The mass exodus of New Yorkers leaving the Empire State has reached a new fevered pitch, with nearly 80,000 choosing to move out to cheaper pastures, according to a new study.
But where are they going?
Whether it’s the high costs of living, a lack of well-paying jobs, or poor Northeastern weather, the population in New York State dropped by 76,790 between 2018 and 2019, according to the latest data from the U.S. Census Bureau.
The number represents a 0.4 percent drop in the state’s population year-to-year, which has dropped by nearly 1.5 million in the past decade.
According to the website Zippia , which used data from the Census to determine where New Yorkers are landing, the most popular destinations are New Jersey, Pennsylvania, Florida, California, Connecticut, and North Carolina.
“New York, New York, what a wonderful place, except for the people who left the Big Apple last year that is. New York may be a cultural and economic hub in the United States,” Zippia stated. “However, it comes at a steep price. No doubt those high prices are partially to blame for New York being the most quickly shrinking state in the United States.”
According to reports, the population drop may cause New York to lose up to two congressional seats by 2022, dropping it from 27 to 25 members in office.
Last year, President Donald Trump was questioned about comments he made in 2017 stating that upstate New York residents should consider moving out of the state. The commander-in-chief doubled down on those statements.
“If New York isn’t gonna treat them better, I would recommend they go to another state where they can get a great job,” Trump said on Wednesday. “I love those people. Those people are my voters. They’ve been treated very badly.”
According to New York Gov. Andrew Cuomo’s Office, the combined state/local tax rate for high-income New Yorkers is the second-highest in the country. The top one percent of taxpayer accounts for nearly half (46 percent) of State Income Tax liability. More than 95 percent of the tax increase from SALT falls on the top 20 percent of taxpayers – these taxpayers pay 87 percent of New York income taxes.
The governor said that the tax reforms encourage New York’s wealthiest to move to other states, “and even if a small number of high-income taxpayers leave the state, it would harm state revenues” and impact funding for education, healthcare, infrastructure, and a planned middle-class tax cut.
The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a reading of 58 in the fourth quarter of 2019, up three points from the previous quarter (Figure 1). The RMI has been consistently above 50—indicating that more remodelers report market activity is higher compared to the prior quarter than report it is lower—since the second quarter of 2013. The overall RMI averages current remodeling activity and future indicators.
Current market conditions increased two points to 56 in the fourth quarter of 2019 (Figure 2). Among its three major components, major additions and alterations gained four points to 56, minor additions and alterations increased by one point to 54 and the home maintenance and repair component rose one point to 58.
The future market indicators gained three points to 60 in the fourth quarter (Figure 3). Calls for bids increased by three to 58, amount of work committed for the next three months gained three points to 57, the backlog of remodeling jobs jumped five points 64 and appointments for proposals increased by two points to 62.
The fourth quarter RMI reading reflects solid demand for remodeling, supported by a strong overall economy and low interest rates. Remodelers still face challenges in the market, including skilled labor shortages, making it harder to work off a backlog quickly.
A report from Douglas Elliman and Miller Samuel says that the average sales price for Manhattan real estate fell 7.5% in the fourth quarter of 2019.
The average sales price fell to $1.8 million, while the median sales price fell below $1 million.
Sales of apartments priced at $5 million or more fell 38% in Q4, leaving behind a two-year supply of luxury apartments on the market.
Now, CNBC says there is an eight-month supply of unsold apartments. Out of the previous nine quarters, eight have seen a drop in real estate sales in Manhattan, a considerably pricey market.
Tax pressures and rising inventory are what brokers say may keep buyers at bay.
“I think we’ll see more of the same,” Jonathan Miller, CEO of Miller Samuel, said to CNBC. “The problem with saying that 2020 will mark the bottom is that it suggests it will go up after that. And I think we still have another couple of years of moving sideways.”
Last summer, a new mansion tax hit the multimillion-dollar apartment market in New York.
Buyers were rushing to close before the new state taxes kicked in on July 1.
The new taxes boost the previous 1% fee on sales of $1 million and above – known as a “mansion tax,” though it applies to all types of homes, not just townhouses – to 1.25% for sales priced above $2 million and 3.9% for a sale of $25 million or more. The transfer tax increases from 0.4% to 0.65%.
This means that the mansion tax makes already high-tax states, like New York, more expensive.
CNBC said there is an expected 2,000 new condos to come onto the market this year, but buyers are steering to the rental market, even in luxury.
The National Association of Home Builders and Wells Fargo, which publish the monthly report, revealed sentiment increased by 5 points to 75, markingthe highest reading since June of 1999.
