Matrix Blog

Historical, Landmark, Milestone

Manhattan Penthouse Co-op Sold For 2nd Highest PPSF in History

June 9, 2014 | 2:57 pm | Milestones |

960fifthFP

Real estate reporter Katherine Clark at the New York Daily News got the scoop on the $70,000,000 penthouse sale at 960 Fifth Avenue, the highest price ever paid for a Manhattan co-op apartment. Curbed New York lays out all the (pretty?) pictures.

The previous record was held by David Geffen, who paid $54,000,000 in 2012 for the Penthouse at 785 Fifth Avenue. Although the Geffen penthouse was renovated, it was 12,000 square feet, more than twice as large as the 5,500 square feet within the penthouse at 960 Fifth Avenue – that just sold for a record price of $70M.

To further illustrate how much more expensive this new record price actually is, take a look at the two highest Manhattan co-op sales prices achieved, but on a price per square foot basis:

David Geffen paid $4,500 psf for the penthouse at 785 Fifth Avenue for the then record price of $54,000,000.

Nassef Sawiris paid $12,727 psf for the penthouse at 960 Fifth Avenue for the new record price of $70,000,000. On a sales price basis, the new record is 29.6% higher than the old record of 2 years ago.

On a price per square foot basis, the record sale was 182.8% above the previous record sale price set two years ago.

With all the attention focused on the newish or new development residential condo market, the all-time price per square foot apartment record was set 2 years ago, around the time of the Geffen purchase.  A Russian oligarch paid $88,000,000 for Sandy Weill’s penthouse condo that works out to $13,049 per square foot. That record breaking sale was largely viewed as a market outlier, that the buyer overpaid as part of a larger divorce strategy – since it was 31% higher than the previous record in the year prior within the same building.

Some other oddities about this new record co-op sale at 960 Fifth Avenue:

  • The 960 Fifth Avenue co-op board is old world and I’ve heard it is fairly tough. As a general statement, it is not that common to see a foreign buyer at the high end of the market approved by a co-op board.
  • The news coverage suggested the buyer was slow to pay his taxes and negotiated a reduced amount with the government. This would be a concern for most co-op boards in terms of collecting maintenance charges in arrears from a foreign national if they stopped paying.

Since these conditions would probably make any high end co-op board nervous, perhaps this is a sign that shareholders (board members are also shareholders) are concerned about damaging potential property values by limiting the universe of people that would be able to afford these types of prices in this new market condition.

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Pulling the Case-Shiller Index Back by 6 Months to Reflect Actual Buyer/Seller Behavior

May 27, 2014 | 10:45 pm | Charts |

matrixCSIshift-5-27-14
[click to expand]

The Case Shiller Index was released today and it continued to confuse consumers, pundits, economists etc…and for good reason. It’s 6 months late.

I wondered what would happen if their index result was pulled back by 6 months to see how it lined up with a couple of significant housing milestones (purple vertical lines). The most recent housing milestone was last year’s Bernanke speech that resulted in the spike in mortgage rates in May-June of 2013.

In the modified trend line (dotted blue) housing prices surge up until mortgage rates spike. This is clearly more logical than the actual index showing housing prices surging for six months after the mortgage rate spike.

In the earlier milestone in April 2010, the adjusted index (dotted blue line) immediately begins to slide after the April 2010 signed contract deadline passed to qualify for the federal homeowner tax credit as part of the stimulus plan. Yes, that’s exactly what happened on the front lines.

I’m going to call this new methodology “time-shifting a housing index.” From an historical perspective, this is a much more useful and reliable trend line. For the near term, it places the CS HP 6 months behind the market without any relevance to current conditions. Then again, the S&P/Case Shiller Home Price Index was never meant to be a monthly housing indicator for consumers as it is currently used by the media. It was originally created to enable Wall Street to hedge housing but never caught on because of the long time lag and therefore the eventual ability of investors to accurately predict the results.


The top chart is fairly self-explanatory but here’s the math again:

  • May 2014 Report Publication Date
  • March 2014 Data (Jan, Feb, March Closings – February is midpoint)
  • January 2014 Contracts (Nov, Dec, Jan Contracts – December is midpoint)

Contracts Assumes 90 days between closing date and “meeting of minds” between buyer and seller i.e. 75 days from contract to close +15 days to signed contract from “meeting of minds.”

