primary (ph) that you know we’ve seen housing markets that were seen as second-home markets like in the New York metro, there is the Hamptons or there is upstate Connecticut or there’s the Hudson Valley, those markets are – you know, they are vacation homes, that’s where you go to vacation on, and now they are becoming a second primary home because the consumer, you know, says “hey I’d love to be able to be out here and work you know good part of the week.”

We are seeing the same phenomenon in Aspen Colorado that others are — you know, you think of vacation tight market, the question that would be asked, well, who wouldn’t want to live in Aspen, even though they have a big home in New York or a big home in Florida or whatever.

So you are seeing this recalibration of I call it the tether between work and home, the length has become intimately longer, and like you said, there is going to be in arbitrage that goes on in that relationship.

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So given all that and given these rising prices, I mean obviously you make a $10 million house, there’s a ton of markup on everything, but wouldn’t you expect what’s the median home price today something like 350 I haven’t kept up with recent increases…

MILLER: Right, in the threes. Yes.



RITHOLTZ: But now look at depending on the region look at the under a million but over half a million, that’s like a solidly upper middle-class home in a lot of the countries…

MILLER: Right.

RITHOLTZ: Wouldn’t you think there is a ton of demand for that, wouldn’t that attract the builders to move into that space?

MILLER: Yes, the problem is that land prices are the problem that that land as a factor in the equation, so when you think about property appreciation, you know, if you’re absolutely thinking in pure wonky terms, what’s actually appreciating is the land in terms of housing prices rising, it’s not the improvements, the improvements depreciate.

Now of course when you renovate, the value of your home goes up. So I’m just speaking in sort of general terms that the appreciation is the cost of land is really what’s driving higher home prices and that’s what builders are facing, are higher land costs, you know, aside from the all the other issues like lumber and labor et cetera.

So it really is a challenge, I don’t know how that gets resolved. The other thing is there’s been tremendous hype, I know specifically in the market that I cover that there’s been a tremendous hype about the suburbs being more affordable.

And so that’s part of this narrative, the cities are expensive, you know, so the suburbs are cheaper. The problem is that in the last couple of quarters the you as we came out of the sort of lockdown period, were seeing like in New York Metro, the suburban housing market that ring those markets, about a third of the closings that occur in each quarter are sold above the last asking price.


MILLER: Meaning they went to bidding wars, a third of the market, right? So that that sort of, and at the same time we are seeing weaker housing prices in urban markets or not you are not seeing the same rate of growth, that’s been sort of one of the patterns of this, there has been this equalization if you will of comparison.

RITHOLTZ: Quite fascinating. So let’s start with another really big question which is this is the end of cities. True or false?

MILLER: False, but let me out a qualifier. The driver of this narrative is just – it’s for the lack of a better word, it’s just dumb, and the reason why I say that is because the problem with the — the problem with the way this is thinking I’m a little Manhattan centric so let me just tell it from that perspective and the I will sort of spill out to the U.S. is that you know when we had this the lockdown a little over a year ago, and everybody is hunkered down, you know, Manhattan, there is a sharp outbound migration to the suburbs and the rental market collapsed, we saw rental prices fall about 25% — 20% to 25% depending on the segment.

We saw home sale prices not really fall immediately but volume collapsed following more than 50% and a lot of the deals that closed during the lockdown were just contracts that virtually closed, you know maybe you could count on one hand maybe the number of people in the market that actually bought something site unseen and just did it virtually.

And the narrative was that what you know, people are fleeing — this the narrative was fleeing the city in sort of air quotes are “Exodus” in air quotes in the suburbs where the beneficiary and there was going to be this structural permanent move to the cities from the cities to the suburbs.

As it turned out, the narrative should have not been city to suburban or urban to suburban, in New York metro, it should been Manhattan to the outer boroughs and suburban because Manhattan was really the laggard, boroughs like Brooklyn and Queens while the rental market was pummeled, their purchase market was a frenzy, they were acting just like the suburbs were.

And what we saw initially was just this massive outpouring from the rental market, rental volume, new leasing activity fell between 70% to 80% on a month over month basis in April, you know, it just collapsed and that many of the first-time buyers in the suburbs actually came from the Manhattan rental market because they’re less – they were less anchored to the city. I always felt that many cities went about two or three years beyond what I would call an affordability threshold, and so they were much faster to leave when they didn’t feel safe and they didn’t have public transportation convenience without being concerned or cultural activities, there was an anchoring.

But the false assumption is that all those people are going to be outside the city forever and there was just a pivot and that is not what happened. And in fact, in the latter — in the recent quarters, especially this first quarter and as we look at a monthly basis, if you are going to the spring market which is sort of the Super Bowl or World Cup of every housing cycle, I think the conventional wisdom lies well, now that the city, Manhattan is starting to fare better, sales activities up year-over-year, rental — the rents are not falling and they are falling a lot but they’re not going by nearly as much instead of 25%, they are falling, you know, 14%, month over month rates are stabilizing. And so you would think that Manhattan signs of positive improvement or parity with last year would mean that the suburbs are you know, a dark dystopian hells gate…


MILLER: You know, and that no one’s there to — and that’s not true, that suburbs are thriving too, so externally I think there’s a lot of this is just, you know, mortgage rate driven that and combined with sort of fear of personal safety and that’s really all it is.

So the narrative of urban to suburban I think has been really over overstated.

On top of that, there’s a really good story – or a study that came out of the Fed, the Cleveland Fed using New York Fed data that basically showed that really the reason for the White population in the cities are lighter is because net migration involves two numbers, inbound and outbound. And the inbound has been on hold, people aren’t going to move into an urban location if they don’t feel safe…


MILLER: With the vaccine adoption, we’re saying record new leasing activity in the city every month since October for its respective month has been the highest on record.


MILLER: So there’s a lot of churn and that is it doesn’t mean we go back to where we were, we’re still at peak Zoom, I think Zoom is still going to be a factor, but by no means are the cities far from over. Of course I’m biased, I love New York, I love the city, and I was just sort of scratching my head feeling – everybody is writing the cities off, it’s over.


MILLER: And I just don’t see that.

RITHOLTZ: So let me see if I can reiterate a few key points in and ask a few follow-up questions. My view has always been hey, city states have been the dominant form of culture, art, economic business energy for 2000 years, there’s a reason for that, it’s not going to just disappear. That said, you see some of the crazy pricier cities like New York and San Francisco are we looking at a potential price reset?

And we haven’t talked about office space but assuming that there is an excess of office space, is that going to get converted to residential, what — how do you see this playing out over the next couple of years?

MILLER: Yes, so those are really good points, I do see you know — I think many people don’t realize like the what I call the eye candy of real estate you know the stuff that is uber luxury, the billionaire’s row of Manhattan say for example, that it’s not housing for mere mortals I like to say. I think maybe people don’t realize that since 2016 – 2015, 2016 which was the peak of the post Lehman uber luxury development market, that prices in some buildings are down 50%.

Like you look at a building like 157 on – you know, there were seven or eight resales in 2020 and the median decline in price as a resale meaning the sponsor, the developer sold in 2014, and then resold, and then sold, you know, the person that bought it from them resold at some point in 2020, you have like one sale it was 18% below, five or six sales that were 40% below and one that was over 50% below what the seller originally paid from the sponsor.

That’s quite a reset already and that was going into the pandemic.

RITHOLTZ: 157 59th Street, Jonathan, is that what you are talking about?

MILLER: 57th street.

RITHOLTZ: 57th street.

MILLER: 57 Street you know what we would call the Manhattan central business district and so you know a lot of that reset had already happened before COVID, before the pandemic. So I don’t see that – and that was a market that was heavily invested in the idea that there was a wide and deep market for billionaires for mega you know,10 million and up type units.

And as it turns out, there is a…


RITHOLTZ: You have written down a lot of those buildings were not sold out a couple years ago, did they ever sell through all units?

MILLER: No, no, there’s still like in aggregate if you do a survey, it’s well over — half the units aren’t sold.


MILLER: At some, you know, the earlier in the – the earlier in the development boom post financial crisis, they have higher sellout than the more recent entries but in aggregate, it’s about half.

