The S&P Case Shiller Index was a released just as I came on the show, as well as what is driving the Brooklyn housing market, why is NYC fairing well, what ails the national housing landscape, will it have further to fall, what are the problems with relying on CSI, foreign buyers and whether Tom is looking at a kick up in his rent next year. Always fun.
The Elliman Report: Manhattan Rentals 3Q 2011 (renamed) was published today. It is part of a report series that we have authored for Douglas Elliman since 1994.
You can build your own custom data tables with the new data. I’m about to launch a site redesign and am rejiggering the way I handle charts (automatic) so I haven’t been very diligent in updating them on my site – sorry about that.
Here’s an excerpt from the report:
…The median rental price, without concessions, was essentially unchanged year-over-year at $2,995. However, median rent with concessions (net effective monthly median rent), increased 4.9% over the same period to $2,970 from $2,831. Approximately 8.6% of new leases had some form of landlord concession compared to 45% in the prior year quarter…The number of listings on the market declined 1.9% to 4,605 in the third quarter from 4,693 in the prior year quarter. Number of new rentals declined 6.9% to 7.998 from 8,593 in the same period last year as more tenants likely opted for renewals. The absorption rate for new rentals was 1.7 months, essentially unchanged from 1.6 month in the prior year quarter but down sharply from 7.7 months in the sameperiod two years ago…
You can build your own custom data tables with the new data. I’m about to launch a site redesign and am rejiggering the way I handle charts (automatic) so I haven’t been very diligent in updating them on my site – sorry about that.
Here’s an excerpt from the report:
…Housing prices in Manhattan continue to remain stable. The median sales price of a Manhattan apartment was $911,333 in the third quarter, essentially unchanged from $914,000 in the prior year quarter and up 7.2% from $850,000 in the prior quarter. The other price indicators offset each other. Average sales price slipped 1.5% to $1,464,528 from $1,487,472 in the same period last year and edged above $1,455,098 from the prior quarter. Price per square foot increased 3.2% to $1,130 from $1,095 in the prior year quarter and
increased 5.8% from $1,068 in the prior quarter…
Flat Prices but More Manhattan Home Sales [New York Times]
‘Boring’ Sales Pace Is Solace for Manhattan Apartments [WSJ]
Manhattan Apartment Sales Gain as Economy Fuels ‘Bipolar’ Market [Bloomberg]
Manhattan home prices rise: Average pad costs $1.4 million [CNN/Money]
Manhattan Market Approaches a New Kind of Normal [Curbed NY]
No strong signs of condo, co-op weakness last quarter [Crain's NY]
Price is right for foreigners [NY Post]
Manhattan home sales market maintains status quo [The Real Deal]
Despite Financial Volatility, Tight Credit and Downgrade of U.S. Debt, Manhattan Fared Better Than Most U.S. Metros in 3Q [WPC]
Big Deals Buoy Manhattan Apartment Market [NY Daily News] not online
Posted by Jonathan J. Miller -Thursday, September 8, 2011, 3:00 PM 1 Comment
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.
Here’s a two-fer on mortgages. I was doing some analysis on the market impact of the looming October 1 drop in Fannie Mae’s conforming loan limit to $625,500 from $729,750 and had a mortgage data set lying around (2011 aggregated mortgage data wasn’t yet available) so I thought I’d share. Incidentally, the drop of the loan limit is not catastrophic to the Manhattan housing market, but it certainly isn’t helpful. Based on the sales over the past year, around 7 percent of the sales would have been moved to jumbo, facing higher down payment requirements, higher rates and FICO and other tighter underwriting requirements. Some of the sales could fall apart due to credit but it would be unlikely that all of them would…
To look at the markets following of both events, I assessed how each economic shock impacted sales activity of Manhattan co-ops and condos, which account for roughly 98% of the Manhattan single-unit residential market. I compared both event timelines by using a three-year window. I track quarterly closed sales, and they lag contract signing by an average of 45 days at that time — but you get the general idea.