“Meeting of Minds” Moment when buyer and seller agree on basic price and terms, usually a few weeks before contract is actually signed i.e. May 2014 Case Shiller Report = December 2013. The optimal moment to measure housing.

Here’s a regular chart that has a longer timeline, with and without seasonal adjustments (you can see that seasonal adjustments are essentially meaningless.)

matrixCSI-5-27-14

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Documentary: The Coney Island Zipper, A Land Use Battle

May 25, 2014 | 9:12 pm |

coneyislandzipper
[click to view film on PBS until 4/1/17]

I saw the documentary: ZIPPER: CONEY ISLAND’S LAST WILD RIDE (here’s the trailer) over the weekend on the land use battle in Coney Island. I like the filmmakers’ focus on the guys that ran the “Zipper” (the ride is guaranteed to make me throw up) to humanize the development battle between NYC, Coney Island residents and the developer. Plus you can’t go wrong with a good Blue Oyster Cult song in the opening.

After watching the documentary (you can purchase or rent it here), you can’t help but see how difficult it is to develop property in NYC striking a balance between community needs with economic feasibility as well as navigate political power and government.

This difficulty is a key reason why residential housing costs are so high in most urban markets.

Still, a new ride in Coney Island was just opened – The Thunderbolt Roller Coaster.

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[Global Top 20] Highest Priced Closed Residential Sales List

May 14, 2014 | 11:15 am | bloomberglogo | Radio |

5-14-14globallist
[click to expand]

After all the hoopla over the recent $147M sale in The Hamptons, I compiled a list of the highest priced sales around the world I could think of. It’s not comprehensive since all the sales are in the US or UK, and there are a few out there that haven’t closed yet.

Here’s a very brief Marketplace Radio piece on this phenomenon.

Please share if you know of others!

A few takeaways:

  • The media coverage to actual sales ratio is staggering.
  • There can’t be more than a few dozen, a few hundred or perhaps a few thousand that would be considered buyers in this space at any one time.
  • These sales are a pop culture-like distraction from the growing issue of access to affordable housing in the US.

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[Three Cents Worth NY #234] Manhattan’s Stormy Listing Trend

June 12, 2013 | 3:50 pm | curbed | Charts |

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 this week’s 3CW column on @CurbedNY:

This week I took a look at Manhattan’s year-over-year listing trends by the number of bedrooms on a weekly basis. I threw in a few milestones using ridiculous artwork (hey, this is Curbed!) to help provide some context. To state the obvious, listing inventory is very volatile and there are periods of time where certain segments stray from the pack. It’s clear that the top end of the market (four bedrooms, pink line) strayed the most over the past few years as many owners tried to piggyback onto a handful of trophy sales…


[click to expand chart]

 


My latest Three Cents Worth column on Curbed: Manhattan’s Stormy Listing Trend [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

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[Three Cents Worth NY #231] Manhattan Sales, Rentals Not Opposites

May 15, 2013 | 1:13 pm | curbed | Charts |

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 today’s 3CW column on @CurbedNY:

I thought I’d take a look at price growth between the Manhattan rental market and sales market over the past decade. I am struck by how many of us have the default view that these two markets always move in opposite directions, myself included. In other words, if rental prices are rising, sales prices must be falling and vice versa. I trended the year-over-year change in median rental price and median sales price over the decade. I also inserted significant US housing milestones along the way but left out the ’13 launch of Iron Man 3…


[click to expand chart]

 


Today’s Post: Three Cents Worth: Manhattan Sales, Rentals Not Opposites [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

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[Three Cents Worth DC #208] Keep Your Eye On The Numbers (For The Past Decade)

September 13, 2012 | 12:24 pm | curbed | Articles |

It’s time to share my Three Cents Worth (3CW) on Curbed DC, at the intersection of neighborhood and real estate in the nation’s capitol. And I’m simply here to take measurements.

