Matrix Blog

Brooklyn

John Burns Has It Wrong, Luxury Home Sales Are Not Increasing

December 11, 2016 | 8:56 pm |

Last week a newsletter from John Burns Consulting got big SEO points by exclaiming that Wall Street Has It Wrong: Luxury Home Sales Increasing. Normally his firm is a good source of housing research, but this time they missed the mark on New York City, even when using facts.

While facts are provided and luxury sales are rising in markets like DC, there is a lack of proper context and this is a challenge that national analysts face when looking at specific market subsets. In this analysis, the luxury market was arbitrarily defined as having a $600,000 threshold. In a number of high cost housing markets on the following chart, their luxury threshold is equivalent to the entry or middle market, which I agree, is booming.

I took a look at markets I report on: Kings County (Brooklyn) and Manhattan. Their respective median sales prices of $735,000 and $1,073,750 are higher than $600,000. The John Burns definition for luxury would include more than half of these respective housing markets.

jbc-yoysalesabove600k

Besides the random threshold selection, their reasons seem to be weak. This list of common perceptions that would explain our underestimate of the strength of the luxury sales market are provided by them. I provide a subsequent clarification for each.

1. New disclosure laws. Foreign-buyer activity has slowed in two high-profile markets, Manhattan and Miami, due to threat of enforcement of new disclosure laws that began in 2016.

The market in both of these markets actually slowed sharply well before the new disclosure laws were in place. And foreign buyer participation in NYC has long been over-hyped.

2. High-profile Florida second-home markets. High-priced homes have indeed slowed in two of the highest-profile second home markets in the country, Naples (Collier County) and Palm Beach. These are two of the six counties where sales have declined.

Again county-wide prices set way below the actual luxury market may be the problem. Within Palm Beach County, I cover Palm Beach and the luxury market starts just below $5 million. In arguably the most expensive city in this county, the median price for all property types is just below their $600,000 luxury threshold.

3. Fortune article on Greenwich, CT. The sales slowdown in high-profile Greenwich, CT, was featured in Fortune magazine. The article included some very misleading headlines about a national luxury slowdown that were supported only by the fact that prices have appreciated 5% at the high end compared to more appreciation at lower prices.

This is an odd interpretation of the Greenwich market. I track this market in my research, live near it and have relatives that live there. This Fortune article was not misleading. Prices have not appreciated 5% at the Greenwich high end and $600,000 might not even buy you a starter home there. In fact, their luxury market has still not recovered from housing bubble.

4. Increased $1 million new-home supply. New-home sales have slowed in a few new-home markets due to a surge in competitive supply. Coupling this surge in supply, builders have pushed prices too high in comparison to the resale competition due to rising costs.

Why is this perception wrong? Excess or rising luxury supply is apparent across the 28 markets I research.

5. Improving entry-level sales. Entry-level sales are also improving at a faster rate than higher-priced home sales. Indeed, the market for lower-priced homes is stronger, but that does not mean that luxury sales are struggling.

True, but I think the disconnect is just the opposite. The luxury market is soft so many market participants assume the entry level is soft as well and yet it is seeing heavy sales volume.

Since housing across the U.S. is softer at the top, Wall Street looks like they have been correct about luxury. Placing a uniform threshold across a slew of different U.S. housing markets doesn’t tell us anything. Stick to specifics since that’s where you provide solid research.

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NYT Calculator: Suburban Sales Boom Measured By Houses on Monopoly Board

November 19, 2016 | 7:46 am | nytlogo | Charts |

The New York Times created another super cool graphic in their new Calculator column, based on my idea. In the fall of 2015 I observed a massive surge of sales in Westchester County (north of NYC for those not familiar with our area). However median sales price was nearly flat during this period. This was phenomenon repeated in all of the counties that surround NYC – except for NJ since I don’t cover that market yet but anecdotally I believe the same phenomenon is occurring there. I believe this moment was the point where the affordability challenge became so severe that renters and move up buyers had to move out of the city.

Specifically, Brooklyn showed a surge in median sales price from 2009 with a modest growth in sales. Westchester reflected the opposite patterns of Brooklyn. Westchester county sales boomed over the same period while the growth in median sales price was much more tepid.

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Below is the NYT graphic for the suburban sales boom article.

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NYT Real Estate Calculator: NYC Rents Go Graphic

October 9, 2016 | 8:49 am | nytlogo | Infographics |

I’m liking the new goodies in the New York Times real estate section, especially this week, and not because the most recent market report on the Manhattan, Brooklyn and Queens rental market for Douglas Elliman was featured.  No, really.

