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Market Reports

Work For A Big Firm, Write A Study, Get Coverage, Earn The Wrath Of The Rational Masses

May 9, 2006 | 12:01 am |

[Update: because of issues with our web host, all posts for May 9th were lost in addition to the backup! I have recreated it in rough fashion.]

I really like Businessweek magazine. Its current, edgy and informative. However, sometimes, in a magazine’s quest to be relevant, they go too far. The personal finance article Why The Housing Bubble Won’t Burst [BW] is an example of just this.

They interview Michael Youngblood, the managing director of asset-backed securities research at Friedman Billings Ramsey & Co. (FBR ) in Arlington, Va., who thinks residential real estate is a lot stronger than most people suspect. He bases this assessment on a new economic model he created that forecasts housing prices in 379 metropolitan statistical areas.

He uses the logic that real estate types are not forward thinking in their analysis of the market. They are looking at trailing indicators like days on market and inventory-to-sales ratio because they move with the market rather than predict the market.

He goes on to say that the biggest bubble markets will see the highest appreciation.

What about listing inventory? negotiability? mortgage rates? contract prices?

This is just dumb.



Manhattan Market Reports Available For Download

April 27, 2006 | 3:47 pm | | Public |

I was a bit tardy getting these posted online, but here are the PDF versions of our two latest market reports that I write for Prudential Douglas Elliman [PDE].

In addition, you can see the [methodology]) that went into the reports including the neighborhood boundaries and the type of content we have available. You can also build your own custom data tables here [aggregate data for 1Q 2006 will be available online early next week in this data section):

1Q 2006 Manhattan Market Overview [pdf]

A quarterly survey of more than 2,000 Manhattan co-op and condo sales.

Although the three price indicators showed growth over the prior year quarter and the prior quarter, price per square foot best characterizes market conditions for the current quarter since it is least impacted by the shift in unit mix toward larger apartments this quarter. The average price per square foot of $1,004 was the highest ever recorded in this study but was essentially unchanged from the prior quarter result of $1,002 for a 0.2% increase. The average sales price and median sales price jumped 9.6% and 8.6% respectively over the prior quarter. The average sales price was one of the highest on record at $1,300,928, second only to the second quarter of 2005 when the average sales price set an all-time record of $1,317,528. This indicator was 7.1% above the prior year quarter average sales price of $1,214,379. Median sales price saw a similar pattern, setting a record at $825,000 in the current quarter, up 17% over the prior year quarter median sales price of $705,000. The contradiction in the average price per square foot compared to these indicators was due to a shift in the mix of apartments to larger units that sold for the quarter…

Manhattan Market Report 1996-2005 [pdf]

More than 80,000 co-op and condo sales transactions from more than 6,400 buildings over the last ten years were analyzed. Each of the 53 different market areas was analyzed with data tables and charts as well as a summary matrix with prior year and prior decade comparisons.

The Manhattan market saw record prices in all major price categories: Average sales price, average price per square foot and median sales price. All categories saw year-over-year gains in excess of 20%. Average sales price remained above $1,000,000 and set a record of $1,221,265, increasing 21.6% over the price year average of $1,004,232. Average price per square foot set a record at $965, increasing 25.8% over the prior year average price per square foot of $767. Median sales price set a record at $750,000, increasing 23.8% over the prior year median sales price of $605,859.With all three price indicators showing similar percentage gains, there were broad-based price increases across most market categories. One of the distinctive characteristics of the market in 2005 was the decline in the number of transactions. A modest increase in mortgage rates and double-digit price gains have reduced affordability. Mortgage rates were above the prior year but are still below levels seen ten years ago. Analysts expect fixed and adjustable rates to increase slightly in the first half of 2006 as the economy continues to improve but the shift in the housing market to more modest price gains may keep further near term rate gains in check…



Late For The Party

April 27, 2006 | 7:20 am | |

James Hagerty in his article Housing Strength Shifts to New Markets [WSJ] notes:

As home sales cool on the East and West coasts, some cities that missed out on the real-estate boom are becoming the strongest markets.

Metropolitan areas whose housing markets look less healthy, at least in the short term, include Boston, Los Angeles, Miami, Minneapolis, New York, Philadelphia and San Francisco. All of them have growing inventories of homes and relatively weak job growth. As a result, houses that a year or two ago might have sold in hours now are languishing on the market for months, and some sellers are cutting prices.

Houston, Dallas and Atlanta appear to be postioned for future appreciation because of strong employment prospects and relatively tight inventory. These markets have been largely dormant while other metro areas are cooling, especially on the east and west coasts. New Jersey is expected to remain flat, per a NJ appraiser that I respect, but at the upper end, there is a 3-year supply.

