10 things we learned from an afternoon with real estate guru Jonathan Miller
Last week, BrickUnderground invited Jonathan Miller—the data whisperer behind the closely watched Miller Samuel market reports—over for lunch at our Midtown headquarters.
Although he's best known for crunching and analyzing numbers to create snapshots of the state of the market—as well as for his decades of experience as a NYC appraiser—we were more interested in ferreting out his best advice for average buyers. As usual, Miller didn't disappoint....
1. Quirky, historic homes can trump brand new condos. While decked out new condos are fetching the highest prices in the market, a little character can make a sounder investment over the long term. "I like texture and quirks," Miller told us. "The more unique the property—in a good way—the better its long term potential value is because of supply and demand."
2. There's a right way to handle an appraisal, and a wrong way. If you're getting your place appraised in the lead-up to a sale or refinance, Miller recommends gathering all the relevant information about your home—and work you've done on it—and summarizing it on one printed page. "Keep it simple, and put it in bullet points," he says. Hand it over to the appraiser, and after that, stay out of their way. "The biggest red flag is a homeowner who's in the appraiser's face giving the hard sell," he notes, since it gives off the vibe that you're overcompensating for a big, unseen negative.
3. Take the flood of market reports with a grain of salt. "Be skeptical of reports that are based only on a company's own data," says Miller, and anytime you see a chart or infographic, check to see what (if any) actual sources are cited. The most important takeaway from any market report? Look at year-over-year numbers as opposed to month-over-month or quarter-over-quarter, since the real estate market is so seasonal. "My go-to is median sale price," he says. "Look at your category [like 2-bedroom co-op on the Upper East Side], and compare it with the same quarter the previous year."
4. When in doubt, upgrade the kitchen. If you're hoping to add some quick value to your place before selling, says Miller, make cosmetic upgrades to your kitchen (e.g. new appliances and counters). "Visually, it has the most impact on buyers," he says.
5. The one thing first time buyers MUST do. "Research like crazy," he told us. "There's no excuse not to know everything about the market you're interested in." Before you start visiting apartments, know what neighborhood you're looking in, what size apartment, and your price range, then keep a close eye on listings that fit the bill so you can have an idea of where prices are going and what's available. "Understand the pieces that make up whether you want to buy there or not," advises Miller. "Maintenance charges, what kind of building, the commute, etc." And be sure to have your paperwork—and mortgage pre-approval—lined up so you'll be able to act quickly. "You have to sell yourself as a buyer who can close," he says. "You can win a bidding war based on terms."
6. Retire the phrase "location, location, location." Besides being a tired cliche, it doesn't tell the full story anymore. "I'd modify it to 'location, leverage, and lifestyle,'" says Miller. Translation: instead of valuing an apartment's location above all else, it's now equally important to consider leverage (i.e. your financing and factors like common charges) and lifestyle incentives like amenities when assessing an apartment's long-term value.
7. Invest in space, not place. On a related note, if you're choosing to spend more on a central location or a bigger apartment, "always go bigger," says Miller. "Neighborhoods are gentrifying and space is at a premium." People are paying more and more for larger apartments—and increasingly willing to try out new neighborhoods—meaning that an outer-borough 2-bedroom may well be a better bet than that Midtown studio.
8. But don't invest in the Bronx or Staten Island just yet. "During the last couple of booms, the market sort of ran out of gas before it hit the Bronx, and you're seeing that now," says Miller. "You're not quite seeing the spillover of this boom into, say, Riverdale." Plus, "because Staten Island is more suburban, it's being held back by the credit crunch much more so than Manhattan." If you're searching for an investment property, look along busy transit and retail lines in a still-affordable neighborhood, says Miller. In other words, don't snap up a Victorian in Staten Island under the assumption the area will become the next Ditmas Park.
9. Water towers: more versatile than you think. Inevitably, people are repurposing out-of-use water towers and turning them into innovative apartment add-ons; Miller says he's seen them used both as guest rooms and tree houses.
10. There's always an apartment worse than yours. Miller's worst-ever experience as an appraiser was in a Chinatown apartment smeared with human waste and clouded with the smoke of Marlboro Reds. "The next apartment I saw that day was an Upper East Side mansion with gold-leafed ceilings," Miller noted.
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From Brooklyn 'creep' to dog-friendly digs, a real person's guide to housing in 2015
