It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out today’s 3CW column on @CurbedNY:

I thought I’d take a look at price growth between the Manhattan rental market and sales market over the past decade. I am struck by how many of us have the default view that these two markets always move in opposite directions, myself included. In other words, if rental prices are rising, sales prices must be falling and vice versa. I trended the year-over-year change in median rental price and median sales price over the decade. I also inserted significant US housing milestones along the way but left out the ’13 launch of Iron Man 3…

[click to expand chart]

Today’s Post: Three Cents Worth: Manhattan Sales, Rentals Not Opposites [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

We recently released the market reports we prepare for Douglas Elliman covering the The Hamptons and North Fork.

This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

HAMPTONS 1Q 2013

• Listing inventory continued to fall.
  
• Number of sales surged.
  
• Number of sales in excess of $5M dropped as many high end buyers rushed to close at the end of 2012.
  
• Limited supply beginning to apply upward pressure to stable markets.
  
• Credit remains tight, restraining supply from entering market, no urgency to list.
  
• Record low mortgage rates and release of pent-up demand keeping demand strong.
  
• Less high end sales as tax-incentivized buyers rushed to close at the end of 2012.
  
  

NORTH FORK 1Q 2013

• Housing prices up in all segments except for top quintile due to tax-incentivized rush at end of 2012.
  
• Number of sales fell and listings rose.
  
• Days on market expanded.
  
  

Here’s an excerpt from the 1Q 2013 report:

HAMPTONS…After an unprecedented year end surge in high end closings motivated by tax planning purposes, the first quarter Hamptons housing market saw an unusually low level of high end sales despite a year-over-year increase in total sales. As a result, the price indicators reflected declines, when in fact the housing market was not experiencing falling prices…

NORTH FORK…Sales activity in the first quarter of the North Fork housing market was somewhat weaker than the same period a year ago as the prior quarter “poached” some activity at the close of 2012. Price indicators were generally higher, but sales were lower and inventory was above prior year levels…

You can build your own custom data tables on the market – now updated with 1Q 13. While we haven’t built separate chart galleries for each market yet, you can browse our chart library.

The Elliman Report: 1Q 2013 Hamptons Sales [Miller Samuel]
The Elliman Report: 1Q 2013 North Fork Sales [Miller Samuel]
The Elliman Report: 1Q 2013 Hamptons Sales [Douglas Elliman]
The Elliman Report: 1Q 2013 North Fork Sales [Douglas Elliman]
Market Chart Library [Miller Samuel]
Aggregated Custom Market Data Tables [Miller Samuel]

We published our report on the Long Island sales market for 1Q 2013.

This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

1Q 2013

• Lowest first quarter listing total in a decade.
  
• Signed contract volume jumped from year ago levels.
  
• Housing prices remained generally stable, indicators mixed.
  
• Limited supply beginning to apply upward pressure to stable markets.
  
• Credit remains tight, restraining supply from entering market, no urgency to list.
  
• Record low mortgage rates and release of pent-up demand keeping demand strong.
  
• Less high end sales as tax-incentivized buyers rushed to close at the end of 2012.
  
  

Here’s an excerpt from the 1Q 2013 report:

…The lack of supply and rise of contract activity continued to define the Long Island housing market. Listing inventory fell to the lowest first quarter level seen in a decade as pending sales continued to rise. Despite the tightening of the market, overall price indicators remained mixed. The number of listings in inventory at the end of the first quarter fell 24.8% to 15,303 as compared to the same period last year, a ten year first quarter low…

You can build your own custom data tables on the market – now updated with 1Q 13 data. Check out the charts by browsing in our chart library.

The Elliman Report: 1Q 2013 Long Island Sales [Miller Samuel]
The Elliman Report: 1Q 2013 Long Island Sales [Douglas Elliman]
Market Chart Library [Miller Samuel]
Aggregated Custom Market Data Tables [Miller Samuel]

We recently completed the 1Q 2013 South Florida market report series for Douglas Elliman. These markets include Miami, Boca Raton, Fort Lauderdale and Palm Beach.

Had a fun interview with Tom and Sara this morning on the always MUST watch/listen Bloomberg Surveillance. We talked housing, rentals, vacancy and inventory. An added bonus was the addition of Adam Davidson – co-founder and co-host of Planet Money as guest anchor. I’m a huge fan of his show. Even bought their t-shirt last week through Kickstarter.

More importantly, I’m still the mayor of the Bloomberg Cafeteria on FourSquare.

Douglas Elliman JUST published their Manhattan/Brooklyn rental report. This monthly report is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994. We discontinued the quarterly rental report series but still present the information in our aggregate database.

MANHATTAN

• Rents continue to press higher. 2013 annual growth on par with 2012.
  
• Rate of rental price growth consistent across all unit sizes.
  
• Limited use of landlord concessions remain.
  
• Vacancy rate below 5-year average, same as year ago.
  
• Stabilizing number of new rentals suggest more balance between landlords and existing tenants.
  
  

BROOKLYN
[North, Northwest Regions]

• After a fast start in 2013, rental price growth slowed – not clear if a trend.
  
• Declining days on market in new year reflects quick pace.
  
• Number of new rentals continued to slow.
  
• Tight mortgage lending conditions keeping pressure on rental market.
  
• Slow improvement in regional economy keeping rents rising despite record low mortgage rates.
  
  

Here’s an excerpt from the report:

MANHATTAN…Median rental price jumped 6.5% to $3,195 from the same period last year, but was unchanged from the prior month. The average year-over-year increase in median rental price has been rising since the beginning of 2013 averaging 5.1% year to date. The average rate of rental price growth is consistent with the 2012 average rate of 5.3%. The year-over-year increase in median rental price across all size categories was remarkably consistent in April…

BROOKLYN…The number of new rentals increased 10.9% above prior year levels, the third lowest annual increase in a year. This metric can be seen as a barometer of tenant resistance to lease renewal rates offered by landlords. Lower new rental growth reflects more tenants re-signing their leases at renewal. After an aggressive series of rental price increases in 2012, landlords have been easing rate increases and tenants have better adjusted to the high rent environment…

The Elliman Report: 4-2013 Manhattan/Brooklyn Rentals [Miller Samuel]
The Elliman Report: 4-2013 Manhattan/Brooklyn Rentals [Douglas Elliman]
Miller Samuel Aggregate Database [Miller Samuel]
Chart Gallery (Brooklyn Monthly) [Miller Samuel]
Chart Gallery (Manhattan Monthly) [Miller Samuel]
Chart Gallery (Manhattan Quarterly) [Miller Samuel]

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out today’s 3CW column on @CurbedNY:

Since Manhattan sales are fairly heavy right now—basically we’re at High Noon of the annual housing market cycle—I wanted to look at how important spring is to the market and explore how housing sales patterns have changed over the past few decades. I plotted the sales market share for each quarter and separated them into their own charts. For example: 2Q 2012 (last year’s spring market) had sales that represented 25.2 percent of all sales for 2012. I then applied a trend line to each quarter to cut through the volatility. The four quarters (sort of) correlate with the four seasons…

[click to expand chart]

Today’s Post: Three Cents Worth: Manhattan Sales Wave More of a Bell Curve [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

Absorption defined for the purposes of this chart is: Number of months to sell all listing inventory at the annual pace of sales activity. (The definition of absorption in my market report series reflects the quarterly pace – nearly the same)

I started this analysis in August 2009 so I am able to show side-by side year-over-year comparisons. The blue line showing the 10-year quarterly average travels up and down because of the change in scale caused by some of the significant volatility seen at the upper end of the market. The pink line represents the overall average rate of the most recently completed month.

Side by side Manhattan regional comparison:

[click images to expand]

The market pace continues to be brisk below the $3M level (incidentally that accounts for 90% of the market).

Manhattan Market Absorption Charts 2013 [Miller Samuel] Manhattan Market Absorption Charts 2012 [Miller Samuel]

Just catching up here on Matrix – had a great visit with Christine Romans on CNN’s Your Money a week ago. Also go to meet Rana Foroohar, Assistant Managing Editor at Time Magazine (sitting next to me but not in the clip) who interviewed me for her column “The Housing Mirage. Good stuff.

Here are the latest:

MLH SQFT Index (Miller Samuel Manhattan Luxury Housing Price Per Square Foot)

[click to expand]

MLH MED Index (Miller Samuel Manhattan Luxury Housing Median Sales Price)

[click to expand]

MLH AVG Index (Miller Samuel Manhattan Luxury Housing Average Sales Price)

[click to expand]

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out today’s 3CW column on @CurbedNY:

Given all the hype about new development product entering the listing-starved Manhattan market over the next couple of years, I thought I’d take a look at the market share of co-ops and condos over the last decade (the boom and bust era), but in a different way. For the uninitiated, Manhattan co-op housing units outnumber condo units 3:1 (i.e. 75 percent v. 25 percent market share)…

[click to expand chart]

Today’s Post: Three Cents Worth: $3,000 is the new $1,500 in Manhattan [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out last week’s 3CW column on @CurbedNY:

It’s no secret that the lack of supply has turned the housing market inside out right now. We are seeing multiple bids on a larger portion of the sales and no immediate relief in sight. I took a look at inventory trends over the past five years to explore how we got here. I separated out the market by re-sale and new development to explore the differences…

[click to expand chart]

Today’s Post: Manhattan Inventory on a Slippery Slope [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

Douglas Elliman just published the market report on the Queens sales market that we author. This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

• Listing inventory fell to 8-year low.
  
• Release of pent-up demand as number of sales increased despite low supply.
  
• Prices showed modest gains.
  
• Low mortgage rates continue to play important role in demand.
  
  
  
  

Here’s an excerpt from the report:

…The key market characteristic of the Queens housing market in the first quarter was the scarcity of supply. This condition kept housing prices stable and combined with record low mortgage rates, brought buyers and sellers close together when negotiating price. Price indicators showed across the board gains from the same period last year. Median sales price edged 1.1% higher to $350,000 from the same period last year and average sales price increased 1.5% to $389,420 over the same period. There were 6,496 listings at the end of the first quarter, an 8-year record and 26.6% less than in the same period last year…

Our Queens data tables are now updated for 1Q13 and charts will be available soon.

The Elliman Report: 1Q 2013 Queens Sales [Miller Samuel]
The Elliman Report: 1Q 2013 Queens Sales [Douglas Elliman]
Aggregated Custom Market Data Tables [Miller Samuel]

We recently published our report on the Brooklyn sales market. This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

• Lowest inventory levels recorded in 5 years.
  
• Sales below year ago levels as lack of inventory impairing sales volume.
  
• Prices are up as supply limitations keep pressure on market.
  
• More bidding wars.
  
  

Here’s an excerpt from the report:

…The Brooklyn housing market began 2013 with rising prices, chronically low inventory and sales restrained from the lack of supply. Several records were set in the first quarter: lowest inventory and listing discount in the 5-years they have been tracked, highest median sales price since Lehman fell and the sharpest year-over-year decline in inventory. Average sales price registered a similar year-over-year gain of 12.3% to $634,594 in the first quarter, a new record. New development trends, often a function of what is made available to the market at any given time, showed a larger gain in median sales price than the re-sale market from the same period last year…

You can build your own custom data tables on the market – now updated with 1Q 13 data. Charts updated with 1Q13 data will be online shortly.

The Elliman Report: 1Q 2013 Brooklyn Sales [Miller Samuel]
The Elliman Report: 1Q 2013 Brooklyn Sales [Douglas Elliman]
Aggregated Custom Market Data Tables [Miller Samuel]

Douglas Elliman JUST published their Manhattan/Brooklyn rental report. This monthly report is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994. We discontinued the quarterly rental report series but still present the information in our aggregate database.

MANHATTAN

• Rental price growth has accelerated since the beginning of the year.
  
• Vacancy rate fell to a 2 year low.
  
• Rise in rents has been consistent across all apt sizes.
  
• Mortgage credit remains tight, employment rising, keeping upward pressure on rents.
  
  

BROOKLYN
[North, Northwest Regions]

• Rental price growth accelerating over the last two months.
  
• Smaller apartments saw larger increases in rental price and the number of new rentals.
  -Luxury market saw weaker price gains than overall market.
  
• Rise in new rental activity more modest than in recent months, sign of rising frequency of renewals.
  
  

Here’s an excerpt from the report:

MANHATTAN…For the past three months, median rent has increased yearover- year. The percentage changes for January, February and March 2013 were 2.6%, 4.7% and 6.7% after bottoming at 0.8% in December of 2012. The March 2013 increase of 6.7% exceeded the 5.1% year-over-year increase in March 2012…

BROOKLYN…After posting no growth in median rental price in January 2013, rents resumed rising with a 7.2% gain in February, followed by an 11.3% increase in March. Average rental price and average rental price per square foot both rose by 11.5% in March over the same period last year…

The Elliman Report: 3-2013 Manhattan/Brooklyn Rentals [Miller Samuel]
The Elliman Report: 3-2013 Manhattan/Brooklyn Rentals [Douglas Elliman]
Miller Samuel Aggregate Database [Miller Samuel]
Chart Gallery (Brooklyn Monthly) [Miller Samuel]
Chart Gallery (Manhattan Monthly) [Miller Samuel]
Chart Gallery (Manhattan Quarterly) [Miller Samuel]

We just published our report on the Westchester & Putnam County New York housing markets.   This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

WESTCHESTER

• Listing inventory fell to lowest first quarter total in four years.
  