“Builders are continuing to see the housing rebound that began in the spring, supported by a low supply of existing homes, low mortgage rates, and a strong labor market,” said NAHB Chairman Greg Ugalde.
In December, the index measuring current sales conditions rose to 84 points, while buyer traffic grew to 58 points and sales expectations over the next six months inched forward to 79 points.
The three-month moving averages for regional HMI scores show the South grew to 76 points, the West increased to 84 points and the Midwest climbed to 63 points. However, the report indicates the Northeast declined to 61 points.
Although sentiment improved in a majority of the nation’s regions, NAHB Chief Economist Robert Dietz warns homebuilders across the country continue to grapple with affordability concerns.
“While we are seeing near-term positive market conditions with a 50-year low for the unemployment rate and increased wage growth, we are still underbuilding due to supply-side constraints like labor and land availability,” Dietz said. “Higher development costs are hurting affordability and dampening more robust construction growth.”
NOTE: The NAHB/Wells Fargo Housing Market Index gauges builder opinions of single-family home sales and expectations, asking for a rating of good, fair or poor. Builders are also asked to rate prospective buyer traffic from very low to very high. The scores are used to calculate a seasonally adjusted index with a rating of 50 or over indicating positive sentiment.
According to NAHB analysis of the Survey of Construction (SOC), nationally, there were 881,076 new single-family units started in 2018, 4% higher than the units started in 2017. It was the double of the units started in 2011, and still 49% less than the peak of 2007 (1,731,171 units).
Among all the nine Census divisions, new single-family units started in the South Atlantic, West South Central and Mountain Divisions exceeded 100k in 2018. These three divisions represent 21 states, while the number of new single-family housing starts in these three divisions accounted for about 62% of the total new single-family housing starts in 2018.
In addition, there were 98,760 new single-family units started in the Pacific Division and 78,858 units started in the East North Central Division in 2018. The Pacific Division accounted for 11% of the total new single-family housing starts, while the East North Central Division accounted for 9%. The other four divisions, including East South Central, West North Central, Middle Atlantic and New England, accounted for the remaining 18% of the total new single-family housing starts.
The scatter plot below compares the nine Census divisions’ annual growth rates of new single-family housing starts in 2017 and 2018. The red line represents the national level in 2018. The X-axis presents the annual growth rates in 2017; the Y-axis presents the annual growth rates in 2018. Each division grew at the different pace, while, nationally, new single-family housing starts rose by 4%. Four out of the nine divisions grew faster than the national level. The New England Division and the Mountain Division led the way with a 13% increase each, followed by the West South Central Division with an 8% increase, and the South Atlantic Division with a 4% increase. Meanwhile, the growth rates of the other five divisions were below the national level.
As shown in Figure 2, compared to last year, the New England Division and the Mountain Division had an acceleration in growth in 2018. Noticeably, the New England Division grew by 13% in 2018, after a 5% growth rate in 2017. Meanwhile, six out of the nine divisions, including South Atlantic, East North Central, Pacific, Middle Atlantic, East South Central and West North Central, experienced a deceleration in growth in 2018. Among them, the West North Central Division experienced the largest deceleration with a decline of 14% in 2018. Moreover, the West South Central Division grew by 8% in 2018, unchanged from 2017.
Startups are racing to fix the construction productivity problem at large. VCs poured $3.1 billion into Construction Tech in 2018. Most of this money went towards modular housing companies or software that promises to optimize current processes such as project management and communication. Yet neither of these buckets addresses the labor shortage head-on. Many startups claim that robots might.
Over the last year, I have been looking into the startups trying to plug this gap with construction robotics.
With such an acute labor shortage, felt deeply by contractors and developers, are robots really the next best thing? What tasks can they accomplish on site today? Most importantly, will the customer— real-life, historically risk-averse contractors and developers—adopt robotics with open arms? If so, when?
The Construction Robotic Landscape
The robotics companies that currently exist take on the shape of a subcontractor. They use robotics to accomplish a vertical task on site like excavation, drywall installation, painting, and roofing. Some companies are inserting their autonomous software into pre-existing construction machinery. While other start-ups are adapting manufacturing robotics and small self-driving vehicles to do construction tasks, but there are still tasks that need to be done by humans, such as roofing, and the use of services like roofing service which can be found at Bell Roofing Company 636 S I St, San Bernardino, CA 92410 (909) 885-6863 could be the best option for this purpose.
Most construction robotics companies promise to reduce construction costs by 1) cutting down on labor expenses, 2) taking less time to accomplish a task by working longer shifts and into the night, and 3) performing tasks faster—not by actually working faster than a human, but by shortening downtime between sub-tasks.
