[Manhattan Absorption] August 2014 The $3M-$5M Market Slows Down

September 13, 2014 | 6:15 pm | Charts |

8-2014Manhattan [click to expand]

Thoughts Not a big difference from last year. Sub-$3M is generally very tight with not much variation between price categories in each region. There isn’t much difference in the $10M+ market. Condos are slower than co-ops overall, but not by much. The difference is being seen in the $5M to $10M, which is moving more slowly moving than it was a year ago.

Side by side Manhattan regional comparison:

August 2014 v 2013
8-201408-2013 [click images to expand]

I started this analysis in August 2009 so I am able to show side-by side year-over-year comparisons. (I got tired of the red/gray look in 9-2014 so I changed it) The blue/red line shows the 10-year quarterly average for context. The pink/orange line represents the overall average absorption rate of the most recently completed month for that market area. 

Definition Absorption defined for the purposes of this chart is: Number of months to sell all listing inventory at the current annualized pace of sales activity in our market report series.


Manhattan Market Absorption Charts [Miller Samuel]

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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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Manhattan Inventory: This is what I mean by rising, but not enough

July 14, 2014 | 9:17 am | Charts |

2q14Manhattan-inventorybyMonth

Yes, inventory is rising off the crazy lows of the past 2 years, but supply is still, well, low.

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2Q14 Manhattan Sales Market: More Supply, But Not Even Close to Enough

July 1, 2014 | 5:55 pm | delogo | Charts |

Manhattan_2Q_2014

Today Douglas Elliman published the Elliman Report on Manhattan Sales that I author. This quarterly report is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994 (20 years!).

Incidentally, we are tweaking the visual aspects of this Elliman report series – we do this every few years. We added a dashboard to provide at-a-glance information but expanded and yet consolidated the text to be one comprehensive section. I expanded the size of the charts but kept the matrix tables just about the same. Since this is a labor of love and a work in progress, please feel free to send along suggestions.

Key Points
- Sales increased for the 7th consecutive quarter, but less at a lower rate than the 27.6% average quarterly increase of the prior 4 quarters.
- Median sales price for co-ops increased 9% as consumer sought out greater affordability as condos increased 0.8%.
- Inventory is up from last year’s near record low. The inventory bottom appears to have been reached in 4Q 2013.
- There were 45.9% listings that sold at or above list price, the largest market share in nearly 6 years.
- Luxury price increases out paced the overall market.
- Sellers are being both motivated and enabled to list as a result of rising prices.
- Mortgage lending remains significantly challenging to buyers.

Here’s an excerpt from the report:

Manhattan housing prices continued to press higher, driven by low inventory and seven consecutive quarters of year-over-year sales growth. Mortgage rates have drifted lower, nearly returning to their prior year levels while the local economy has added jobs and international demand for product has been relentless. The luxury market showed the most price gains as more new development product has begun to close…

Here is some context on the lack of inventory [click each chart to expand]:

2q14Manhattan-inventorybyMonth

2q14Manhattan-inventorySPLIT


The Elliman Report: 2Q14 Manhattan Sales [Miller Samuel] Miller Samuel Aggregate Database [Miller Samuel] Market Chart Gallery [Miller Samuel]


Rocket Ship: Manhattan New versus Existing Average Sales Price

July 1, 2014 | 8:49 am | Charts |

2q14Manhattan-newexisting
[click to expand]

I’ll let this soak in.

New development sales are significantly detached from the balance of the market. I selected average sales price to exaggerate the trend to make my point.

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Time-Shifted Case Shiller: Dallas, Denver Crushing it, Polar Vortex a Non-Issue ‘Cause It’s Still December

June 24, 2014 | 5:29 pm | Charts |

matrixCSI-6-24-14 [click to expand]

The above chart is a generic trend line for the seasonally and non-seasonally adjusted 20-City Case Shiller Index released today using the data from the release.

And here’s the same index that I time-shifted backwards by 6 months to reflect the “meeting of the minds” of buyers and sellers. More specific methodology is embedded in the following charts. By moving the index back 6 months, the changes in the direction of the index are in sync with economic events (reality). In my view this index has a 6 month (5-7) month lag rendering it basically worthless to consumers but perhaps a useful tool for academic research where timing may not be as critical. I’m just grasping here.

matrixCSI-6-24-14INDEXshift

[click to expand]

And here’s a time-shifted trend line for the year-over-year change in the 20 city index. You can see that the pace of year-over-year price growth began to cool at the end of last year. Talk about the weather is still premature since the polar vortex occurred after the new year.

matrixCSI-6-24-14YOYshift

And here is the ranking by year-over-year changes for each city as well as the 10 and 20 city index. Dallas and Denver are no longer under water and Las Vegas, despite recent good news has a long way to go to get to the artificial credit induced high it reached in 2006.

matrixcsi6-2014ranking

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NAR May 2014 Existing Home Sales: ‘Heat-up’

June 23, 2014 | 2:54 pm | Charts |

6-23-NAR-EHSperc

[click to expand]

I always like to parse out press release of the NAR Existing Home Sales Report using their data but presented it with proper emphasis. I believe these charts are better ways to interpret the report results.