• Current supply is just below the 10-year average.
  
• While sales are up, contract volume surged above year ago levels.
  
• Overall price indicators were mixed indicating stability.
  
  

PUTNAM

• Listing inventory declined as sales edged higher
  
• Housing prices edged higher.
  
  

Here’s an excerpt from the report:

…The first quarter of 2013 was defined by falling listing inventory and a significant rise in contract activity. Despite the faster pace of the market, price indicators showed stability compared to the same period last year. However, the overall market is expected to see more upward price pressure if the pace of falling supply and rising sales activity continues. The number of closed sales in the first quarter of 2013 showed only a modest gain of 5.6% to 1,348 compared to the same period last year. However, the total number of contracts surged 27% over the same period representing a significant acceleration in the pace of the market since the end of 2012. Listing inventory continued to fall sharply, down 17.5% to 5,587 from the first quarter of 2012, the lowest first quarter total in four years…

You can build your own custom data tables on the Westchester & Putnam market – now updated with 1Q 13 data. I’ll be posting the updated charts soon.

The Elliman Report: 1Q 2013 Westchester & Putnam Sales [Miller Samuel]
The Elliman Report: 1Q 2013 Westchester & Putnam Sales [Douglas Elliman]

Absorption defined for the purposes of this chart is: Number of months to sell all listing inventory at the annual pace of sales activity. (The definition of absorption in my market report series reflects the quarterly pace – nearly the same)

I started this analysis in August 2009 so I am able to show side-by side year-over-year comparisons. The blue line showing the 10-year quarterly average travels up and down because of the change in scale caused by some of the significant volatility seen at the upper end of the market. The pink line represents the overall average rate of the most recently completed month.

Side by side Manhattan regional comparison:

[click images to expand]

In sub-$3M the market pace is moving twice as fast as the 10-year average and also faster than the $3M+ markets. Especially note the acceleration below $1M in the side by side comparison to 2012 above.

Manhattan Market Absorption Charts 2013 [Miller Samuel]
Manhattan Market Absorption Charts 2012 [Miller Samuel]

I spoke with Michelle Makori on the state of Fannie Mae (who just reported a record profit). CCTV America is part of China Central Television (CCTV), the largest television broadcaster in China.

I was interviewed on the Daily Ticker by Yahoo! Finance’s very sharp Lauren Lyster on a USAToday story that Millennials now entering the housing market. Basically I agree but we are very early in the process. Household formation has been restrained since the financial crisis began 5 years ago but rising rents and falling mortgage rates are perhaps forcing the issue.

Mary Thompson of CNBC did a nice job capturing the state of the Manhattan housing market using the release of our Douglas Elliman Manhattan Sales Report for 1Q 13. I spoke to her and also ran over to 30 Rock and provided some commentary to producer Stephanie Dhue on camera. The differing results between our report and a competitor were handled perfectly.

In addition to the Sqwawkbox on the Street clip above, here’s a different clip that ran on Power Lunch. Good stuff.

We published our report on Manhattan market sales for 1Q 2013 today.   I’ve been writing this series for Douglas Elliman since 1994.

My Take

-Inventory remained near historic lows, seeing the largest year-over-year decline in the 12+ years we’ve tracked it.
-Sales increased despite drop in inventory – low mortgage rates and pent-up demand as key drivers.
-All price indicators increased from year ago levels – largely due to inventory near historic lows.
-Largest price increases since credit crunch began with exception of 2010′s federal homeowner tax credit era.
-Days on market and listing discounts dropped as inventory declined.
-Luxury market had slower rate of decline in inventory (about half) than the overall market.

Here’s an excerpt from the report:

…The first quarter Manhattan housing market was defined by the acute shortage of inventory. As with many US housing markets, inventory in Manhattan has been falling for several years; this quarter, listing inventory posted its steepest year-over-year drop in the 12 years we’ve been recording it, declining 34.4% from the prior year quarter to 4,960. This was the ninth consecutive month and the 14th of the last 15 months that has shown a year-over-year decline in inventory. Despite the drop, number of sales increased 6.3% to 2,457 as consumers fought tight credit conditions to take advantage of low mortgage rates, and more still were incentivized by the rise in rental prices over the past two years…

The charts and data tables are updated to include the first quarter of 2013.

Here is some of the press coverage for the report today.

The Elliman Report: 1Q 2013 Manhattan Sales [Miller Samuel]
The Elliman Report: 1Q 2013 Manhattan Sales [Douglas Elliman]

I can’t wait for the documentary Money for Nothing to be released. In fact I donated to IndieGoGo.com because I was so impressed that I wanted my own copy.

This documentary is compelling and so are all the cast members. It includes a who’s who list of current and past members of the Federal Reserve as well as economists and Wall Street experts. Cast members include my friend Barry Ritholtz and Gary Shilling who both have been on my podcast. Todd Harrison of the great site Minyanville.com and John Mauldlin who I have always looked to for insights. Jim Grant of Grant’s Interest Rate Observer who called me at the height of the crisis to get a gauge on the Manhattan housing market.

During the housing bubble I often felt like screaming as I saw the financial world through my appraisal glasses thinking I missed an important math class in 8th grade. Fast growing banks with gigantic mortgage volume and many of my appraisal competitors in bed with mortgage brokers were clearly smarter than me – they could make the numbers work and I couldn’t.

In 2003 and 2004 I remember being absolutely confident as a non-economist that the Fed was keeping interest rates too low for too long. I could see it in the loss of lending standards and the lavish incomes enjoyed by those around me who embraced a world of based on moral flexibility. The froth was simply ignored.

Don’t mean to get sentimental on you dear readers, but this movie struck a chord with me. Enjoy the trailer and watch for the release date announcement.

For a bunch more, check out Nathan Pyle‘s collection.

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out this week’s 3CW column on @CurbedNY:

After reviewing an appraisal of a Manhattan sales transaction yesterday that had more than a dozen backup offers above list price (and not the first such situation we’ve seen recently), I thought I’d keep the listing inventory discussion train rolling on 3CW. I looked at a 12-year monthly co-op and condo inventory and named the housing stage at beginning of each year. Incidentally, Manhattan inventory has collapsed 54.5 percent from peak. The monthly 12+ year co-op and condo average is 7,292….

[click to expand chart]

Today’s Post: A Dozen Manhattan Housing Market Stages [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out this week’s 3CW column on @CurbedNY:

With the sales market heating up following the remarkable rental market run-up last year, I thought I’d look at the market share of rental versus sales activity. I compared them by using closed sales and closed rental transactions for all of 2012. Keep in mind that I only used new rentals (not renewals), since renewal data is not generally available (and not part of any rental market studies currently published)…

[click to expand chart]

Today’s Post: Manhattan Rental Market Trapped in Sales Brochure [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

Absorption defined for the purposes of this chart is: Number of months to sell all listing inventory at the annual pace of sales activity. (The definition of absorption in my market report series reflects the quarterly pace – nearly the same)

I started this analysis in August 2009 so I am able to show side-by side year-over-year comparisons. The blue line showing the 10-year quarterly average travels up and down because of the change in scale caused by some of the significant volatility seen at the upper end of the market. The pink line represents the overall average rate of the most recently completed month.

Side by side Manhattan regional comparison:

[click images to expand]

Although everything seems to be absorbed at an historically fast pace, co-ops are generally being absorbed more slowly in nearly every price segment below $5M.

Manhattan Market Absorption Charts 2013 [Miller Samuel]
Manhattan Market Absorption Charts 2012 [Miller Samuel]

I know this is tiring, but it’s March 14th, better known as National Pi Day – an important day of celebration since 1998. Incidentally the United States House of Representatives supported the designation of Pi Day in 2009 – proof that they can actually get important things done.

More importantly, I’ve learned over the years:

“Pie is better than Cake.“

Or as my friend told me recently:

“‘Pie in the sky’ is better than ‘cake on the ground.’”

Powerful stuff anyway you slice it (sorry).

Should be fun.

They tell me it is sold out and there is a waiting list, but just in case…

Douglas Elliman published the Manhattan/Brooklyn rental report for February 2013. This monthly report is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994. We discontinued the quarterly rental report series but still present the information in our aggregate database.

MANHATTAN

• After 4 consecutive months of modest year-over-year gains in median rental price, February showed larger increases.
  
• Days on market and listing discount weakened.
  
• Vacancy rates unchanged after falling for 7 consecutive months.
  
• Super-luxury market (top 5% began at $8,155) outpaced overall median rental price gains.
  
• The sharp gains in the number of new rentals ended as landlords are more in sync with the market at time of lease renewal.
  
  

BROOKLYN
[North, Northwest Regions]

• After a one month slowdown, the year-over-year rise in median rental price resumed it’s higher rate of growth.
  
• Days on market contracted.
  
• Larger apartments show largest rise in rental price indicators.
  
• The economy slowly improving and credit remains tight, keeping upward pressure on rents.
  
  

Here’s an excerpt from the report:

MANHATTAN After four consecutive months at an average of 1.6% year-over-year price gains, median rent rose 4.7% from year ago levels to $3,190. Average rental price also expanded at a similar pace, rising 4.9% from prior year levels to $3,956. The number of new rentals declined 8.8% from prior year levels, marking the first drop since July 2012, as more modest rental price growth at the end of 2012 forced landlords to be more consistent with pricing at time of lease renewal…

BROOKLYN After last month’s more modest gains, the rental market resumed robust price growth in February. Median rent increased 7.2% from the same month last year to $2,590. The other price indicators showed larger gains over the same period…

The Elliman Report: 2-2013 Manhattan/Brooklyn Rentals [Miller Samuel]
The Elliman Report: 2-2013 Manhattan/Brooklyn Rentals [Douglas Elliman]
Miller Samuel Aggregate Database [Miller Samuel]
Chart Gallery (Brooklyn Monthly) [Miller Samuel]
Chart Gallery (Manhattan Monthly) [Miller Samuel]
Chart Gallery (Manhattan Quarterly) [Miller Samuel]

Had a great visit with Tom Keene this morning on Bloomberg TV’s Surveillance along with Scarlet Fu and Sara Eisen. It was simulcast on Bloomberg Radio.

Also in studio was James Lockhart, vice chairman of WL Ross & Co., formerly the head of GSE regulator FHFA. We were also joined by Nicolas Retsinas, a senior lecturer in real estate at Harvard Business School who called in – he has been on my old podcast a few times. Both provided great insight to the housing narrative.

Here’s the second clip from the same session. My basic premise is that while new home sales are rising, it will not be enough to address the collapse of listing inventory which will drive housing prices higher in the US. Hint: It’s mostly about tight credit. Housing is local and credit is national.

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out this week’s 3CW column on @CurbedNY:

One of the biggest housing market complaints these days pertains to the lack of inventory, both existing and new development. Many would assume the complaining is only coming from buyers and real estate agents and not from would-be sellers. Of course, for those who are selling it should be a good time since the competition is limited, right?…

[click to expand chart]

Today’s Post: Manhattan’s Inventory Skyfall [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

We perform periodic appraisal services for the federal government so we got this email today regarding “these unfortunate circumstances.”

Unfortunate indeed.

In case you have any doubts about the amount of compensation that the securities industry enjoys versus the private sector in NYC, I created the chart above. While the bonus comp results has been released for 2012, the salary data is not out yet so I built this chart from 1985-2011. In 2011, securities industry salaries + bonuses were 7x larger than private industry salaries.

In case you had any doubts about how important the industry is to the NYC, regional and state economy, hopefully you are now – love them or hate them.

Since Wall Street bonuses were announced yesterday and have been talked about and analyzed a lot over the past 24 hours, I thought I’d share the following video which apologizes a lot for compensation levels of the securities industry but breaks down the advantages of the bonus compensation practice on Wall Street.

I was provided with a video from OnlineMBA.com

Three Cents Worth: Have Bonus, Will Buy in Manhattan? [Curbed NY]
In Defense of the Wall Street Bonus [OnlineMBA]
NYC Securities v. Other Private Industry Compensation [Miller Samuel Charts]
Wall Street Bonuses Rose in 2012 [NYS Comptroller]

UPDATE: Bloomberg Television saw this post and made it their “Single Best Chart” of the day.

