Posted by Jonathan J. Miller -Tuesday, May 15, 2012, 10:04 AM Comments Off
Absorption defined for the purposes of this chart is: Number of months to sell all listing inventory at the annual pace of sales activity. (The definition of absorption in my market report series reflects the quarterly pace – nearly the same)
I started this analysis in August 2009 so I am able to show side-by side year-over-year comparisons. The blue line showing the 10-year quarterly average travels up and down because of the change in scale caused by some of the significant volatility seen at the upper end of the market. The “blue” line for average changes very little year to year but the scale of the chart does frequently.
Side by side Manhattan regional comparison:
April 2011 v. April 2012
[click images to expand]
Thoughts on the year-over-year comparisons
Manhattan All price segments below $2M experienced noticeable increase in pace of absorption.
East Side Condo market accelerating except for $10M+
West Side $3M to $10M accelerating
Downtown Below $2M went from faster than average absorption to a lot faster.
Note: This chart series does not include shadow inventory (properties ready for market but not yet listed for sale) so this analysis somewhat understates the pace of condo absorption. The Uptown (Northern Manhattan) data set is too thin for a reliable presentation.
Posted by Jonathan J. Miller -Monday, April 16, 2012, 12:01 AM Comments Off
[click to expand]
I’ll be speaking with Bloomberg’s Ken Prewitt and Tom Keene on Bloomberg Radio’s “Bloomberg Surveillance.” on Monday morning at 9am. We released our rental market report last week and we’ll be speaking about the relationship between the sales and rental market and the disparity between current peak and the last peak: credit policy between those two periods were polar opposites:
4Q 2006: Manhattan Rental Market sets a 20-year (the length of my data series) record high. Credit standards were essentially non-existent by that time in the housing boom causing prices to rise so rapidly that the lack affordability ultimately pushed buyers into the rental market.
1Q 2012: Current credit standards for mortgage lending are so tight that many potential buyers are forced to rent, competing with the existing rental pool and forcing rents to rise – they are currently just 5% short of the 4Q 2006 record.
Rents continue to rise, but rather than being a leading indicator of an improving economy and sales market they are a reflection of an irrationally tight mortgage lending environment. Drivers of tight credit, namely low rates, rising foreclosures, more regulations and sliding housing prices are keeping underwriting standards above historical norms and as a result, driving more volume into the rental market driving rents higher. This is a national phenomenon, not just a Manhattan situation.
Here’s an excerpt from the report:
Year-over-year prices continued to
show strong gains as landlord concessions
declined. Median net effective rent was
$3,064 for the first quarter, 9.1% higher
than $2,808 in the prior year quarter.
Use of concessions fell to 11.1% winthin
all new rentals from 36.8% in the same
period last year. Rental price per square
foot increased to $52.57 in the first quarter,
reaching its highest level since the third
quarter of 2008, just as the credit crunch
began.
Posted by Jonathan J. Miller -Wednesday, April 4, 2012, 10:45 PM Comments Off
Had a quick couple of clips in this one covering the Manhattan housing market. Inventory restrained, pent-up demand for Q2 to be released, credit remains tight, etc. Always great to speak with Suzanne Pratt at NBR.
Posted by Jonathan J. Miller -Tuesday, April 3, 2012, 12:57 PM 2 Comments
[click to expand]
The Elliman report for the 1Q 2012 Manhattan Market that I author was released today and there was a lot of commentary thrown around that I thought I’d apply actual data to. They relate to the topic of “bidding wars” and some sort of upward price skew cause by the closing of the $88M sale this quarter (contract signed in December).
More “bidding wars” What’s being projected as market conditions The chart above is my attempt to quantify this phenomenon. When a property is sold above the list price at the time of contract, then it’s reasonable to assume there was intense competition between buyers that drove the property over list aka “bidding war”. I doubt there are many buyers on earth who would pay over list price unless there is more to the story.
What’s our take on the story? We estimate that 8.4% of all sales in the quarter were sold above list price and therefore were subject to a “bidding war.” However it’s probably a bit higher than that since 11% of the sale sold for list price. There might have been a bidding war up to the list price and the buyer with the best terms (i.e. cash) won the bid. However I would not characterize the market as rampant with bidding war activity right now. It’s been steadily rising since 2Q 2009 but still remains about half the levels seen just before the credit crunch began in 2008.
The $88M sale skewed the overall numbers higher What’s being said about the record sale’s impact to the market results The record sale at 15 Central Park West closed for $88M during 1Q 2012 and there was concern that this simply skewed the numbers and overstated the results.
What’s our take on the story? This is not the case. When removing the $88M sale from the mix, the median sales price of $775k remains unchanged. That’s because median sales price slices from the top and bottom until it meets in the middle. There were 10 sales that sold for $775,000 this quarter and therefore the removal of this high sale had no impact on the middle. Average sales price was skewed 2.7% higher than it would otherwise would have been. Still not a big deal and it would be inappropriate to remove the $88M from the data set – otherwise the $48M and $36M sale in the year ago quarter would also need to be purged.
After 6 quarters of talking “luxury this” and “$88M that,” we get to look at something new. The entry-level in Manhattan (studios and 1-bedrooms) saw it’s largest market share since 2009. If you recall, I dubbed 2009 as the “Year of the First Time Buyer” due to to falling mortgage rates post-Lehman and the federal homeowner tax credit for first time buyers. However be on the look out for excessive market hyperbole concerning bidding wars. The quarter didn’t kick in until late February after the pummeling the consumer received in the fall with a swirl of bad economic news and pressed the “pause” button. The late start in the season suggests a pretty robust 2nd quarter ahead.