See for yourself.

 

nytcalculator10-9-2016rents

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Better Than a Sex Scandal: Brooklyn Housing was #3 on the Bloomberg Terminals

October 8, 2015 | 9:53 pm | bloomberg_news_logo | Favorites |

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The Bloomberg News story “Brooklyn Homes Sell at Record Pace in Outer-Borough Surge” was the 3rd most read story on the Bloomberg terminals world wide this afternoon.

Here’s the Douglas Elliman report.

The Brooklyn housing story in fact earned more reads than the Stanford Business School sex scandal, the Bill Gross $200M lawsuit against PIMCO and Deutsche Bank’s $7B loss this quarter.

After all, Brooklyn is now a global brand.

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Brooklyn, Queens Set Records, NYC rents jump, Westchester, Putnam and Dutchess Get Busy

October 8, 2015 | 9:05 pm | delogo | Reports |

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We published a slew of research today for Douglas Elliman Real Estate:

Manhattan, Brooklyn & Queens Rentals

Manhattan Rentals – Median rental price increased year-over-year for the 18th consecutive month – Median rental price was third highest on record – Brisk employment growth and strong economic conditions kept upward pressure on rents – Mortgage lending conditions remained tight tipping would-be first-time buyers back into rental market – Strength at lower end of market remained as non-doorman rents rose faster than doorman rents – Luxury median rental price slipped, showing weakest conditions of all price segments – Inventory slipped and marketing time remained low, despite rise in vacancy rate

Brooklyn Rentals – Median rental price set a new record for third consecutive month – Median rental price exceeded the $3,000 threshold for first time – Landlord concessions remained at nominal level as inventory slipped – Rental price indicators moved higher across all size categories – Listing inventory as well as negotiability between landlords/tenants fell – Median Brooklyn rent was $288 less than Manhattan

Queens Rentals – Price indicators showed mixed results, suggesting general stability overall – Studios showed strong price growth as 1-bedrooms and 2-bedrooms were flat – New development market share comprised 30.2% of new rentals – Luxury market median price gain was modest, but exceeded the overall market – Median Queens rent was $362 less than Brooklyn and $650 less than Manhattan

Brooklyn Sales – Brooklyn median and average sales price set a new record – Brooklyn remains the only New York City borough with a median sales price above the pre-financial crisis high – Condo, co-op and 1-3 family properties set new median sales price record – Luxury housing prices followed overall market trend – Sales expanded as listing inventory declined, resulting in brisk market pace – Fastest marketing time in 8 years

Queens Sales – Queens median and average sales price set a new record – Condo median sales price set a record for second consecutive quarter – Co-op price indicators set new record – 1-3 Family price indicators set new record – Luxury price indicators set new record – Inventory declined as sales surged – Marketing time fell as negotiability expanded

Westchester County Sales (expanded) – Record number of sales for the quarter, based in historical back to 1981 – Fastest marketing time and least negotiability in the 5.5 years this metric has been measured – Listing inventory for all property types slipped from year ago levels – Absorption rate was fastest market pace in 15 years – Single family and condo median sales price indicated stability – Single family market share declined even though sales increased – Luxury price indicators slipped, out performed by overall market

Putnam/Dutchess County Sales (new)

Putnam County – Price trend indicators increased on a year over year basis – Listing inventory slipped as the number of sales surged – Based on absorption, the market pace was 17.2% faster than the year ago quarter – Marketing time and listing discount expanded despite faster market pace

Dutchess County – Price indicators suggested general stability – Single family prices edged higher as condo prices declined – The pace of the market slowed as sales declined and inventory expanded

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Most NYC building permits since ’63 – Brooklyn nearly equals rest of city

July 30, 2015 | 10:20 am | wsjlogo |

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Source: WSJ

Yesterday evening Josh Barbanel at WSJ posted a milestone piece on the current building boom: Construction in New York City Goes Through The Roof: New residential permits surge as developers rush to qualify for tax break

There has been an incredible surge in NYC residential building permits, the most in more than 50 years. It’s amazing to see the Brooklyn permit total nearly reach the total of remainder of the city tallied together.

New York City is entering what could be the biggest building boom in a generation, census figures show, as work gets under way on hundreds of residential projects in neighborhoods across the city. In the first six months of the year, developers received new residential building permits for 42,088 apartments and houses in the city, according to the U.S. Census Bureau, already more than in any full year since 1963, when nearly 50,000 permits were issued.