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Check out this week’s 3CW column on @CurbedNY:

Since New York State Comptroller Thomas DiNapoli graciously accommodated our Tuesday Three Cents Worth release date with his report on Wall Street Bonuses, I thought I’d try to come up with a chart that somehow correlates Wall Street cash bonus payments and the Manhattan housing market. Prices don’t correlate well with any form of Wall Street bonus data and employment trends seem to be too macro to equate with annual housing price trends…

[click to expand chart]

Today’s Post: Have Bonus, Will Buy in Manhattan? [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

For Jhoanna Robledo’s story: “Splitting the Rent, Fair and Square: Appraiser Jonathan Miller calculates how to divvy up the bill based on a typical two-bedroom, $3,200-a-month apartment.” in this week’s real estate feature piece in New York Magazine The Art of Roommating, I attempt to give some logic on how to fairly allocate the rent to 2 people sharing a 2-bedroom, 2-bath Brooklyn apartment.

Gotta love the first comment made on the web site:

…or if you’re friends you could split it evenly. just saying.

Splitting the Rent, Fair and Square [New York Magazine]

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

I’m on vacation this week but it didn’t stop me from writing 3CW. Read this week’s 3CW column on @CurbedNY:

Since there was a recent theory proposed in the Journal about why Manhattan rents are currently flat or falling (they’re not falling), I thought I’d talk about the problem with the theory. It used a multi-year generalization (2007 to 2013) and applied it to explain the last four to five months of market behavior—which doesn’t explain what happened from 2007 to 2011 or what is currently happening. In theory I get the point being made—we have a lower level of financial services jobs than we did in 2007 and therefore more lower paying jobs are being seen in the rising employment numbers—and it’s a long term concern for both rental and sales…

[click to expand chart]

Today’s Post: Getting Pulled From Renting To Buying [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

Douglas Elliman published their Elliman Report: Manhattan/Brooklyn Rentals for January 2013 that we prepare so I thought it would be a good idea to show the slowing pace of rental price growth. These charts reflect a 90 day moving average given how choppy the percentage changes are. Both markets are seeing easing rental price growth.

Brooklyn is showing the same pattern.

[click to expand]

The Elliman Report: 1-2013 Manhattan/Brooklyn Rentals [Miller Samuel]
The Elliman Report: 1-2013 Manhattan/Brooklyn Rentals [Douglas Elliman]
Miller Samuel Chart Gallery: Manhattan Monthly [Miller Samuel]
Miller Samuel Chart Gallery: Brooklyn Monthly [Miller Samuel]

As the above chart illustrates, the aggregate median housing price in New York City, based on co-op, condo and 1-3 family property sales, with and without Manhattan sales go their separate ways circa mid-2006, at the Case-Shiller Home Price Index peak of the national housing market. This also makes the decline in the New York Case Shiller HPI all that more maddening (because it’s not Manhattan, or co-ops or condos or new development and includes Long Island, Fairfield, Westchester, Northern New Jersey and a county in Pennsylvania).

The market share for new development sales in Manhattan peaked in 2Q 06 at 57.9%. The 4Q12 market share was 12.5% but fear not, more new development is coming per The Real Deal.

During the boom through today, the shift in the mix towards Manhattan luxury property, largely from the combination of new development activity as well as vigorous Wall Street and international demand has expanded the difference between Manhattan and the rest of New York City. In other words, the gain in median sales price for NYC was caused by a shift in the mix toward higher end properties.

A recent post in CNN/Money featured Andy Warhol’s 1984 “U.S. Unemployment Rate. No Campbell Soup Cans but it feels strange to associate his art with economic data from the 1980s. It somehow works for me. One of the coolest property inspections I made was through “The Factory” years ago.

In 2007 the “Stand-up Economist” Yorman Bauman led the way with this much watched video on the difference between macro and micro economists. “Microeconomists are wrong about specific things while macroeconomists are wrong about things in general.” HI-larious.

And recently the TV game show “Teen Jeopardy” had 5 questions about the “Federal Reserve.”

Christie’s sales rep said:

“Economic data has become popular culture. While we used to think of it as being some kind of verified information only for people who are really knowledgeable about the economy, it’s popular culture now. You can talk to a taxi driver about it.”

I completely agree. Gangnam Style and GDP now go hand in hand.

We devour housing data ie the recently released Real Deal Data Book (I’ve got a lot of charts and tables in there!)

Throw in the heavy downloads of our report series for Douglas Elliman, NAR Research, CoreLogic, Case Shiller, RealtyTrac, etc. it’s clear to me that housing data is an obsession and embedded in popular culture (thank goodness).

Douglas Elliman published the Manhattan/Brooklyn rental report for January 2013. This monthly report is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994. We discontinued the quarterly rental report series but still present the information in our aggregate database.

MANHATTAN

• Modest year-over-year rise in rents for 4th consecutive month, following a rapid 12-month rise.
  
• Pace of rental price growth easing as low mortgage rates pull more buyers into sales market.
  
• Days on market while at fast pace, was slowest since August 2011.
  
• Limited use of landlord concessions remained norm.
  
• Vacancy rates remained low, falling year-over-year for 7th consecutive month.
  
• Luxury markets saw larger gains in rental prices than the overall market.
  
  

BROOKLYN
[North, Northwest Regions]

• Rents flat from same period last year, might be beginning of a period of more modest rental price growth.
  
• Studio activity slowed as more renters showed resistance to rising rents and became first time buyers.
  
• Luxury rents outpaced overall market as purchase demand provided competition with higher affordability despite tight credit conditions.
  
  

Here’s an excerpt from the report:

MANHATTAN …Median rental price increased 2.6% from the same period last year to $3,150. After a 12-month stretch showing a robust 7.5% average year-over-year increase, the most recent four months increased by an average of 1.6%. Average rental price rose 1.6% to $3,794 and average rental price per square foot increased 3.2% to $50.71 over the same period. In a year of limited rental concessions, the year-over-year net effective median monthly rent increased 2.6%, as did face rent…

BROOKLYN …Median rental price was $2,527 in January, showing no material change from the same month last year. Over the same period, average rental price increased 4.6% to $2,958 and average rental price per square foot rose 4.6% to $35.36…

The Elliman Report: 1-2013 Manhattan/Brooklyn Rentals [Miller Samuel]
The Elliman Report: 1-2013 Manhattan/Brooklyn Rentals [Douglas Elliman]
Miller Samuel Aggregate Database [Miller Samuel]
Miller Samuel Chart Gallery (quarterly rental charts only – monthly coming soon) [Miller Samuel]

Andrew Siff, a reporter for WNBC Channel 4 in New York did a great job articulating the tight inventory phenomenon we are seeing in both the region and nationally.

Tri-State Real Estate Market Under Tightest Squeeze in Years [WNBC Channel 4]
Listing Inventory Is, Well, Listing [Matrix]

I’ve been talking a lot about the causes of falling inventory lately and some mortgage industry types seem to resistant to the idea that credit is keeping supply off the market, versus some sort of uniform national paralysis or sales surge (sales arent’ rising nearly as fast as inventory is falling).

Michelle Higgins at New York Times does a nice feature piece: Dear Owner: Please Sell: Faced With Apartment Shortage, Brokers Get Creative on how this shortage of inventory is changing the way brokers work to get inventory to sell.

But seriously, you’ve got to love the chart (at top) in the article – we provided ten year’s worth of monthly inventory trends to show the visual of just how low inventory has fallen. What’s amazing is the drop is happening in virtually every housing market I can think of.

Since credit is a national market and housing is local, I view this phenomenon as a byproduct of tight credit.

I’ll repeat that: Tight Credit Is Causing Housing Prices to Rise.

Yes I know. I’ll explain.

This week the Federal Reserve released it’s January 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices and it continued to show little movement in mortgage underwriting standards but demand was up. The increase in demand has not softened mortgage lending standards. In fact, mortgage standards have remained essentially unchanged since Lehman collapsed in 2008.

On the household side, domestic banks reported that standards for both prime and nontraditional mortgages were essentially unchanged over the past three months. Respondents indicated that demand for prime residential mortgages increased, on net, while demand for nontraditional residential mortgages was unchanged.

Tight lending standards has prevented many sellers from listing their homes because they don’t qualify for the trade up, holding supply off the market. The shortage is manifesting itself by also keeping people unaffected by tight credit from listing until they find a home they wish to purchase. Record low mortgage rates keep the demand pressure on as affordability is at record highs. Rising prices are not really based on anything fundamental like employment and a robust economy.

Tight credit + record low mortgage rates => reduced supply + steady demand => rising prices.

Like I said before…

Tight Credit Is Causing Housing Prices to Rise.

I’ll repeat that….

Tight Credit Is Causing Housing Prices to Rise.

January 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices [Federal Reserve]
Falling Inventory Has Created a Housing “Pre-Covery,” not “Recovery” [Miller Samuel Matrix]

As the credit world was unraveling around them, email communications between analysts at S&P seems to be pretty damming to their neutrality position. And finally now the lawsuit. There’s a fascinating re-write of the great Talking Heads song “Burning Down The House” by an S&P analyst.

I’ve got the entire Talking Heads catalogue on my iPhone and I’ll bet that David Byrne and the rest of the ‘Heads never imagined their music would used to describe a global credit bubble.

Here is the S&P email with the revised lyrics – as the credit world was imploding…

“With apologies to David Byrne…here’s my version of “Burning Down the House”

“Watch out
Housing market went softer
Cooling down
Strong market is now much weaker
Subprime is boi-ling o-ver
Bringing down the house

Hold tight
CDO biz — has a bother
Hold tight
Leveraged CDOs they were after
Going — all the way down, with
Subprime mortgages

Own it
Hey you need a downgrade now
Free-mont
Huge delinquencies hit it now
Two-thousand-and-six-vintage
Bringing down the house.”

Wow. Their other songs like “Wild Wild Life”, “Road to Nowhere”, and “Psycho Killer” might have also done the trick.

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Read this week’s 3CW column on @CurbedNY:

Since the housing headline data theme of our January market report gauntlet in all 16 markets was the severe drop in inventory, I thought I’d break it down further. I looked at the transition from the month of December to January by week over the past four years to demonstrate two patterns: the level of inventory and the seasonality of inventory. Incidentally, the seasonal pattern for the prior 12 years I have the data for is nearly the same as 2010-2012, with the exception of 2008…

[click to expand chart]

Today’s Post: Is the Bottom Falling Out of Inventory? [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

I’ve inflation-adjusted housing in some of my charts over the years but it always felt like a double dip since housing is a huge component (42%) of the measurement of inflation.

The issue came up again with last week’s excellent WSJ article on our Manhattan housing figures – adjusted for inflation, housing prices were equivalent to 2004 levels and not adjusting for inflation brought prices to 2006-2007 levels. So I reached out to my friend Jed Kolko, the Chief Economist and Head of Analytics at Trulia who had some thoughts about the issue.

[Jonathan] Is it appropriate to inflation adjust housing prices? I don’t see this done all that often and always wondered if it was appropriate since housing prices (i.e. rental equivalent) are a huge part of the inflation calc?

[Jed] You’re right, that housing prices are an important part of inflation, so it’s a little odd to deflate housing prices by a measure that includes housing prices.

[Jonathan] So when would it be appropriate?

[Jed] The context when it does make sense to inflation-adjust housing prices is when looking over a very long time horizon – like decades – when dollars clearly meant something different than today. In particular, analyses of home prices versus price changes of other assets (like equities) are often (and should be) inflation adjusted in order to show the real return on investment.

[Jonathan] So when would it not be appropriate?

[Jed] The context when it’s definitely not appropriate is when comparing home prices across different cities/metros/regions. Measures of local inflation are hugely driven by home prices, and even local differences in the prices of other things, like restaurant meals or haircuts, are driven largely by local differences in real estate costs. Inflation-adjusting when comparing local home prices is a case of dividing something by itself. The better way to compare housing prices across metros relative to spending power is to divide home prices by income or wages. I did exactly that in this post, as a measure of affordability.

Absorption defined for the purposes of this chart is: Number of months to sell all listing inventory at the annual pace of sales activity. (The definition of absorption in my market report series reflects the quarterly pace – nearly the same)

I started this analysis in August 2009 so I am able to show side-by side year-over-year comparisons. The blue line showing the 10-year quarterly average travels up and down because of the change in scale caused by some of the significant volatility seen at the upper end of the market. The pink line represents the overall average rate of the most recently completed quarter.

Side by side Manhattan regional comparison:

[click images to expand]

All market segments below $5M, which is roughly 95% of the housing market are seeing their fastest pace (lowest absorption rate) in the 12 years I’ve been tracking listing inventory.

Manhattan Market Absorption Charts 2013 [Miller Samuel]
Manhattan Market Absorption Charts 2012 [Miller Samuel]

According to TerraCRG’s Brooklyn Commercial Market Report, Development activity based on dollar volume for 2012 jumped 221% year-over-year and multi-family jumped 54% as providers of supply begin to respond to improving demand.

The East and North Brooklyn regions plus DowntownPark Slope saw the heaviest volume. Here are some insights presented in the report:

2012 Was Peak, Commercial Activity to Level Off in 2013

We believe development site sales activity peaked last year and as a result, most shovel-ready sites have been purchased and are now being built mostly as rentals. This means land-sale activity will level off in 2013, mainly due of lack of inventory. This, in turn, will put upwards pressure on pricing of well-situated residential development sites. At the same time, we expect to see more assemblages of existing tear-downs and an increase of large trades of commercially-zoned lots that developers will try to bring through the rezoning or variance process. By the end of this year, developers will break ground on large condo projects again.