RITHOLTZ: That’s amazing.

MILLER: So not very successful but on the – you know, on the flipside for the developers themselves, many of them broke even on construction costs at 40% to 50% of sales.


MILLER: So they can hold these things for years but it’s you know it it had a limited lifespan and that is not like — you are driving down the highway, you know, at 80 miles an hour and then you get off the exit and the exit speed is 45, it feels like you’re going five or 10 miles an hour.


MILLER: and I think that the danger in looking at sort of uber luxury, I see this as a circus sideshow it not that real the real issue which is very difficult to build affordability – affordable housing, in New York, it’s very complicated, and in any urban market and that is a challenge that’s been around you know for a century.

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Let’s stick with the topic of urban apartments that are for sale.

So I’m hearing you break this into a couple of different strata — affordable housing which if anyone’s been around Manhattan and in full disclosure, our offices are like half a dozen blocks apart in midtown near …

MILLER: Right.

RITHOLTZ: Bryant Park, affordable housing has pretty much been pushed out of Manhattan to the outer boroughs, there’s some but it’s becoming fewer and further between, then there is sort of midpriced housing. And I’m hearing you really differentiate between what I think of as luxury housing which is a nice apartment on Central Park West store somewhere on the Upper East side with a balcony versus these crazy uber billionaire housing.

MILLER: Right.

RITHOLTZ: And those are two different strata, how are they managing in terms of sales and how important is that to urban centers like New York or Chicago or San Francisco Miami and down the line, is it — is this is just a sideshow is this really a key part of the real estate market there?

MILLER: Well, the circus side show I’m referring to is the sort of uber luxury category which you know, really starts at 5 million and up, you know, the first wave of the new development after the financial crisis was 10 million and up and then they realize, you know, that was too much and so split the units in half or whatever, and you’re starting to see you know – well, you are not starting, you are then seeing you know, a very slow adoption and large repricing – significant repricing from say 2014, 2015 hights.

The balance of the market, new development is being snapped up the lower you go in price, the faster they are absorbed so the challenge is how do you create something that is affordable because the demand is there, it’s just there’s just not enough of it and that’s the problem the way we sort of try and you know, the sort of – you know, the optimum new development pricing for like a modest two-bedroom, you know, it’s really going to be, you know, $2 million to $4 million when really the market demand is more like $1 million to $3mln.


MILLER: So sort of there’s not quite match because it’s been driven by land prices, land prices you know have been you know, historically – Manhattan land prices have always been very high, but it’s also very complicated and difficult to build in New York and it takes a person you know pretty much you know an insatiable drive to develop to do it and you know, the rewards can be very high.

Just a side note, you know, language and how things are articulated is everything. In the 1950s, the term luxury meant that you have an elevator and maybe had a door man …


MILLER: Like you know like that was luxury.

You know, today, luxury you know is, I mean, I define luxury in many housing market I covers the top 10% of transactions by price. I don’t — I do it in an objective way not a sort of subjective way. But that market, you know, often behaves very different than the balance of the market…


MILLER: You know, the market is very segmented. I think when we look at real estate and talk about affordability, we tend to sort of look to the very high-end as sort of a reason but you know, when you have a one bedroom apartment in Manhattan sort of an average one bedroom at a modest building selling for 1.5 million, right? As sort of an average, you know, that’s a big number.



RITHOLTZ: Yes, but it does have an elevator, right? I mean, so…

MILLER: It does have an elevator and does have a doorman and you can – it does have a — youhave a bathroom in your apartment and you definitely have the basics.

RITHOLTZ: There is no doubt that top 10% is different than the rest of the market and you and I had a conversation a long time ago when we discussed mortgage rates are just not relevant to that market segment.

MILLER: Right.

Until the pandemic so.

So I’m exaggerating a little bit when I say that. So the way to think of Manhattan in aggregate all the sales transactions are in any given year, we have about seven years of data are about 50% cash.

Meaning that they bring cash for the closing, now they could’ve gotten financing in Ireland and brought the cash over but …

RITHOLTZ: It’s mostly…


MILLER: …going to see that.

RITHOLTZ: It’s mostly — so I don’t know if we discussed a buddy, lives on Central Park West and he was trying to do a refinance of his mortgage and he found it incredibly problematic and he was working his way through – is when rates first collapsed and he went to the head of the co-op board, it was a buddy of his…

MILLER: Right.

RITHOLTZ: And said “Hey what what’s the problem why are you guys having such a hard time with all this paperwork?” And the guy paused and said, I won’t mention his name, but he said …

MILLER: Right.

RITHOLTZ: You are the only person in the whole building that has mortgage, the entire building not too far from the Dakota everybody was a cash buyer just to give you a sense of wealth at that level, nobody is borrowing for their primary residence there.

How much is it? 12 million, all right I will write you a check.

MILLER: Right, exactly, and it’s not their – right, may have multiple read so the way to think of it is when you – before the pandemic, you split cash buyers and 50% of the market and they scale by price.

So the more reliant users on financing tend to be at the lower end of the price spectrum so we talk about under $1 million, you know roughly 40% of those buyers rely on — I’m sorry 60%, 40% pay cash, 60% …


MILLER: …get a mortgage on average.

As you move to say the operand like north of 5 million, it’s around 80% pay cash and 20% get financing but I would argue that the 20% financing don’t do it for the purchase, they do it because their financial planner said they can get a deduction.


MILLER: And what has happened post pandemic and II think this is a temporary blip that the numbers have shifted a little bit and that even you know instead of 80% to 90% people paying cash at the top, it’s like 70% to 80%, it dropped about 10% just because rates are so low how could you not take advantage of them at that you know…


MILLER: Even at that price point.

RITHOLTZ: Free money.

MILLER: And because the market has been so soft at the top that you don’t need that to differentiate you from other buyers like you did five or six years ago by paying cash or not having a mortgage — or mortgage contingency.

RITHOLTZ: Interesting.

MILLER: You are starting to see, we are starting to see, you know, while we’re continuing to see bidding wars even during the pandemic, we saw bidding wars at about 3 1/2% of the Manhattan transactions which seems like a lot but in 2015 it was 31% much like the suburbs are today.

RITHOLTZ: It’s a tenth.

MILLER: But we are seeing some upward price pressure now in some of the segments that are a better – you know, we are starting to see a little bit more intensity because inventory which was bloated during the lockdown has come down and it’s just about 10% to 12% above the long-term norm.

So we are not really dealing with the market that’s just lousy with inventory, it’s really tightening up a bit.

RITHOLTZ: So I have two last questions related to cities, and the first is we started talking about office space let me let me ask that question in a different way, would you be a buyer of commercial real estate in the city, have those prices fallen enough that doing conversions are financially attractive including to those pension funds and institutional investors that are looking at real estate or has that reconfiguration — has that reset not taken place yet?

MILLER: So when you think about a real estate transaction or real estate market and how you get to the point where prices are much lower, there’s always a step missing in this process and we’re in the middle of this step and I will explain. So think of it this way, there’s an external event and sales activity plummets because of whatever, you know, think of COVID right?

So transaction activity plummets whether it’s leasing or you know, office building purchases, it plummets. So what happens right after that? Inventory picks up a lot, right? You know supply and demand go on opposite directions.

And so the next assumption the next step is that prices fall except for the part where the seller has to capitulate to market conditions and that takes a couple of years. It is like, think of a, you know a seller in you know, your neighborhood and they wildly — the market plunges, you know, the factory closes, it supports all the jobs in the town and they don’t reset their price because for you know that had this built an idea for a long time and I think that is what is happening with commercial landlords, where you know where there’s going to be in aftermath that is going to be different.

The problem right now is that it’s and there’s a lot of fun – there is a lot of money being raised to sort of scavenge you know the dead carcasses, but I think that’s a multiyear process down the road and the reason for that is because it takes a lot for the landlords to capitulate. The other thing is you know, they are locked in with tenants, you know that might have five years left at a full, you know about pre-COVID sort of rate.

And so I think this is going to play out in sort slow-motion is my guess.