While permit numbers don’t translate directly to what will actually get built, it is clearly a sign of a significant pipeline in the making.

Reasons?

  • Expiring tax abatement program encouraged developers rush in and start foundation work by June 15
  • Alternative financing around the globe chasing higher returns that low rates can’t deliver
  • Little regulatory oversight because of Dodd-Frank bogging down traditional commercial lenders
  • Significant pent-up demand from 2008-2012 unleashed on the market
  • Improving economy with near record employment growth

UPDATE – I neglected to be more clear and say that this surge will likely collapse in the near future, since the jump in permits is likely to be wildly exaggerated as a result of the first reason above.

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Record Queens Condo Prices: Bigger Than Crises in Greece, China

July 9, 2015 | 9:51 pm | delogo |

Rental_0615Douglas Elliman published our research today covering Queens sales, Brooklyn sales Westchester/Putnam sales as well as the rental market for Manhattan Brooklyn & Queens. You can download the reports and more at Douglas Elliman’s market report page.

Like last week’s Manhattan report, there were lots of records set and it wasn’t simply the influence of high end sales – prices were up across the board in most markets.

Incidentally, the Bloomberg News article that covered record Queens condo sales was the second most emailed story world-wide. It stoked more interest than the finance crisis in Greece and the recent Chinese stock market gyrations. Apparently only “investors with satellites” was a more popular read.

Idea (?) for next quarter: Talk about drones and investors in the Queens housing market.

2q15queensrptBLOOMBERGTERMINALS

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Flipping Out About East Brooklyn’s Gentrification

January 28, 2015 | 9:59 pm | nymaglogo | Charts |

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[click to expand]

This infographic was part of an epic must-read Andrew Rice piece for New York Magazine called: The Red Hot Rubble of East New York which explores the gentrification frontier where investors and New York City’s efforts to create affordable housing are running headlong into each other.

As much as 10% of the property sales are flips and prices are up 150% over the past 2 years.

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VIDEO: Fox Business Risk & Reward w/ Deirdre Bolton 12-31-14

December 31, 2014 | 5:42 pm | foxbusiness | TV, Videos |

Came into the city on the last day of 2014 to join Deirdre Bolton on her Fox Business show Risk & Reward to talk housing rents and 2015 with a dash of $50M+ sales in New York. Always fun.

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[Three Cents Worth #273 NY] Three Cents Worth: No Relief In Sight For New York Renters

November 29, 2014 | 8:45 pm | curbed2 |

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out my 3CW column on @CurbedNY:

Before the tryptophan kicks in on Thursday, I thought I’d present the rental market trends for Manhattan, Brooklyn, and Queens coverage in another way. Because of seasonality, I tend to rely on median rental price compared to the same period a year ago. I applied a 90-day moving average as a trend line for each of the markets to help show where these markets seem to be headed…

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[click to expand chart]


My latest Three Cents Worth column on Curbed: Three Cents Worth: No Relief In Sight For New York Renters [Curbed]

Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami
Three Cents Worth Archive Curbed Hamptons

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[Three Cents Worth #271 NY] How New York’s Average Sales Price Broke the $1 Million Mark

November 4, 2014 | 4:00 pm | curbed2 | Columns |

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out my 3CW column on @CurbedNY:

Although it has been a little more than a month since the third quarter ended, I thought I’d show that the average sales price of the five boroughs in aggregate broke the $1 million threshold for the first time, to a record $1,040,516…

3cw11-4-14
[click to expand chart]


My latest Three Cents Worth column on Curbed: How New York’s Average Sales Price Broke the $1 Million Mark [Curbed]

Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami
Three Cents Worth Archive Curbed Hamptons

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Bloomberg View Column: Only Brooklyn Is Over the City’s Housing Bust

October 13, 2014 | 2:32 pm | BloombergViewlogoGray | Charts |

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Read my latest Bloomberg View column Only Brooklyn Is Over the City’s Housing Bust. Please join the conversation over at Bloomberg View. Here’s an excerpt…

Housing prices in four of New York’s five boroughs still haven’t reached their pre-crash highs. The outlier? Brooklyn.

Housing prices in Brooklyn now are more than 8 percent above the peak reached in 2007. The other four boroughs, meanwhile, are all more than 10 percent below their highs, with the Bronx still down by almost a quarter….

[read more]


My Bloomberg View Column Directory

My Bloomberg View RSS feed.

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