In reference to my New York Times quote this weekend by Vivian Toy – Bidding Wars Resume:

Jonathan J. Miller, the president of the appraisal firm Miller Samuel, estimated that two-thirds of the roughly 4,000 [8,389] apartments for sale in Manhattan are priced too high for the current market.

“So,” Mr. Miller said, “you have this weird situation right now where you have above-average inventory, but people are fighting over the ones that are priced correctly.”

(I’m not sure where the 4,000 number came from because Manhattan 3Q 09 showed 8,389 but the specific amount is irrelevant.)

The difference between a bidding war of two years ago and the current market is the irrational nature of bidding wars back then – it was all about “winning.” The market today is about obtaining value – with prices having fallen an average of 25% since pre-Lehman.

Also, there is a larger disconnect between buyers and sellers than a few years ago as measured by the lower pace of sales. There was a reprieve this summer when sales surged, but listing inventory is still above average levels and a higher level of listings are priced above market level leaving purchasers fighting over a smaller selection.

Although this is anecdotal, I do believe that there are fewer bidding wars that occur above list price than we saw a few years ago.

When my friend and bigger than macro Big Picture blogger Barry Ritholtz refers to me as “Our man Jonathan Miller drops the truth bomb” I am confident I nailed the current state of bidding wars.



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5 Responses to “[Over Coffee] Quote: Our man Jonathan Miller drops the truth bomb”

  1. John A Keith says:

    Jonathan, how have you been??

    Re: the NY Times article and your 3rd-quarter tally, does the 8,389 units include just “currently-listed” condos or the “shadow” inventory in new developments, as well?

    Thanks.

    • Jonathan Miller says:

      John! All is well – I might be headed your way in a few weeks.

      Inventory doesn’t include “shadow” new development and that isn’t where the bidding wars are occurring – its purely re-sale.

  2. Edd Gillespie says:

    Absolutely amazing that the metaphor for truth in real estate is a bomb. By extension, appraising must then be the war. Just please keep researching, analyzing and reporting Jonathan. You’re showing the industry how appraising is properly supported and reported.

  3. I agree that it’s another weird situation in todays oh so interesting real estate world but the notion of bidding up properly or slightly below market, priced apartments is not weird. These are the properties that are viable, overpriced apartments are not in the running. So I think it makes sense. A smaller pool of well priced properties becomes the default inventory, therefore you get possible bidding wars.

  4. Edd Gillespie says:

    The way this so called “recovery” is shaping up, there is no credible evidence to support the conclusion that when the priced right inventory is used up that buyers will turn to the overpriced stuff. Not this time.
    Almost all of the sales prices since 2001, or maybe even earlier, have been fluffed with bubbled loans. What the greedy in the market saw was demand, but turns out it was not sustainable and we won’t be going back there any time soon. Get those prices down or it’s heading for yet another dive.