Archive for Market Reports
Manhattan Residential Rental Market Report Fourth Quarter 2011
Posted by: | CommentsThis week, we released our Fourth Quarter report for the Manhattan Residenital Rental Market. Manhattan Residential Rentals Market Overview Q4 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
“Tight mortgage credit conditions continued to drive rental prices and activity higher.”
- The median net effective rent (face rent less landlord concessions) jumped 9.5% from $2,950 to $3,121 in the same period last year. The year-over-year-gains were consistent across all rental price indicators.
- The 2-bedroom and 3-bedroom markets outpaced their smaller counterparts,increasing 14% and 18.1% respectively over the same period.
- New rental activity (excluding lease renewals) was up 10% from 7,217 to 7,942 in the same quarter last year.
- About 7.4% of new leases had some form of landlord concession compared to the 40.5% in the prior year quarter. For those leases with concessions, the average amount was the equivalent of 1.2 months of free rent.
- Days on market—the number of days from original list date to lease signing—was at its second fastest pace of 37 days in 15 years, which is when we began tracking this metric.
Manhattan Co-op/Condo Residential Sales Market Report Fourth Quarter 2011
Posted by: | CommentsOur Q4 Manhattan Market Overview was released today and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
“After a year of mixed economic news, the Manhattan housing market, while continuing to experience overall price stability, closed out the year with a slower pace of sales.”
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Median sales price was $855,000, a modest 1.2% increase from $845,000 in the prior year quarter. Price per square foot increased 5.6% to $1,117 from $1,058 over the same period.
- There were 2,011 sales in the fourth quarter, 12.4% less than 2,295 in the prior year quarter. The fourth quarter had the lowest number of sales since the same period six years ago, perhaps related to the unusual surge in sales in the prior quarter. Pending sales were also below the prior year level.
- There were 7,221 active listings at the end of the fourth quarter, essentially unchanged from the same period last year, but 2.6% less than the ten-year quarterly average of 7,412.
- Days on market—the number of days from the last price change if any to the contract date—saw a modest 5 day increase to 130 days from 125 days, still consistent with the 132 day average for the prior decade.
- Listing discount—the percent difference between the list price at time of sale to the sales price—fell to 4.9% from 8% in the same period last year.
Mortgage Market Trends for week ending December 30, 2011
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MARKET RECAP
The news is understandably slow the week between Christmas and New Year’s Day. The most notable release was last Friday’s news on new home sales, which rose to an annualized rate of 315,000 units in November, a 1.6-percent gain over October.
To be sure, we have a long way to go until we reach the normalized construction rate of 1.5-million units per year. Nevertheless, we expect the new-home market to gain pace in 2012. After all, there are only 158,000 units in inventory. Even at the current slow sales pace, this equates to a record low six-month supply
Over the past three years, new-home construction has fallen far below historical norms and also below the level needed to keep pace with population growth. The fact is our country gains roughly 2.7 million people and one million new households annually.
You might not see supply as a problem. We are all familiar with the glut of distressed properties. Indeed, Bank of America expects eight million distressed homes to come to market over the next four years. These homes, we’ve so often heard, will continue to depress new home construction.
We view B-of-A’s outlook with a skeptical eye. There is a likely prospect that many of these distressed properties will simply go away. Destruction is too frequently overlooked in many supply projections. A house is not a permanent structure. Many are destroyed by fire, wind and flood each year. Many more are lost through simple decay and abandonment. Based on U.S. Census data, 300,000 homes are lost annually. That number will surely rise in years to come.
In short, the math – low inventory plus more households minus more home destruction – suggests to us a rebound in new-home construction. We are not alone in this contention, either. Wells Fargo projects that housing starts will continue to rise each year for the next five years before reaching once again the normalized construction rate of 1.5-million units annually by 2017.
Of course, projections are one thing, betting on those projections is another. Here, we see an encouraging trend. Big money is starting to wager on housing. The Wall Street Journal reports that many large hedge funds are investing billions in housing-related investments. Other investors have followed suit. Shares of homebuilders are up 30 percent over the past three months, making them one of the best performing investments in the market.
