They’re expecting 2,000 attendees! You can sign up here.
I’m looking forward to it.
Rob Ferdman over at Quartz writes a great breakdown of the narrowing rental spread between Manhattan and Brooklyn using the data I crunch for The Elliman Report: Manhattan & Brooklyn Rentals. Here’s my version of the chart.
After I designated last week’s Bloomberg story headline “Brooklyn’s Hipster Economy Challenges Manhattan Supremacy” as my favorite new phrase, specifically:
Brooklyn’s Hipster Economy
Quartz has given me a new favorite phrase (see under original chart):
Coolness doesn’t come free
In the spring of 2012 my floor level valuation methodology was illustrated in a great piece in New York Magazine by Jhoanna Robledo called “What Price Height and Light?. The graphic and accompanying descriptions provide incredible clarity to a fairly convoluted subject.
In the flurry of transitioning content to our new site over the past few months, I remember the actual moment when I deleted the original post for this topic by mistake and thought, “wow this is annoying but I can always go the Wayback Machine.” However, today someone asked me about the graphic and I couldn’t find my prior post on the Wayback Machine (but I found a bunch of cool stuff) so I am reposting this piece. I really LOVE the graphic that New York Magazine came up with.
The graphic is fairly self-explanatory.
I just returned from an incredibly helpful and fun annual appraisal conference in Texas. I was asked to make a presentation and ended up joining their board of directors. I’ve been a member of RAC (Relocation Appraisers & Consultants) for about 20 years and even though the organization started out with a primary emphasis on relocation appraisals in the early 1990s, RAC is so much more than that. Most of the members provide expertise in complex residential with a lot of work in litigation support. The quality of the residential appraisers in this organization is the best in the country – bar none. Most of the mainstream US appraisal trade groups emphasize or have a majority concentration of commercial appraisals and RAC fills the void.
There was a terrific Bloomberg News story by Oshrat Carmiel: Manhattan Trophy Home Sellers Test Buyer Limits on Price that delved into the disconnect between reality and perception of the luxury housing market in Manhattan. I talk about this phenomenon on Bloomberg Radio’s ‘Taking Stock’ with Pimm Fox and Carol Masser.
It all began with Sandy Weill’s $88M sale of 15 Central Park West PH20 to a Russian Oligarch back in late 2011 that closed in early 2012. He was reportedly purchasing the unit for his 20-something daughter to crash when she wasn’t at her home in Monaco but it was more likely a divorce strategy. The home sold for $13k per square foot, 30% more than the recent $10k ppsf record previously set within the building (ie definition of an outlier).
Combine this outlier with the dearth of high end new development until recently and this 13k ppsf threshold became a new pricing tool for hopeful sellers and real estate brokers of large properties. The $100M resale penthouse listing at CitySpire was the new symbol of “outlier pricing” phenomenon. Other examples of aggressive pricing are cited in the Bloomberg story.
Despite the fact that this nearly $100M subset represents a tiny sliver - a handful of listings and sales – in the overall Manhattan market, consumer (buyers and sellers) have been subjected to a buzz saw of news reports about trophy properties giving the impression that properties like this comprise most of the housing market.
In reality there have only been a handful of contracts signed near the $100M threshold at buildings like One57 and 432 Park Avenue (the near $100M townhouse contract doesn’t count because it’s roughly 1/2 the ppsf of those apt sales)..and otherwise the overall Manhattan market seeing very modest price growth.
Yet none of the trophy apartment resales are selling at this new price point. Sellers have been testing the waters to see if someone across the globe will be willing to pay for something here, that in relative dollars to their home market is a good deal or they hope they will get lucky and these buyers will over pay.
Apparently these trophy sellers haven’t used the Internet.
Just got this feedback emailed from a real estate agent: In every neighborhood and property class “testing the waters” is an age-old technique that has enough utility to go on forever. As an agent, I prefer the price that results in a quick sell but I never turned down a client who insists on an absurd Ask. In most such cases, I have picked up a few customers and sold them something else they could afford before the “outlier” ran out of inquiries and the seller dropped its price or took it off the market. I like it when journalists report activity at the extremes of price and value because it helps me to identify the evolving dimensions of the market.