One thing I’ll say about remote work and you know right now I like to say we are at peak Zoom, and so this is not how it’s going to be for office workers, but it’s not going to be the way it was pre-COVID. It’s going to be somewhere in between and we’re trying to figure out where that is. The same goes with landlords, you know that that you know office space, we prove that remote working actually works but it is not optimal, it’s very difficult to train new people, to you know, create office culture, you know, so it works, but it’s not perfect.

And after COVID like I said earlier, it’s still here is an option …


MILLER: So we are going to see downsizing and were going to – you know, but we’re also going to see at the lower rents, we are going to see an influx, I call it a youth Renaissance…


MILLER: And that’s what I’m kind of excited about for cities is you know, one of the challenges of the urban — of urban markets was the whole new urbanism trend, you know, walkability you know, your local, your — you like three or four blocks from your office, and so you don’t need to rely on public transportation, grocery and shopping is like a two or three block radius.

The problem is that as development expanded in cities across the country, the creative class that working and working class were completely squeezed out.


MILLER: And so were, you know, a lot of office workers where they had to live in the suburbs and then sort of commute in. And so what’s happening now with rents down sharply and sales to a lesser degree because they are down modestly in terms of pricing, you’re already seeing, we have been seeing record inbound – or we have been seeing record new leasing activity like the highest since the financial crisis for like the last five or six months but prices are still falling.

And that is pulling in a whole new sort of demographic that I think will have profound implications for the rejuvenation of the city sort of – and I’m calling it like a youth renaissance and that applies to companies, companies that wouldn’t be able to afford Class A office space.

Now the people left you know, holding the bag here are landlords who have enjoyed tremendous you now advantage for a long time, but I think you know, for the mid – for the short and midterm, I think that you know, that is going to be a very challenging world for them.

RITHOLTZ: To say the very least. I was kind of surprised we were in the city this weekend on Saturday, I actually took my wife and her sister down to Renovation Hardware which is down the packing district because my sister in law wanted to buy a dining room table but wanted to see it first and I was shocked about a number things. First I was shocked that I was able to pull up and get a parking space half a block away…

MILLER: Right, right.

RITHOLTZ: Which is unheard of and then second, I try to get lunch rented reservations like days before everything in the neighborhood without proceeding fully booked up which is a positive economic sign and then when we were leaving I was shocked at how parts of the village in Soho were just now sadly, it was beautiful out, but it was just jampacked with people, it was it was a party going on mostly young people out and about mostly masked, that’s a whole another discussion, but midtown was a ghost town and downtown was just fullbore.

Is that a residential versus office comparison because I didn’t know how but how else to read into it like…


RITHOLTZ: When you come through a tunnel and you make your way down to the you know the meatpacking district on the lower Westside you pass through three or four different types of neighborhoods and granted Midtown is usually quiet on the weekends but this was really quiet especially because Soho was just banging, it was amazing.

MILLER: Right, so I would look at this as – the way I would describe what you said was Manhattan and cities in general have an optics problem and so when you think about like a story on Manhattan, or a San Francisco or Chicago, you know, the central business district the camera pans over the vacant boarded-up retail and piles of garbage and you say, wow, this represents Manhattan or Chicago or — and then you go to like the Upper East side are you know another a number of the residential neighborhoods, they are vibrant, it’s not normal, you know, everybody is wearing a mask but there’s a lot of activity a lot of outdoor dining in the nice weather and it is just – it’s encouraging.

But it’s a complete opposite visualization of what you’re seeing in the central business districts. And I think that changes over time as more and more people come in, I think that the big sort of pivot point is going to end up being around September but maybe earlier, is that seems to be when corporate America is talking about calling their employees back you know and I think this is a function of the acceleration of vaccine adoption. You know, that seems to be the default answer, but you start to hear some financial firms talk about –I think it was Credit Suisse and SAP, and I think it was JPMorgan and Bank of America, we’re talking about July, June, May, as really starting to ramp it up.

And two things happen when that happens when the context of central business districts like you know Wall Street or Midtown is that you immediately send oxygen to street-level retail which you know thousands and thousands of office workers are not in that locale and all of a sudden, they are.

So that is going to – I think it will be rapid deployment or resurgence in retail, I’m not saying it goes back to pre-pandemic but it improves dramatically in a fairly fast clip and then the other thing is I think that the rental markets in the central business districts are going to boom in the short term as this callback happens which then sort of brings up the sort of aggregate numbers of you know, the various markets that we covered in terms of real estate activity.

And I think that – and so I look at 2021 as this sort of gradual process as opposed to some sort of light switch but I think the closest we get to a light switch is when corporate America feels safe enough or the employees feel safe enough to start calling people back en masse recognizing that it’s not going to be everybody but it is going to be dramatically more than we are seeing right now.

I think people when they think about remote working, they sort of stereotype it as you are sitting in your suburban house and you’re working remotely with your colleagues, you know, who may or may not be in the office in Midtown for example. But I got to tell you, a lot of the remote work that is going to happen, I think it is going to happen in the city itself.

Just because someone say works at home, once or work at home for a couple days a week, well, they may live in, you know, Washington Heights of the Upper Eastside or Soho, and they’re still doing. So it’s not — working remote shouldn’t be sort of pigeonholed as suburb into sort of you know, cities, it’s everywhere into you know where these companies are located.

RITHOLTZ: Very interesting.

So last question on this segment on cities, when do you go back to the office and when do you have your staff come back?

MILLER: So right now, our staff is already you know where I’d say about 20% back but alternating – they have a schedule so we don’t have too many people in at the same time you know we have some people that live within walking distance and don’t want to they love their spouse but they don’t want to sit in their one bedroom apartment where they are both working all day or they have small kids and they alternate or whatever.

So that — so that’s already happening. I’m very anxious to get back in personally but I’m going to start it slow, I live in Connecticut and I’m a commuter and I’ve had yesterday with the two week anniversary of my second COVID shot so I feel much better about coming in as well – you know, and I’m anxious to.

So starting in May, I’m probably going to come in one or two days a week as a regular schedule.


MILLER: And before the pandemic, for the last like 12 or 13 years, I was only coming in three days a week I was working at home I was already working at home on Mondays and Fridays and so now, you know, I end up coming in two days a week at sort of probably the maybe stay at home one more day than I normally would.

RITHOLTZ: Are you going to drive or are you going to take mass transit?

MILLER: I’m going to take mass transit you know, wear the N95 mask, try to stay away from – I’m going to still be even though I’m have – had both doses, I’m still going to be very cognizant of first of all, you know, there is still risk and is still a lot unknown, but I want to start going back in and I’m just going to be very prudent about it. And I think most of my staff feel the same way. I’m probably not going to everybody in for, you know, probably not until the fall and what we found is that the remote really works but the big, big,big challenge of it where it doesn’t work, where it fails is mentorship.


MILLER: We are really busy, we anticipate being very busy for the next couple of years, we are desperately trying to hire people and you can’t train them remotely, you can’t – you know, they are not immersed in the office and overhearing you know all the problem-solving evaluation questions so it’s really a dilemma that we face, but you know, safety always comes first.

RITHOLTZ: Quite fascinating.

Let’s talk a little bit about something you’ve been writing about for a long time and there are two key issues here I want to touch on. One is racial prejudice in the housing market and then more specifically the topic you’ve been writing about is issues of racial inequality and lack of diversity within the housing industry itself.

You — you’ve been a pretty vocal critic of your own industry when it comes to this. Tell us what’s wrong with the housing industry.

MILLER: So yes, if you think back to the 1930s and think about the federal government and the redlining that was prevalent and the deemed restrictions covenants that were in place for housing and housing markets throughout the United States, I know the Northeast where I’ve grown up and live – live now, you know, a big part of the history of housing and how housing markets grew and were shaped.

And so one of the things that is extremely obvious in my own appraisal profession is that we are an aging professional of middle-aged White males, that is what we are.

And the reason we are is because the leadership in our industry is it sort of sets the tone and so I will give you an example. To be a licensed or certified appraiser, you have to follow standards called USPAP, US Professional Appraisal Practice, standards of professional appraisal practice, it’s called USPAP.

