Mar. 31, 2008 - ... 5 golden rings ... 4 price drops ...
I have removed the content of this blog post, as it comments about the current listing of another agent. For information about why, check out end of an era for Manhattan Loft Guy / a new day dawns? from April 9.
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Mar. 25, 2008 - creeping Manhattan inventory a feint or more creepy?
oracle of data
Over at Matrix, Jonathan Miller links to a chart he did for Crain’s New York Business showing that the number of coops and condos available for sale in Manhattan has gone up 15% from the end of December to the end of February, though still at relative historically low levels. As you can see from this chart he did for Curbed, which I hit in seasonality of Manhattan inventory, not so much, the rise since December 2007 brings inventory back to the level it of January 2007.
impossible to know but fun to speculate?
Of course the question for these days of General Economic Anxiety is whether the 2 month rise in inventory to start 2008 will continue an upward trajectory and take more starch out of the real estate market, or whether the monthly inventory will repeat that lovely color (teal?) for 2007 in the Curbed chart by dropping in late Spring.
I probably should look again at the data corruption issues to providing a number for Manhattan loft inventory in my weekly reviews...
© Sandy Mattingly 2008
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Dec. 8, 2006 - data are limited (point taken), but what next / NY Times column about the flaws in reported housing data
Economix mixes data and opinion to complain about data
His general point is easily stated:
The truth is that the official numbers on house prices — the last refuge of soothing information about the real estate market on the coasts — are deeply misleading.
Leonhardt starts his piece with the drama of an auction about a month ago in Naples, Florida at which “a few dozen houses went on the block in front of about 500 bidders”. He quotes one analyst as saying the houses sold at auction lost about 25% of their 2005 value, and contrasts this with the official federal government housing index that showed that the average Naples home appreciated 20% year over year.
the data are what the data are (as Rumsfeld might have said)
Clearly, there is a disconnect between the auction results and the OFHEO index, but Leonhardt takes a curious turn in criticizing the OFHEO data:
But the statistics have a number of flaws, perhaps the biggest being that they are based only on homes that have actually sold. The numbers overlook all those homes that have been languishing on the market for months, getting only offers that their owners have not been willing to accept.
I agree with his general analysis of the weakness in the various statistics commonly reported, but I think he went pretty far overboard in making his point.
The “biggest flaw” in a statistic measuring sales is that it is based only on homes that have actually sold?? What else could that stat be based on?
To say that “sales” data “overlooks” homes that have not sold is really beside the point. To say that you don’t get a complete sense of the market if you only look at “sales data” is a truism – which Leonhardt demonstrates nicely in a journalistic way by using the Naples auction data.
are opinions (guesses) better than data? (not so much)
But I thought it was weird that Leonhardt was so critical about the kind of actual data that is available and supported his argument by quoting one “expert” after another for their “opinions” about what the market is “really doing”. Especially because he didn’t need to do that to support his general point about the limitations in the data.
I find Leonhardt’s Economix column usually interesting because he starts with a fact or some data, then explores what the fact or data means (or, as in this case, does not mean). With so much to talk about, I guess it just bothered me that he “wasted” space by buttressing his point with the opinions of Talking Heads.
Not to mention that he slid a personal opinion about our local Manhattan market in without any visible support:
In New York City, where co-op boards generally bar the door to absentee speculators and creative mortgages, prices seem to have slid a bit in the last few months, but only to roughly their 2005 levels
Given his focus on the utility of data, I wonder what he is relying on for that statement, especially with the NY Post article I quoted yesterday reporting median sales price increases year-over-year of 6.7% or 12.7%. (Yes, there are limitations and flaws in those numbers, but I would expect some discussion – rather than just an un-sourced opinion.)
The oft-quoted Jonathan Miller rode to the rescue with a discussion about the sources and limitations of the data that Leonhardt addressed in his Economix column. He did so much more concisely and comprehensively than I could and – to me – in a much more straightforward way than Leonhardt did. So if you have gotten this far with me, read Home Prices: To Tell The Truth, The Whole Truth And Nothing But the Truth (Sort Of) on Matrix.
© Sandy Mattingly 2006
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Oct. 30, 2006 - Manhattan as “fundamentally” different / supply, demand and superstars
limits on building increase volatility?
Jonathan Miller on Matrix today links to a Business Week article that suggests that ‘the answer’ may still be on the supply side, because cities that place limitations on supply (through zoning, principally) have both greater upside swings and greater downside swings. BW suggests that these markets (New York among them) will swing up from the current ‘bust’ more quickly than other cities.
How do you know if your own local market is the kind that will snap back or the kind that will languish indefinitely? One key factor is the ease or difficulty of building new homes. Places where new home construction is a long and expensive process, such as Boston and San Francisco, tend to experience big price movements, both up and down. "Restricted supply leads to more volatility in prices," says Edward L. Glaeser, a Harvard University economist who has studied big-city housing markets.
Glaeser isn't ready to predict where prices are headed market by market, but the cities with tight housing do usually boom again after a bust. In places such as Atlanta and Houston, by contrast, price cycles are usually mild, because the supply of housing is flexible. Traditionally, flexible markets have gone through booms and busts only when there was a wrenching change in demand, such as during the oil-patch roller-coaster of the 1980s.
Houston vs. Manhattan – my cost-to-build hypothesis supported
My hypothesis last week specifically mentioned Houston as a market in which the cost of building a new house would more directly limit the cost of resale homes, in contrast to Manhattan, so I take this as support for my supposition.