The WSJ study says that Boston is among the worst right now. Another study I posted a few days ago indicated that Washington DC was also marginal because of the rampant speculation. On a trip to San Diego a few months ago, I was struck by how many condo sales offices there were downtown, yet their employment situation is strong which may mitigate some of the problems.

I thought it was especially interesting that a realtor in Miami indicated that the surge in inventory (up 236% over the past year) would be absorbed by population growth within 12-18 months. Thats gotta be something in the order of 10,000 to 15,000 condo sales sold over this period. I find that very hard to believe.

Actually, now that I think of it, this study seemed to single out a few cities as being promising, but most of the cities on the list seem to have problems and the premise of the story isn’t really proved.


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Coastal Prices Loft Zips

April 25, 2006 | 12:01 am | |
Source: SohoBlues.com

In Sara Clemence’s special report: The Most Expensive ZIP Codes [Forbes.com] she ranks the top 500 zip codes nationally, which is quite an undertaking. (ok – shameless plug: my firm provided the Manhattan stats)

Only 2 Manhattan zips made the cut, which was similar to last year. Whats so interesting to me is that the zips that you would think made the list, those that contained Fifth Avenue, Park Avenue and Central Park West, didn’t make the cut. California was most represented at the upper end of the list, and those are nearly all are adjacent to some waterway. Eastern Long Island did well, posting the highest zip code on the list, 11962 in Sagaponack, New York.

Only 10013 and 10007 made top 20 and these zips happen to be primarily loft areas in the neighborhood known as TriBeCa (acronym for triangle below Canal Street). In the mid-1990’s the downtown loft markets of SoHo (South of Houston Street) were discovered and became one of the most popular areas for new development, primarily through conversion of manufacturing buildings to residential condominiums. As the market matured, loft spaces were getting larger, especially as the dot com boom blossomed. From a practical nature, units tended to sell for more on a per square foot basis, so developers made them larger. From a physcial standpoint, subdividing loft space was tricky and with 4,000 square foot floor plates on many, it made sense to market 4,000 square foot units or 2,000 square foot units but not much in between. This market appealed to existing residents, but more importantly, they appealed to residents in more traditional residential neighborhoods like the Upper East Side and the Upper West Side.

The Most Expensive ZIP Codes [Forbes.com]
Zip Zip Hooray for the Hamptons [NYP]
Forbes: Tribeca, Soho Go Zip Zip Zip [Curbed]
Forbes: Most Expensive Zip Codes [Gawker]

_Other Zip Studies_
Most expensive housing markets [CNN/Money]
Gulp! It’s $528K for Boulder home [RMN]


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[In The Media] Squawk Box 5-2-06

April 24, 2006 | 12:01 am | Public |

I’ll be on Tuesday’s morning edition of Squawk Box on CNBC. I’m tentatively scheduled to be on at 7:40am (May 2, 2006).

I’ll be discussing the current state of the residential real estate market, east coast real estate trends, specifically New York. I believe they are doing a daily segment with representatives from different parts of the country. On Monday someone will discuss the west coast markets.

UPDATE: Thats Tuesday, May 2, 2006 not April 25, 2006 as originally posted.


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Lies, Damn Lies, And Statistics Part III: Nobody Agrees On How To Do The Math

April 21, 2006 | 12:01 am |

I attended the NYU/NYT VU 2006 panel discussion in New York today and one of the speakers was Ian Schrager, the boutique hotelier, who has immersed himself into condo development. He said something that got a chuckle and I it really hit home with me. He basically inferred that observers of the housing market currently suffer from the analysis paralysis.

This article in Thursday’s Washington Post by Tomoeh Murakami Tse (formerly of New York Newsday) who wrote an article addressing the disparity of housing data: Open-Ended Equations How Stable Is Washington’s Housing Market? It All Depends on How You Do the Math [WP]

Home buyers beware: The Washington region is now one of the most precarious real estate markets in the nation, according to reports by economists, banks and industry analysts.

But wait a minute. Maybe it’s one of the safest, according to reports by other economists, banks and industry analysts.

  • PMI says DC is in the top 20 of riskiest markets

  • Credit Suisse “assesses DC as moderate and stable”

  • Center for Economic and Policy Research (Baker) compares rents and home prices

  • Economy.com (Zandi) measures using 9 variables

“There’s different ways the market can adjust,” said Zandi, a believer in the soft-landing scenario for housing. Prices could be flat, he said, “and the economy can catch up to it, or the market could fall 5 to 10 percent, trade sideways and let the economy catch up.”

With analysts and economists disagreeing on the current state of the market, it is no wonder there is no consensus on its future, either.

This reminds me of an old economist’s joke that “not only can a group of economists disagree on where the market came from, they can’t agree on where the market is going.” Not much of a joke – seems fairly real world to me.