Brooklyn Transitions from Affordable Manhattan Alternative to Destination

Multifamily sales are expected to continue to show strengths and we expect volume to increase in 2013 as institutional owners and large portfolio owners try to take advantage of the low yield expectation and bring large portfolios to market before the low interest rate environment changes. Brooklyn’s strong market fundamentals mean residential rents in core and transitional neighborhoods will continue to increase aggressively as more residents call Brooklyn their home. To these new residents, Brooklyn is no longer a more affordable alternative to Manhattan, it’s a destination. This upside opportunity will attract investors that so far concentrated their efforts on Manhattan to buy multifamily buildings in Brooklyn.

A few weeks ago I provided some logic to Jhoanna Robledo at New York Magazine about valuing a fireplace. She’s just as interested in quantifying amenities as I am and has written some fun pieces on valuing various amenities using my logic. Floor level. Outdoor space. Light and Views.

She distilled down the ±90 minutes of discussion on the hot topic…and remember when it comes to valuation logic, one size doesn’t fit all. My approach came from 26 years of valuing thousands of co-ops, condos and townhouses in NYC but the same logic could very well apply to other markets.

In a study of Manhattan sales that appraiser Jonathan Miller made with researchers from NYU’s Furman Center for Real Estate and Urban Policy, apartments with fireplaces cost an average of about 10 percent more than those without. (The difference was 11.4 percent in condos, 9.7 in co-ops.) But the fireplace is “part of a suite of amenities” not easily parsed from other prewar features like high ceilings. Miller estimates that the fireplace itself adds 2 to 5 percent to the price. That’s a fairly wide range, depending majorly on placement: A mantel in the center of the living room is worth a lot more than if it’s in a back bedroom. And if the fireplace doesn’t work, or the flue needs more than a cosmetic touch-up? That cuts the value by half.

Think yule log.

[click to open reports]

Elliman Report: Miami Sales (Spanish) 4Q 2012 [Douglas Elliman]
Elliman Report: Miami Sales (Portuguese) 4Q 2012 [Douglas Elliman]
Elliman Report: Miami Sales (English) 4Q 2012 [Douglas Elliman]

Josh Barbanel at the Wall Street Journal took the results of our just released Elliman Report: The Manhattan Decade 2003-2012 and adjusted them for inflation – showing that housing prices are as affordable as they were in 2004.

Here’s his original story in WSJ “Easing Apartment Pain” [subscription] that goes with the chart.

We published our Manhattan Decade report, a ten year moving window data compendium of the market from 2003-2012. It’s my favorite report just for the sheer volume of information that doesn’t exist anywhere else. I long ago dubbed it “The Phone Book.” This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

MANHATTAN DECADE (Co-ops/Condos) 2003-2012

• Sales increased year-over-year for the 3rd consecutive year to second highest level in decade (after 2007 peak).
• Housing prices remain 11-13% below the 2008 peak, housing sales are 21.8% below 2007 peak.
• Housing prices were mixed but showed stability for 4th consecutive year after the 2008 credit crunch and correction.
• Listing inventory fell sharply to lowest level in 12 years.
• Credit remains tight as economy slowly improves.
• Inventory falling – low to negative equity, no urgency to list.
• Sales rising as record low mortgage rates create demand.

Here’s an excerpt from the report:

…For the fourth time in 5 years, the number of sales exceeded the 10,000 threshold. The number of sales increased 3.4% to 10,508 from the prior year to the second highest level of the decade despite declining inventory and historically tight credit conditions. For the past three years, sales activity has remained remarkably consistent as the market settled into a stabilized period following the onset of the credit crunch marked by the bankruptcy of Lehman Brothers in the fall of 2008. The peak year for the number of sales in the decade occurred in 2007, reaching 13,430. The 2012 total was 21.8% below the decade peak. However the 2007 level was the top of the housing/credit boom, considered an anomaly rather than a normal period of housing sales…

Later today we’ll have additional information available on the market so you can build your own custom data tables and browse our chart library.

The Elliman Report: 2003-2012 Manhattan Decade Report [Miller Samuel]
The Elliman Report: 2003-2012 Manhattan Decade Report [Douglas Elliman]
Market Chart Library [Miller Samuel]
Aggregated Custom Market Data Tables [Miller Samuel]

We published our Manhattan Townhouse report, a ten year moving window data compendium of the market from 2003-2012. For the past 26 years we’ve been tracking the townhouse market, it has remained a small luxury subset representing a few percentage points of the overall residential market so a detailed quarterly or monthly analysis isn’t practical. This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

MANHATTAN TOWNHOUSE 2003-2012

• Sales were at highest level since the credit crunch began, the third highest total of decade.
• Housing prices remain 25% below the 2008 peak (which was a significant spike), housing sales are 19.2% below 2007 peak.
• Housing price indicators were mixed, showing overall stability for the most recent four year period.
• Listing inventory fell sharply from the prior year, resulting in the fastest absorption rate in 6 years.
• Single family sales showed more year-over-year improvement in price and sales than the balance of the market.

Here’s an excerpt from the report:

…Townhouse sales rose to 277, their highest level since 343 sales were reached in 2007 before the onset of the credit crunch. The 15.4% increase in sales this year marks the third consecutive yearover- year increase in activity. Consistent with the rise in sales was the 18.9% drop in listing inventory to 411 and the two month drop in days on market to 106. Market share for East Side sales led all regions, jumping to 26% from 20.8% in 2011. The year-over-year change in price indicators were mixed with a 4.2% decline in median sales price, a 6.1% gain in average sales price and a 12.2% rise in average price per square foot…

Later today we’ll have additional information available on the market so you can build your own custom data tables and browse our chart library.

The Elliman Report: 2003-2012 Manhattan Townhouse Report [Miller Samuel]
The Elliman Report: 2003-2012 Manhattan Townhouse Report [Douglas Elliman]
Market Chart Library [Miller Samuel]
Aggregated Custom Market Data Tables [Miller Samuel]

It’s time to share my Three Cents Worth (3CW) on Curbed NY, at the intersection of neighborhood and real estate in the capital of the world…and I’m here to take measurements.

Read this week’s 3CW column on @CurbedNY:

So it’s Whale Week on Curbed and I had to get a whaling reference into the post title. After a month at sea—sorry, another bad reference—it’s good to be back on Curbed. Consistent with this week’s theme, I took a look at the number of sales at the top 1 percent of Manhattan’s apartment market. The top 1 percent begins at about the $10M threshold (blue). And I threw in the $30M+ (pink) subset for good measure. I am only presenting closed transactions, so sales like the $90M+ contract at One57 aren’t included…

[click to expand chart]

Today’s Post: Throwing Harpoons at Trophy Sales [Curbed]
Three Cents Worth Archive Curbed NY
Three Cents Worth Archive Curbed DC
Three Cents Worth Archive Curbed Miami

I thought the chart created by the WSJ using our data nicely illustrated the end of year spike in sales and prices at the end of the 2012, influenced by the notion that taxes, whatever form they take, will be higher in the future. I think this surge in activity will take some of the edge off the market in 2013.

MLH AVG Index (Miller Samuel Manhattan Luxury Housing Average Sales Price)

[click to expand]

MLH SQFT Index (Miller Samuel Manhattan Luxury Housing Price Per Square Foot)

[click to expand]

MLH MED Index (Miller Samuel Manhattan Luxury Housing Median Sales Price)

[click to expand]

I was speaking at the New York Real Estate Bar Camp recently and asked the audience what to call the state of housing market right now, since I objected to the use of the word “recovery” and “a period of better stats without underlying fundamentals” wasn’t catchy. Philip Faranda came up (more like shouted out) a brilliant suggestion. We’re in a “Pre-Covery!” I loved it and it stuck.

I thought about the new word when I read a great Robert Shiller piece in the New York Times this weekend called: A New Housing Boom? Don’t Count on It.

Shiller questions the substance of the happy housing news we’ve all been reading about:

It’s hard to pin down, because nothing drastically different occurred in the economy from March to September. Yes, there was economic improvement: the unemployment rate, for example, dropped to 7.8 percent from 8.2 percent. But that extended a trend in place since 2009. There was also a decline in foreclosure activity, but for the most part that is also a continuing trend, as reported by RealtyTrac.

What’s missing from all the metrics being tracked and discussed is sharply falling inventory - that’s what is driving prices higher even though little else has changed.

The reason for falling inventory? Sellers, when they sell, become buyers (or renters) and with >40% of mortgage holders having low or negative equity, they don’t qualify for the trade up. We have been so focused on negative equity that we’ve paid short shrift to the impact of low equity.

Not only don’t many sellers qualify – they simply aren’t under duress i.e. they haven’t lost their job, don’t need to move, etc. so what will they do when they realize they don’t qualify?

Nothing.

They expect/hope hope the market improves eventually.

This has created yet another form of “shadow inventory.”

Although I certainly agree that the long term trend of mortgage rates doesn’t really correlate with housing prices since rates have been falling for years, weak employment and personal income are not justifying the last 6 months of housing market improvement.

I see falling mortgage rates as simply keeping demand steady (but rates can’t fall much further) and falling inventory is either pressing prices higher or to stabilization depending on the market.

Here is a simplistic generic but typical scenario in most of the markets I follow over a 2 year window:

• The number of sales in a market rises 2%.
• The number of listings in same market falls 30%.

In this scenario the rise in sales is NOT working off inventory – the math doesn’t work so something else is in play – low or negative equity is choking off new listings entering the market against steady demand caused by falling rates.

Since low inventory is not a local market phenomenon but is happening in nearly every housing market I can think of (sales rising modestly and listing inventory falling sharply) it makes this a credit phenomenon. I like to say “housing is local but credit is national.”

To make this discussion really crazy we could even say that tight credit conditions are actually prompting the pre-recovery something that on the surface is very counterintuitive. But in reality, tight credit is choking off supply and low rates are keeping demand constant. Then prices rise.

Prices by themselves don’t tell the story of affordability. Income has something to do with it. Candy bars were only 20¢ in 1978 but I was only making $2.65 at my college job.

Catherine Rampell of NYT Economix blog posts a cool chart on the ratio of house price to annual household income from the IMF.

Housing prices are crazy expensive in Asia.

The average co-op maintenance in Manhattan was $1.68 per month in 4Q12. I got a call from Robert Frank at CNBC who was researching maintenance charges for their new reality show – tonight’s show features a $95M co-op listing overlooking Central Park with a large terrace and a $60,000 per month maintenance charge. At nearly 8,000 square feet, that’s $7.50 per square foot per month or 4.5x the Manhattan average co-op maintenance per square foot.

To watch everyone on CNBC’s Sqwawkbox oooh and ahhhhh over the listing, check out the video as well as Robert Frank’s post on maintenance charges.

It remains to be seen whether the market supports the price but whatever the price paid or whoever the buyer is, rest assured they will pay all cash and probably won’t live in it full time.

There was a really good appraisal story in the Sunday Real Estate Section this weekend by Lisa Prevost focusing on appraising high end properties whose theme is well-captured in the opening sentence:

As home sales pick up in the million-dollar-plus market, deals are being complicated by unexpectedly low appraisal values.

The higher the price strata of the market, the smaller the data set is to work with so the conventional wisdom seems to be that less data = more unreliable appraisals. However I believe the real problem is lack of market knowledge by more appraisers today as a result of May 2009′s Home Valuation Code of Conduct (HVCC) – the lack of data at the top of the market merely exposes a pervasive problem throughout the housing market.

To the New York Times’ credit, they are the only national media outlet that has been consistently covering the appraisal topic since the credit crunch began and I appreciate it since so few really understand our challenges as well as our our roles and relationship to the parties in the home buying and selling process. Appraising gets limited coverage in the national media aside from NAR’s constantly blaming of the appraisers as preventing a housing recovery (in their clumsy way of articulating the problem, they are more right than wrong).

Here’s the recent NYT coverage:

January 27, 2013 Appraising High-End Homes
January 11, 2013 Understanding the Home Appraisal Process
October 12, 2012 Scrutiny for Home Appraisers as the Market Struggles
June 14, 2012 When the Appraisal Sinks the Deal
May 8, 2012 Accuracy of Appraisals Is Spotty, Study Says
September 16, 2011 Decoding the Wide Variations in House Appraisals

The general theme and style of coverage comes about when Realtors start seeing an increase in deals blowing up that involve the appraisal. The Prevost article indicates that higher end sales are more at risk because the market at the top (think pyramid, not as in ponzi) is smaller and therefore the data set is smaller.

This may be true but I don’t think that is the cause of the problem but rather it exposes the problem for what it really is. I contend that the problem starts with the appraisal management company (AMC) industry and how it has driven the best appraisers out of business or pushed them into different valuation emphasis besides bank appraisals by splitting the appraisal fee with the appraiser (the mortgage applicant doesn’t realize that half their appraisal fee is going to a bureaucracy).

