Matrix Blog

Records, Thresholds and Outliers

Bloomberg Surveillance TV – Guest Host 9-25-14 : Housing and bendable iPhones

September 25, 2014 | 1:40 pm | bloomberg_news_logo | Videos |

Was asked to guest host this morning for the 7-8am hour on Bloomberg TV’s Surveillance. Tom Keene, Scarlet Fu and Adam Johnson team up for a must-watch show every morning.

In the first clip we talk Manhattan Luxury market problems and records. In the second clip we banter about the bendable iPhone Plus and housing as an investment. These two articles likely prompted my invite:

NYC Luxury-Condo Buyers Await New Towers as Sales Slow [Bloomberg News]
NYC’s Most Expensive Condo to Be Listed at $130 Million [Bloomberg News]

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

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

wsjbpcphlistingterrace
[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 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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The $100M+ US Home Sale Trifecta – Without NYC – 2014 Edition

May 6, 2014 | 5:23 pm | Milestones |

60furtherlaneGE

With the $147M sale in East Hampton, NY, it has been a busy couple of weeks for the .0000000000000000001% of the home buying public in the US. With the 3rd US home sale to close above $100M in 2014, it has left many thinking – why isn’t NYC in the fray?

After all, NYC arguably legitimized the US “trophy sale” frenzy a few years ago when Sandy Weill sold his penthouse at 15 Central Park West to a Russian oligarch for double what he paid for it. I’ve argued that this $88M sale was the launchpad for the new trophy market in NYC even though the transaction appears to be a divorce strategy. After that sale closed, the subsequent trifecta of trophy sales back then seems relatively affordable now.

As journalists tell me…three data points make a trend.

2014 US Sales over $100M
$147,000,000 Further Lane, East Hampton, NY
$120,000,000 Copper Beech Farm, Greenwich, CT
$102,000,000 The Fleur de Lys, Los Angles, CA

So is the era of US $100M+ sales a trend?

Yes, although it is probably more accurate to call it a “phenomenon” than a trend.

In NYC? Eventually.

To a few real estate brokers I engaged with on this topic, the idea that NYC would see the $100m threshold broken in 2014 seemed inevitable, only because of this 2014 US trifecta. It is the belief that we are experiencing a momentum swing over the $100m threshold because 3 sales by May, compared to a sale a year means a shift.

Meh. I view this phenomenon as “product-specific” and not “location-specific.” There is a randomness to the locations where these sales occur. However I do believe the probability is high that NYC will see such a sale in the not too distant future.

Then again, does it really matter? Do these $100M+ sales have anything to do with the remainder of the US housing market? No they don’t. But it’s fun to talk about.

The Manhattan $1M Average Sales Price Threshold broken in 2007
I remember when the Manhattan $1M average sales price threshold was broken in 2007, foreign media went gaga, struggling to find a deeper meaning to housing. There wasn’t. I always viewed it as simply a number on the spectrum.

Affordable Irony
Definitive proof that I have “hipster” tendencies – my never ending search for irony.

Yesterday’s announcement of the 3rd US $100m+ sale was one of record breaking irony: the announcement of NYC mayor’s 10-year plan to create 200k affordable housing units. The need for affordable housing – low and middle income – has always challenged NYC. The mayor’s affordable housing plan “moon shot” as the New York Times has described it came out on the same day as the $147M East Hampton sale story broke. Irony.

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Heightened Observations on the ‘Billionaires Row’ Phenomenon

April 9, 2014 | 11:05 pm |

VF6STR1261CJ70.pd
[Source: Vanity Fair, click to expand]

Paul Goldberger, the Pulitzer Prize-winning architectural critic at the New Yorker and voice of design reason, penned a comprehensive overview of the “tall towers” building phenomenon in the latest issue of Vanity Fair. It’s an engrossing piece with stunning visuals as it correctly describes the global trend that is creating it.

I believe Michael Gross, the author of the new book on 15 Central Park West, Manhattan’s truly first super luxury condominium that was wildly successful and oblivious to the global economic crisis, coined the phrase “Billionaire’s Belt” which best describes this new Manhattan submarket and new housing classification. I was pushing “57th Street Corridor” as a label but there were no takers so I’ve modified Michael’s phrase to “Billionaires’ Row” as if all these buildings are fighting to be the best.