In fact, BW then goes on to support my demand-side supposition, talking about “superstar cities” that have unusual demand for housing:
With apologies to the mainstream, the truth is that supply considerations can cause markets to diverge from what seem to be the fundamentals for a long time, perhaps permanently. One explanation for this is the "superstar cities" concept developed by economists Joseph E. Gyourko and Todd M. Sinai of the University of Pennsylvania's Wharton School and Christopher J. Mayer of Columbia Business School. They argue that certain cities -- Boston and San Francisco, say -- benefit from a winner-take-all phenomenon that separates them from also-rans. People all over the world want to own homes in Boston and San Francisco, and the supply is limited. As worldwide wealth rises, there is a bidding war for homes there. No such luck for, say, St. Louis. In fact, according to the authors, the gap between prices in San Francisco and the national average doubled between 1970 and 2000
Part of this may be an analysis of which cities are ‘fashionable’ at a given time, with the ability to “create” demand by being “unique” tempered by (in some places – Miami, Las Vegas??) the ease of building more housing.
In an era of globalization, cities with international reputations can get an edge over blander neighbors if they're perceived as scarce commodities. For example, Nashville, as the capital of country music, has at least the potential to convert its fame into wealth, says Gleb L. Nechayev, an economist at Boston-based Torto Wheaton Research, a unit of CB Richard Ellis. Miami developers have parlayed the city's international fame into booming sales of condos to Latin Americans and Europeans. But while the uniqueness phenomenon may help growth in those cities, it won't necessarily keep prices up, because it's easy to build: Witness the current glut of Miami condos.
we are so special (really)
Of course, we in Manhattan view Manhattan as inherently and perpetually unique – so we are so special that we are immune from normal economics ;-)
THX to Jonathan for the link.
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Sep. 8, 2006 - what’s messing with Texas / foreclosure rates up
RISMedia reports that Texas is #3 among the top states in home foreclosure rates in July. It sticks out among states that have had significant speculator investors (Nevada, Colorado and were #1 and #2) and those whose economies are characterized by Perot’s sucking sound (Michigan, Illinois, Indiana and Ohio are all among the top ten in number of new foreclosures).
The data is from RealtyTrac (TM) (www.realtytrac.com), “the leading online marketplace for foreclosure properties”. James J. Saccacio, chief executive officer of RealtyTrac, is quoted as saying that
“[w]hile foreclosure activity continues to remain slightly below historical averages, there appears to be the possibility for a significant amount of upward pressure on foreclosure rates in the next few months.”
He cites the usual suspects of (1) ARMs about to re-set for many, and (2) the “cooling” real estate market nationally. But I found it interesting that foreclosure activity continues to remain slightly below historical averages.
But who is messing with Texas? Texas has been reported as one of the “bright spots” in the national real estate scene – one of the few states expreieincing more robust price growth. Must be is the yin to the yang of Texas foreclosures.
© Sandy Mattingly 2006
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Aug. 22, 2006 - Eyes out for a market indicator / 240 Park Av South follows its sibling at #260
Comparing pricing at building A to building B – pretty good lab data is coming
By then we will probably all know how the market is doing, but the related developments at 260 Park Avenue South (at 20th St; occupancy began this year) and at 240 Park Avenue South (at 19th St; to be completed next year) would provide very good comparative data about the Manhattan luxury market in general, and the market for high-end condominium lofts more specifically late this year or early next.
THX to Triple Mint for pointing out the project. Her take was on 240 PAS as one of several Gwathmey Seigel projects in the post-Design For Living period (the Astor Place curved glass tower that has taken many shots in the press and New York City blogosphere).
My take is that ready-in-2007 #240 PAS will provide a great side-by-side market study compared to its sibling at #260 PAS, which was sold beginning in 2005. The same developer is aiming at the same market.
Same finishes, same sizes, same developer, same location (nearly)
According to The Real Deal, 240 PAS sold at an average price of $1,275/ft, but that “front end” apartments sold for more (“as much as” $2,400/ft). 240 PAS will feature all “frontal” apartments. (#240 will be smaller, with only 55 units, compared to the 110 units at #260).
“Like its neighbor at 260 Park, the new project will feature loft-style apartments with 11-foot ceilings (15 feet in the penthouses) and 8-foot high windows that will let in light from the front, back and sides -- courtesy of a back courtyard and a rounded southeast corner that will grant expansive Downtown views. All the units will be "frontal," unlike at 260 Park Avenue South, [Yitzchak] Tessler says.”
The two bedroom “B” line at 260 PAS should qualify as “frontal;” it has the best downtown view, at the Southeast corner of the building. The top floor unit, #11B, just went into contract off an asking price of $2.825mm for 1880 sq ft, or $1,503/ ft asking.
(Makes me wonder about some the front-end space that sold for “as much as” $2,400/ft, but who am I to quibble with a developer’s data??)
Two bedrooms at 240 PAS will be smaller than the “B” line a block north (though bigger than the two bedrooms in other lines at 260 PAS).
“The project at 240 Park Avenue South will include 800-square-foot one-bedrooms, 1,500-square-foot two-bedrooms, 2,150- square-foot three-bedrooms, and four 4,000- square-foot penthouses.”
The developer has not selected a marketing firm yet, so there will be no marketing for a while. But when that new building “comes out”, it should be easy to compare how the market is doing at that time.
Just look one block north.
© Sandy Mattingly 2006
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on matters of interest to Manhattan coop or condo loft apartment dwellers, buyers, sellers, and others, especially about New York City real estate
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