Lies, Damn Lies, And Government Statistics: Part I [Matrix]
Lies, Damn Lies, And Government Statistics: Part II [Matrix]


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Four Out Of Five Consumers Chew Bubble Gum, (But NIMBY)

April 19, 2006 | 7:57 am |

Its all how you phrase the question.

The Gallup Poll did a survey on consumer attitudes toward the housing market Seven in 10 Consumers Expect Housing Bubble to Burst [Gallup] yet 6 out of 10 think their local markets are fine.

The problem with this kind of survey is that the presentation is misleading, and because it is done by such a reputable company, it demonstrates the disconnect between certain elements of the media and the market itself. Now I don’t claim to know how to take a poll, but the survey was gathered by telephone based on 1,004 adult interviews. That seems kind of light to me.

First of all, Gallup uses the word bubble to characterize the real estate market, which infers imminent collapse. Whether or not you agree with that result is not the point. The survey therefore appears biased from the onset.

The title of the article Seven in 10 Consumers Expect Housing Bubble to Burst [Gallup] suggests that this is the way we feel about our housing market.

Yet in small subtitles the survey says Still, only about 4 in 10 expect housing prices in their areas to remain the same or decline. Why wasn’t it presented in reverse? Probably because its not as titilating.

Gallup breaks out consumer reaction to a national housing bubble and local housing bubble which is the most telling aspect of such a survey. Here’s the summary

  • 71% think on a national level, the housing bubble is going to burst including 24% who think its very likely.
  • 32% think that their local market is vulnerable including only 7% who think its very likely.
  • 87% of all consumers think their local market will continue to appreciate or stay the same.

So basically, consumers feel there is a problem on a national level but feel their local markets are relatively safe. Two assumptions can be made about the the significant disparity between local and national perceptions of the market.

Firstly, on a local level, consumers are more informed about the nuances of their market than they are about the overall market. This makes a broad statement that real estate is a local affair.

On the other side of the argument, it could mean that consumers are in denial about the market and tend to agree with national reporting because it does not necessarily have a direct impact on their own property.

Since we know that housing markets are made up of slow and expensive transactions [WP] that are impacted by local influences like zoning, location, etc., then I would tend to agree with the local perception, and, on a national level, the situation might appear more grave because its easier to cover in the media.

Either way, I don’t chew much gum.



Just Because There’s A Chart Involved, Doesn’t Mean The Message Is Accurate

April 17, 2006 | 12:01 am |
Source: Quadlet

A hat tip to John Keith over at The Boston Real Estate Blog who posted this link [Are Real Estate Prices Dependent on Mortgage Rates? [Quadlet Consulting]]) and asked for my feedback. Actually I have also seen this study linked to a bunch of other sites but felt that it was so weak I was reluctant to post about it because I didn’t know where to begin.

The study stated that by looking at Manhattan average sales price and correlating it to 30-year fixed mortgage rates, it is inconclusive that mortgage rates influence values.

The study uses data from the Manhattan real estate broker Corcoran Group that goes back to 1974. I find this resource interesting because Corcoran was founded in the late 1970’s or early 1980’s and therefore it is not clear where their data came from prior to that unless it is a very thin set from early on and later data is based mainly on their own sales. However, the trend line does appear reasonable.

I think a lot of the problem is the data set chosen. He uses annual data provided by a brokerage firm. The subject is the Manhattan market which does not always behave like the national market due to the international nature of the local economy as well as the predominant co-op housing stock (this has kept investors out during this recent boom). He might have considered NAR or OFHEO stats since his mortgage rates are national. Also, he does not use quarterly data (Corcoran doesn’t have it), so its not going to appear very responsive in graphic form. He uses fixed mortgage rates yet adjustable rates are one of the primary drivers of the recent housing boom. Plus he makes the assumption that mortgage rates are the only factor that causes prices to fluctuate. Over the past 10 years, the Manhattan housing market has been plagued by the chronic limitation in supply. So the premise of rising rates causing prices to slow would not be immediate if inventory is tight.

Despite all this, my stats do show a clear pattern of influence of mortgage rates using a CPI adjusted 1-year adjustable and a 30-year fixed unadjusted.

I think the bottom line here is that the issue with drawing this sort of conclusion, its that it seems to be based on the quality of the graphics, and not much more than that.

I would have to conclude that his effort appears noble but it is overly simplistic and misleading.


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The Real Deal Podcast: Jonathan Miller On Manhattan 1Q 2006

April 5, 2006 | 11:42 am | | Public |

[The Real Deal has innovated the delivery of information about the New York real estate market in its magazine and online format to its readership. This is part of a series of podcasts on the state of the Manhattan housing market. -ed]

Jonathan Miller

Is the Manhattan housing market cooling or is it still hot? [TRD]

The podcast format allows me to summarize the results of the just completed 1st Quarter 2006 Prudential Douglas Elliman Manhattan market Overview without rattling off a bunch of statistics – those you can get from my report which will be posted on my web site shortly.