Read this week’s 3CW column on @CurbedDC:

…I thought it would be visually helpful to show the ebb of and flow of the DC Metro area’s housing market. And since I just learned how to rotate a GIF image, I’m making up for all the art classes I never took in high school (band). I trended a decade’s worth of the robust web data from the regional MLS (RBI, a division of MRIS)—monthly new pending home sales and median sales price in a two year moving window. I also inserted some commentary on the milestones during the decade (i.e. highest points for price and sales, lowest points for price and sales, Lehman/credit crunch, tax credit, etc). Hopefully it’s not too distracting…

 

[click to read column]


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

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Change is Constant: 100 Years of New York Real Estate

February 7, 2012 | 11:28 am | delogo | Articles |


[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]

Read More

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[Sideways] 4Q 2009 Manhattan Market Overview Available For Download

January 5, 2010 | 11:51 am | delogo | Reports |

The 4Q 2009 Manhattan Market Overview , part of a report series that we have authored for Prudential Douglas Elliman since 1994, was released today.

Other reports we prepare can be found here.

The 4Q 2009 data(coming later today) and a series of charts (available now).

Press coverage can be found here once we get around to uploading it. In the meantime….

An excerpt

……There were 2,473 sales in the current quarter, up 8.4% from the 2,282 sales in the prior year quarter and up 10.9% from the prior quarter. This level of activity was more than twice the 1,195 sales seen in the first quarter of 2009, which had been lowest level of sales in nearly 15 years. The return to more normal historical levels of sales activity was also reflected in the decline in inventory levels. There were 6,851 active listings at the end of the quarter, a 24.6% decline from 9,081 listings in the same period a year ago, but down 18.3% from 8,389 listings in the prior quarter….The second half of the 2009 Manhattan housing market reflected a new era, marked by the milestone Lehman Brothers Bankruptcy tipping point of September 15, 2008. Buyers, sellers and real estate professionals have slowly adopted to changes including stringent, if not irrational mortgage underwriting, elevated unemployment and layoffs, lower compensation, a sharp price correction, shadow inventory, first time home buyers tax credit, rising foreclosures, declining appraisal quality, expanding marketing times and a host of other challenges. While the increased level of sales in the second half of 2009 was encouraging, a true housing recovery will be marked by a meaningful decline in unemployment and greater consumer access to credit…….

Download 4Q 2009 Manhattan Market Overview

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TED’s Excellent Adventure

February 13, 2009 | 3:23 pm | nytlogo |

Link to Bloomberg Chart

Ok, so this is my second Bill & Ted reference this week, but hey, Keanu Reeves starred, Matrix, etc.

I was having lunch with a good friend (other than the grief I regularly get about my bright shirt colors) the other day and he suggested I follow the TED spread more closely. While I have followed it, I’ve not been as fanatical about as many economists are. Perhaps I should be since, like the Fed’s Senior Loan Office survey, TED provides useful insight into the lending environment beyond mortgage rates.

I watched the CNBC special last night House of Cards, which was very good – not too much I hadn’t heard before but it did provide more clarity to the sequence of events and expanded my understanding of the roles Fannie/Freddie, Greenspan, CDOs and the rating agencies played in the risk/reward disconnect.

I also learned that the word Credit is derived from the Latin for Trust.

The TED spread (Treasury Eurodollar) for the uninitiated is the rate spread between treasury bills and and LIBOR.

Treasury bills are thought to represent risk free lending because there is the assumption that the US government will stand behind them. LIBOR represents the rate at which banks will lend to each other.

the difference in the two rates represents the “risk premium” of lending to a bank instead of to the U.S. government.

When the TED spread is low, banks are likely in good shape because banks feel nearly as confident lending to each other as if it were backed US government (The US has recently proved we’ll back pretty much back anything).

The spread is usually below 100 basis points (“1″ on the chart). It reached a recent low of 20 basis points in early 2007, which in my view, shows a disconnect in the pricing risk since the subprime mortgage boom began to unravel in early 2006.

The spread spiked in in mid 2007 at the onset of the credit crunch (that was a summer to remember) and later spiked to 460 on October 10, 2008 as the wheels came off the financial system and became the new milestone or “tipping point” for the new housing market.

The spread has been contracting which is perhaps a sign that banks are starting to feel less panicked about each other. I think lending conditions will improve over the next few years, but there is a long way to go as measured by years rather than quarters.

Note: Another TED worth noting. A great resource for the intersection of Technology, Entertainment and Design.


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