Posted by Jonathan J. Miller -Monday, October 31, 2011, 2:32 PM
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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…
Three Cents Worth: Manhattan Housing Gets Spiked, Dipped, Bumped, Occupied
[Click to expand and read full post on Curbed NY]
Curbed DC Three Cents Worth Archive
Curbed NY Three Cents Worth Archive
Posted by Jonathan J. Miller -Monday, October 31, 2011, 1:00 PM
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I gave some thoughts to Teri Rogers for her new Real Estate Survival column in amNY which is now posted on her must-read apartment survival guide resource: Brick Underground.
One of the items I mentioned concerned monthly carrying charges…I get asked this all the time, so here goes:
The average Manhattan co-op maintenance per square foot in 3Q 2011 was $1.53.
The average Manhattan condo common charge + real estate tax per square foot in 3Q 2011 was $1.40 ($0.91 CC + $0.49 RET).
The lower monthly condo costs are due primarily to the inclusion of tax abated buildings which have unusually low real estate taxes.
I’d conclude that the overall average monthly for Manhattan co-ops and condos are fairly similar.
Posted by Jonathan J. Miller -Monday, October 31, 2011, 12:27 PM
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[click to open index]
The USD Index tracks a basket of currencies measured against the US Dollar. The USD Index includes the currency of our trading partners including the Euro, Japanese Yen, British Pound, Canadian Dollar, Swiss Franc and Swedish Krona.
This past summer, the participation of foreign buyers seemed unusually strong. However the USD Index spiked in September and then weakened again but not to the summer lows. This may take some of the wind out of the “sales” (sorry) for foreign buyers in Q4.
There was a nice summary of the foreign buyer phenomenon last Friday in US News and World Report by Meg Handley:
Internationally oriented sales amounted to $82 billion for the year ending in March, according to the most recent data from the National Association of Realtors, about 8 percent of total U.S. sales and $16 billion more than the same period last year.
In fact, US Senator Chuck Schumer introduced a bill to incentivize foreign buyers to buy residential real estate. What I like most about the bill, is the $500k threshold since there are higher housing prices along the US coastline and FHFA reduced the conforming mortgage limits to high priced housing markets on October 1, 2011 – which are mainly on the east and west coasts.
The bill, if passed, as well as the weak US Dollar, are not the ultimate answer to the housing mess but clearly the solution is going to be comprised of many items, rather than one big idea.
Posted by Jonathan J. Miller -Friday, October 28, 2011, 10:05 AM
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We released our Brooklyn market report last week – Jill Urban of NY1 does a nice segment, interviewing Dottie Herman, President/CEO of Prudential Douglas Elliman and moi.
Wore a new tie.
Posted by Jonathan J. Miller -Thursday, October 27, 2011, 9:46 AM
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[click to open report]
The Elliman Report: Hamptons North Fork Sales 3Q 2011 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:
…Housing prices in the third quarter were up sharply from the same period last year, but experienced a seasonal decline from the spring market activity of the second quarter. There were 30 sales above the five million dollar threshold, nearly three times the 11 sale total in the prior year quarter. Median sales price increased 12% to $700,000 in the third quarter from $625,000 in the prior year quarter, but declined 8.6% from $766,250 in the prior quarter. Average sales price followed the same pattern, rising 14% to $1,452,678 in the third quarter from $1,273,775 in the prior year quarter, but falling 4% from $1,513,636 in the prior quarter. The fourth and fifth market quintiles posted year-over-year gains in median sales price, while the lower three segments showed declines…
The Elliman Report: Hamptons North Fork Sales 3Q 2011 [Miller Samuel]
The Elliman Report: Hamptons North Fork Sales 3Q 2011 [Prudential Douglas Elliman]
Hamptons North Fork custom data tables [Miller Samuel]
Market Report Series Archive [Miller Samuel]
Posted by Jonathan J. Miller -Thursday, October 27, 2011, 9:28 AM
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[click to open report]
The Elliman Report: Long Island Sales 3Q 2011 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:
…There were 5,141 sales in the third quarter, 18.4% above the 4,343 total in the prior year quarter, and 22.3% above the prior quarter total of 4,205. The current total is the fourth highest quarter in three years, led by three quarters significantly impacted by the federal homebuyers tax credit from the second half of 2009 through early 2010. Year-over-year, signed contracts were up 8.6% to 4,813 from 4,430 in the prior year quarter. The federal homebuyer tax credit continued to influence reported price trends; however, the third quarter should be the last period to see much impact from last years stimulated price trends. The median sales price of a Long Island property that sold in the third quarter was $365,000, down 3.2% from $377,250 in the prior year quarter and up 4.3% from $350,000 in the prior quarter…
Other reports we prepare can be found here.