My firm does a much smaller share of bank appraisals than our historical norm these days but it is NIRVANA and we’re not likeley to return to our old model anytime soon.

Since the bank-hired AMC relies on appraisers who will work for half the market rate and therefore need to cut corners and do little analysis to survive, they generally don’t have local market knowledge often driving from 2 to 3 hours away.

Throw very little data into the equation as well as a very non-homogonous housing stock at the luxury end of the market and voila! there is an increased frequency of blown appraisal assignments.

There is always less data at the top of the market – the general lack of expertise in bank appraisals today via the AMC process is simply exposed for its lack of reliability. Unfortunately the appraisal disfunction affects many people’s financial lives unnecessarily such as buyers, sellers and real estate agents (and good appraisers not able to work for half the market rate and cut corners on quality).

The appraisal simply is not a commodity as it is treated by the banking industry. The appraisal is a professional service so by dumbing it down through the AMC process, they have succeeded in nearly destroying the ability to create a reliable valuation benchmark on the collateral for each mortgage in order to be able to make informed decisions on their risk exposure.

The record average sales price in our Douglas Elliman Hamptons market report made “The Bloomberg Number” today on Betty Liu’s show “In The Loop.”

The record price (highest we’ve seen since we began tracking it in 1999) was the result of skew towards the high end of the market as higher end consumers pushed to close prior to December 31 to avoid potential tax increases. It’s not that housing prices are rising, rather a lot more sales closed at the high end in 4Q12. For example there were more sales to close at or above $5M (49) than we have seen since we began tracking this metric in mid-2008.

Looks for a slower market in 1Q13 as sales that would have organically closed were poached (pulled back) into 4Q12.

Since housing bust began, Condo Vultures has led the way with distressed new development information on Miami, a housing market that became branded for foreclosures and stalled new development activity after the mid-decade crash. Their name suggests someone who is picking over the dead carcasses of stalled condos built during the boom and no one has marketed themselves more thoroughly in this segment.

They seem to perform a lot of analysis through public record and have the inside track on data from developers not in public record. Good for them. It’s a niche they own. But with that dominance comes responsibility.

Their regular email press releases are chocked full of information hyperbole (as most newsletters are) but there is often a disconnect between the headline and the content (just like we see with the monthly NAR releases). Recently I observed that they stopped the dated approach of marketing properties as a percentage discount from original pricing. I do find the releases interesting to read but I worry about the accuracy of the messaging for the uninitiated. I found the latest one grating so I thought I’d break it down because it symbolizes the challenges and responsibilities of analyzing a market segment with limited transparency.

Here’s the headline:

600 New South Beach Condos Unsold As Sales Slow Dramatically In Q4 2012

That’s sounds quite dire, right?

Not really. In a pool of 600 units, 10 sold in 4Q12, down from 20 sales in 4Q11. Let’s delve into the rules of market trends:

Misuse of percentages – The results suggest a 50% drop in sales. And to use my favorite example of this technique, a market whose sales rise from 1 to 2 experienced a 100% increase in sales. Better to say 10 fewer sales or 1 more sale than last year when the numbers are so small.

Number generalization – There are no precise numbers being provided anywhere in this release yet the results are numbers-based …less than 10 sold in 4Q12 and more than 20 sales sold in 4Q11. If you are burning calories on providing approximate metrics worthy of a screaming headline, why not provide the actual numbers? If it was 9 and 21 or 1 and 29, the same logic would apply so why omit it?

Data set size – Based on the release, there were “about 600″ unsold from boom, new development condo listings in 4Q12, the same size as the prior quarter. However the release doesn’t provide the year ago quarter total. What if it was 1,200?…then the drop was proportional. Why not be transparent and just provide the actual numbers – they must have them to provide such “precise estimating.” The 10 sales or less total represents 1.7% of the inventory or even less depending on how many sales there actually were.

When I first read through this release I did some quick math – I took the 10 sales (or less) which represented 1.7% of the 600 unit market and wild guessed, based on general market activity, that this shadow inventory was at least 700 last year. So at this level, the 20 sales (or more) in 4Q11 would indicate a 2.9% share. With this logic, the sales market share of the shadow inventory fell from 2.9% to 1.7% over the year, a 1.2% drop in market share.

Should a 1.2% decline be described as a dramatic slow down? No, based on the info presented, the decline was more like a rounding error.

C’mon.

We published our 4Q 2012 reports for both The Hamptons and North Fork. Since this was the final quarter of 2012, we also released our Hamptons/North Fork Decade report, a ten year moving window data compendium of the Hamptons/North Fork market from 2003-2012

This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

HAMPTONS 4Q 2012

• Most fourth quarter sales and lowest level of inventory in 6 years.
  
• Highest average sales price in 7 years, skewed by high end market strength.
  
• Days on market expanded as older listings were absorbed due to lack of supply.
  
• Credit remains tight as economy slowly improves.
  
• Inventory falling – low to negative equity, no urgency to list.
  
• Sales rising as record low mortgage rates create demand.
  
• A release in pent-up demand from election year and “fiscal cliff” concerns over rising taxes.over rising taxes.
  

NORTH FORK 4Q 2012

• Inventory at lowest level in four years.
  
• Sales rising from record low mortgage rates and pent-up demand.
  
• Credit remains tight as economy slowly improves.
  
• Inventory falling – low to negative equity, no urgency to list.
  

HAMPTONS/NORTH FORK 2003-2012

• Median sales price up 31.9% over decade.
  
• Average sales price nearly doubled, reflecting emphasis on luxury market over the decade.
  
• Number of sales 20.4% less than in 2003.
  
• Days on market 2 months slower than in 2003.
  

Here’s an excerpt from the 4Q 2012 report:

HAMPTONS…The final quarter of the 2012 Hamptons housing market was characterized by unusually heavy sales volume and falling inventory, which both hit 6-year highs and lows, respectively. The strength at the upper end of the market continued to skew the overall price indicators higher, while the pace of the market accelerated and older listing inventory was more readily absorbed…

NORTH FORK…The fourth quarter 2012 North Fork housing market was marked by upward price pressure, falling inventory, rising sales and a faster pace than we had seen in the same quarter a year ago. The price gains were weighted towards the end of 2012, as falling inventory provided buyers with fewer options and record low mortgage rates fostered additional affordability…

You can build your own custom data tables on the market – now updated with 4Q 12 and annual 2003-2012 data. I’ll post the updated charts soon. In the meantime you can browse our chart library.

The Elliman Report: 4Q 2012 Hamptons Sales [Miller Samuel]
he Elliman Report: 4Q 2012 North Fork Sales [Miller Samuel]
The Elliman Report: 2003-2012 Hamptons/North Fork Decade [Miller Samuel]
The Elliman Report: 4Q 2012 Hamptons Sales [Douglas Elliman]
The Elliman Report: 4Q 2012 North Fork Sales [Douglas Elliman]
The Elliman Report: 2003-2012 Hamptons/North Fork Decade [Douglas Elliman]
Market Chart Library [Miller Samuel]
Aggregated Custom Market Data Tables [Miller Samuel]

We published our report on the Long Island sales market for 4Q 2012. Since this was the final quarter of 2012, we also released our Long Island Decade report, a ten year moving window data compendium of the Long Island market from 2003-2012

This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

4Q 2012

• Lowest fourth quarter inventory level in 8 years, down 21% from a year ago.
  
• Year end rising momentum in sales as pending sales outpaced closed sales.
  
• Price indicators were up across-the-board from a year ago.
  
• Credit remains tight as economy slowly improves.
  
• Inventory falling – low to negative equity, no urgency to list.
  
• Sales rising as record low mortgage rates create demand.
  
• A release in pent-up demand from election year and “fiscal cliff” concerns over rising taxes.
  

2003-2012

• Sales increased for first time since 2006.
  
• Median sales price up 3.2% over decade.
  
• Market peak in price was 2006, same as the US housing market.
  
• Housing prices have shown stability for 3 years.
  

Here’s an excerpt from the 4Q 2012 report:

…Long Island, like much of the greater New York region, is experiencing a chronic short of listing inventory. Steadily declining over the past several years, Long Island listing inventory reached an 8-year low in the fourth quarter. The large year-over-year drop in supply was met with an increased level of sales activity, both in terms of signed contracts and closed sales…

You can build your own custom data tables on the market – now updated with 4Q 12 and annual 2003-2012 data. I’ll post the updated charts soon. In the meantime you can browse our chart library.

The Elliman Report: 4Q 2012 Long Island Sales [Miller Samuel]
The Elliman Report: 2003-2012 Long Island Decade [Miller Samuel]
The Elliman Report: 4Q 2012 Long Island Sales [Douglas Elliman]
The Elliman Report: 2003-2012 Long Island Decade [Douglas Elliman]
Market Chart Library [Miller Samuel]
Aggregated Custom Market Data Tables [Miller Samuel]

We published our inaugural report on the Palm Beach, Florida sales market for 4Q 2012.   This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

• Luxury market prices outpaced the overall market.
  
• Overall price indicators show sharp year over year gains.
  
• Overall sales levels trending higher.
  
• Days on market expanded as demand worked off older inventory.
  
• Negotiability between buyers and seller fell sharply.
  
  
  
  Here’s an excerpt from the report:

CONDO/TOWNHOUSE Median sales price jumped 23.9% from the same quarter last year to $588,750. Average sales price and average price per square foot edged 5.8% and 1.3% respectively over the same period. Number of sales jumped 56.1% year-overyear to 64 sales, but remained unchanged from the prior quarter…

SINGLE FAMILY Although this market segment represents a narrow submarket of Palm Beach, the number of sales nearly doubled from prior year levels, reaching 26. All price indicators showed double-digit year-over-year gains; median sales price increased 13% to $2,775,000 over the period, while average sales price and average price per square foot showed larger gains, rising 32% and 26.1% respectively…

You can build your own custom data tables. We’ll be adding a chart library for this market area shortly.

The Elliman Report: 4Q 2012 Palm Beach [Miller Samuel]
The Elliman Report: 4Q 2012 Palm Beach [Douglas Elliman]
Aggregated Custom Market Data Tables [Miller Samuel]

We published our report on the Fort Lauderdale, Florida sales market for 4Q 2012.   This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

• Overall price indicators show year over year gains.
  
• Overall sales levels trending higher.
  
• Luxury condo prices jumped, single family slipped.
  
• The time to sell a property fell sharply.
  
  
  
  
  Here’s an excerpt from the report:

CONDO/TOWNHOUSE
Median sales price jumped 19.4% from the same period last year to $215,000. Average sales price and average price per square foot increased 13.5% and 12.9% respectively over the same period, while number of sales increased 3.7% to 474…

SINGLE FAMILY Median sales price jumped 13.8% from the prior year quarter to $182,000. Average sales price and average price per square foot increased 2.6% and 6.3% respectively over the same period. There were 457 fourth quarter single-family sales, a 19.3% surge above prior year levels…

You can build your own custom data tables. We’ll be adding a chart library for this market area shortly.

The Elliman Report: 4Q 2012 Fort Lauderdale [Miller Samuel]
The Elliman Report: 4Q 2012 Fort Lauderdale [Douglas Elliman]
Aggregated Custom Market Data Tables [Miller Samuel]

We published our report on the Boca Raton, Florida sales market for 4Q 2012. This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

• Overall price indicators show sharp year over year gains.
  
• Overall sales levels trending higher.
  
• Marketing times fell sharply and negotiability between buyers and seller narrowed.
  
  
  
  
  

Here’s an excerpt from the report:

CONDO/TOWNHOUSE Median sales price of a Boca Raton condo jumped 28.2% from $93,000 in the prior year quarter to $119,250. Over the same period, the number of sales edged 1.4% higher to 642. With 1,227 active listings, the monthly absorption rate was 5.7 months, consistent with the past several quarters…

SINGLE FAMILY Median sales price surged 17% from the prior year quarter to $310,000. Number of sales jumped 17.9% to 566 sales over the same period, the largest fourth quarter total in more than 6 years. With inventory at 1,127, the absorption rate, or number of months to sell all active listings at the current pace of sales, was 6 months, which was consistent with the past several quarters…

You can build your own custom data tables on the market – now updated with 4Q 12 data. We’ll be adding a chart library for this market area soon!

The Elliman Report: 4Q 2012 Boca Raton [Miller Samuel]
The Elliman Report: 4Q 2012 Boca Raton [Douglas Elliman]
Aggregated Custom Market Data Tables [Miller Samuel]

We recently published our report on the Queens sales market for 4Q 2012. This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

• Although year-over-year inventory slipped nominally, it was the lowest fourth quarter total in 7 years.
  
• Price indicators up from same period last year year.
  
• Number of sales declined from year ago levels restrained by limited inventory.
  
• Luxury market prices rise but not at pace of overall market.
  
• Mortgage underwriting remains “irrationally tight” but record low mortgage rates and improving employment continue to drive demand.
  