It’s important to note that many of the companies I spoke to are in their pilot phase. They are testing their technologies on live construction sites for the first time and require additional engineering oversight to get the job done. If these pilots (which may take six-plus months) run successfully, these construction robotics companies will most likely be ready for commercial use in one-and-a-half to two years. The biggest technological hurdles for robotic construction technology at the moment are 1) seamlessly integrating into an already-complicated construction site, 2) working off of plans and maps that evolve as they work, 3) being able to execute the task as well as a contractor.
However, the biggest challenge of all remains whether developers and contractors will adopt the technology at large.
The Customer: Curious, Risk-averse, & Cost-aware
Even though the labor shortage is real, one can’t help but wonder: if the construction industry has been hesitant to adopt technology in the past, will they adopt robotics today?
Unlike in manufacturing, where a single owner is incentivized to operate as efficiently as possible and invests in large capital expenditure projects that pay off over time, construction managers are motivated to turn around a single project as cost-effectively as possible while delivering to the architect’s specifications. They only work on a handful of projects each year, so they have a low willingness to experiment.
From speaking to contractors, I found that they would be willing to adopt technology or hire a robotics sub-contractor if there was proof that the robotic option could drastically reduce costs on their project.
To understand the biggest opportunity for cost savings, I set out to understand what costs the most on a construction site. While this data is challenging to obtain and costs are extremely variable site-to-site, through conversations with contractors, I have seen some patterns emerge, which I plot in the accompanying graph. Costs tend to be held up in a few key verticals, and then widely distributed across most other tasks.
% of Overall Cost CREDIT: JULIETTE CILIA
Of the verticals that tend to cost the most today (structural support [i.e., concrete and steel] and mechanical and plumbing), not many can be automated because of the complexity of the task or we have yet to uncover companies in those verticals. Some verticals that proportionally cost less but still incur significant costs and are deployed across asset types, like drywall and bricklaying, are appealing, but it is unclear how quickly a large-scale contractor would rush to adopt them.
In the near future we will see more companies tackling the cost-consuming tasks on big development projects. CREDIT: PXHERE.COM
The space is still evolving, but I suggest holding off on large checks until we see movers who can tackle some of the costlier verticals, like cast-in-place concrete or facade installation. Automating these jobs will save contractors major money and could be widely adopted in time. While construction robotics are still maturing, I believe that in the next two to three years, we will see more companies tackling the cost-consuming tasks on big development projects, helping us finish more of our cities, offices, hospitals, and homes on time.
Facebook’s advertising practices are, once again, under scrutiny.
This week, Gov. Andrew Cuomo called on the Department of Financial Services (DFS) to investigate Facebook’s ad practices that, according to reports, allow New York state-regulated advertisers to exclude consumers—even those looking for housing—through zip code information, based on classifications including race, sex, disability, national origin, religion, and familial status, the Daily News first reported.
“Facebook touts its advertising platform as a powerful means for housing and housing-related advertisers to reach desired consumers,” a statement from Cuomo’s office reads.
“The allegations against Facebook advertisers are extremely troubling and fly in the face of everything that New York stands for,” Cuomo said in a statement. “I am calling on the Department of Financial Services to investigate these claims and help ensure that New Yorkers seeking housing for themselves and their families are not discriminated against in any way.”
In March, following several legal actions, the American Civil Liberties Union (ACLU) announced a civil rights settlement with the tech giant as it vowed to take steps to ensure that advertisers could not discriminate when sending credit, job, and housing ads to users.
“As the internet—and platforms like Facebook—play an increasing role in connecting us all to information related to economic opportunities, it’s crucial that micro-targeting not be used to exclude groups that already face discrimination,” Galen Sherwin, senior staff attorney at the ACLU, said in a statement.
The spring home buying market got off to a disappointing start in April, as sales sputtered and the state marked the ninth consecutive month of year-over-year sale declines, a new report Thursday shows.
The median sale price of a single-family house was unchanged in April, at $250,000, on a 5-percent decline in sales, according to the monthly report from The Warren Group, which tracks real estate trends in New England.
Sales closed in April typically would have gone under contract 45-60 days earlier, right around the traditional start of the spring homebuying season.
Through the first four months of this year, sales are down nearly 7 percent, compared with the same period in 2018. In the same period, the median sale price fell 1.2 percent, to $240,000, compared with $243,000 for the same four-month period last year.
Hartford County’s home sale market did better than the state as a whole in April. Sales were flat, but the median sale price crept up 1.4 percent to $223,000 from $219,000 for the same month a year ago.
Across all the state’s eight counties, all but Hartford, Litchfield and Middlesex counties saw year-over-year sale declines in April. The deepest decline was registered in New London County, down 16.6 percent compared with April of 2018.