Up For A New Year
As we approach the end of the old year nearly all of us stop to ask, “How will the new year unfold?” Of course, none of us know with any certainty the answer to that question, but it can be insightful (and fun) to ponder. So, how will 2012 unfold, at least as it pertains to the housing and mortgage markets?
Both markets will obviously be influenced by economic growth, which, in turn, will spur job growth. We see a pick up in economic growth and job growth in 2012.
The economy has been growing at a sluggish rate for too long now. The United States is unique in that Americans tire of pessimism quicker than most other cultures, and then we do something about it. In our opinion, rising consumer confidence points to a lot of pent-up demand that is waiting to bust loose, and will bust loose in 2012.
A pick up in demand, in turn, necessitates new hires. In fact, a recent survey by CareerBuilder.com found that nearly one in four employers is keen to add new permanent full-time employees. These employers are simply waiting for a clear sign the coast is clear. We think they will get that sign in the first quarter of 2012.
Greater economic activity will obviously impact the housing market. We see accelerated sales volume in both the new and existing home markets. We also expect to see prices stabilize in the first half of the year, and then appreciate perceptibly in the second half.
As for the mortgage market? This is much more difficult to call. The Federal Reserve has stated it intends to hold rates low through 2012. However, all it takes are a few persuasive signs that the economy is back on track, and the Fed could easily backtrack from its stated goals. All we can say is that we would be much less surprised to see mortgage rates 50 basis points higher six months from today than 50 basis points lower.
Graph Courtesy from NY Times in an article by Vickie Elmer December 29, 2011. Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.
Third Quarter 2011 Hamptons And North Fork Sales Report Released
Posted by: | CommentsToday we released third quarter sales for theHamptons/North Fork residential market. The Hamptons/North Fork Market Overview Q3 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
“East End market conditions reflected increased activity, especially in the luxury market as listing inventory slipped”
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There were 538 sales in the third quarter, 14.7% above 469 sales total in the same period last year, but 13.1% below the prior quarter total of 619 sales.
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Median sales price was $700,000 in the third quarter, 12% higher than $625,000 in the prior year quarter. In the third quarter, 67.1% of all sales fell below the million dollar threshold consistent with the 65.9%, five-year average.
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There were 2,238 listings at the end of the third quarter, 1.5% less than the 2,271 listings in the same period last year.
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Although price indicators and sales activity increased from the same period last year, the listing discount measuring the negotiability between buyer and seller edged higher to 11.3% from 10% in the same period last year.
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Days on market, the number of days from the last price change to contract date, increased 6 days to 170 days from 164 days in the prior year quarter.
Third Quarter 2011 Long Island Sales Report Released
Posted by: | CommentsToday we released third quarter sales for the Long Island residential market. The Long Island Market Overview Q3 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
“Sales activity jumped above last year’s levels, as listing inventory slipped. Negotiability between buyers and sellers held steady.”
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Median sales price declined 3.2% to $365,000 from $377,250 in the prior year quarter. Average sales
price followed a similar pattern, declining 3.9% to $457,496 from $475,946. The decline is largely attributable to last year’s federal homebuyers tax credit that had pushed sales prices higher. -
There were 5,141 sales in the third quarter, 18.4% above the 4,343 total in the prior year quarter and 22.3% above the prior quarter total of 4,205. The current total is the fourth highest quarter in three years, led by three quarters significantly impacted by the federal homebuyers tax credit from the second half of 2009 through early 2010.
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There were 21,462 listings on the market at the end of the third quarter, 1% less than 21,670 listings in the prior year quarter and 5.8% less than 22,772 listings in the prior quarter.
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The average number of days to sell a property from its original list date to contract date was 116, nominally longer than 112 days in the prior year quarter.
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The listing discount, or negotiability between buyer and seller, measures the percentage discount from the original list price and the sales price, was essentially unchanged at 6.5% in the third quarter compared to 6.6% in the same period last year.