  

Here’s an excerpt from the report:

…In the final quarter of 2012, the Queens housing market saw a sharp year-over-year bump in prices, a modest slip in sales and listing inventory, shorter marketing times, and less negotiability between buyers and sellers. The historically tight mortgage underwriting standards continued to hold the impact of record low mortgage rates in check.

Both price indicators pressed above prior year levels. Median sales price was up 13.7% from the prior year quarter at $390,000, the highest level in nearly 4 years. Average sales price showed a similar result, rising 9.4% to $432,503 over the same period. All market quintiles generally saw gains in median sales price compared to the prior year period…

Our Queens data tables are now updated for 4Q12 and charts will be available soon.

The Elliman Report: 4Q 2012 Queens Sales [Miller Samuel]
The Elliman Report: 4Q 2012 Queens Sales [Douglas Elliman]
Aggregated Custom Market Data Tables [Miller Samuel]

We recently published our report on the Brooklyn sales market for 4Q 2012.   This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

• Record low mortgage rates fueling demand but credit remains tight holding demand in check.
  
• Lowest inventory total in four years.
  
• Price indicators show sharp year over year gains.
  
• Number of sales declined from year ago levels restrained by limited inventory.
  
• Market share of new development at lowest level since credit crunch began as old pipeline of product has been nearly exhausted.
  
  

Here’s an excerpt from the report:

…The Brooklyn housing market saw a final quarter of 2012 characterized by unusually low inventory, which in turn limited the volume of both re-sale and new development activity despite the demand generated by record low mortgage rates. As a result, the price indicators showed a year-over-year jump across most market segments.

There were 4,685 listings at the end of the fourth quarter, the metric’s lowest total since we began tracking it in mid-2008. Listing inventory was 20.7% below prior year levels, resulting in a 9.7-month absorption rate, faster than the 11.4-month rate in the same period last year. Despite record low mortgage rates and a slowly improving economy, the number of sales fell 7.3% to 1,445 over the same period, as limited inventory and tight mortgage lending conditions continued to restrain demand…

You can build your own custom data tables on the market – now updated with 4Q 12 data. Charts with 4Q12 data appended will be online shortly.

The Elliman Report: 4Q 2012 Brooklyn Sales [Miller Samuel]
The Elliman Report: 4Q 2012 Brooklyn Sales [Douglas Elliman]
Aggregated Custom Market Data Tables [Miller Samuel]

This report is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

MANHATTAN

• The pace of rental price increases have slowed for 3rd consecutive month.
  
• Falling mortgage rates are pulling more renters into the sales market.
  
• Rents remain at high levels with pressure coming from low vacancy rate, tight credit and an improving economy.
  
• Vacancy rate has fallen below year ago levels for 6th consecutive month.
  
• New rentals up 20.5% from the prior year indicating continued tenant price resistance at time of lease renewal.
  
• Luxury and Super-Luxury rental prices grew faster than overall market over the year.
  
• Doorman prices up as non-doorman prices slipped.
  
  

BROOKLYN
[North, Northwest Regions]

• Prices edged above year ago levels and remain elevated.
  
• New rentals up 12.5% over last year’s levels as tenants continued to resist rising prices.
  
• Days on market at third fast monthly rate in nearly 5 years.
  
• Luxury market price trends were mixed.
  
• 2-bedroom market had most overall improvement in price and activity.
  
  

Here’s an excerpt from the report:

MANHATTAN For the third consecutive month, the year-over-year pace of median rental price growth eased. Median rental price increased 0.8% from the prior year period to $3,150. Year-over-year gains in this metric for the prior three months were 10.2%, 1.6% and 1.4%. Compared to the same period last year, average rental price was up 10% at $3,973, while rental price per square foot was down 4.5% to $49.88…

BROOKLYN Median rental price increased 7.6% from the same month last year to $2,637. This rate marked the fourth highest level over the past 5 years; the three highest levels were all recorded in 2012. Compared to the same period last year, average rental price edged 5.6% to $2,880, while average rental price per square foot jumped 16.7% to $36.01…

I’m really behind schedule in uploading content to the site due to the heavy year end appraisal volume we are digging out of…but I’ll get it done soon. You will be able to build your own custom data tables on the Manhattan rental market using quarterly data – our new monthly format will be available online shortly and we will be phasing in monthly charts to our rental chart gallery soon.

The Elliman Report: 12-2012 Manhattan Rentals [Miller Samuel]
The Elliman Report: 12-2012 Manhattan Rentals [Douglas Elliman]

By now I think most of us have been nearly worn out by all the coverage of the “Doprah” interview last week with the play by play daily snippets leaked before the interview actually aired.

I won’t pontificate because there is plenty of that. I just want to show you the 30 second video I’ve watched hundreds of times for inspiration since it aired a decade ago. While he’s never been my “hero,” he has been an inspiration. The video takes on a whole new meaning now.

The New York Times Real Estate goes gonzo this weekend with a nice write-up AND a large color artwork on perhaps the least understood part of the home buying process.

No not the radon test…

The appraisal. Can’t live with them, can’t live without them.

Here’s my stream of consciousness on the topics brought up in the article:

• “Sale and “Comparable” are not interchangeable terms. Really.
• There is no ratings category for (like totally) “super excellent.” The checkboxes provide good average fair poor with “good” at top end (but fear not, “super excellent” is marked “good” and like total adjusted for).
• Not all amenity nuances that are important to you as a seller (ie chrome plated doorknobs), are important to the buyer.
• Not all amenity nuances that are important to you as a seller, are measurable in the market given the limited precision that may exist.
• Not all appraisers have actually been anywhere near your market before they were asked to appraise your home, so technically they shouldn’t be called appraisers. Since their clients don’t seem too concerned about this, something like “form-filler” seems more appropriate.
• Most appraisers who work for appraisal management companies are not very good, but some actually are.
• When an appraiser makes a time-adjustment for a rising market, understanding whether a bank will accept that adjustment or not is (should be) completely irrelevant and quite ridiculous (unless they are “form-fillers” and not actual appraisers). I have always believed that the appraiser’s role is to provide an opinion of the value and that occurs in either flat, rising or falling markets.
• HVCC was a created with best intentions by former NY AG Cuomo by attempting to protect the appraiser from lender pressure, but it has literally destroyed the credibility of the appraisal profession by enabling the AMC Industry.
• The 12% deal kill average of an AMC an arm’s length sale properly exposed to the market is absolutely an unacceptably high amount and a major red flag for appraiser cluelessness about local markets.
• I’ve never heard of a major bank since the credit crunch began who would throw out the original appraisal found to have glaring errors that would severely impact the result. My quote on this nailed that sentiment with brutal precision, if I do say so:

“You have a better chance of winning Powerball than getting a lender to abandon the first appraisal.”

Understanding the Home Appraisal Process [NY Times]

We just published our rreport on the Westchester & Putnam County New York housing markets.   This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

WESTCHESTER

• Housing prices remain stable.
  
• Sales up sharply as many anticipated higher taxes relating to the Fiscal Cliff in 2013.
  
• Listing inventory continued to fall. Higher sales and tight credit ARE keeping inventory low.
  
• Days on market edged higher as older inventory continued to be absorbed.
  
• Luxury prices continued to outpace the overall market.
  

PUTNAM

• Housing price indicators were mixed.
  
• Sales slipped from the same period last year.
  
• Listing inventory continued to trend lower.
  
• Days on market edged higher as older inventory continued to be absorbed.
  

Here’s an excerpt from the report:

…The fourth quarter 2012 Westchester housing market was characterized by general price stability, sharply rising sales activity, declining inventory and a faster overall market pace heading into 2013.

Median sales price saw a nominal 0.6% decline from prior year levels to $395,000. Average sales price increased 11.5% and average price per square foot rose 5.2% over the same period. The year-to-date results show nominal declines for all price indicators, including a 1.6% decline in median sales price. In the fourth quarter, the luxury market price indicators outpaced the overall market. Median sales price increased 21.6% from the prior year quarter to $2,150,000…

You can build your own custom data tables on the Westchester & Putnam market – now updated with 4Q 12 data. I‘ve added some charts for Westchester (Putnam coming) and will be adding to them in the future.

The Elliman Report: 4Q 2012 Westchester & Putnam Sales [Miller Samuel]
The Elliman Report: 4Q 2012 Westchester & Putnam Sales [Douglas Elliman]

We published our report on the Miami sales market for 4Q 2012.   This is part of an evolving market report series I’ve been writing for Douglas Elliman since 1994.

Key Points

• SALES SURGE – Sales were up sharply from a year ago, the highest fourth quarter in at least 6 years.
  
• FALLING INVENTORY – Listing inventory fell sharply. Low or negative equity holding back supply in addition to higher sales activity.
  
• SMALLER DISTRESSED SALES SHARE – 40.2% market share of distressed sales (REO+Short Sales) lowest share in 3 years.
  
• DEMAND DRIVERS – International buyers continued to play a key role in demand. Record low mortgage rates as well.
  
• HIGH END MARKET RISING WITH ENTIRE MARKET – Luxury market price trends rising consistent with gains in overall market.
  

Here’s an excerpt from the report:

…The market pace within Miami’s coastal communities continued to quicken in the fourth quarter. Distressed sale market share and listing inventory continued to fall, prices trended markedly higher, properties sold faster with less negotiability, and international buyers continued to play a key role in demand.

All price indicators posted large increases from year ago levels; median sales price jumped 27.3% to $210,000, average sales price surged 27.8% to $402,626, and average price per square foot increased 21.5% to $260. A portion of these substantial gains was attributable to the continued decline in market share of lower priced distressed sales, which fell to a 3-year low at 40.2%. However, the average sales price of non-distressed condo and single-family sales still jumped 16.6% above prior year levels…

You can build your own custom data tables on the Miami sales market – now updated with 4Q 12 data. I’ve also updated the charts on the Miami sales market.

The Elliman Report: 4Q 2012 Miami Sales [Miller Samuel]
The Elliman Report: 4Q 2012 Miami Sales [Douglas Elliman]

Jill Urban of NY1 News came by my office to talk about the state of the New York rental market – she did a great job conveying the state of the market.

The Elliman Report: 12-2012 Manhattan Rentals [Miller Samuel]
The Elliman Report: 12-2012 Manhattan Rentals [Douglas Elliman]

Bruce Kirsch over at REFM Blog posts a view worthy class on the stalwart of real estate calculators, the HP 12C.

Here’s my sentimental look at retiring my old HP12C.

Had a quick but fun visit with Trish Regan and Adam Johnson on Bloomberg TV’s “Street Smart.” We covered some of the results of the 4th quarter market report on Manhattan sales I have been preparing for Douglas Elliman for years.

Just before I came on to the set there was a breaking news flash that a tanker crashed into San Francisco’s Bay Bridge – quickly thought my segment would be cut but alas it wasn’t. I have a long legacy for timing like that, just not this time.

Sorry but I just had to have at least one blog post title with “cliff” in it. But seriously, the 2012 drop in listing inventory was quite pronounced in the context of recent years and it is at it’s lowest level since 2000 when I began tracking it.

This is the same situation on a national level.

We published our report on Manhattan market sales for 4Q 2012 today.   I’ve been writing this series for Douglas Elliman since 1994 (I was 5 years old).

My Take

-Listing inventory fell to it’s lowest level in more than 12 years (since we began tracking it) to 4,749 apartments, may cause upward pressure on prices in 2013.
-A record fourth quarter with 2,598 sales – highest 4th quarter in at least 25 years we’ve tracked it, spurred by looming changes to federal tax laws, general economic improvement, elevated activity in an already recovering market.
-Price indicators were mixed, showing stability but with some evidence of growth by pending, size and quintile analysis.
-Days on market expanded as new supply shortage caused older inventory to be sold off.
-Luxury price trends out gained overall market yet luxury inventory did not fall as fast as many luxury sellers tried to “copycat” trophy sale success.

Here’s an excerpt from the report:

…The Manhattan housing market continued to be characterized by falling inventory across the re-sale and new development markets and an uptick in sales. Most of the price indicators in this report continue to range from demonstrating stability to modest growth. The market appears poised for some level of price appreciation in 2013, considering historically low mortgage rates that drive sales, coupled with a chronic shortage of active listings, which are at their lowest level in more than 12 years….

The charts and data tables are updated to include the fourth quarter of 2012.

Here is some of the press coverage for the report today.

The Elliman Report: 4Q 2012 Manhattan Sales [Miller Samuel]
The Elliman Report: 4Q 2012 Manhattan Sales [Prudential Douglas Elliman]

I joined Dan Gross for my monthly visit on his “The Number” segment talking about the general improvement in the US housing market, FHA’s possible pending implosion and what’s in store for the market in 2013.

Always fun.

Tomorrow I’ll be a featured speaker at The Northeast New Jersey Chapter of the Appraisal Institute’s 6th Annual Meadowlands Conference in Teaneck, NJ.

My presentation is called:

The Intersection of Housing and Credit in 2012, How This Cycle Ends.

Always great to hang out with valuation professionals who care about their profession.

It’s time to share my Three Cents Worth on Curbed NY, at the intersection of neighborhood and real estate in the capitol of the world. And I’m simply here to take measurements.