And the problem with USPAP is that the organization that administers it or sets, basically, sets the criteria for entering into the profession you know, what’s — how to behave they have the technical boards for specific things and one of them is called the AQB, the Appraisal Qualifications Board.

And from this organization’s founding because appraisers weren’t licensed and became the licensing — licensing requirements really started in the early 90s FIRREA and really are – there has been no change.

So for example the AQB has not had a minority member until this year and only because of external pressure from myself and others that had been writing about this, they literally set these the standards for entry into the profession which is anemic, it’s been anemic for the last 20 years and so we’re aging out and the reason for that is I think it’s just blindness that they don’t realize so they set up a diversity committee …

RITHOLTZ: Of white guys.

MILLER: Of white guys, yes, which is insane and that what that tells is they can’t see it, right? I think there’s been a lot of sort of, there’s been I believe it’s three stories that are being recycled over and over nationwide about you have you know a — an African-American couple refinancing their house or some example like this, there was one story meeting described in Florida, another in California, I forget where the other one was but it’s all in the same sort of idea where the appraiser comes in and they appraise it for X.

And then the homeowner, you know, has their nonminority neighbor come in and act like they’re the occupant and they take down all sort of personal photos and then magically the home appraises for more and they are able to get their mortgage et cetera, you know because you know and it’s sort of you know you basically saying, look, this was a prejudiced outlook on the value.

And I think in a lot of those cases and you know and who knows I’m sure this is one of those things that happens a lot, it certainly happens in the brokerage industry, there is just a big News Day story the last year you serve an undercover type story. So it is prevalent, it’s prevalent in I would suspect every industry. This systematic racism is here, it’s, you know, it’s here, it’s just one of the things that societies are sort of grappling with.

But unfortunately you know, it’s in my industry, it’s a big thing and there’s nothing that is it’s all lipservice, it’s all just I call it like checking the box, like hey, we have a diversity committee, check that box. But there’s nothing inherently different, it’s the same people that have been in charge for over three decades, right? And they just realize now it’s a problem only because outsiders are telling them it’s a problem.

We have the same issues with our largest trade group, the Appraisal Institute where you know a handful of women and no minority representatives you know as senior executives, it’s just an inherent systematic — systemic problem.

But it’s being blamed on the local appraisers you as like that’s the reason I think it’s more top-down it’s the people that are sort of attracting people to the profession, the people that are setting the standards for entry, I think one of the biggest problems in our industry is that unlike being an accountant, until you have two years of experience full-time, you can’t be licensed, you can’t be certified.

So can you see the Catch-22? How do you get licensed or certified unless that person is like a family friend because on the economic side since the financial crisis and thanks to Dodd Frank, in order to remove moral hazard from mortgage lending, a lot of the appraisal functions like the ordering of appraisals, the reviewing of appraisals has been shifted to giant third-party institutions who pay cap to fee.

So you know you on your mortgage application take — you know, pay X dollars and don’t realize that 50% to 70% of that dollar goes to a third-party company that all they do is make sure you are license in your state, make sure that you’re compliant with whatever regulations are, and that’s it.

So, you’re — you can attract new people in because they competition has, you know, fallen through the floor and then the regulations that we have are created by people that are completely immune to what the challenges are.

And so, we’re really at a crossroads where a lot of the stuff is being pointed out public, but it’s — you know, it’s been built in for a century or nearly a century — over a century, but specifically the housing and there’s no sort of proactive response.

So, people like myself and others had been very vocal about it, naming names, you know — you know, feeding the public intel about what’s going on to try to affect some sort of change to bring more diversity and more people into different, you know, real estate industries. And that’s been my passion for quite a while.

RITHOLTZ: So — so it’s funny you mentioned most people who — who are in the suburbs probably don’t realize — most white families probably don’t realize how systemic it is and — and the moment when I realized was reading one of the biographies of Robert Moses where — and who — Robert Moses was a famous builder who — who had done parks and (inaudible) just, you know, all over New York state his fingerprints are everywhere — highways, and bridges, and just endless infrastructure projects.

And in the New York area there are highways and parkways, and what separates them is the parkways are cars-only, you can’t have trucks on it. And they have this beautiful stone archway. I know that some of these are in Connecticut also and Westchester.

MILLER: Oh, absolutely, yeah.

RITHOLTZ: These archway overpasses. And I just thought they were pretty. It was only reading one of his biographies that I learned that these were designed to keep buses from the city from going to the suburban parks, beaches, et cetera which, at the time, were all wide. I had no idea it was literally a physical impediment to keep urban dwellers out. It was a sort of shocking moment when I learned that.

You’ve criticized the national appraiser board, and I’ve read some stuff about the National Association of Realtors, what’s going on with these big umbrella organizations aside from just the total lack of diversity in their membership.

MILLER: Right, right. They’re definitely a challenge. And the — it’s, you know, interesting the story just told that was in “The Power Broker” by Robert Caro.

RITHOLTZ: That’s the book I was thinking of.

MILLER: And that’s the first — and that is the first book I read when I moved to Manhattan. And — and I just felt like I had to know how the city was built, and it was a spectacular read. I highly recommend it.

You know, I think in — when you think about the real estate world, the real estate community, they’re still — they’re — these trade — you know, you have to remember that these are trade groups so they’re doing everything to help their members sell more, you know. And — and so I think when we look at NAR, National Association of Realtors, they have — I believe they spend — I — I — I thought I read this recently that they have the highest spend per lobbyist in Washington or one of the top people. And, you know, their whole thing is to make real estate transactions easier and faster.

I — you know, when we saw — when we — this news day story on Long Island I would imagine that’s the default everywhere, that’s not — Long Island is not, you know, an outlier. And there’s — there’s just not a lot of insider discussion about how to fix this just like there isn’t in the real estate appraisal to me, which is a tiny sliver.

My profession has about 75,000 credentialed members across the U.S.; NAR has like 1.4 million, 1.5 million members, I believe, dramatically bigger, you know, tremendous lobbying power. And they do have an appraisal sort of subset within the organization that has done some really good work, but still the problem remains nationally.

And, you know, it’s really interesting. There was a study that was done by the Brookings Institute — Institute like two or three years ago that was part of a court testimony — a court testimony — congressional testimony in Washington, which basically said that appraisers — like it didn’t understand what appraisers do, and I think this is one of the big — biggest challenges in valuation is everybody really knows what a real estate agent does, but they don’t know what a real estate appraiser does. And the — and that makes us sort of, you know, we get blamed for a lot of things.

And one of the blame — and we were seeing this in a lot of articles in the public is that we’re the ones that set pricing in a — in a — in a neighborhood or a city. And the problem is is that our profession is really a — a profession of observers, and we — we create opinions for a living, so certainly vulnerable to prejudice in that regard, but our — our goal is not to set markets. Our charge from lending institutions that we do appraisals for is to give a — a market value opinion on what the property would sell for if it’s sold for today. You know, what — what is it?

And we don’t say, you know, we don’t make a neighborhood lower priced because there’s — we’re literally using sales from the neighborhood, so maybe it perpetuates the — the larger problems. And there’s this really a big misunderstanding about, you know, the role that we play and other people play in the industry. And I’m telling you, you know, there’s a long way to go and it needs to happen quickly because it’s long overdue.

RITHOLTZ: Right. That’s funny you mention that the — the — one accusation is you’re — you’re helping to hold prices down. During the financial era leading up to it anyway, the criticism of appraisers were, well, they’re using comparables. So, if a neighborhood is becoming a bubble in price, all they’re doing is saying, look, all these other comparables sold for crazy prices, so therefore, you could give them a mortgage for this crazy price.

MILLER: Right. I mean, you know, that — and — and you’re absolutely right, and — and this is part of the — the problem is that we’re not forecasters, we’re not predicting the future. We’re saying here’s something it sold yesterday for this price, three-way bidding war. So, what is the collateral work today?

