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Luxury, Super, Ultra, Mega

Bloomberg View Column: What Does It Mean When a House Sells for $50 Million?

September 17, 2014 | 2:58 pm | BloombergViewlogoGray | Articles |

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Read my latest Bloomberg View column What Does It Mean When a House Sells for $50 Million?. Please join the conversation over at Bloomberg View. Here’s an excerpt…

One of the byproducts of the global financial crisis has been the creation of a new class of housing and buyers. Some of the strongest evidence is the rise in the number of residences sold for more than $50 million.

A buyer recently paid a record $71.3 million for a Manhattan co-op, breaking the $70 million record set only a few months earlier. These sales seem modest compared with a $147 million sale in East Hampton, New York, and a $120 million sale in Greenwich, Connecticut, the two highest U.S. residential transactions in 2014. There have been six sales of more than $100 million in the past four years, with more likely to come…[read more]

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[Three Cents Worth #267 NY] NYC Sets New Record Average Sales Price

August 5, 2014 | 3:17 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 my 3CW column on @CurbedNY:

Although our NYC market reports only cover Manhattan, Brooklyn, and Queens, I also track Staten Island and The Bronx for fun. For the second quarter 2014 NYC analysis, I observed two new records:

1. The average sales price for NYC residential real estate (co-ops, condos and 1-3 family sales) reached a record $975,441 (pink line).

2. The average sales price for NYC residential real estate excluding Manhattan reached a record $542,216 (orange line).



2q14NYC-ASPspread [click to expand charts]


My latest Three Cents Worth column on Curbed: NYC Sets New Record Average Sales Price [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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A Fifth Avenue Co-op’s 87-Year Price Increase was 3.6X Rate of Inflation

August 1, 2014 | 6:30 am | nytlogo |

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A few months ago there was a record $70M sale of a penthouse co-op sale at 960 Fifth Avenue.  The purchaser paid $5M over list price.

While doing some research I ran across an article in the New York Times archive that described a record Manhattan sale of $450,000 in the same building in 1927.  The apartment was located on the 10th and most of the 11th floor in the same building (aka 3 East 77th Street).

Based on the unit description, I believe this to be Apartment 10/11B which last sold for $21,000,000 on July 24, 2013.   Using the BLS calculator for CPI, a $450,000 sales price in 1927 adjusted for inflation to 2014 dollars would be $6,164,043 or an increase of 1,270%.

However the apartment sold for $21,000,000. an increase of 4,567% or 3.6 times the rate of inflation.

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Cluttering Luxury Housing Markets with Listings Made for TV – Manhattan Edition

June 28, 2014 | 4:55 pm | wsjlogo |

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[Source: WSJ]

A little over a week ago the WSJ’s Candace Taylor broke the story about 3 contiguous listings to be marketed together at the top of a 15-year old ground lease condo in Battery Park City for $118,500,000.  At 15,434 square feet, that works out to $7,678 per square foot.  CNBC’s Robert Frank provides more details in a video tour that was broadcast shortly after the story broke.

Normally I don’t bother to do the math on this sort of thing but after the Cityspire listing a while back, I thought I’d tweak my thinking a bit as the luxury market gets more than its fair share of confusing “milestones.”

Doing the Math
Here’s my listing price logic using content in the near viral news coverage of the record Battery Park City listing – I break down the 3 units:

$56,500,000 ($7,406/sqft) listing - 7,628 sqft 5-bed listed last year for 5 days and removed.

$11,700,000 ($3,330/sqft) purchase - 3,513 3-bed in April 2014.

$19,000,000 ($4,425/sqft) listing – 4,293 sqft 4-bed $23M January listing dropped to $19M, then removed.

$87,200,000 is the aggregate total for the 3 units that total 15,434 square feet ($5,640/sqft). The current list price of $118,500,000 represents a $31,300,000 premium for the combination of all 3 units before we might assume the millions in renovations to combine if you believe that the $87,200,000 total is what aggregate of the individual properties are worth.

Given the $3,330 ppsf recent sales price of the 3-bed and the unable to be sold for $4,293 ppsf after 6 months on market 4-bed and the not-market tested 5 day listing period 5-bed at $7,406, I can’t figure out how the listing agent gets to $7,678 ppsf as an asking price for all 3 together before the cost of renovation to combine? Perhaps the seller set the price.

The listing broker tells us that the pricing “is justified by the square footage“, as well as the views and building’s amenities.”

Got it.

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Manhattan New Development: Small Share, But Rising Sharply

June 20, 2014 | 11:58 am | delogo | Charts |

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I took a look at the change in new development inventory versus re-sale inventory both by year-over-year change (quite dramatic) and number of units.  Both categories bottomed out at the end of 2013.

These trends are based on Manhattan co-ops and condos which represent more than 98% of the “non-rental” market.  Much of the new inventory coming online is located within the “luxury” market which is the top 10% based on price.

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Tall and Thin Skyscraper Renderings: the New Bricks and Mortar

June 10, 2014 | 10:05 am |

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The New York Post ran an article on Sunday “Chinese buyers snapping up NYC skyscrapers” that was chock full of Manhattan skyscraper renderings – I found myself clicking through all of them. While I already am familiar with each of these residential and commercial towers, I never get tired of looking at them.

