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July 3, 2015

What Greek Debt Crisis? Manhattan Set A Record Number of Housing Records

Once I got over the NYT Cooking section’s affront to the sanctity of guacamole [1] that brought down the Internet and learned all about Monroe, Michigan [2] from Stephen Colbert, I focused on Manhattan’s housing market.

Manhattan’s 2Q 2015 co-op/condo average sales price set a new record of $1,872,367. For perspective, the average sales price for the first quarter of 1989 when I began to formally track (although our data goes back to the 1970s), was $371,099 or an inflation adjusted $799,726.

2q15manhattanASPbloomberg [3]

The coverage of our report went viral [4] (because everyone likes a good record) and the Bloomberg article [5] that chronicled the report results rose to the number 1 shared article on the 315,000 Bloomberg Terminals. Everyone loves to read about real estate, apparently more than the Greek debt crisis [6].

2q15manhattanRPT-BLOOMBERGTERMINALS [7]

I believe most readers assumed that the record was set by all those amazing super luxury condo sales from Billionaires Row [8].

VF6STR1261CJ70.pd [9] Source: Vanity Fair [10]

For all of our readers who could care less about Manhattan, the housing related takeaway was not about a bunch of super tall super luxury condos that skewed housing prices to record levels relying on a metric subject to significant skew. It was much more fundamental as outlined in the New York Times piece [11]. Read on.

This week we released our housing research on the 2Q15 Manhattan sales market [12] for Douglas Elliman Real Estate [13]. I’ve been tracking the market since we founded our appraisal firm Miller Samuel back in 1986 (You guessed right, I have the maturity of a 19 year old) and lots of records were set. You could say a “record number of records [14]” were set.

Here’s a running (but not full) list on the records for the 2Q15 Manhattan apartment market:

Co-op/Condo
Highest Average Sales Price
Highest Average Sales Price – New Development
Highest Average PPSF – New Development
Highest Median Sales Price – New Development
Highest Average Sales Price – Resales
Largest Average Square Feet – New Development
Highest 2-Bedroom Median Sales Price
Highest Median Sales Price 5th Quintile
Highest Median Sales Price 2nd Quintile
Highest Median Sales Price 1st Quintile

Co-op/Condo
Highest Average Sales Price
Highest Median Sales Price
Highest Median Sales Price – Resales
Highest Average PPSF – Downtown
Highest Median Sales Price – 2-Bedroom
Highest Average Sales Price – 2-Bedroom
Highest Average PPSF – 4+ Bedroom
Highest Median Sales Price 5th Quintile
Highest Median Sales Price 4th Quintile
Highest Median Sales Price 3rd Quintile
Highest Median Sales Price 2nd Quintile

Condo Highest Average Sales Price
Highest Average Sales Price – New Development
Highest Average Sales Price – Resales
Highest Average PPSF – Resales
Highest Median Sales Price – Resales
Highest Median Sales Price – Studio
Highest Median Sales Price 5th Quintile
Highest Median Sales Price 4th Quintile
Highest Median Sales Price 1st Quintile

Loft (Co-op+Condo)
Highest Average PPSF
Highest Average Sales Price – Resales
Highest Average PPSF – Resales

Luxury (Co-op+Condo) – Top 10%
Highest Average Sales Price
Highest Average Sales Price – New Development
Highest Median Sales Price – Co-op
Highest Median Sales Price – Condo
Highest Median Sales Price – Resale

There are more but I got tired of building this list. I think you get the point.

I realize that average sales price is a metric subject to significant skew, especially when analyzing a housing market where $25M to $100M are not uncommon and lots of new product coming online is priced very high.

Captain Cranky Pants [15], a troll who frequents Curbed New York comment boards, was confused about the cause of the records and set me straight with a memorable “compli-sult” (a compliment nested within an insult).

You’ve come a long way for an appraiser in the NYC market, Dog knows how, but you still produce bunk.

Although I thought I did a pretty good job of explaining this in my interview with Mark Crumpton on Bloomberg TV a few days ago.



Just take a look at the recent inventory trend that shows how the growth is cooling after bottoming in 2013.

2q15manhattanYoYinventory [16]

Inventory levels right now are similar to this time a year ago.

2015-06Manh-inventorymonthly [17]

That’s why we saw so many records broken outside of the new development market. After all, new development closings only accounted for 7.9% of total closings. While their market share is expected to grow considerably over the next few years as units in these projects begin to close, we also track re-sale separately, so it’s not hard to keep housing records in perspective. The stronger U.S. dollar has taken the edge off of some of the super luxury demand by foreign buyers but their participation has been wildly over-hyped. New York City’s economy is booming and job growth is at near record levels.

We are in the midst of a housing affordability crisis.

Tight credit and record housing prices are worrisome (that applies to rents as well). It is not good news for many who want to live and stay in New York. And it’s not great for New York City and virtually any U.S. city and town that wants to grow when job creation isn’t supported by affordable homes for those new workers.

Think of the highly visible super luxury new development market as the green peas you’re trying to mix into the homemade guacamole. It causes our focus to stray away from the issue of a limited affordable housing market for most of us, the stuff most people want to dip.

See you next week.

Jonathan Miller, CRP, CRE
President/CEO
Miller Samuel Inc. [18]
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 [19].

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