The offset to that is the credit profile of the consumer that’s buying, which we have …


MILLER: … nothing to do with. If we were in the forecasting business and there was, you know, more liability attached to our, you know, what we’re writing about, then, you know, the cost of an appraisal would be, you know, five — four, five times what it is now, which I’d gladly — I’d love that. But that is not what mortgage sort of machine wants. They want cost to be nominal.

And, in fact, during this essential or during this pandemic, the GSEs, which arguably, you know, have about 90 percent of mortgage flow through their hands about something like 70 something percent of mortgages that were issued during the pandemic did not have an appraisal. They were — they were just — you know, they ran their sort of their own Zestimate against, you know, their own — you know, there’s — there’s — their Zestimate will be the consumer-facing AVM or automated valuation model and they’re running their own. So, you know, that could be a nice little mortgage challenge down the road.

But — but what’s really interesting — and this is something — it’s off topic, but when we think about Zestimates or AVMs and their accuracy, if you ask most consumers — and I find this amazing, you know, the Zestimate has a median accuracy rate of five percent, OK. So, when you really think about — they hear five percent and like, wow, within five percent.

RITHOLTZ: Sounds good.

MILLER: That’s — that’s amazing except for when you actually read what they’re saying. That means that 50 percent of the median accuracy, that means 50 percent of the time it’s within five percent. And 50 percent of the time, it’s not. That’s pretty — and that’s basically the AVM world that is, you know, the idea of automation so — you know, which is something that we’re sort of migrating towards overtime.

RITHOLTZ: Quite fascinating. So, point blank, are — are home prices in a bubble?

MILLER: No, I don’t think so. And the reason is we don’t have that — that help we got from the mortgage industry in terms of when you don’t qualify for a loan we can’t get one. And one of the things — if you look macro, mortgage volume is in the U.S. has — in terms of like the average loan amount has not kept pace with home prices, so actually we’re not as — we’re becoming less leveraged even though, you know, there’s a tremendous amount of sales activity and prices are ramping up as opposed to Canada, which is the opposite, which we’re seeing mortgage volume rise faster than its associated housing volume so, you know, maybe (inaudible) around they’re going to have the problem that we did that they didn’t have in our housing bubble.

And so, I — I — and I think the one thing that’s good to remember and something I just — I’ve discussed before is that mortgage underwriting is Not normal; it is tighter. You know, if we go prior to the housing bubble era and then — and then go 30 years prior to that and — and use that as the standard, we’re tighter than that era. So, I feel very good about that.

We deal with lenders all the time and there’s — you know, there’s a lot of seriousness applied to marketing. And — and, in fact, you — you definitely are seeing — you know, lenders could be lending more, but they — they are not — they are not on the same page because — as they were in the past because they’re worried about the future and the, you know, future risk. And I think that’s really encouraging because, to me, it suggests, you know, and — you know, we — we — we know that each new — each time it’s different, but that — that I — it doesn’t seem like we have a — a mortgage or a banking crisis, you know, laying at our doorstep that’s obvious. And — and, you know, I think that, at some point, we’re going to see, you know, home sales activity dissipates simply because, you know, financing is going to become a problem.

RITHOLTZ: So, this is a crazy new era where in order to get a mortgage, you have to qualify for one, have an income …

MILLER: Right.

RITHOLTZ: … a credit history and — and a down payment. So obviously …

MILLER: Right.

RITHOLTZ: … it’s different than it was in just ’05, ’06, ’07. But the flipside of that is how much of this is interest rates driven and what happens if rates start to tick up? And what else might cool off this market?

MILLER: Yeah, I — you know, it’s funny I — I always hate the blame or the — the driver on low mortgage rates just because, you know, rates have been falling for over 30 years and housing prices have gone up and down, and volume has gone up and down on of the cycle, so there’s lots of other factors. And mortgage rates, people that sort of track it and live and die by it, you know, they missed a lot of the color. You know — you know, that sort of results in the pricing decision that borrowers ultimately make.

But it is — I just think you can’t go wrong when you — when you have lenders sort of leaning away from risk when it comes down to this, so I’m not — I’m just not that — I’m just not that concerned about it. I think things will cool off activity when we hit a certain level.

I’ve read that about 50 percent of people that have a mortgage in the U.S. have a rate that’s four percent or less.


MILLER: And — and so I — and this actually came from my friend Ivy Zelman at Zelman & Associates.


MILLER: And the — so I start thinking of if we top four percent, you know, that’s when we start seeing like an off switch being flipped or, you know, for the sort of extra activity that we’ve been — you know, the market has been enjoying, you know, with the — the rate drop but …

RITHOLTZ: That’s amazing.

MILLER: … it’s — it’s — it’s kind of shocking that that many people have, you know, that low.

RITHOLTZ: So, when we bought this house — and I want to say it was 2014, so it’s about — I know it’s 2014, it’s about seven years ago, people thought I was crazy when I said I’m going to do the variable mortgage even though it was at the low-low rate of 3.75, and it’s since slipped just under three percent. And I’m just about to the point where I’m ready to say, OK, let’s convert this to a — to a — to a fixed rate mortgage.

But I remember having people say to me you’re doing a variable at 3.75? I’m like, well, as soon as you …

MILLER: Right.

RITHOLTZ: … can show me signs that rates are not going to be lower.

MILLER: Rates will never be lower.

RITHOLTZ: Right. Well, that happens all the way down to zero. And, you know …

MILLER: Right.

RITHOLTZ: … even if it ticked up, this is 150 basis point limit and you could always convert it to — to fix back then. But I didn’t think I was taking …

MILLER: Right.

RITHOLTZ: … a big chance with that. The — and — and what I’ve noticed is I’ve seen increased solicitations now for refinance your mortgage. Those are ticking up again.

MILLER: Yeah, right absolutely. And, you know, it’s interesting because there’s a lot made, and I — I don’t quite know the answer to this, but there’s a lot made on — you know, one of the points you brought up is, you know — you know what’s inventory like. Is it, you know, why we have so little of it?

And one of the reasons — I don’t know if I — and I’m sure there’s a study I’ve never seen one. But, you know, one of the — the reasons now for low inventories people don’t want to give up their low rate, you know, that they’re not quite. And I — I don’t know. I — I hear that kind of — you know, it sounds — it sounds logical until you really think about it. I — I — I’m not quite, quite there yet (inaudible) …

RITHOLTZ: You can roll out of the three percent to a 3.5 percent that’s going to affect you moving to a different house.

MILLER: Right, so you’re not going to move because you need …

RITHOLTZ: Right, it makes no sense.

MILLER: … another bedroom or whatever. But that’s used — that logic is used a lot, and I — I need to be better educated about it because I — I’m not buying it.

RITHOLTZ: So, you mentioned the Zestimate, which is the Zillow estimate, but there’s now a whole new world of iBuyers, and open doors, and even Zillow that had gone from mere apps to facilitate transactions to actually becoming buyers. Tell us what’s going on in that world. You — you were involved with one of those apps some time ago, weren’t you?

MILLER: Yeah. I was — I was on a truly industry advisory board a year before they had a or before they had a website, and they …


MILLER: … came out a year after Zillow. And then by 2014, they essentially merged or, you know, they’re, quote, “were bought by Zillow.” And — and then — I — you know, I was out, but I — I learned a lot behind the scenes.

Aand, you know, in many ways, it seems like, you know, for those listeners that aren’t aware what an iBuyer, it’s essentially a company comes to you and buys your house from you. You don’t put it on the market. They’re going to give you an offer and they factor in repairs; there’s a bunch of charges.

And, you know, for many sellers it’s actually more than a commission might be if you sold them same price. But there’s a convenience. You don’t have to show your house. You have to let — specially during, you know, this period of, you know …


MILLER: … pandemic and all that. And so, when it first — when — and I’ve heard of presentation by open door at a — at a conference I was at, you know, before the pandemic. And it’s pretty impressive, but it always struck me as — because the margins are razor thin …


MILLER: … that it only will work in a homogeneous housing market, like think of Phoenix or Las Vegas, you know, where these firms really, you know, do a lot of deals activity of transactions because the housing stock is very similar, so you can be more precise.