Read today’s 3CW post on Curbed New York:

Since the Euro is creaking under the prevailing sentiment that Greece will flee, I thought it would be interesting to take a look at how Manhattan looks from Europe and the UK’s perspective. I threw in Canada and Australia for good measure. I applied their currencies against the US dollar and the Manhattan inflation adjusted average sales price (dark blue line)…

[click to expand]

• Curbed NY Three Cents Worth Archive
  
• Curbed DC Three Cents Worth Archive

Crazy?

In the past few days there have been some pretty serious announcements of high end sales in the Manhattan apartment market. First there was the $52M co-op sale at 740 Park Avenue and then there was the $70M condo sale at 50 Central Park South. The former was a record – the highest sales price of a co-op apartment in Manhattan history and the second was a near record sale for a Manhattan condo. One could say this $70M sale was the highest arm’s length condo sale in history since it appears from what I’ve read that the $88M sale at 15 CPW a few months ago was more of a global divorce strategy play.

In appraising we use the “paired sale” technique to extract what certain amenities are worth. One could argue that these 2 recent sales were very similar:

• Both were about 10,000 square feet.
• Both are duplexes (2 levels).
• Both had terraces.
• Both located on well known streets/addresses.
• Both were located in pre-war buildings.
• Both sold at about the same time.
• Both appeal to an affluent buyer who doesn’t require financing.

Simplistically speaking the key differences are the form of ownership (co-op v. condo) and the view. The 50 CPS property has full frontage on Central Park, the most sought-after view in Manhattan. The 740 Park Avenue is located on the 12th and 13th floor has city views that do not clear the roof lines of most buildings in the immediate area.

In our market, the premium for a Central Park view can be about 25% of an apartment’s value. In our co-authored research paper on Manhattan co-op v. condo value with NYU Furman Center, the inherent difference in value between a co-op and condo after controlling for all differences is about 9%.

25% + 9% = 34%

This 34% total is pretty consistent with the 34.6% difference between the $52M co-op and the $70M condo sales prices.

So the numbers aren’t so crazy after all.

• Wynn lands Ritz-Carlton penthouse for $70M [The Real Deal]
  
• Park Avenue co-op sells for record $52.5 million [CNN/Money]
  
• Fertilizer King Rybolovlev Sued By Wife For $88 Million 15 CPW Purchase [NYO]
  
• The Condominium v. Cooperative Puzzle: An Empirical Analysis of Housing in New York City [Miller Samuel]

Knight Frank’s Prime Global Cities Index showed more weakness this quarter.

The first three months of 2012 brought with it little new momentum. The Eurozone’s debt debacle remained at the forefront of the global economic agenda, several critical elections were on the horizon (Russia, France, Greece) and Asia’s highly-effective cooling measures showed no sign of being relaxed. Against this backdrop some luxury buyers took to the side-lines to observe their market’s trajectory.

Primary markets seem to be cooling off a bit. I thought the conclusion was quite powerful.

The safe-haven argument still resonates. Capital flight will continue to focus on cities with low political risk, transparent legal systems, good security and ideally those with an HNWI-friendly tax regime.

• Prime world city markets turn negative [Global Briefing/Knight Frank]
  
• Prime Global Cities Index Q1 2012 [Knight Frank]

About five years ago, The New York Observer started a publicity campaign called The Power 100 where they selected 100 notables in New York Real Estate circles, put them on a list and threw a party to build loyalty and hopefully attract advertisers. It was a fun thing to be a part of. It wasn’t scientific and it wasn’t a serious endeavor nor was it taken seriously. It was just fun and created appreciation from those selected.

I was part of the list in three of it’s first four years. Myself and many others blogged about it. The effort got a lot of attention for NYO which was the intent.

I’ve always liked and respected the reporters there (still do) and I love the flagship NYO publication. I’ve subscribed for years and have been a regular source of market information for the publication.

However this year the publisher changed the methodology by switching it to their other publication The Commercial Observer and excluded media types and most residential types unless you owned a brokerage or sold a few apartments north of $20M.

Of course I’m down with that.

However I didn’t expect the publication to be mean about it. (Not to be confused with snark.) The Commercial Observer published a list of who was cast off (your’s truly) without disclosing the methodology change.

Imagine your kid applying to college but they don’t get accepted – only the college decides to publish their name in a list with all those who weren’t accepted?

I think the “Out” list is just as interesting as the “In” list – here’s a sample.

• Bill Ackman – Pershing Square Capital
• Serena Boardman – Sotheby’s
• Timothy Dolan – Archbishop, RC Church of NY.
• Steve Cuozzo – New York Post
• Si Newhouse – Conde Nast
• Howard Rubenstein – Rubenstein Communications
• Steven Rubenstein – Rubenstein Communications
• Sheldon Silver – Speaker NYS Assembly
• Lockhart Steele – Curbed Network
• Jay Walder – MTA

I’m going to start a new list “The Tepid 25″ since the word “Power” is a bit obnoxious.

Ok, enough of this drivel already. Back to work.

UPDATE: Here’s the response (tweet) to my post although they neglected to include my link and changed the topic – the social media person at TCO treated this as opportunity to expand the conversation thread rather than addressing the issue of right versus wrong. In media relations this technique is called “reframing the conversation” since my post was addressing how they mocked people being removed as being “Out” in a fit of self-importance, although many are sources for the publication and have been long time friends of it. When you don’t disclose your methodology you can’t do what they did. It’s simply wrong. No, it’s mean.

So here’s a lesson on what not to do on Twitter when your actions are challenged:

CO: Dear @jonathanmiller, you provide your list of the 100 Most Powerful, we’ll publish in our pages 2 weeks from now. Sincerely, The CO #co100

JM: @commercial_nyo yes I’m sure you would. #disconnect

CO: Weak RT @jonathanmiller @commercial_nyo yes I’m sure you would. #disconnect

UPDATE2:
We just got invites to attend the Power 100 party, presumably to celebrate our touted removal from the list. Really? JS needs a sit-down.

Absorption defined for the purposes of this chart is: Number of months to sell all listing inventory at the annual pace of sales activity. (The definition of absorption in my market report series reflects the quarterly pace – nearly the same)

I started this analysis in August 2009 so I am able to show side-by side year-over-year comparisons. The blue line showing the 10-year quarterly average travels up and down because of the change in scale caused by some of the significant volatility seen at the upper end of the market. The “blue” line for average changes very little year to year but the scale of the chart does frequently.

Side by side Manhattan regional comparison:

April 2011 v. April 2012

[click images to expand]

Thoughts on the year-over-year comparisons

• Manhattan All price segments below $2M experienced noticeable increase in pace of absorption.
• East Side Condo market accelerating except for $10M+
• West Side $3M to $10M accelerating
• Downtown Below $2M went from faster than average absorption to a lot faster.

Note: This chart series does not include shadow inventory (properties ready for market but not yet listed for sale) so this analysis somewhat understates the pace of condo absorption. The Uptown (Northern Manhattan) data set is too thin for a reliable presentation.

It’s time to share my Three Cents Worth on Curbed NY, at the intersection of neighborhood and real estate in the capitol of the world. And I’m simply here to take measurements.

Read today’s 3CW post on Curbed New York:

With all the hoopla about record low mortgage rates, the resurgence of entry-level buyers despite the headline-creating high end market, entering the “gray” area of rent versus buy, I thought I’d take a look at how falling mortgage rates impact the size of apartments being sold. The logic being that smaller apartments thrive as rates fall. I recognize that there is a lot more nuance in the size of what sells at any given time, but hey, this is Curbed…

[click to expand]

• Curbed NY Three Cents Worth Archive
  
• Curbed DC Three Cents Worth Archive

A few days ago, a post by Felix Salmon at Reuters caught my eye: Chart of the day: Let’s go buy a house! Yesterday he asked me to send similar data for NYC and would run the same chart. I sent over 20 years worth of median sales price and median rental price (face) data for Manhattan and he punched one out: Rent vs buy, Manhattan edition laying the results on top of the US data.

He’s running a payment equivalent adjusting for inflation and he says:

Obviously the Manhattan data series, with fewer transactions, are much noisier than the national series. But broadly speaking, it costs you the same amount to buy a house today, in terms of your monthly mortgage payment, as it did at the end of 2004, when the median sales price was just over $600,000.

Here’s what I told him when admiring his chart handiwork:

We are def moving into a gray area where we are now seeing more and more Manhattan individual apts as cheaper to buy than rent in our appraisal practice – especially coops since they are cheaper than condos. Obviously the problem remains whether the buyer is credit worthy.

Since this analysis is in aggregate, there is not a “tipping” point where the line is crossed and everyone runs out and just starts buying apts (i.e. Justin Bieber tickets).

• Chart of the day: Let’s go buy a house! [Felix Salmon/Reuters]
  
• Rent vs buy, Manhattan edition [Felix Salmon/Reuters]

Last night the championship dreams for Knicks fans that began in earnest with Linsanity, was officially over, ending with a final loss to Miami in Miami. The Knicks resurgence has been one of the few feel good stories of the year. I will now shift my sports focus to the Yankees and, oh yes, Tebow. Seriously considering following Curling instead.

During the regular season, my sons and I began to collect “Clydisms” by Walt “Clyde” Frazier, our Knicks hero from the championship years. He uses sing-songy phrases to describe the action. Even his new restaurant name has the same style to it.

When one of us wasn’t able to watch a game, the others texted the rest of us new phrases hoping to discover a new one to add to our list.

His phrases are addictive, part of the complete game experience, yet at the same time, completely uninformative. Sort of like national housing market studies. Although the headlines for housing have decidedly turned positive.

Here’s our collective hard earned list:

Moving and grooving
Sliding and Gliding
Swishing and dishing
Rebounding and astounding
Running and stunning
He’s the Novack in novocaine
He’s the Guadeloupe with the hoop
Whacked and hacked
Cruisin’ and Bruisin’
Perculating and devastating
Fields with the steal
Hanging and banging
Duke and hoop
Dishing and swishing
Tantalizing and mesmerizing
Huffing and puffing
Penetrate and devastate
Posting and toasting
Hustling and muscling
Resounding rebounding
Dooming and glooming
Hounding and pounding
Hang and bang
Hanging and banging
Thriving and driving
Duping and hooping
Stops and pops
The Knicks with the knack
Eratic, dramatic, ecstatic and charismatic
Straining and paining
Slammin’ and jammin’
Winning and grinning
In the Knick of time
Slicing and dicing
Wishing they were swishing
Huff and stuff
Sharing and caring
Using and abusing
In the Knick of time
Hurrying and worrying
Hustling and bustling
Spinning and winning
Shakin’ and bakin’
Shake and bake
Stumbling and bumbling
Puffing and stuffing
Penetrating and creating
Agile and hostile
Elton got branded
Swoops to the hoop
Contagious and outrageous
Duping and hooping
A little more pep in their step
Amazing grace
Wheeling and dealing
Hustle with muscle
Transitioning and swishing
Stoppin’ and poppin’
Velcro “d”, stickin’ to the man
Plays with heart and smart
Hacking and whacking
Cruising and bruising
Fortitude and aptitude
Wheels and deals
Bounded and astounded
Posting and toasting
Stooping and hooping
Pulverized in the paint
Huffs and stuffs
Fire and desire
Spinning and winning
So nice we’ll show it twice
Showing his amazing grace
Tenacity and sagacity
Penetrating and creating
Hustling and bustling
Shaking and faking
Dancing and prancing
Prancing on the perimeter
Nasty and sassy
Synergy and energy
The attack, attacking the rack
Trying to keep from crying
Moving and grooving
Stumbling and bumbling
Not hesitating but devastating

My fave? “Moving and grooving” hands down.

Julie Satow’s New York Times ‘Square Foot’ Column Accuracy of Appraisals Is Spotty, Study Says takes a look at a study that concluded that commercial appraisals were too high when tested against what the property actually sold for. My partner John Cicero in our commercial valuation firm Miller Cicero was referenced in the piece. While he liked the article and agreed with the conclusions, he pointed out the potential flaws in the study.

Of course the report is pointing out what has been an obvious problem for at least the past decade. Banks have transitioned into the view that an appraisal report is a commodity and not a professional consultation. The irony here is the same thinking applies across both commercial and residential valuation assignments for banks but with polar opposite results.

Commercial valuations are seen as “too high” and residential valuations are seen as “too low.” This probably has a lot to do with the fact that commercial real estate, especially class a office space in markets like NYC, Washington DC and San Francisco is probably in the middle of a bubble and there is clearly indirect pressure on the appraiser to make the deal work (no matter what is being said publicly).

Of course residential valuations were way too high during the housing boom so a similarity can be drawn during that period as lenders relied on mortgage brokers to deliver the majority (2/3) of loan volume by the time the market peaked.