The Elliman Report: Long Island Sales 3Q 2011 [Miller Samuel]
Hamptons/North Fork custom data tables [Miller Samuel]
Posted by Jonathan J. Miller -Thursday, October 27, 2011, 7:54 AM
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It seems logical to me that a bank can’t foreclose on a mortgage if they can’t prove ownership. You can’t re-take what you don’t own. That’s what last year’s “robo-signer” scandal was all about.
You can appreciate (no pun intended) how much foreclosure volume actually fell after the “robo-signer” scandal last fall in this chart on the Long Island housing market.
Source: Long Island Real Estate Reports
One step further…
According to Bloomberg, The Massachusetts Supreme Judicial Court made recent ruling in that:
banks can’t foreclose on a house if they don’t own the mortgage, went one step further in a closely watched case and said a sale after that foreclosure doesn’t transfer the property. Therefore, the buyer couldn’t bring his court action against a previous owner, the court ruled.
So logically it follows that if this home was resold by the bank even though the bank did not have valid ownership, the chain of title has been broken and the re-sale is not valid until ownership in each step has been proven.
Wow.
If this is universally adopted (can’t see why it wouldn’t), it will scare investors, keep foreclosure sales activity artificially low, keep credit tight and prevent the housing market from clearing excess supply anytime soon. Of course, it isn’t unreasonable to prove you actually own a property when selling it.
That’s why this housing crisis reflects a systemic breakdown – there was a lack of respect for the rule of law (and no criminal penalties to those who did break it) so we keep uncovering problems that have to be resolved before we can start at square one.
What a mess.
Posted by Jonathan J. Miller -Tuesday, October 25, 2011, 4:26 PM
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Got a chance to speak with Tom Keene and Ken Prewitt in studio this morning where we covered a lot of ground.
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.
Miller Samuel’s Miller Says Home Prices to Fall 5-10% (13 min) [Listen]
Posted by Jonathan J. Miller -Tuesday, October 25, 2011, 6:30 AM
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Former economic adviser to President Obama Dr. Larry Summers pens an opinion piece in the Washington Post: “How to stabilize the housing market“.
I can’t decide why this was submitted to Wapo since it offers no solutions to stabilize the housing market. Should be renamed “here are some of the problems with the housing market.”
Some feel he’s made our credit problems worse by derailing Obama’s economic strategy. Here and here is a two part podcast with Barry Ritholtz that contains some very choice words for Dr. Summers.
When I first read Summer’s piece I was reminded of Steve Martin’s line on SNL (way back in 1978) where he offers some sage advice on “how to have a million dollars and never pay taxes”:
“First, get a million dollars, then…”
The observations he makes are not new and not insightful beyond basic conventional wisdom. I continue to be amazed at how disconnected the very smart DC econoliteri are from what ails housing.
“First, banks need to lend, then…”
He says:
- First, and perhaps most fundamentally, credit standards for those seeking to buy homes are too high and too rigorous.
- Second, as President Obama stressed in rolling out his jobs plan, there is no reason that those who are current on their GSE-guaranteed mortgages should not be able to take advantage of lower rates.
- Third, stabilizing the housing market will require doing something about the large and growing inventory of foreclosed properties.
- Fourth, there is the issue of preventing foreclosures, the initial focus of housing policy efforts. The right way forward is far from clear.