The statewide median sale price was pulled down by declines in Fairfield, Tolland and Windham counties. Price gains in the other five counties — the highest being a 11-percent year-over-year rise in Middlesex County — were not strong enough to lift the overall median price to an increase.
So far in 2019, the four-month trend for sales and prices paid is disappointing for the state’s housing market, which has struggled to recover from the last recession, which ended in March 2010. There were hopeful signs in 2018 when Connecticut registered its third consecutive annual gain in median sale price. The velocity of sales remain a concern, however, failing to show upward momentum.
The median sale price is a well-watched indicator of changes in sale prices and trends affecting property values. But it doesn’t necessarily mean all home prices and values, for that matter, are moving in the same direction.
The U.S. inventory of homes for sale was flat in the first quarter, compared with a year earlier, the first time since 2016 there wasn’t a decline, according to a Truliareport.
Inventory increased in 50 of the nation’s 100 largest metro areas, up from just 19 areas one year ago. Starter-home supply rose 3.5% year-over-year – the fastest annual growth rate observed in more than 6 years – while the number of luxury homes on the market fell 4.5%, the report said.
The increase likely is being driven by homes lingering on the market as high prices put them beyond the reach of first-time buyers, according to the report. About 54% of homes for sale were in the starter- or trade-up-home segments – in other words, the first few rungs of the housing ladder.
“The markets with the greatest growth in inventory are also markets where prices have rapidly risen to notoriously high levels and supply has been severely constrained over the past few years,” the report said. “This rapid appreciation has caused affordability to deteriorate more quickly in these areas, and the nascent rise in inventory may actually reflect an exhaustion of demand in these communities, more than it reflects a greater number of sellers listing their homes.”
The 10 markets with the largest gains in inventory are also among the nation’s most-expensive housing markets, including the San Francisco Bay Area, Seattle, Los Angeles and San Diego.
“Even in these markets, dramatic increases in inventory – especially among starter homes – have yet to stem the tide of declining affordability,” the report said.
Nationally, there were 273,282 newly-listed homes on the market during the first quarter, down 6.9% from the 293,481 in the year-earlier period. In other words, inventory growth was driven by homes that were listed in prior quarters.
“Inventory growth seems to be driven more by ebbing demand rather than an infusion of new supply,” the report concluded.
The first quarter data may be representing the tail-end of a housing slump caused by November’s eight-year high in mortgage rates that since then have fallen.
At the end of March, the U.S. average rate for a 30-year fixed mortgage had the largest one-week decline in more than 10 years, dropping to 4.06%, according to Freddie Mac. Since then, it has bounced around in a narrow band, and this week averaged 4.1%.
In March, pending home sales increased 3.8% as the cheaper financing costs brought more buyers into the market, according to the National Association of Realtors.
Last week, an index measuring mortgage home-purchase applications rose 5% from a week earlier and was 5% higher than the year-ago week, according to the Mortgage Bankers Association.
“We saw a good week for the spring home buying season,” MBA’s Joel Kan said in the report released on Wednesday.
In Rancho Mirage, California, a tired 1960s house is completely transformed with new features and materials that blend midcentury charm with contemporary taste.
Despite a 1984 remodel, the desert midcentury that a couple recently purchased as their vacation home near Palm Springs had long suffered signs of aging with outdated finishes, deferred maintenance, and ill-proportioned rooms. Eager to breathe new life into the 1960s dwelling, the homeowners looked to Seattle–based Stuart Silk Architects for a gut renovation to bring their holiday home to modern standards.
“Our clients wanted to create an updated, midcentury modern home that isn’t too modern,” the architects explain of the project, dubbed Thunderbird Heights. “Our goal was to capture the feel of a home that could have been built in the 1950s but also has elements of today. We wanted to integrate fresh ideas alongside design elements popular in the 1950s in Southern California.”
Starting with a reconfiguration of the entire floor plan, the architects removed and replaced “90 percent” of the original house with new construction; most of the existing foundation and roof structure were reused.
Thermally broken windows replaced all original glazing while large expanses of floor-to-ceiling glass were installed to open the home up to greater natural light and views of the outdoors.
Further enhancing the indoor/outdoor living experience are two new open-air terraces attached to the living room and kitchen. To accommodate a growing family, the architects also added an extra bedroom for a total of five bedrooms with ensuite bathrooms.
Midcentury influences abound in the updated architecture, from the home’s long horizontal forms and flat roof to custom-made details like the geometrically inspired entrance door and metal screens.
Yet the home is far from a 1960s time capsule. Blending together midcentury elements, contemporary surfaces, and the couple’s individual tastes, Thunderbird Heights has a vivacious character that’s uniquely its own.