Here’s an excerpt from the report:
Despite global economic turmoil last fall, the
housing market continued to show stability,
continuing a pattern that began in mid-
2009 after the credit crunch began. The
S&P’s downgrade of US debt, paired with
the European debt crisis, Wall Street bonus
concerns, and large swings in the stock market
indices all contributed to the market’s slowed
pace leading into the first quarter. As a result,
the number of sales slipped 3.5% to 2,311 from
2,394 in the prior year quarter. However, sales
levels began to rise during the middle of the first
quarter. The price indicators continued to show stability.
The median sales price slipped 0.9% to $775,000.
As I’ve mentioned before, we just launched this site and I am getting used to how it works under the hood. The data section will be updated shortly, if not by the time you read this. Charts may be a bit longer since I am doing some house cleaning.
Posted by Jonathan J. Miller -Wednesday, January 11, 2012, 6:00 AM 1 Comment
[click to expand]
Last fall Prudential Douglas Elliman turned 100 years old and they asked me to write an article for their Elliman magazine. If you’ve been living in a cave, I’ve been writing their housing market report series since 1994.
What started as a simple project morphed into a fun, albeit gigantic, research project. I learned a lot about the evolution of the Manhattan housing market, largely through the amazing incredible New York Times archives. This was right about the time of my web site revision and semi-necessary hiatus so I am cleaning out my desk of posts I have been itching to write so please indulge me.
The article I wrote for Douglas Elliman was beautifully presented by their marketing department and prominently inserted in their Elliman magazine (and iPad app!).
Diane Cardwell of the New York Times in her “The Appraisal” (an incredible column name BTW) penned a great piece: In an Earlier Time of Boom and Bust, Rentals Also Gained Favor that originated from my article and zeroed in on the 1920s and 1930s to draw a comparison to the current market.
I have the feeling my project is going to morph into something bigger – it’s just too interesting (to me). A few things I learned about the Manhattan market over this period:
Douglas Elliman published the first market study in 1927 [heh, heh] not counting other marketing materials written before WWI)
Real estate media coverage in the first half of the century was social scene fodder (same as today) but with extensive and excessive personal details presented on tenants, buyers and sellers yet housing prices and rents were rarely presented in public.
Manhattan made a rapid transition from single family to luxury apartment rentals and eventually co-ops.
Housing prices and rents by mid century weren’t that much different than the beginning of the century.
Manhattan’s population peaked at 2.3M around WWI.
Wall Street in the 1920’s was seen as the driver of the real estate market.
Federal and state credit fixes in the late 1930’s help bail out the housing market.
• Change Is The Constant In A Century of New York City Real Estate – pdf [Miller Samuel]
• My Theory of Negative Milestones [Matrix]
Posted by Jonathan J. Miller -Tuesday, November 15, 2011, 10:00 PM Comments Off
Always a pleasure to visit Bloomberg HQ. Deirdre’s got a new show and I like the format – more time for one-on-one discussion. Today we spoke about how the NYC metro area and Miami is fairing.
Posted by Jonathan J. Miller -Wednesday, November 2, 2011, 10:19 AM Comments Off
Absorption defined for the purposes of this chart is: Number of months to sell all listing inventory at the annual pace of sales activity. (The definition of absorption in my market report series reflects the quarterly pace – nearly the same)
I started this analysis in August 2009 so I am able to show side-by side year-over-year comparisons. The blue line showing the 10-year quarterly average travels up and down because of the change in scale caused by some of the significant volatility seen at the upper end of the market.
Thoughts
Manhattan co-ops saw a slow down in their absorption rate up to $5m while condos not only saw faster absorption rates over last year but also faster than the 10-year average. $10m+ co-ops improved as condos weakened.
East Side Co-op absorption slowed sharply at nearly all price points, exceeding the 10-year average while condos generally moved more quickly. $10m+ condos weakened however as this small market segment size often results in volatility.
West Side Sub-million co-ops slowed as condos generally remained stable or improved across most price points. Condos at $10m+ slowed.
Downtown Co-op absorption improved below under $1.5M while condos generally improved across most price points. $10m+ co-ops improved as condos weakened.
Note: This chart series does not include shadow inventory (properties ready for market but not yet listed for sale) so this anlaysis understates the rate of condo absorption. The Uptown (Northern Manhattan) data set is too thin for a reliable presentation.
Posted by Jonathan J. Miller -Monday, October 31, 2011, 2:32 PM 3 Comments
It’s time to share my Three Cents Worth on Curbed NY, at the intersection of neighborhood and real estate in the capitol of the world.
Now that our quarterly gauntlet of reports is behind me, I thought I’d throw a chart together to gain a little perspective on where we are now with context given to the past decade. I plotted median sales price adjusted for inflation against the monthly absorption rate. Absorption in this case is defined as the number of months to sell all active inventory (excluding shadow) at the current pace of sales activity. In grocery store parlance, it would be the number of months to sell everything on the shelves if no one restocked them. I’d love to go back 25 years which is the extent of the bulk of our sales data but was only able to begin to capture listing data circa the dotcom era needed for the absorption stat…
Had a fun interview with Tom and Sara this morning on the always MUST watch/listen Bloomberg Surveillance. We talked housing, rentals, vacancy and inventory. An added bonus was the addition of Adam Davidson – co-founder and co-host of Planet Money... Read More