My two big rules: ignore seasonal adjustments and focus on year-over-year results. The consumer doesn’t know that the EHS report results are heavily adjusted rather than providing the actual results.

Since the annual sales figure is a multiplier of a monthly figure, why do we need to alter the actual numbers any more by adjusting for seasonality? Through recent periods like the possible expiration of the Bush tax cuts (end of 2010), the federal homeowners tax credit for new buyers and existing home buyers as well as the expiration of the fiscal cliff at the end of 2012, seasonal adjustments are subject to maddening skew.

For much of 2013, median sales price was rising at an annual rate of more than 10%…

  • It’s good to see the pace of the market returning to more sustainable conditions – last year’s market was not normal with rapid price growth and tight supply.
  • Now we are seeing inventory return to the market and rate of price growth is easing. Both are good news.
  • Mortgage rates have slipped but still not to the lows of early 2013. Falling rates not helping sales rise because last year was a release of years of pent-up demand.
  • First time buyers are still not as active as they need to be, with their share down to 27% from 29%. Typically they shold account for at least 1/3 of the market. Tight credit and tough job market are reasons (not a lifestyle changes).

 

6-23-NAR-EHS

[click to expand]

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Manhattan New Development: Small Share, But Rising Sharply

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

matrixnewdevresalelist-6-20-14

[Click to expand]

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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Manhattan-Brooklyn Rental Price Spread Widens to $500

June 12, 2014 | 3:15 pm | delogo | Charts |

2014-5Brooklyn-Manhspread
[click to expand]

The report we author for Douglas Elliman covering the Manhattan/Brooklyn rental markets was published today.

Back in February many observers of the Manhattan and Brooklyn rental markets were saying: “The Spread is Dead, Long Live the Spread!” Ok not really.

But there was a lot made of the fact that the difference in median rental price between the two markets narrowed to $210 from as much as $1,125 in 2008. Manhattan rental prices had stabilized at the end of last year as Brooklyn continued to see sharp gains.

But that was as close as it got. Since the beginning of the year, month-over-month Manhattan rental prices began to rise as Brooklyn started to level off.

Manhattan rents cooled last year as the sales market poached demand from record volume. I saw the decline was temporary. The excess purchase activity from several years of pent-up demand has largely been absorbed allowing rents to begin climbing again.

Brooklyn rents are beginning to level off as a result of all the new rental development entering the market soaking up demand.

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Trends in Home Size and Home Ownership React to Economic Conditions, Not Taste

June 9, 2014 | 11:42 am | Charts |

With big swings in housing related trends over the past decade, long term patterns are called into question. When a long term trend seemingly changes direction, it is reasonable to point it out. As I opined previously, the housing industry often defaults to linear thinking. It’s not enough to point out a trend, it is better to proclaim that the trend will run indefinitely because consumer tastes have changed.

Here are a few examples of trends in the US housing market that are not trends:

Average New Home Sale Size

matrixSQFT-6-9-14

[click to expand]

When the housing bubble popped in 2006, shortly after it was pronounced that the multi-decades long trend would reverse it self. Yet the change was a purely short term economic shift as the entry level surged with the sharp decline in mortgage rates. After a few years, the trend of expanding sizes resumed. I’m not saying that the trend will run indefinitely larger, but it is important to look at why the average square foot began to fall in the first place. A harsh economic condition with a rapid rise in affordability prompted in a shift in the mix. And remember, this highly referenced metric reflects new homes which is only about 15% of normalized housing sales.

Here is the housing conversation on home sizes from 2007-2011.

Home Ownership matrixHO-6-9-14

[click to expand]

Perhaps one of the largest misinterpretations of consumer trends has been on the subject of homeownership. As is evident in the chart, the heavily documented push to higher homeownership played was a sudden burst rather than a long term gradual change. The surge in the trend was artificial, based on fraud and unsustainably loose credit conditions that where based on NOTHING. With the multiyear decline, we are beating ourselves up over the decline in the homeownership rate yet we are reverting to the mean since credit is unusually tight. In fact the median homeownership rate of 64.8 over the past 49 years is exactly where we are right now in 1Q14. Will the market overcorrect towards rental? Yes I believe it will until tight credit conditions resume to more historic norms.

Here’s terrific takedown of the homeownership metric by Jed Kolko, Chief Economist at Trulia.

Will the US become a nation of renters and micro-houses? If one makes those arguments out over the long term, I don’t know what compelling information those trends would be based on.

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