While I’m no architectural critic and some of these designs are controversial, even cited as dangerous, I must admit I really like the genre. I was fatigued from enduring the boring, utilitarian and ultimately generic designs throughout the 1980s and 1990s.  We got a sampling of this new genre in the last new development boom a decade ago, but with the shift towards the higher end of the market, there seems to be more money available for creating iconic designs.

As far as the China hyperbole cited in the piece, it is an assumption based almost exclusively on anecdote as well as 2013 research by National Association of Realtors (cited as “US National Real Estate Association” but had no luck finding it with Google so I assumed they meant NAR). And how do we rely on an NAR survey of it’s members when so few Manhattan real estate agents are members of that trade group?

I’ve inserted all the renderings below: I’m not going to  bother labeling them since that’s not the point – you can get that detail in NY Post piece.  These are placed here for your oogling pleasure.

HudsonYards from West Chelsea (c) Related Cos..jpg

ARTS ARCHITECTURE

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99 Church Street, Silverstein Properties, New York

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World Trade Center

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[London Calling] ‘Mike Mulligan and his Steam Shovel’ New Development Edition

June 9, 2014 | 10:41 am |

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I read Mike Mulligan and his Steam Shovel nearly every night to my 4 sons when they were younger (probably an unnecessary qualifier). It was also my favorite children’s book as a kid.

As it turns out, this story preempted current London construction methodology (h/t boingboing.net).

So, many of the squares of the capital’s super-prime real estate, from Belgravia and Chelsea to Mayfair and Notting Hill, have been reconfigured house by house. Given that London’s strict planning rules restrict building upwards, digging downwards has been the solution for owners who want to expand their property’s square-footage.

mikemulligandig

This trend reflects the appraisal concept of highest and best use for the equipment despite the inherent wastefulness. Does it make sense to leave the equipment in the basement? With all the concern in the US about below grade empty oil tanks and the environment, I wonder how this practice is allowed, cost effectiveness aside.

Given the exceptional profits of London property development, why bother with the expense and hassle of retrieving a used digger – worth only £5,000 or £6,000 – from the back of a house that would soon be sold for several million? The time and money expended on rescuing a digger were better spent moving on to the next big deal.

You really need to read the book.

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The Woolworth Penthouse Explained

May 29, 2014 | 5:35 pm |

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[Source: NY Post, click to expand]

I’ve had this page bookmarked all week and found myself referring to it periodically for the above sort-of infographic. Lois Weiss lays it all out in her article, clearly titled: This is what a penthouse on top of the Woolworth Building could look like

At one point in time, the Woolworth Building was the tallest building in the world, so this apartment would have been the highest condo in the world (ok, ok, condos weren’t around back then).

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Yahoo! Finance: Talking about “Why” we are seeing more $100m+ home sales

May 23, 2014 | 1:02 pm | Videos |

I had a great conversation with Lauren Lyster on Yahoo! Finance, Daily Ticker on the super high end housing market. Incidentally, if she switched from TV Host/Reporter to real estate, she’d have the best name in the real estate brokerage business.

Here’s a recent list of high priced sales.

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Contrary To Popular Belief, The World Has Manhattan All Wrong

May 18, 2014 | 11:00 am |

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[Source: Time-Life]

Today, when I speak to friends and relatives in other parts of country, I find a consistency in the image Manhattan currently conveys and it’s completely skewed. Here’s a little background.

1985 to 1995 [Wild West] I moved to Manhattan in 1985 and it was perceived by outsiders as a very dangerous place. “Manhattan-bashing” was in vogue. My relatives in the Midwest saw Manhattan as a place where tourists were getting mugged and stabbed in broad daylight (It didn’t help that my father was mugged twice in Midtown outside of our office in broad daylight on a weekday). They feared for our lives.

1996 to 2000 [Dot Com Boom] Manhattan now had “Silicon Alley” as well as NASDAQ – which was soaring. Midwesterners were caught up in the stock market frenzy as evidence by conversations of trades of Microsoft and Caterpillar stock over potato salad and cheeseburgers and bottles of Faygo.

2001 to 2008 [9/11 to Development Boom to Lehman] The 9/11 tragedy struck New Yorkers hard but the subsequent rise of NYC from the ashes into an eventual new development housing boom was simply amazing. The Manhattan housing boom peaked in 2008, two years after the US housing market had peaked. This period ended with the collapse of Lehman Brothers and access to credit worldwide immediately evaporated.

2009 to 2010 [Collapse and Rebound] There was a surprisingly rapid improvement in the regional economy in the year following Lehman’s collapse and housing rebounded faster than expected.

2011 to 2014 [Playground of Wealthy Foreigners] Manhattan and Brooklyn become a favorite safe haven for international investors to park their money in real estate.

But now we stuck with a Manhattan housing market exaggerated stereotype (represents 90% of media coverage) in 2014:

  • Most sales are all-cash transactions.
  • Most purchasers are made by foreign buyers.
  • Most sales are millions of dollars (i.e. $5M and up).

When in fact, the 2014 Manhattan housing market reality is:

  • 45% of sales are all-cash transactions.
  • Foreign buyers are a small part of the market – i.e. 60% of all sales are co-ops and foreigners don’t purchase them.
  • More than half of all sales are below $1M (i.e. $5M+ is way up in the top 5%).

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