Third Quarter 2011 Brooklyn Residential Sales Market Overview
Posted by: | CommentsToday we released third quarter sales for the Brooklyn residential market. Brooklyn Market Overview Q3 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
“Sales noticeably increased, as all price indicators edged higher, and listing inventory remained stable.”
- There were 2,219 sales in the third quarter, 18.1% more than 1,879 sales in the prior year quarter, and the second highest quarterly total in three years.
- Median sales price increased 5% to $510,000 from the prior year quarter, reaching its highest level in three years, and tying the 2008 third quarter level.
- Listing inventory edged 0.9% higher to 6,688 in the third quarter from the prior year quarter. With the rise in sales outpacing the increase in inventory, the absorption rate fell to 9 months from 10.6 months over the same period.
- Days on market expanded by nearly a month over the same period to 149 days from 109 days in the prior year quarter, as stable inventory, and higher sales resulted in an increase in sales from older listings.
- The listing discount—the difference between the listing price at time of contract and the contract price—was 3% in the third quarter, down from 5% over the same period last year.
Third Quarter 2011 Queens Residential Sales Market Overview
Posted by: | CommentsToday we released third quarter sales for the Queens residential market. The Queens Market Overview Q3 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
“The market continued to find its way to stability, as price indicators higher and both listings and sales levels declined”
- There were 2,743 residential sales in the borough, 11.8% less than 3,110 sales in the same period last
year. The decline in sales was attributable to re-sale, as new development sales nearly doubled. - For the fourth consecutive quarter, the year-over-year median sales price increased.
- The median sales price was $385,000, 8.5% above $355,000 in the prior year quarter.
- Listing inventory fell 15.9% to 10,305 from 12,255 in the prior quarter. Coupled with the decline in sales, the monthly absorption rate–the number of months to sell all listing inventory at the current pace of sales–was at 11.3 months, 4.2% faster from 11.8 months at this time last year.
- The listing discount–the percent difference between the list price and time of sale and the sales price–was essentially unchanged at 6.6% as compared to the prior year quarter result of 6.7%.
- It took 8 days longer on average to sell a property as compared to last year, resulting in a total of 108 days in the third quarter.
Manhattan Residential Rental Market Report Third Quarter 2011
Posted by: | CommentsToday we released Third Quarter report for the Manhattan residential rental market. Manhattan Residential Rentals Market Overview Q3 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
Median rent with concessions (net effective monthly median rent), increased 4.9% to $2,970 from $2,831 in the prior year quarter.- The number of listings on the market slipped 1.9% to 4,605 in the third quarter from 4,693 in the prior year quarter. Number of new rentals declined 6.9% to 7.998 from 8,593 over the same period last year, as more tenants likely opted for renewals.
- Approximately 8.6% of new leases had some form of landlord concession, compared to 45% in the prior year quarter.
- Of the leases with concessions, the average amount was the equivalent of 1.2 months.
- Days on market—the number of days from original list date to lease signing—was 58 days, nearly 3 weeks slower than the 38 day average of the prior year quarter.
- The absorption rate for new rentals was 1.7 months, essentially unchanged from 1.6 month in the prior year quarter but down sharply from 7.7 months in the same period two years ago.
Manhattan Co-op/Condo Residential Sales Market Report Third Quarter 2011
Posted by: | CommentsOur Q3 Manhattan Market Overview which was released Tuesday and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
- Housing prices in Manhattan continue to remain stable. The median sales price of a Manhattan apartment was $911,333 in the third quarter, essentially unchanged from $914,000 in the prior year quarter and up 7.2% from $850,000 in the prior quarter.
- Although year-over-year co-op sales activity was unchanged, the increase in condo activity resulted in a 16.7% year-over-year increase in overall sales activity. An increase in demand from foreign buyers due to the weak US dollar is likely a key factor for the gain.
- There were 7,726 active listings at the end of the third quarter, 4.9% fewer than 8,123 listings in the same period last year and 4.3% less than 8,070 listings in the prior quarter.
- Consistent with the decline in inventory, the time to sell an apartment and the discount from list price have also declined. Days on market fell to 119 days from 125 days and the discount from the list price at time of sale slipped to 4.4% from 5.8%, both from the same period last year.