Here are my observations to these 4 points:
- First – Banks have to be incentivized to lend and ease underwriting standards. The problem with Washington establishment is they have been begging and pleading for banks to lend since the crunch began. THIS WILL NOT WORK. Banks don’t want to, primarily because of the low rate policy held by the Fed. No real spread and tough to equalize the risk between borrowing from the Fed for free and a higher risk proposition with Joe and Mary Homebuyer.
- Second – Yep. Low rates don’t do anyone any good if you can’t get a mortgage. That’s what is happening now. It’s all credit access, baby.
- Third – Five years of elevated REO activity coming. Its not going away and housing won’t recover until it clears the market. Our government resources can’t stop this. They aren’t large enough.
- Fourth – Uh, yes its a complex problem.
NOTICE TO THE WASHINGTON ECONOMIC POLICY ELITE
Create economic incentives to lenders and problems slowly go away. Housing won’t recover without credit repair. Incentivize lenders to lend. Asking doesn’t work. Focus on the banks and they will in turn help the consumer. Don’t bypass the banks and go directly to the consumer since that’s not a sustainable fix.
Late into the Depression, 10% down lending returned to the market with government incentives and helped housing recover more quickly. You don’t starve a recession and feed a boom. Washington’s still got it exactly backwards.
Posted by Jonathan J. Miller -Monday, October 24, 2011, 4:00 PM
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William C. Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York gave a speech today providing a national and regional economic outlook. He is Vice Chair of the FOMC.
Here are my favorite semi-housing related points of his presentation:
National
*…the output of the U.S. economy—grew at a 3 percent annual rate from mid-2009 through 2010. While hardly a blistering pace, this growth was sufficient to add nearly 1 million jobs and reduce the unemployment rate by a half percentage point during 2010. Then, during the first half of 2011, growth slowed abruptly to a 0.8 percent annual rate. Job growth slowed so much that the unemployment rate rose back up to 9.1 percent.
Growth slowed partly because of temporary factors…Energy and commodity prices rose sharply…April’s tragic earthquake and tsunami in Japan disrupted many global supply chains.
Residential construction—which typically boosts economic activity during a recovery—is at a standstill. Moreover, many homeowners are now consuming less because the decline in house prices reduced their wealth…
Mortgage rates are at record lows…but obstacles to refinancing and access to credit for home purchases are limiting the support provided by low rates to house prices and consumption…the prospect that unemployment and negative equity will continue to feed the foreclosure pipeline—continues to put downward pressure on home values.
…cutbacks in employment and spending by state and local governments intensified in 2011 and are likely to continue…states are likely to cut spending further as the federal government stimulus aid to states peters out.
…the federal government will soon end much of the support it has been providing to the economy through stimulus programs….it will be very important to avoid excessive short-term cutbacks or tax increases that could harm the recovery.
…the sovereign debt crisis in Europe has weakened the outlook for global growth and with it, U.S. exports…some financial institutions are facing pressures to cut back lending.
Without robust growth, the economy is more vulnerable to negative shocks, which unfortunately seem to keep coming. It is like riding a bicycle—at a slow speed, the bicycle wobbles and the risk of falling rises. Politics here and abroad have not helped. The intense debate around raising the debt ceiling and the subsequent downgrading of the federal debt took a toll on household and business confidence.
- Stabilizing the housing sector is particularly important because housing equity is an important part of household wealth...Taken together, such efforts could help shift people’s expectations about future house prices. If prospective homeowners no longer fear that prices could decline further, they will be more willing to enter the market to take advantage of reduced prices and low financing costs, and existing homeowners will feel more confident about spending. A vicious cycle could be replaced by a virtuous circle, in which stabilization in house prices supports spending, growth and jobs.
Regional
- Citywide employment fell by nearly 4 percent during the downturn, much less than the nationwide job loss of 6.5 percent. During the recovery, New York City has already regained half of the net jobs lost during the recession. This has happened without much help from the securities industry (Wall Street), which has been a driving force behind local economic recoveries in the past. This time, the strongest contributors to job growth have been professional and business services, leisure and hospitality.
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