Posted by Jonathan J. Miller -Thursday, February 23, 2012, 5:49 PM 1 Comment
In one of the greatest column names ever devised during the illustrious history of the New York Times known as “The Appraisal” [wink], Elizabeth Harris, pens “Amid a Subway Project’s Dust and Noise, No Complaints About the Rent” about the war zone that is Second Avenue on the Upper East Side of Manhattan. I was on vacation when this was published earlier this week and I was forbidden to bring my laptop.
I was approached to try to take a stab at measuring the impact of the Second Avenue subway construction on the local housing market. Listen to the blasting.
Sales transactions move too slowly to capture the neighborhood impact since this is a relatively recent event of the past few years. So I looked at rents since they are smaller and more nimble.
Methodology
I divided a portion of the Upper East Side neighborhood into three zones (East 64th Street to East 96th Street) as follows:
The blocks to the east and west of Second Avenue (Third Avenue to First Avenue)
The blocks to the west of Third Avenue (to Fifth Avenue)
The blocks to the east of First Avenue (to East River)
I analyzed all the properties collected during our production of the The Elliman Report: Manhattan Rentals that actually rented in 2010 and 2011 and compared them. In a rental housing market that is seeing sharp gains in rents in the past year, I thought it would be interesting to see if there was a material difference in direction between the subway “zone” and everywhere else. I was only looking at “face” rents (the rent paid before deducting concessions) because I have more of that data.
And there was a difference.
In fact, the subway zone showed a 1.7% decline in median rent year-over-year, a 3.2% increase to the west and a 2% increase to the east. And the number of rentals in the subway zone increased 9% while the areas to the west and east fell 5.1% and increased 2% respectively over the same period suggesting that increased affordability may be attracting tenants.
Construction was supposed to be completed by 2016, but now it looks like 2018 or longer.
A gigundo transfer station…
[Courtesy: NYT]
…and trucks carrying explosives [Turn your head to left when viewing photo]…
[Courtesy: NYT]
While I was on vacation, I was contacted by Eyewitness News to discuss my numbers on camera but that wasn’t possible – although the online story includes no mention of the source of the results, the video did provide proper credit.
Thoughts
As time moves closer to completion some buyers may benefit from upside given how unpleasant some blocks are right now. The construction will likely provide downward pressure on housing prices in the near term but those along the zone will likely catch-up and perhaps even benefit from the transportation upgrade.
As a general rule, neighborhood property values tend to be higher in the west and lower in the east. It’s also possible that the price midpoint may shift further to the east than it is now once construction is completed.
Location specifics aside, additional subway access to and from the neighborhood should prove to be a tremendous asset to property owners in that area over the long run.
Posted by Jonathan J. Miller -Thursday, February 2, 2012, 10:25 PM 2 Comments
We released our report on the Manhattan co-op/condo market for 2002-2011 this morning. This report is 60 pages of data bliss as far as I’m concerned. More than 100,000 sales collected, cleaned, sliced, whipped chopped and pureed.
Absolutely love the cover photo the graphics people selected.
I’ve been authoring this market report series for Douglas Elliman since 1994.
Co-ops and condos consistently account for roughly 98% of Manhattan residential sales. Manhattan is primarily a rental market and single family sales are a very specific high end niche market.
Here’s an excerpt from the report:
The number of sales remained above the 10,000 sale threshold for the second consecutive year and for the fourth time in the decade. There were 10,161 sales in 2011, the third highest total of the decade. The total was 1% above the prior year total of 10,060, but 24.3% below the 2007 housing boom peak of 13,430. The weakest period of sales activity for the decade was in 2009, the year after the “Lehman tipping point” in late 2008, when the credit crunch and low consumer confidence stifled sales activity. The second weakest period surprisingly occurred in 2005, after affordability fell sharply with the highest pace of price appreciation in the decade. The last two years of the decade saw the most sales of 3-bedroom and 4-bedroom apartments as the market benefited from unstable global economic conditions. Foreign buyers and the wealthy continued to seek financial refuge in the high-end Manhattan housing market.
The custom data tables are updated and ready for you to play with. The chart section on the new site remains a work in progress.
Posted by Jonathan J. Miller -Thursday, February 2, 2012, 10:10 PM Comments Off
We released our report on the Manhattan Townhouse Market for 2002-2011 this morning. I define a “townhouse” as a 1-5 family house that can be delivered vacant. It’s one of my favorite reports to work on because the market is so unique.
One of the things that drives the 2-family and 3-5 family markets are owner/users. Purchasers rarely view these properties as vehicles for cash flow – in appraisal parlance, their “highest and best use” is eventual conversion to single family occupancy.
I’ve been authoring this market report series for Douglas Elliman since 1994.
The market consistently accounts for roughly 2% of Manhattan residential sales – it’s a high end niche market.