The common thread in all this is to understand how the appraiser is engaged by the bank. In residential valuation it has morphed over to the appraisal management company process (B of A’s Landsafe is the poster child for bad appraisals) and in commercial valuation it has become a robotic automated engagement process:

John Cicero, a managing principal of the appraisal firm Miller Cicero, said: “It is a broken profession in a lot of ways. The appraisal industry has become commoditized, where lenders see appraisals as simply a commodity to be purchased by a vendor and where more emphasis is placed on the price of an appraisal than the expertise of the appraiser.”

For example, Mr. Cicero said, in the past lenders would often have long discussions about the project and the appraiser’s qualifications before hiring. Now, it is more common for lenders to use an online bidding system, where they issue a request for proposals from appraisers and often choose the least expensive. “They actually refer to us as vendors submitting a bid, not educated professionals who are providing an important service,” he said.

After a while (and it’s been a while) this becomes a self-fulfilling prophecy and the majority of appraisers used by banks are simply bad at their craft (taking liberties here) because the system attracts that “type” appraiser. As a result many of the good appraisers have either left the business or switched their client base to those who see valuations as more than the equivalent of a “title search.”

Banking’s shortsightedness illustrated
When a bank is considering lending $200M on a commercial office building, they are usually are more concerned about shaving $500 off the appraisal fee than they are contracting with a seasoned local market expert. [Commercial] high-ballers with fast turn times are thriving and their product is very weak. The same goes for a residential mortgage [low-ballers] only with commercial lending, the stakes are much higher because the exposure is so much greater – then ask yourself, who is the party that lacks competency? I’d say it’s systemic.

• Accuracy of Appraisals Is Spotty, Study Says [New York Times]
  
• John Cicero’s Bio [Miller Cicero]
  

I wanted to illustrate how little of the Miami housing market today is financed with a mortgage. And despite that, sales activity is trending higher. Counter intuitive but a reflection of its two drivers of demand: investor at the lower end and cash buyers, often foreign, at the upper end.

Any thoughts on the FHA, Conventional financing cross over back in 2Q 2011?

I’m slowly starting to build our Miami chart archive.

• Miami 1-Family, Condo Financing Types [% Market Share] [Miller Samuel]
  
• Miami Housing Market Charts [Miller Samuel]

Jed Kolko, Trulia’s Chief Economist on the sales market:

“Housing prices have already bottomed with asking prices on the rise for three straight months. Aside from a stumble in December, asking prices have been stable or rising for the last eight months,” said Jed Kolko, Trulia’s Chief Economist. “Prices have joined the recovery, alongside sales and construction. But foreclosures threaten prices, especially in judicial-foreclosure states like Florida, New Jersey, Illinois and New York, where many more distressed sales are still to come.”

on rental market:

“Rents have steadily increased as people who lost their homes in the crash became renters. At the same time, high unemployment and tight credit sidelined would-be homeowners,” said Jed Kolko, Trulia’s Chief Economist. “But relief for strapped renters may be in sight. Construction of multi-family buildings revved up last year. These new rental units will come to market later this year, giving renters more choices and less fierce competition.”

Here’s the April 2012 report and a breakdown of the largest metro areas.

The Trulia Price Monitor for April 2012 shows:

• Asking prices up 1.9% quarter-over-quarter, seasonally adjusted.
• Asking prices up 0.5% month-over-month, seasonally adjusted. This is the third straight month of month-over-month increases.
• Asking prices up 0.2% year-over-year, the first year-over-year increase in the price index.
• Asking prices up quarter-over-quarter in 92 of the 100 largest metros.

The Trulia Rent Monitor for April 2012 shows:

• Rents up 5.6% year-over-year.

New York Metro - you can see how much faster the rental market is rising over the sales market. In fact more than half of the NYC metro area are showing declining price trends.

The Trulia Price and Rent Monitors rely on the latest asking price or rent rather than the original to better track the direction of the market. Prices on MOM, QOQ and YOY on based on a 3 month moving average. Here’s the nitty gritty. Love the “technical” and “non-technical” FAQ notes detailing how it works.

Note: I have been on the Trulia Industry Advisory Board since its inception in 2006.

• Trulia Price Monitor Is Launched: New (Better) Way To Look At Housing Price Trends [Matrix]
  
• Rising Home Prices: Coming to a Market Near You [Trulia]
  
• Trulia Price and Rent Monitors – April 2012 [Trulia]
  
• Trulia Price and Rent Monitors – FAQ [Trulia]
  

It’s time to share my Three Cents Worth on Curbed NY, at the intersection of neighborhood and real estate in the capitol of the world. And I’m simply here to take measurements.

Read today’s 3CW post on Curbed New York:

Since we are in some sort of rent versus buy gray zone right now, I thought I’d create a “gray” matrix showing the market share differences in location and apartment size based on the buy and rental market in Manhattan. This is not a rent versus buy analysis but rather a comparison between two distinctly different markets…

[click to expand to humungous version]

• Curbed NY Three Cents Worth Archive
  
• Curbed DC Three Cents Worth Archive

Elliman Report: Miami Sales (Spanish)Elliman Report: Miami Sales (Portuguese)

[click to open reports]

I took five years of French in high school so it’s a bit disorientating to see my analysis translated, but very cool at the same time. We are expanding our South Florida market analysis significantly over the next several months (no, France is not on the rollout list…yet).

• Elliman Report: Miami Sales (Spanish) 1Q 2012 [Douglas Elliman]
  
• Elliman Report: Miami Sales (Portuguese) 1Q 2012 [Douglas Elliman]
  
• Elliman Report: Miami Sales (English) 1Q 2012 [Douglas Elliman]

We published our report on Hamptons/North Fork sales for 1Q 2012 this morning.   I’ve been authoring this report series for Douglas Elliman since 1994.

Here are some takeaways:

• Overall housing prices (median sales price up 1.2% ) continued to show stability.
• The luxury market showed larger year over year increases in the price indicators than the overall market.
• Number of sales were up nominally from same period last year (0.5%).
• Listing inventory is down sharply year over year (down 17.5%) – home sellers are more cautious about entering the market (ie sales flat but inventory falling).
• Properties taking somewhat longer to sell and there is a little more negotiability on price between buyer and seller (days on market and listing discount expanded)
• Despite strength in prices at high end, we saw an uptick in market share of sub-million sales – the decline in mortgage rates and warm weather brought buyers out sooner.

Here’s an excerpt from the report:

Median sales price edged up 1.2% to $630,000 from $622,500 in the prior year quarter. Average sales price increased 17% to $1,437,597 from $1,228,857 over the same period, largely due to continued strength at the upper end of the market. In the median sales price by quintile analysis, the fifth quintile increased 24.8% yearover- year, while the remainder of the market segments showed modest change and mixed results over the same period…

I’ve got a tool to build custom data tables and view charts on the market.

• The Elliman Report: 1Q 2012 Hamptons/North Fork Sales [Miller Samuel]
  
• The Elliman Report: 1Q 2012 Hamptons/North Fork Sales [Prudential Douglas Elliman]

We published our report on Long Island sales for 1Q 2012 this morning.   I’ve been authoring this report series for Douglas Elliman since 1994.

Here are some takeaways:

• Housing prices were mixed – median sales price unchanged 0% but average sales price fell 5.4%. The drop in mortgage rates shifted mix to lower priced homes.
• Pending sales unexpectedly jumped from year ago levels (+21.2%) as mild winter weather brought consumers into the market earlier than usual.
• The luxury market was somewhat weaker than the overall market. Luxury median price slipped 2.6% year over year.
• Listing inventory was also down (4.1%) as sellers were more cautious about listing their homes.
• Properties taking somewhat longer to sell and there is a little more negotiability on price between buyer and seller (days on market and listing discount expanded)

Here’s an excerpt from the report:

Although the number of sales slipped 1.2% from prior year levels, the mild winter weather brought an unexpected surge in first quarter pending sales. There were 5,209 signed contracts outstanding in the first quarter, 21.2% more than 4,297 in the prior year quarter. The unusual amount of pending sales activity this quarter may temper the levels of the second quarter, typically a high water mark for sales activity each year. Listing inventory slipped 4.1% to 20,358, the lowest first quarter total in six years…

I’ve got a tool to build custom data tables and view charts on the market.

• The Elliman Report: 1Q 2012 Long Island Sales [Miller Samuel]
  
• The Elliman Report: 1Q 2012 Long Island Sales [Prudential Douglas Elliman]

Quest Magazine asked me to write an intro piece on the luxury housing phenomenon i.e. “Real Estate Renaissance” followed by a number of housing types from the markets they publish within. Quest is a beautiful magazine with some interesting editorial perspectives and great visuals on high end real estate.

Here’s what I wrote (I’m arguably the driest writer in the magazine, but hey, it’s how I think):

Real Estate Renaissance: Jonathan Miller – April 2012

One of the primary characteristics of the U.S. coastal housing markets, after the dust settled from the collapse of Lehman Brothers, has been a sustained period of high-end market strength. Trophy properties are seeing new demand.

The sudden end to an era of reckless bank underwriting and subsequent entry into a period of fiscal austerity was expected to disproportionately crush the luxury housing market. Easy access to credit allowed for many consumers to live beyond their means.

The onset of the credit crunch led to the overnight evaporation of the secondary market for jumbo mortgages, too large to be purchased by ailing Fannie Mae and Freddie Mac. While the federal government focused on the former GSEs, little attention was given to improving access to mortgage financing for high-end housing. Banks now have to hold jumbo mortgages in their own portfolios rather than offload the risk to investors hungry for bigger returns. The much tougher jumbo mortgage financing requirements were expected to bring a collapse of high-end housing prices and grind sales activity to a halt. But that isn’t how it played out. The price spread between high-end and starter homes has expanded over the past several years despite irrational mortgage underwriting standards for jumbo mortgages. In fact, a remarkable number of home purchases at the high end of the market have been paid with cash rather than obtaining mortgage financing at commercial banks, thereby bypassing the lending industry’s legacy of poor lending decisions in the prior decade. The global accumulation of wealth during the global economic boom enabled many investors after its end to seek out luxury housing in the U.S., helping coastal markets outperform others.

The weakness of the U.S. dollar against other foreign currencies, specifically in Europe, South America, and Asia has brought investors to U.S. soil in droves. Initially, this was viewed as a currency play where wealthy foreign investors were simply taking advantage of the sharp discount for U.S. housing. While the favorable exchange rates may have tipped the balance towards the acquisition of U.S. assets like housing because of the perceived discount, investors were also moving their assets into a relatively more politically and economically stable environment.

Will the use of cash in housing purchases continue? It seems likely, perhaps out of necessity. Rational jumbo mortgage underwriting standards and the creation of stable secondary market for jumbo markets is not expected to return for years. Once those problems are eventually resolved, the widening gap between luxury housing and the balance of the market could very well widen further.

• Real Estate Renaissance: Jonathan Miller [Quest Magazine Blog]
• April 2012 Issue [Quest Magazine]

With his Housing Barometer, he combines three key housing market indicators:

• new construction starts (Census)
• existing-home sales (NAR)
• the delinquency-plus-foreclosure rate (LPS First Look).

Here’s the full write up: Trulia’s Housing Barometer: Recovery Slips Backward in March

and constantly asks:

What does a “normal” housing market look like, and how far away are we?

It’s time to share my Three Cents Worth on Curbed NY, at the intersection of neighborhood and real estate in the capitol of the world. And I’m simply here to take measurements.

Read today’s 3CW post on Curbed New York:

By far the three most popular observations about the Manhattan housing market to date in 2012 are: “mortgage rates are at historic lows” and “listing inventory is tight” and…ok, there are just two that are worthy.

I thought I’d mash them together and see what happened since I’ve never made the direct association. Admittedly I was surprised with the visual that resulted….

[click to expand]

• Curbed NY Three Cents Worth Archive
  
• Curbed DC Three Cents Worth Archive

Recently I was contact by The Real Deal Magazine to take a look at the correlation between the stock market performance and the housing market. I personally don’t believe it and I have written about correlation and how silly it can get.

The thinking goes like this:

The Dow Jones Industrial Average rises, the housing market rises = correlation = a housing market indicator, but…

“Twenty-five percent of New York City wages come from financial services,” Miller said. “It’s part of the fiber of being here and so there’s always been a propensity to correlate the Dow Jones industrial average with housing here. I don’t ascribe to that belief. Housing is not a stock. [Rather,] if you have a robust and actively traded market, in theory, employment is more likely to be stable, which consummates sales transactions.”

Actually, Manhattan’s market share was 37% in 2009 after reaching 44% in 2008.

For years I’ve been posting a DJIA versus Manhattan inflation-adjusted sales price chart and there wasn’t much correlation – I also tried a non-inflation version to no avail. But the reporter’s call inspired me to revisit the topic and compare DJIA against Manhattan sales and the patterns were actually pretty similar (see top chart).

When I think about the housing rebound in the dark days just after the Lehman tipping point and how stock-market orientated we are in Manhattan, the only thing that seemed to push consumers back into the market was the roar of the stock market in the first quarter of 2009. This comparison against sales (transactions) seems show the same trend. While I’m still not on the correlation bandwagon, the 20-year trend is quite compelling.