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April 24, 2015

Housing Forecast: Warm and Sunny, With Limited Chance of Affordability

The Northeastern U.S. had a heck of a winter with record setting snowfall and plenty of days with very low temperatures. Back in January and February many in the real estate industry I spoke with were lamenting the brutal weather and expecting a weaker housing market as a result. Admittedly I was incredulous at this widespread belief since the year before we went through a more intense polar vortex [1] and 1Q14 U.S. GDP was revised to the negative due to the significant economic impact it caused. Yet GDP snapped back in the subsequent quarter. Blaming the weather is an always an easy to digest sound bite, usually included within talking points of state of the market releases by real estate trade groups and real estate brokerage firms.

I’m here to state for the record that it is always colder in the winter than the summer and the winter is when we tend to see snowfall. I’ll even go out on a limb and say that some winters are colder than average and some winters are warmer than average. The same goes for snowfall. When a potential homebuyer goes out in January to look at property and are uncomfortable doing so, do they cancel home buying plans for five years? No they wait a few weeks or so for the weather to warm up and resume looking at houses. Sorry for the sarcasm but I grow tired of the weather being the default explanation for weaker housing conditions at the beginning of each year. Get over it.

As for the NYC metro area, the first quarter results were generally better than the same period last year despite a harsh winter. Hmmm.

One of the big NYC metro regional housing stories of this week has been the decline or anemic growth of listing inventory since the beginning of the year. I wrote about falling U.S existing inventory [2] which a few weeks ago. Inventory levels are generally below long terms norms across most of the metro area.

The Wall Street Journal did a nice recap on the state of the regional housing largely using our research and the trend showed generally more sales, less inventory and rising prices. The biggest focus for the regional coverage was the Hamptons market (plus nothing cooler then getting a chart made with your data).

WSJchart4-23-15 [3]

There was tremendous focus on the first quarter Hamptons housing market results – apparently the harsh winter had no apparent impact on a largely second home market. Some of the results that we weathered (sorry).

Read about it here [4], here [5], here [6], here [7], here [8] and here [9].

Inventory is falling in other parts of the county we cover. Aspen [10] and Los Angeles [11] are seeing declining inventory as well.

No Schussing: [12] Going Up That Slippery Housing Market Slope

This week capped a four week gauntlet of 17 market report releases covering the first quarter of 2015 for Douglas Elliman [13]. I was pretty excited about the research behind our two newest reports for Aspen, Colorado and Greenwich, Connecticut as well as second editions for Los Angeles and Fairfield County, Connecticut.

  • Aspen Sales [14] Aspen housing prices increased year-over-year for the fifth consecutive quarter as the market pace accelerated and sales activity skewed to larger sized properties over the region. Median sales price jumped 46% to $3,200,000 from the prior year quarter, the highest first quarter result in five years. Average sales price surged 55.3% to $4,152,116 over the same period to the highest first quarter in the ten years this metric has been tracked…
  • Greenwich Sales [15] Greenwich condo and single family housing price indicators showed mixed year-over-year results. Condo median sales price increased 10.5% to $775,000 while single family median sales price declined 18.1% to $1,780,000. The price decline was consistent with the 13.4% drop in average sales size to 3,426 square feet. Price indicators for the luxury market, the top 10% of all sales, outpaced the overall market despite the 10.2% decline in average sales size to 7,924 square feet…
  • Fairfield County Sales [16] The Fairfield County housing market began 2015 with a burst in sales above prior year levels as regional economic conditions continued to improve. The first quarter market had the highest number of sales in 9 years and the lowest amount of inventory in a decade. There were 1,706 condo and single family sales, up 7.7% from the prior year quarter. Listing inventory fell 20.3% to 4,922 over the same period. The combination of rising sales and falling inventory created the fastest market pace in a decade…
  • Los Angeles Sales [11] The first quarter housing market continued to see rising prices, but now with the addition of rising sales. Median sales price for the region has been increasing on a year-over-year quarterly basis since the summer of 2012. The combination of rising prices and low inventory had kept sales activity from expanding. In the first quarter of 2015, the number of sales increased, reversing the recent trend…
  • Hamptons Sales [17] The Hamptons housing market continued to see robust conditions, with the highest first quarter median sales price in a decade and the highest first quarter sales activity in 8 years. Median sales price rose 4.6% to $920,500 from the prior year quarter. Average sales price followed the same pattern, up 3% to $1,761,028 over the same period and the highest first quarter level in 7 years…
  • North Fork Sales [18] Housing prices for the North Fork were mixed as the pace of the market moved faster. The absorption period, the number of months to sell all inventory at the current pace of sales, fell 32.3% to 11.1 months. The sharp drop to the fastest first quarter market pace in 8 years was the result of the combination of rising sales and falling inventory. There were 134 sales, up 22.9% from the prior year quarter, the highest first quarter total in 8 years. Inventory fell 17.3% to 494 over the same period…
  • Long Island Sales [19] With Long Island inventory refusing to budge from low levels, housing prices continued to edge higher. Median sales price for Nassau and Suffolk counties, excluding the Hamptons and North Fork, was $360,000, up 4.3% from the prior year quarter. Average sales price followed a similar pattern, rising 4.7% to $458,208. Price indicators for the luxury market, defined as the top 10% of all sales in the period, rose faster than the overall market…
  • There’s a lot of information here to digest. Pull out a chair and read it on your balcony or backyard no matter what the weather is.

    Jonathan Miller, CRP, CRE
    President/CEO
    Miller Samuel Inc. [20] Real Estate Appraisers & Consultants

    ps Please feel free to share.  If you get tired of all the charts, real estate commentary and articles presented in each weekly note, just opt out.  I always appreciate feedback so please email me [21].

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