I think Zillow was late to the party, but certainly have the wherewithal to jump in quickly. The problem — and what’s interesting is in their iBuyer effort they’ve had a press release that they’re not using their Zestimate technology, which — which I think — I don’t know about you, but that, to me, says something (inaudible).

RITHOLTZ: Saying there have to be a lowball offer because they’re buying it to resell. It makes sense, right? If you’re …

MILLER: Yeah, right.

RITHOLTZ: … you know, any place you see, sell your car for cash, 1-800-CARS or whatever it is. You know, they’re — they’re going to pay you less than if you sell it yourself, and it has to be the same with real estate.

MILLER: Right, right, right. And, you know, for some at the convenience like …


MILLER: … you don’t want to hassle with all that, and the stress — and maybe it takes five months, and so I get it. There’s going to be a niche, but I think with the — all those really burst on the scene and open door was really — and there’s offer pad, there’s others. You know, I think that it was like, hey, this is going to replace traditional brokerage and it’s going to be — you know, it’s in a dominant form of — of selling your house. And, you know, I think it’s — there’s a market for it, I think it’s just going to be — play a much smaller role.

And the problem is that, you know, these companies are investing billions in technology to be able to get comfortable with valuation. And — and it’s really — seems — seems like a pretty risky venture. And, you know, one side of it is after the pandemic lockdown started to occur, all these companies ceased operations because they’ve never gone through a down market or …


MILLER: … you know, what could be a down market. I thought that was really interesting that, you know, a lot of the — you know, the boom we’re seeing in FinTech and all this is predicated on rising market conditions, you know, strong sales activity, growing sales activity. And — and this — that just sort of caused me to pause a little bit. You know, it’s like — and I was saying this before the pandemic that, you know, these — these haven’t been tested in a down market and how does that work? Does their inventory explode? You know, as sales growth slow down, how does that work?


MILLER: And they haven’t been tested yet. So, I think it’s an evolving model. It’s here to stay. And — and I think, you know, they’re — they’re going to work really hard to figure it out, and there’s going to be thinning the herd, so to speak, you know, with all these companies out there. There’s not enough room for all of them.

RITHOLTZ: Right. It’s — hey listen, the inconvenience of selling your house on the market and — and having people trample through your living space, that convenience has a value, but I assume that value is — I don’t know — 500 bucks, 2,000 bucks, but it’s not going to be let me sell this house for $32,000 less than I otherwise would have get — gotten. Yeah, I don’t think it’s worth that amount. So, it’ll be interesting to see how these progresses over time.

MILLER: Yeah. And I think — I think I think just like everything in this sort of post-lockdown pandemic world, there’s going to be — there’s just a recalculation going on right now, all sorts of things. And this will be one of them.

RITHOLTZ: Really interesting. Last question before we get to our favorite questions, you had briefly mention SALT, which is the — the tax reduction for state …

MILLER: (Inaudible) tax, the federal tax bonds.

RITHOLTZ: … and local — right, taxes against your house, which the previous administration had slash to about $100000, which I know infuriated people in blue states like New York, and California, and — and Connecticut. So — so let me ask you the question, who are the geographic winners and losers of the pandemic? How much of it is related to that SALT deduction changing for real estate? And do you think there’s a — a move afoot to tie a rollback of SALT to the infrastructure bill? Do you think this has any legs that this will change?

And I’m not asking this because it personally hit me in the pocketbook, it did, but it’s a fascinating …

MILLER: Right.

RITHOLTZ: … subject.

MILLER: Sure, sure. I think — so, you know, essentially it’s a $10,000 exemption cap on property taxes and state local taxes. And SALT — you know, when I grew up SALT stood for Strategic Arms Limitation Treaty, but — and then there was SALT, too. This is a — a different salt that, you know, cuts closer to home so to speak.

And — and it really in high-cost, high-tax states are very vulnerable, You know, the offset to this was to double the standard reduction. And so, I remember being, you know, a couple of years ago because this went into effect January 1, 2018. I remember going to a conference in Dallas, and we were sort of brainstorming our next conference and what were some of the things we’re going to talk about, and I brought this up. And everybody from the Midwest like stared at me, like what are you talking about because they don’t have the same, you know, high taxes, you know, relative to, you know, different locales they might, but in the context of, you know, New York State or New Jersey or Connecticut or California, Illinois, you know, these are really consequential.

And — and I think, you know, aside from Rockland County, New York being like the highest property tax per capita, I believe I read that in a Bloomberg story — or it might be Westchester like I think they’re buying for the top.


MILLER: You know, really big numbers, and that sort of been baked into housing prices. So really what this does is it — you know, if you — just to be aspirational per second, you know, you buy a house for $10 million, and the typical annual property taxes are about 175,000. And let’s just say your state and local taxes are the same, so double your property taxes, and you can only write off $10,000 now. That really changes the math substantially.

And so, what you’ve seen is, you know, higher-end housing markets pre-pandemic in the suburban markets really get hit hard — the north shore of Long Island, a lot of the higher-end housing markets around the country that we track noticeably in California where we — we focus on Southern California.

You definitely have seen prices fall as a result. Not overnight, it’s sort of been a gradual decline. And, you know, it was really interesting, and again back to my idea that the pandemic has been this great disruptor is that Florida has been — and was anticipated — you know, January 1, 2018, the Florida real state community — I cover about 14 housing markets in — in Florida on the gulf side and the oceanside. And — and everybody’s just, you know, ready. You know, they’re just there, you know, ready for this massive flood of demand from the northeast.

And while it was there, it was tepid.


MILLER: And once the pandemic hit and I think, you know, for many that had been on the fence since skewing to the wealthy in the high-cost housing markets, you did see this surge in activity during — you know, after the lockdown ended in Florida. And surprisingly, at least to me, it hasn’t stopped that …


MILLER: … you know, the contract data we’re seeing, you know, in many of these — in the (inaudible) in southern California — southern Florida, we’re seeing contract activity that is 40 to 150 percent …


MILLER: … year over year in March. And — and it is really absorbing the — what Florida had been known for the ocean side for a tremendous buildup in inventory especially as you skew up in price. And we’re seeing a lot of that get burned off, but inventory is definitely coming down because sales activity has been at record levels.

And I think a lot of it had to do with the — the SALT tax and the — and the — and the ability to work remotely …


MILLER: … but — you know, but the pandemic — we should look at the pandemic as sort of the trigger or the — the — the instigator of this because I think it accelerated everything. It accelerated remote — you know, remote software by probably a decade. It accelerated, you know, what was an anemic response to the tax, the SALT tax. Federal law all of a sudden became like a big marketing point.

So, I think, you know, there — there is surprisingly, you know, an appetite for putting patches on the law, but that comes with, you know, revenue lost.


MODERATOR: And so, — so I — I — I would say that the odds of something are — are, you know, I — I wouldn’t say it’s a sure thing, it seems it’s not a sure thing, but it — it — certainly the odds of it are a greatly improved over the last couple of months in what I’m detecting. That doesn’t mean it will happen, but I — but I do — but I — I — I wouldn’t be surprised if it did.

RITHOLTZ: Well, it’ll be interesting if it did. There’s — there’s a house I’m enamored with on — on Centre Island, a few doors down by — from Sean Hannity that’s listed for sale for $9.9 million. And really, until we get that SALT deduction back, I can’t even think about …

MILLER: Yeah, yeah, yeah.

RITHOLTZ: … buying a house that’s 10 times the cost of the house I currently am in.

MILLER: Yeah, (inaudible) it’s a struggle.

RITHOLTZ: So — so I’m — I’m rooting for the SALT deduction to come back so I could …

MILLER: But — but here’s the — but — but here’s the thing, here’s the thing is, you know, you’d have to act immediately because the market …

RITHOLTZ: Right, everybody else will pile into it.

MILLER: And just so (inaudible) where it was.

RITHOLTZ: I literally just sent you — I just sent you a link to that house, which has its own little nestled cove harbor marina, but it only holds two jet skis. So, I don’t know if that’ll work for us. But …

MILLER: Well, (inaudible) …

RITHOLTZ: … my wife and I love looking at that sort of stuff. And I’m like (inaudible) what about this house?