A while back, I was invited by the Long Island Chapter of the Appraisal Institute to keynote for their winter dinner/seminar tonight in Westbury, Long Island:
It’ll be great to catch up with my friends and colleagues and I always love to talk appraisalspeak for extended periods of time.
The presentation will cover (2 CE credits):
Long Island Market Reports, Key Trends, Drivers of the Current Residential Market, Fiscal Cliff, Pent-Up Demand, Record Low Inventory, Mortgage Rates, Federal Reserve, Transitioning to a Sustainable Long Term Housing Market Recovery
In a question and answer period, discussion will include Snapshot of the Long Island Housing market, including 4Q 2013 market research results in Long Island, Hamptons and the North Fork; Affordability, What is driving Sales Activity?; The relationship between Sales and Prices – Why is inventory low?; Spike in Mortgage Rates; Federal Reserve taper miscommunication; Why are Housing Prices Rising?; Long Island and Manhattan real estate economy, Credit Issues, Lending, Market Trends, Impacts, and Challenges in Year 2014.
The latest Nor’easter is supposed to start at about 2AM so it looks like we’ll get this done just under the wire!
Here is an interview I recently did for Bloomberg Television’s In The Loop on the first phase of the long awaited and sorely needed Second Avenue subway line. I had also looked at this data about two years ago.
For the show I crunched closed sales data for the 4th Quarter of 2013 versus the same period in 2009 and provided a similar time frame for the rental market. I defined the impacted subway zone as the Upper East Side neighborhood between Third Avenue and First Avenue extending from 96th Street to 59th Street. Areas out side the zone were simply those to the east and west of it but within the neighborhood. I realize that simply taking the average price of all transactions in each of the zones are subject to skew. However given the large size of the zones, I think it is a reasonable way to extract some sort of impact.
Based on the results, the subway zone fell behind the areas outside the zone during the 4 year time span.
West of Zone
Sales Prices +14.7%
Rental Prices +7.7%
East of Zone
Sales Prices +12.2%
Rental Prices +9.1%
I’m headed to Miami this week to speak at the Urban Land Institute’s Miami Condo Market Symposium: Embracing Boom & Bust Cycles. Based on the speaker list, it promises to be an informative event.
On Friday I taped an interview with Christine Romans, host of CNN’s Your Money on the housing recovery and why rising mortgage rates aren’t necessarily a bad thing. She’s a very engaging interviewer – plus it’s always fun to visit the studio.
This clip captures a large part of the interview – there were three more Q&A volleys on the televised broadcast omitted in this clip – they’ll be airing them in other segments.
Yesterday’s release of the Case Shiller Index prompted a flurry of coverage given the 20-cities’ highest YoY increase in 7-years. I did a three way split interview from a remote location in CT (see studio set up below). I was a guest along with Vincent Reinhart, chief US economist at Morgan Stanley and Stan Humphries, chief economist at Zillow Inc. Betty Liu and Adam Johnson kept the conversation going.
I especially liked Stan’s modification of the Case Shiller Index results which excluded foreclosures and his research on low and negative equity (my explanation for low inventory right now). The drop in foreclosure activity over the past year caused significant skew to the mix. According to Stan the index would show roughly a 5% increase YoY rather than an 10.9% increase. A huge difference and yet another reason why this index does more harm than good to our understanding of the housing market.
Vincent’s observation that seasonality is considered in Case Shiller is basically wrong – not technically wrong because the data is seasonally adjusted. However the methodology of a repeat sales index washes out seasonality. If you look at the Case Shiller chart, there hasn’t been “seasons” in housing since 1987. That’s simply not true. The Case Shiller Index does not reflect annual housing cycles.
Since Case Shiller Index lags the signing of contracts by 5-7 months, expect to see much higher YoY results this summer.
How the sausage is made