Here’s an excerpt from the report:
The Manhattan housing market saw the largest
number of sales since the credit crunch began,
reaching a yearly sales level consistent with the
annual average of the past decade. The robust
apartment rental market influenced the gain in
2-family and 3-5 family market share as 1-family
market share slipped over the past year. The
jump in market share of lower priced multi-family
sales pulled the price indicators lower. Listing
inventory as well as days on market expanded
year-over-year as all price indicators slipped.
The townhouse price indicators were more than
double their respective 2002 levels. East Side
and West Side market share of Manhattan sales
fell as Downtown and Uptown market share
expanded over the same period.
The custom data tables are updated and ready for you to play with. The chart section on the new site remains a work in progress.
We also published a companion report, The Hamptons & North Fork Decade 2002-2011 with a revised format, to lay out out the market in context over an expanded window of time.
Here’s an excerpt from the 4Q 2011 report:
There were 541 sales in the fourth quarter, 0.6%
more than 538 sales in the prior year quarter and
prior quarter. The level of sales remained above
the 5-year average of 484 sales. Despite the
relative stability of sales, the number of available
listings fell sharply. There were 1,728 listings
available at the end of the fourth quarter, 25%
less than 2,303 listings at the end of the same
quarter last year.
Despite the decline in listing inventory and
stability of sales, days on market and listing
discount expanded over the year. Days on
market, the number of days from the last price
change to contract date, was 201 days, 25 days
longer than 176 days in the prior year quarter.
Listing discount, the percentage difference
between the list price at time of contract and the
sales price, increased to 13.4% from 9.3% in the
prior year quarter.
Median sales price was $675,000, down 7.5%
from $730,000 in the prior year quarter. Average
sales price followed the same pattern with a
decline of 16.2% to $1,335,884 from $1,594,785
in the same period last year. The price indicators
in the prior year quarter were pressed upward
from the high end skew caused by concern over
the potential expiration of the Bush tax cuts
and rise in capital gains rate. Buyers and sellers
rushed to close before the end of 2010.
The custom data tables are updated and ready for you to play with. The chart section on the new site remains a work in progress.
We also published a companion report, The Long Island Decade 2002-2011 is the first of its kind, to lay out out the market in context over an expanded window of time.
Long Island remains weak, but considering the turmoil of the fall that began with the S&P downgrade of US debt in August that lead to significant volatility in the financial markets and the European debt crisis, this uncertainty resulted in a modest decline in housing prices and a nominal decline in sales activity. However this weakness has been a continuing trend.
Here’s an excerpt from the 4Q 2011 report:
Housing prices slipped in the fourth quarter,
dipping below prior year levels. Median sales
price was $339,000 in the fourth quarter, 4.8%
below $356,050 in the same period last year.
Average sales price showed a similar trend,
declining 5.1% over the same period to $412,060
from $434,424 in the prior year quarter.
The number of sales for the quarter totaled
4,222, essentially unchanged from the 4,252
total of the same quarter last year. However,
pending sales declined 7% to 4,134 from 4,447
over the same period. Listing inventory slipped
1.6% over the year to 18,447 from 18,742 in the
prior year quarter. During the fall, housing market
participants were confronted with a series
of economic woes, such as financial market
volatility after the S&P rating agency downgraded
US debt last August, and the financial crisis in
Europe. As a result, they appeared to press the
“pause” button, taking longer to make decisions
and waiting until more time had passed before
returning to the market.
The custom data tables are updated and ready for you to play with. The chart section on the new site remains a work in progress.
Posted by Jonathan J. Miller -Thursday, January 19, 2012, 10:17 AM 1 Comment
We released our report on the Brooklyn sales market for 4Q 2011 this morning. I’ve been authoring this series for Douglas Elliman since 1994. This report is the first to provide comprehensive insight and analysis for both counties beyond standard MLS stats.
Overall Westchester price indicators were mixed while the number of sales slipped from the same period a year ago. Overall sales were up but single family sales fell 5.4%. Sales of Westchester 1 families comprised 57% of all county residential sales, their lowest market share in 30 years (as far back as the data goes). Over the last few years there have been quarters that have been close. The uptick in everything else (lower priced or rent driven) caused the low market share. Putnam showed a jump in overall sales while the price indicators were mixed.
Here’s an excerpt from the report:
The price indicators for the quarter were partially
mixed partially, as a result of a significant variance
caused by the surge in entry-level co-op sales.
The average square footage of a residential sale
was 2,082, down 2.8% from 2,143 in the same
period last year. As a result of the decline in size
and shift in the mix to smaller sales, the fourth
quarter median sales price and average sales
price were nearly identical. The median sales
price of a Westchester residential sale was
$525,000, up 16.7% from $450,000 in the prior
year quarter. The average sales price showed
the opposite trend, falling 9% to $524,722 from
$576,512 in the prior year quarter.
The custom data tables are updated and ready for you to play with. The chart section on the new site remains a work in progress.