MILLER: (Inaudible) — right, but everybody during this lockdown, I think, you know, is — you know — you know, if they, you know, didn’t have worries about being employed or, you know, they — they were thinking about the future and like when we get out of lockdown, I was obsessed with I — I want a lot more land with the — with a park. So, you know, we’re like looking all over Connecticut just — just because — and the command (ph) …

RITHOLTZ: You go in and you’ll get more land at the same price.

MILLER: You get — you get about — yeah, you get like three or four times the land and the same house for half the price and, you know, a historic barn or something along that line so …


MILLER: … so it is a …

RITHOLTZ: I want a standalone garage, which I don’t have. I have — my garage is part of the house and …

MILLER: Right.

RITHOLTZ: … if I can — if I can get enough land where I could build a freestanding garage, it will remove limitations on — on how many — how many cars I can have.

MILLER: How many bring-a-trailer visits …


MILLER: … you can make.

RITHOLTZ: I’m — I’m literally wearing a bring-a-trailer t-shirt as we’re recording this.

All right. So, let’s …

MILLER: Right.

RITHOLTZ: … by the way, there was a term for that sort of Zillow — I’m drawing a blank on it, that sort of Zillow browsing. You can absolutely just get lost in — in that world, and it pure escapism looking at $5 million and $10 million and $25 million.

By the way, the funny thing is what’s shocking about not putting a — a cap on the price when you browse Zillow is that you’re looking at particular neighborhood, hey, show me all the houses in East Hampton …

MILLER: Right.

RITHOLTZ: … and — and, you know, above $1 million. And you’ll see these things come up at $40 million and $60 million and $90 million. It’s out in Montauk, Dick Cavett’s property, which apparently is 18 acres or something like that. It was up for sale for some ungodly number. I don’t know if …

MILLER: Right.

RITHOLTZ: … if he got it, but it’s shocking when we see what happens.

All right before I run out of time, let me jump to our favorite questions that we ask all of our guests, and — and let me try and run through these more quickly than usual because we have been BS-ing the whole time. Tell us what you’re streaming these days. Give us your favorite Netflix or Amazon Prime entertainment.

MILLER: So — so actually, I — I am one of those people like we — we cut the cable during the lockdown. And — and so I have Hulu, I have Netflix, I have all these things, it’s amazing, but I don’t watch it. My wife watches it, I just don’t watch TV other than, you know, a few Yankee games. I just — and, you know, you’ve said to me, hey, we’re in the golden age of television.

I literally — I think I’m becoming my dad like — who never liked TV. I just don’t watch TV anymore hardly at all. So — so I — I’m sort of the — the opposite of …


MILLER: … most of my peers, it seems.

RITHOLTZ: Huh, so no Queen’s Gambit or anything like that.

MILLER: Nothing. It is — you know, I think the closest I get to — and — and this is just silly is that I’m sort of obsessed with radio detective shows from the 1940’s and 50’s. I — I listen to a lot of podcasts of like old radio shows, just sort of …


MILLER: … white noise when I’m working. So, I am — I just don’t fit the profile.

RITHOLTZ: Now that I know that that’s your gig, let me just suggest something that you might enjoy, which is …


RITHOLTZ: … a little off to the side from that. John Pizzarelli hosts the show called Radio Deluxe, where it’s just him and his wife.


RITHOLTZ: And for 90 minutes …

MILLER: I do listen to that.

RITHOLTZ: Oh, that’s amazing. So, it’s …

MILLER: I do listen to that, yes.

RITHOLTZ: It’s great music, plus they’re both so knowledgeable that you get color on …

MILLER: It’s just fun.

RITHOLTZ: Yeah, you get color on the songs and on the writers. And — and a lot of the stuff is from the era you were just describing. I had no idea you were a …

MILLER: Yeah, I — I feel like I’m a young soul, but with the old taste so.

RITHOLTZ: Right, right. And they do mix it up, it’s some newer stuff, but a lot of it traces back to the Great American Songbook and that, obviously, is 20’s, 30’s, 40’s, 50’s. It’s very different than a modern stuff.

Let’s talk about mentors. Who helped to shape your career?

MILLER: Well, I’ve had to that I really would jump — who would jump out at me. One is my first job coming out of New York. I actually went to college to be in the hotel business. My father had built a hotel when I was younger, and I don’t know what else to do and I knew something with real estate, but not specifically. And I lasted for three years and pretty much hated every minute of it. The company that I worked for was eventually acquired by Marriot. And I just — it just wasn’t — I wasn’t passionate about it.

However, I just — my first boss, a gentleman named John Nelson, really taught me how to navigate like corporate politics and how to like really cut away at the sort of sort of the noise and solve the problem. And I just never forgot it. And — and that was, you know, 40 plus years ago, and I still touch base with them every so often. He really meant a lot to me.

RITHOLTZ: You know …

MILLER: The other mentor I had — the other mentor I had was a — one of the founder of Douglas Elliman is Dottie Herman who …

RITHOLTZ: Oh, sure.

MILLER: … she is the one that, you know, basically implored me because of — I was — you know, she found me. I was — I would — I would brief the executives about a — you know, the state of the market, what was going on. And — and she implored me to essentially, you know, expand and right about other markets that I don’t necessarily work in. And — and that’s — that’s what I — she really championed me and really relied on, you know, what the market number — which was very contrarian to the — the sort of real estate site guy, which is it’s always a good time to buy and …

RITHOLTZ: Or sell.

MILLER: … or sell.


MILLER: And — and it was more like we want to give — and that’s been their mantra, it’s sort of entrepreneurial like we want to give our customers, you know, neutral market benchmark so they can make informed decisions. That’s essentially what it was. And to me, that was sort of shocking and I was really — I went with it. And now we, you know, issue hundreds of reports a year and they’re used by the Fed and all the — like alphabet soup of agencies in Washington, and they’re not seen as a brochure.

And — and to her credit, that was, you know, she really feel bad in me. And I’ll forever be grateful.

RITHOLTZ: So, I want to — first of all, you reminded me of a very infamous national association of realtors advertisement they threw out early in the collapse in the mid 2000’s thousands, which is it’s always a great time to buy …

MILLER: There was so many.

RITHOLTZ: … or sell a house, I don’t know if you remember that.

MILLER: Right.

RITHOLTZ: … but it was a lot what …


RITHOLTZ: Well, you — you know, if you have a stock market background, hey, it’s either a good time to buy or sell, but not both unless you’re the broker taking the piece in the middle. So …

MILLER: I think they’re side, right, exactly. Right, right, (inaudible).

RITHOLTZ: But — but I have a very vivid recollection of being on a panel with Dottie Herman in like ’05, ’06 when the rollover was just starting. And you might have been …

MILLER: Right.

RITHOLTZ: … on that panel with us with pre-Nobel Bob Shiller if that rings a bell.

MILLER: Yeah. I — she wasn’t with us on the — I was on like I think the panel. You were on the panel before me and I was after is the one I’m remembering (inaudible) from.

RITHOLTZ: OK. And I just remember her …


RITHOLTZ: … looking at me like I had two heads when I said, you know, 30 percent drop in real estate is not unthinkable for a financial crisis. And she just was a guest. I have a vivid recollection of that. I could be wrong, but I’m pretty sure it was her.

MILLER: It’s funny. In 2007, you know — you know, the — the U.S. market had already started to tank, you know, the Bob Shiller — you know, Case Shiller Index peaked into that summer of 2006. So self-activity actually peaked in 2005, you know, (inaudible) …

RITHOLTZ: Right, it was volume and price.

MILLER: … we learned from that is, yeah, volume leads price by, you know, one to two years.


MILLER: And I’ve learned that in many different instances. But I remember he and I were on a stage at Lincoln Center. It’s like 3,000 people in the audience. And the — the — the — the — and this is 2007, so Manhattan was a year or two behind the U.S. market because of Wall Street comp and really sort of extended our — our boom for a few years.

And I remember him be asked, well, what do you think how much will prices reset? And he said 30 to 50 percent, and there was a gasp in the audience. And he was right.