Mortgage Market Trends for week ending August 26, 2011
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MARKET RECAP
The woes of homebuilders and anyone dependent on home building continue. The July report on new home sales shows that the annual sales rate has fallen to 298,000 units, hitting a five-month low. The good news is that supply isn’t expanding. In fact, only 165,000 homes are in inventory. This is a record low and a 6.6-month supply at the going sales pace.
Homebuilders face a cluster of problems: bargain-priced foreclosures; higher lending standards; and skittish buyers, many of whom have been further put off by the recent stock market sell-off. Mounting concerns of a double-dip recession and rising cancellation rates have only exacerbated homebuilder worries. The chief concern now is that builders could be forced to cut prices, something they’ve been fighting tooth-and-nail.
Despite the recent spate of bad news, home prices continue to hold their own, and in many instances are moving higher – at least month-over-month. The FHFA home price index for June increased 0.9 percent after posting 0.4 percent and 0.3 percent increases in May and April respectively.
However, does the slump in new and existing home sales portend falling home prices? We remain optimistic that prices will hold. People are understandably wary about big-ticket purchases, like a home, because of slow job growth and stagnating economic activity. But all have a reservation price (a price they will not sell below). Houses (that is, habitable houses) won’t be given away; they’ll be taken off market if the sales price doesn’t exceed the reservation price.
Reservation prices could fall and the monthly price trend could reverse, of course. That said, we think most of the bad news is baked into the system, so we don’t think there will be any heavy discounting. In short, we still think a home is a worthwhile investment in today’s market.
Mortgages have also been holding a price trend. Bankrate reported that its weekly survey on rates posted another all-time low. It’s worth noting, though, that after the survey was released, yields on the 10-year Treasury note spiked 10 basis points, which points to higher mortgage rates in the next survey.
A surfeit of negative news has kept mortgage rates low. This has lead many analysts to opine that ultra-low mortgage rates are the new norm. We think this is a dangerous way of thinking (which we’ll explain below) and that it is still best to take advantage of rates unseen in over 50 years.
Is This the New Norm?
We’ve gone down the higher-inflation, higher-interest rate road many times in the past, only to find ourselves doubling back. There is an interesting trend occurring with banks, though, that could persuade us to go down it once again.
One of the more vocal criticisms of banks is that they haven’t been lending as much as they should. There is some validity to the criticism; banks have been squirreling away a higher amount of reserves with the Federal Reserve, which has attenuated loan supply and, therefore, money supply, thus keeping inflation in check.
Data released by the Federal Reserve show this period of containment appears to be ending. In other words, excess bank reserves are leaking into the economy and money supply is growing. Because we operate in a fraction-reserve banking system, which means one dollar can be sufficiently leveraged to produce nine more; more reserves put to work can quickly raise inflation pressure.
This all might seem abstruse to the layperson unfamiliar with the intricacies of the Federal Reserve and fractional-reserving banking. All we are saying is that it is folly to write off price inflation and the possibility of higher mortgage rates, because there is no “normal” when it comes to financial markets.
Graph Courtesy from NY Times in an article by Vickie Elmer August 26, 2011. Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.
Second Quarter 2011 Hamptons & North Fork Residential Sales Market Overview
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Just released today are the new 2Q 2011 Residential Sales Market Report for the Hamptons & North Forkprepared by Miller Samuel Inc. for Prudential Douglas Elliman.
- Median sales price slipped 1.1% to $766,250 from the same quarter last year, as average sales price jumped 11.3% to $1,513,637.
- Year-over-year quarterly sales activity edged 6.4% higher to 619 sales compared to the same quarter last year, yet surged 63.3% from the first quarter. The lack of activity in the first quarter was related to the market concern over the potential increase in capital gains tax, causing market participants to rush to close before the end of 2010.
- Listing inventory increased 6.3% to 2,329 listings compared to the same quarter last year, the same rate of increase in the number of sales.
- Despite the stability in prices and the absorption rate, the marketing time of an average sale was 188 days, 57 days longer than the corresponding quarter in 2010.