One important similarity between the two periods: Both were already influenced by recessions, whether people were aware of it at the time or not.
Sept. 11: The housing market was already sliding down that slippery slope as sales activity weakened and marketing times expanded. The go-go market created by the tech boom in the preceding few years was unwinding and prices were beginning to soften, especially at the upper end of the market. Access to credit remained reasonably accessible, unlike today.
In the weeks that followed 9/11, the housing market was a virtual ghost town with little contract activity. A well-known brokerage firm issued a press release saying that prices had fallen 30% overnight, but I took issue with that claim since there were essentially no sales to measure the market — a classic mark-to-market situation. That press release was subsequently withdrawn.
When the Federal Reserve pushed rates to the floor shortly after the attack and mortgage rates fell sharply, consumers responded. We observed a surge in demand firsthand about five weeks after the attacks — the market restarted at the entry-level priced apartment segment. This was made clear to me when we were engaged by a bank to appraise the purchase of a one-bedroom apartment in the East 50s in a non-doorman building. The contract was signed after a five-way bidding war. Soon we were seeing many such bidding wars and the market began to boom from the bottom up.
Lehman: Sales activity in the housing market peaked in 2007 and prices peaked a year later in 2008. Sales activity was erratic in 2008 leading up to Lehman but the trend was clearly weakening. The slowdown actually began during the summer of 2007 when the mortgage system started to break down. When American Home Mortgage collapsed and the two Bear Stearns hedge funds famously imploded during that summer, the pace of the market began to cool. By the time Lehman went under (and Fannie Mae, Freddie Mac and AIG were bailed out at nearly the same time), the consumer and mortgage lenders went into the fetal position and waited.
Unlike the 9/11 timeline, the Manhattan housing market took nearly two years to reach levels seen in September 2008 and have not come close to peak sales levels reached in the two years prior to the credit crunch (obviously because artificial credit conditions were in place). Unlike the months following 9/11, residential mortgage credit has continued to remain unusually tight and has in fact tightened since the beginning of 2011. Hard to rally the consumer when the Fed continues to keep rates too low for banks to be incentivized to lend.
Leading up to 9/11 a lot was done to reduce oversight of commercial lending, neutering regulators and allowing investment banks step into the mortgage process. The Fed kept rates rock bottom through June 2004, fueling an unprecedented housing boom. Prices were rising so quickly in the first half of the decade that affordability waned and banks removed all underwriting standards in order to keep the pipeline full as Wall Street off-loaded the risk to investors across the globe.
Of course, it all ended badly, marked by the Lehman bankruptcy.
Posted by Jonathan J. Miller -Thursday, August 18, 2011, 3:30 PM 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
The entry level market continues to weaken but the absorption rate is consistent with the 10-year average. $500 to $2M is moving best but $1.5M to $2M is the fastest. Dowtown is most efficient market overall followed by West Side then East Side.
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 -Wednesday, July 13, 2011, 5:53 PM 5 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.
Last week we released our rental study and the consensus was that the rental market was strong, better than the sales market (and expensive). So I thought I’d present the past 20 years and look at some of the peaks. When adjusted for inflation, the perspective of when peak was actually changes quite a bit.
Posted by Jonathan J. Miller -Tuesday, July 12, 2011, 5:30 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 as of late I am able to show side-by side 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
The east side continues to show slower absorption rates in most categories compared to the the same period last year. The west side and downtown are showing softer conditions in the lower end and above $2M but price categories in between are being absorbed faster than the long term average rate.
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.
You can build your own custom data tables with the new data. Charts will be uploaded shortly.
Here’s an excerpt from the report:
…The average rental concession in the second quarter was 1.2 months of free rent or its equivalent in the second quarter, down from 2 months in the same period last year. As a result, the net effective monthly rent paid by tenants increased to $2,888 from $2,700 over the same period. There was an 11% decline in the number of rental listings available, as new rental activity expanded 51.5% between 2010 and 2011 second quarters…
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