There was a 27.6% surge in lower priced co-op sales in the fourth quarter bringing down the overall price indicators. The jump was influenced by the sharp drop in mortgage rates during the fall. Overall sales for the borough were 6.1% above the prior year quarter. I thought it was interesting that the two lowest priced regions, South Brooklyn and East Brooklyn, posted a sharp increase in sales and drop in price indicators while the two highest priced regions, North Brooklyn and Northwest Brooklyn posted declines in sales and increases in prices.
Here’s an excerpt from the report:
The housing market saw year-over-year gains
in sales for the fourth quarter. There were 1,558
sales, 6.1% more than 1,468 in the same quarter
last year. The increase in sales was largely due
to the increase in market share for co-ops,
which comprised 22.5% of all borough sales,
up from 18.7% over the same period. The surge
in lower priced co-op sales was a result of the
sharp decline in mortgage rates during the fall
after the S&P downgrade of US debt, which
occurred at the end of the summer. Listing
inventory declined 4.8% over the same period
to 5,908 from 6,203 in the same quarter last
year. As a result, the number of months to sell all
inventory at the current pace of sales fell to 11.4
from 12.7 over the same period, but above the
10.4 average of the past three-and-a-half years.
The custom data tables are updated and ready for you to play with. The chart section on the new site remains a work in progress.
Queens saw significant price skew from the 127.7% increase in year-over-year sales of lower priced co-ops in response to the drop in mortgage rates during the fall. Even with the surge in co-op sales, overall sales declined 19.3% over the same period. New development posted it’s second highest market share since the credit crunch began. However it would be fair to characterize the entire borough as weaker than last year at this time.
Here’s an excerpt from the report:
Median sales price for the fourth quarter
declined 7% to $343,000 from $369,000 in the
prior year quarter. Average sales price showed
the same pattern, sliding 2.5% to $395,264
from $405,489 in the same period last year.
The decline in the overall price indicators was
primarily due to the large shift in the mix toward
co-op sales, the lowest priced property type. As
buyers took advantage of record-low mortgage
rates during the quarter, the lower priced market
quintiles saw larger year-over-year declines in
median sales prices.
The custom data tables are updated and ready for you to play with. The chart section on the new site remains a work in progress.
Posted by Jonathan J. Miller -Tuesday, January 10, 2012, 1:37 PM 12 Comments
Actually our birthday was last October 1st and I had grand plans to post this back then when this site was supposed to be relaunched. Well, like our 25 years, time passed quickly and I am posting 3 months later.
Miller Samuel was founded by my family including moi, my wife Cheryl, my sister Dina and my parents Donald and Ethel (who retired in 2002) it’s been fun, challenging, frustrating and rewarding but I think I speak for all of us – we wouldn’t trade the experience for anything.
My back-of-the-envelope estimate of the total market value of all properties appraised, adjusted for inflation (not for changing market conditions) is over $80 Billion, but who’s counting?
But I digress…
We were originally going to name our firm Appraisal Specialists (what were we thinking?) in 1986 and found out someone in New York State already had that name when we went to incorporate. We quickly appended the word “Group” to form Appraisal Specialists Group (another horrible name) but within the year we renamed our firm Miller Samuel with the latter name being a former partner early on. We originally worked out of our apartments and got a real office within the year. Went with Macs back in 1986, developed our own software to fill out the appraisal reports, incorporated bar code and scantron forms into our process and to top it off. I have to laugh when I think that we were the first appraisal firm to have a 2-line fax machine ’cause we were so “hi-tech” and our banking clients used to fax everything.
The Miller Samuel name stuck and we expanded, outgrowing 3 offices, launching a commercial affiliate Miller Cicero, shifting our client mix away from primary emphasis on banks and expanded our real estate market report coverage throughout the New York City region and Miami for brokerage Prudential Douglas Elliman and dabbled in report coverage in other housing markets such as Washington, DC and Baltimore. We’ve done a lot of blogging and podcasting, social media, magazine articles, research studies, data aggregation, seminars and other things to provide more transparency to the housing markets we cover.
We’ve got a really great appraisal staff, averaging 14 years of experience and it’s really a lot like an extended family.
After 25 years we have seen radical changes for the worse in our dysfunctional leaderless appraisal industry – appraisal quality for bank lending is at an historic low thanks to appraisal management companies, but yet we are well positioned for the future.
We live and die by our reputation of taking no quarter when it comes to:
providing a neutral valuation benchmark for our clients to enable them to make informed decisions.
In one of the greatest column names ever devised during the illustrious history of the New York Times known as “The Appraisal” [wink], Elizabeth Harris, pens “Amid a Subway Project’s Dust and Noise, No Complaints About the Rent” about the war zone that is Second Avenue on the Upper East Side of Manhattan. I was on vacation when this was published earlier this week and I was forbidden to bring my laptop.