MILLER: You know, just — it doesn’t happen. And just like what I was saying earlier like it doesn’t happen immediately. You know — you know, sales drop, inventory surges. And then it takes like a year or two for prices — you know, for sellers to capitulate. If they don’t want to sell, they don’t sell, they wait, but they have to sell more and more have to sell and then boom, you know, the prices are falling. And — and that’s what everybody, I think, it’s wrong with these cycles.

RITHOLTZ: Right. They’re always — they’re always stuck on what the neighbor sold the house for a year or two years ago. And it’s like, hey, if you have a time machine, you could go back to 2003 and get that price. But in ’08, you’re …

MILLER: Right.

RITHOLTZ: … screwed. And that 35 percent number came from a piece that Reinhart Rogoff wrote. They — they end up writing a book …


RITHOLTZ: … “Why This Time is Different,” but it was a research …


RITHOLTZ: … piece that was out in ‘07 about when you have financial crises, you typically see a 50 percent collapse in the — in the real stock market. Real estate falls 30 plus percent. I mean, they weren’t making predictions, they were saying here’s what the averages look like over the past eight centuries. And …

MILLER: Right.

RITHOLTZ: … it was so pressing that they ended up writing a book about it a couple of years later.

Speaking of books, what are some of your favorite books? What are you reading right now?

MILLER: So, I — so I had been on a — on a — I don’t know, reading about New York and history of New York sort of the cultural history, just cool things. When I moved to the city in the 80’s, I was just enamored with, you know, the grit, I guess, you’d call it and my dad outside of our office twice coming in and out of our office in midtown in — in the — you know, the nineties was mugged in broad daylight. You know, I’m thinking, wow, this is what a city, you know. And — and I was just thinking about sort of what — what are the components that sort of went into that?

And so, I — I just read a book called “The Club King,” and it was by Peter Gatien who is the — you know, had all these night clubs and, you know, sort of competing with Studio 54 and all that, and — and what the culture behind that and the limelight. And it’s fascinating read.

And then the book I’m almost done with now is called “The History of St. Marks” (sic). And if you’ve ever been to Manhattan, the block — it’s like a three or four block from Astor Place to Tompkins Square Park where the riots were in the late 80’s and just the eclectic nature of it. And if you ever want to feel for like what New York was, although less so now because it’s gentrified, but that’s where it was. It was greedy, and I just love — I just love that about New York.

So, any kind of history of New York, this was — this book is called “The Death of St. Marks Place.”

RITHOLTZ: Speaking of gentrification over an alphabet city near there, ABCD is — is why it got its name, the gentrification used to be in on Avenue A. Has it penetrated to Avenue C&D?

MILLER: Oh, it’s completely — it’s completely gentrified.

RITHOLTZ: Wow, in Brooklyn.

MILLER: So, in my — I remember, you know, when they had to close Tompkins Square Park because I remember one time daring myself to walk through it …


MILLER: … and it was literally, you know, junkies and homeless and …


MILLER: … gangs. I mean, it was just like in the movies. It was — and — and, you know, just going in that area was, you know, a little rough. And I remember there was a new conversion called Christodora House, which is on the Avenue B on the eastern side of Tompkins Square Park.

And the Christodora House is infamous in sort of local New York circles because of all the protests outside of it because it was a more affluent, although relative to today’s prices, you know, was a deal, but where they spray painted on the front door die up the scum. And that …


MILLER: … raised phraseology became like the mantra of sort of the anti-gentrification movement. And so, many houses or buildings in that — you know, I — I remember doing, you know, appraisals in a condo co-op conversion and a modest place. And across the street, you know, it’s — it’s all, you know, people basically camping out in — in an abandoned house and eventually, you know, many of these were acquired by the squatters.

I had a — I — I met a friend of mine or a class colleague. We weren’t that close in high school, but in — I grew up in D.C.


MILLER: And he was like one of these people that ended up like taking control of an abandoned building and then selling it with his buddies and like never have to work again.

RITHOLTZ: Absolutely insane. Let me get …

MILLER: (Inaudible).

RITHOLTZ: … let me get to the last two questions before I run out of time. What sort of advice would you give to a recent college grad who is interested in a career in the real estate industry?

MILLER: Well, if it’s the appraisal industry, I, at this point, would say hold on before you go this path just because it’s — it’s, you know, in the generic sort of mortgage world, it’s dying a slow death.


MILLER: In the specialty world like what we do, it’s — you know, I — I feel very confident for a long — you know, there’s always a niche that is hard to automate. In terms of the real estate industry, you know, when we think of that we think of brokerage, you know, it’s like anything like professional athletes. You have, you know, the — the top 20 percent makes 80 percent of the money.


MILLER: And — and so the goal is to, you know, get to that cycle and, you know, do you want to do that? I’m finding that the — there’s a lot more people coming out of college and, you know, that coming into this industry than ever before. You know, the stereotype is like, you know, suburbanites that are, you know, bored and want to do sell — you know, sell real estate on the side or it’s always a side gig.


MILLER: And I think it’s one of those professions where — and I’m — I think I’m right, 99.9 percent of the real estate brokers in America today did not think about being a real estate broker until the opportunity presented itself that they didn’t, you know, in high school or college say, “Boy, this is what I want to do.” It’s always by accident. And …

RITHOLTZ: Interesting.

MILLER: … and — you know, so maybe if you’re one of those people something to think about, it is fascinating. Membership in the NAR fluctuates with the performance of the housing market. You know, it’s — you know, it’s — it’s up — I should know, but I — I don’t, but it’s somewhere like 1 million, 4.5 million membership.

And during the financial crisis, it was like down, you know, right at a million or, you know, just a hair under it. So, it’s — there’s tremendous like upward and downward because you’re living on — you’re living and breathing on a 100 percent commission. And that’s not for everybody.


MILLER: And some people have a knack for it and make a lot of money, you know, nine-digit — eight-digit numbers, I mean, amazing numbers.

RITHOLTZ: That’s amazing.

MILLER: But that’s the exception not the rule.

RITHOLTZ: And our final question, what do you know about the world of housing today that you wish you knew 34 years or so ago when you were first getting started?

MILLER: So, I think the first thing would be is that — is that you — you know, don’t aspire to have a bigger rental apartment. I mean, I was clearly biased. I mean, the — you know, I work — I do my reports, right, you know, for a real estate brokerage company. I’m surrounded with brokers every day. But the one thing I really wish I had was sort of the more focus on saving money in my 20’s, and then — and then buying something sooner.

I didn’t buy my first house until about 36 because I lived in the city and, you know, couldn’t afford houses and so I moved out to the suburbs, and — and then have traded up from there. So, I really wish that I had been a little bit more goal-oriented on that earlier on. I realized later.

Now part of it was starting a business, put every — all the money we have back into it. But the money I was putting in to rent, I wish I had a thought about a little bit differently.

I — I like to say that my — I have four boys. They’re all adults, you know, 22 to — to 32 years old, and my three oldest all have houses. So — so …

RITHOLTZ: And you — and you didn’t at that age.

MILLER: I didn’t. I mean, they all beat me by, you know, you know seven, eight years. And it’s not that I didn’t want to — and I could see the moment but, you know, starting my own business and, you know, not just me with my family and, you know, paying too much for rent, having a nice place to rent, I think, you know, sent me back at 10 or — 10 or 15 years.

RITHOLTZ: We have been speaking with Jonathan Miller. He is the founder and CEO of Miller Samuel.

If you enjoy this conversation, check out our previous 400 or so other discussions. You can find those at iTunes, Spotify, wherever finer podcasts are sold.

We love your comments, feedback, and suggestions. Write to us at You can sign up for my daily reads at Check out my weekly column on Follow me on Twitter @ritholtz.

I would be remiss if I did not thank the craft staff that helps put these conversations together each week. Michael Boyle is my Producer. Tim Harrow (ph) is my Audio Engineer. Atika Valbrun is our Project Manager. Michael Batnick is my Head of Research. Michael Boyle is our Producer.

I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.




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