[Media Chain-links] 1Q 2006 Manhattan Market Overview

April 4, 2006 | 7:39 am | | Public |

The 1Q 2006 Manhattan Market Overview that my appraisal firm, Miller Samuel, prepares for Prudential Douglas Elliman, was released today. I always think its interesting (actually, its fun) to see how the various media outlets (Big and Small Media, Blogs) respond to the exact same set of data and how the real estate brokerage companies who write alternative reports, frame their comments.

This list is in no particular order and excluded all the redundant articles (ie news feeds). I will keep adding to it through the week after the initial post.

Apartment Prices Up Again After a Slump in Manhattan [NYT]
Housing frenzy slows down[NYDN]
Wall Street bonuses lift Manhattan apartment prices [Reuters]
Reports: Luxury Housing Boom May Be Reaching Its Crest [NY Sun]
First Quarter Reports: Thousand Island [NYO The Real Estate]
Housing market still steady [NY Newsday]
City Apts. Defy U.S. Bubble Trouble [New York Post]
Condo boom boosts Manhattan real estate market [Inman News]
Manhattan housing market shows weakness [CNN/Money]
Manhattan Apartment Sales Cool Off [TheStreet.com]
Manhattan Apartment Prices Climb at Slowest Pace in Three Years [Bloomberg] IMMOBILIARE: SALE, SI SGONFIA OPPURE CROLLA [Wall Street Italia]
Manhattan housing market booms in first quarter [The Real Deal]
State o’ the Market Update: Through Thick and Thin, ‘Essentially Flat’ [Curbed]
Brokers say New York real estate market is cooling [Financial Times]
[Wall Street Bonuses Fuel Manhattan Real Estate Surge [DJ]](no link)
A game of telephone [Property Grunt]
Manhattan Market Up, Psychology Down in Q1 [Brownstoner]
Real Estate Rashomon [Walk-Through]

Here are a handful of radio and tv clips as well.


[Bloomberg TV]


[WNBC-TV]


[WPIX WB11]


[WABC-TV]

[WCBS Radio]


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From The Garden State: The February 2006 Otteau Report

April 4, 2006 | 12:02 am |

[This monthly market report is provided by Jeffrey Otteau of the Otteau Appraisal Group who also authors a series of widely followed market reports on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.] I have known Jeff for many years and consider him one of the leaders of the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis over the years. -Jonathan Miller

STILL! Waiting for the Spring Market

Although buying activity in February registered a 15% increase over January’s level, it is currently running well behind last years pace confirming the slowdown in the residential market is continuing into 2006. Year-to-date buying activity is currently running 14% less than last year’s pace while the inventory of unsold homes on the market is 61% higher than a year ago. By combining these indicators the resulting Market Swing of -75% indicates that the 2006 market has lost 75% of its strength as compared to last year at this time. While considerable demand still exists from the buying side of the housing equation, declining housing affordability will continue to dictate the “mood of the market”. From the seller’s perspective, more aggressive marketing and pricing strategies will be essential to restore the buyer’s ‘sense of urgency’ that was prevalent in 2005.

Here are the 2005 annual stats as well.


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From The Garden State: The January 2006 Otteau Report

March 8, 2006 | 1:03 pm |

[This monthly market report is provided by Jeffrey Otteau of the Otteau Appraisal Group who also authors a series of widely followed quarterly reports on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.] I have known Jeff for many years and consider him one of the leaders of the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis over the years. -Jonathan Miller

Waiting For The Spring Market

If you’re looking for a positive sign in the New Jersey housing market you can take some comfort in knowing that increase in contract-sales activity from December to January was slightly greater than the month-to-month increase of 1 year ago. Despite relative improvement however, sales activity in January ran 12% less than January 2005 indicating that the weakness in the residential market which began in October has carried over into 2006. Further evidence that the market has softened comes from the continuing increase of unsold inventory which grew by more than 2,000 homes in January and now stands 46% higher than 1 year ago. Home buyers will clearly have much more to say in determining the selling price of a home in 2006 than was the case last year.

Despite these signs, the Spring Market will arrive, although later than we’ve grown accustomed to in recent years. Look for the Spring rally to start in late March once home buyers realize that the long predicted collapse in housing prices won’t occur and as climbing mortgage interest rates bring some urgency back into the home buying equation.

With all the increased competition on the market this year, the appearance of a home will play a greater role in determining marketing success. Items such as condition, décor, and curb appeal will take on greater significance as home buyers have a wider selection of competing homes from which to choose.

Here are the 2005 annual stats as well.


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