I like Goldberger’s description of the new design trend:

…the latest way of housing the rich, is an entirely new kind of tower, pencil-thin and super-tall—so tall, in fact, that one of the new buildings now rising in Manhattan, the 96-story concrete tower at the corner of 56th Street and Park Avenue, 432 Park Avenue, will be 150 feet higher than the Empire State Building when it is finished…

And that these residences provide…

a place not for its full-time residents but for the top 1 percent of the 1 percent to touch down in when the mood strikes.

One thing missing from this piece, and perhaps rightfully so is the discussion of why these projects are being built beyond the notion that the global wealthy are demanding them. In Manhattan, new construction developers have to target the super luxury market because land prices are at record highs – we just came out of a record setting building boom last decade – and few prime sites are available. With a high cost of land, inflated labor and materials costs, the math does’t work otherwise for more mainstream projects.

Our city’s obsession with chronicling lifestyles of the Wall Street rich and dysfunctional in the previous boom with prices of $3,500 to $4,000 per square foot seem downright quaint now. Now upwards of $10,000 per square foot has emerged as the price point for all participants in this market niche to aspire to.

New York City residents don’t seem quite sure what to think about these projects and their likely full time emptiness. One thing is for sure, the world’s elite are now a lot more visible and it’s a lot easier to point fingers…doesn’t One57 kind of look like it’s flipping the city off while it looks at the park?

one57topNYO
Source: New York Observer.

But this global pattern of the wealthy searching for hard assets to invest in doesn’t appear to be ending anytime soon.

And we’ll continue to appraise it.

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Manhattan Price Records from 1982 to 2013 (Will Soon Be Broken)

January 31, 2014 | 10:21 pm | nytlogo | Charts |

4q13manhattan-records
[click to expand]

What I love about this chart is how Manhattan co-ops dominated the record books through the late 1990s Dot.com boom until condos started to take over. Until then, condos were seen as more utilitarian and less about luxury. Over the past decade, Manhattan condos have generally eclipsed co-ops in the record books.

As a stagnant form of Manhattan housing stock, they ain’t building luxury co-ops like that any more (actually they’re not building them anymore).

I’ve updated this chart through the end of 2013, but it’ll be obsolete fairly quickly with records expected to fall in 2014. At a minimum, anticipated record closings include a few condos and a townhouse.


Manhattan Co-op/Condo Closed Sale Records By Year

December 3, 2012 | 7:00 am | Charts |


[click to expand]

I took a look at the past 20 years of co-op and condo sales and pulled the highest closed sales for each year. I may have a few close seconds in the list. Co-op sales prior to 2006 were not a matter of public record so they were culled from our internal files.

The sales patterns show distinct eras that have been shorter in recent years (like the weather!).

Here’s my list – editorials welcome if I got any wrong. I’m going to continue to edit this list annually going forward given our market’s obsession with records.


[click to expand]


Manhattan’s 10k+ Square Foot “Trifecta” of Sales

May 21, 2012 | 11:23 am | nytlogo |

Last week’s Manhattan housing market certainly ended on a high note – literally. You know that old saying about things happening in threes? My word of the week is “trifecta” – it’s always been a favorite, along with “neat, blowhard and Muttontown.

My favorite phrase is “The Trend is Your Friend” and one needs at least 3 data points to make a trend. Sometimes I append “…until it ends.”

I spoke about The $70M Condo versus $52M Co-op Smackdown, Manhattan Style last week but there is another big sale to make headlines was scooped by Alexei Barrionuevo at the New York Times. Alexei corrected me on my Twitter feed that the price was “over” 90M.

It’s all quite breathtaking when you look at this sale in context of the entire market. However what sets the last 3 sales of $52.5M, $70M and $90M+ apart is they all exceed 10k square feet. The recent $88M sale was a nominal 6,744 square feet.

This record sale won’t close until the building construction is completed next year or so and I am not so sure it will still be a record at that point.

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