- Listing discount—the difference between the list price at time of contract and the contract price–jumped to 11.4% from 6.4% in the same quarter last year, reflecting a larger mix of high-end sales.
Second Quarter 2011 Brooklyn Residential Sales Market Overview
Posted by: | CommentsToday we are released second quarter sales for the Brooklyn residential market. Brooklyn Market Overview Q2 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
“Prices edged higher as sales surged, but rising inventory tempered further gains.”
- Median sales price rose 3.7% from $463,000 second quarter last year to $480,000, also marking a 1.1% increase from $475,000 in the prior quarter.
- There were 1,942 sales across the borough, just slightly above last year’s numbers, as sales activity has generally remained stable over the past two years.
- The number of sales remained 7.7% below the 5 year quarterly average, while the number of listings remained 17.4% above the 5 year quarterly average.
- The time taken to sell a residential property expanded by more than a month over the last year to 142 days, but was consistent with the historic norms prior to last year’s federal homebuyers tax credit.
- The percentage difference between the listing price at time of contract and the contract price—the listing discount—increased to 3.9% from 2.8% in the prior year quarter.
Manhattan Residential Rental Market Report Second Quarter 2011
Posted by: | CommentsToday we released Second Quarter sales report for the Manhattan residential rental market. Manhattan Residential Rentals Market Overview Q2 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
- There was an 11% decline in the number of rental listings available, as new rental activity expanded 51.5% from the second quarter last year to the same period this year.
- A nominal 3.4% of new rental transactions received landlord concessions, averaging an equivalent of 1.2 months of free rent, compared to 60% of new rentals receiving an equivalent of 2 months free in the same period last year.
- Tenants paid a median net rental price of $2,888 per month this quarter, as compared to $2,700 in the same quarter last year, also marking a 2.8% increase from $2,808 last quarter.
- The average number of days from original list date to lease signing, or days on market,was 33 days, nearly 3 weeks faster than the 53 day average in this quarter last year.
Second Quarter 2011 Queens Residential Sales Market Overview
Posted by: | CommentsToday we are released second quarter sales for the Queens residential market. The Queens Market Overview Q2 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
“The second quarter Queens market showed price and inventory stability compared to the past year.”
- For the third consecutive quarter, the year-over-year median sales price of a Queens residential property edged higher. Median sales price
increased 2.1% from $335,000 in the same period last year to $342,000. - There were 2,361 sales in the second quarter, 40.6% below the same period last year, largely due to the federal homebuyer tax credit expiration in April 2010 that had stimulated sales activity.
- Although second quarter listing inventory slipped 1% below the same period a year ago, the monthly absorption rate—the number of months to sell all listings at the current pace of sales—jumped to 16.7 months, up from 10 months, as sales activity fell short of last year’s levels.
- Buyers and sellers grew somewhat further apart in their negotiations as measured by the listing discount that expanded to 7.1% from 6.4% in the same period a year ago, above the 6.1% average of the past 5 years.
- With the lower level of sales activity and stable inventory, the time to market a property expanded by 18 days to 115 days in the second quarter.
Manhattan Co-op/Condo Residential Sales Market Report Second Quarter 2011
Posted by: | CommentsOur Q2 Manhattan Market Overview which was released Friday and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman 
- There were 2,650 sales in the second quarter, 3.8% less than the federal-tax-credit-stimulated 2,756 sales total from the same period last year, and 10.7% more than 2,394, a seasonal uptick from the prior quarter.
- Median sales price declined 5.5% to $850,000, the second consecutive year-over-year decline of this metric. Both average sales price and price per square foot edged 1.6% over the same period.
- There were 8,070 active listings available at the end of the second quarter, 1.1% less than the 8,157 total in the same period a year ago, but a 6.1% seasonal increase from the 7,605 total in the first quarter.
- The number of days between the change in the list price, if any, and contract date—known as days on market—jumped from 105 in the previous year’s second quarter, to 136 days in the same period this year.
- The percentage difference between the listing price at time of contract and the contract price—the listing discount—fell to 3.5% from 9.1% in the prior year quarter.
