Archive for Market Reports
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.
Tis the Season: Coop Financials Released in May – Part 3 of 3
Posted by: | CommentsThis is the third in a 3 part series. In Part 1, we discussed the General Principles of a Coop Corproation and the Telltale signs of a GOOD Building. Part 2 discussed what to look for in Coop Financials. Finally, we’ll look at:
Assessing a Coop’s Financial Condition
It has been my experience that very few buildings are in such a state of financial disrepair as to warrant a decision on the part of the buyer not to purchase in a particular building.
This was not always the case especially in the 1980’s and early 1990’s, a time that saw a tremendous amount of new conversions and with that, the problems that arise in such situations. Currently, the overwhelming majority of coops have been established for over fifteen years (a very conservative estimate) and has in many ways gotten the kinks out of their financials. They tend to enjoy low or no sponsor ownership, attractive financing and low instances of shareholder default.
In spite of the likelihood that the majority of buildings are solvent, buyers are concerned about the potential for increased maintenance and assessments, these concerns are the main motivation behind their question; “Is this a good building?”
Before forming an opinion, it is essential to understand the following points:
- Buildings, regardless of their location, age and prominence, need on-going repair and the replacement of parts, systems, and structure.
- Operational costs are subject to inflationary pressure and therefore are likely to rise.
- Salaries are subject to union mandates.
- Taxes are subject to the municipality.
- The only manner in which a building can raise money is by employing one or more of the following sources:
- Refinance their underlying mortgage.
- Exercise their ability to draw upon a line of credit.
- Raise maintenance.
- Institute an assessment.
- Institute a flip tax on resales.
Based on the aforementioned, it is logical to conclude that ownership costs are going to rise in 99% of the cases.
The job at hand is to assess that a building is being run conscientiously (an imperative) and predict to what extent future costs are likely to rise.
Finally, I recommend a NY Times article which describes some Red Flags in a co op’s statement.
Mortgage Market Trends for week ending May 20, 2011
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MARKET RECAP
We suspect that there are a few businesses tougher than the home-building business these days, but we are hard pressed to think of any. The homebuilders likely agree, given the homebuilder index remains at a depressed 16 reading for May.
Homebuilders continue to report lousy conditions. They blame competition from distressed sales, which made up 39 percent of the homes sold in the first quarter, as well as unavailability of construction credit for their woes. What’s more, sales of distressed homes also pressure prices of existing homes, which means new home sales have been crimped further by buyers unsure that they will be able to sell their existing home at a favorable price in order to trade up.
Homebuilders are surely frustrated by the sputtering and the false starts that they’ve had to endure over the past 18 months. Just when it appears a positive trend in starts will take hold it reverses and falls again. Starts rebounded 7.2 percent in March but reversed 10.2 percent in April, dropping to an annualized rate of 523,000 units. The drop was led by a 24.1 percent fall in the volatile multifamily-starts component, but the larger and more significant single-family component was off 5.1 percent. Unfortunately, we doubt that homebuilder fortunes will improve much in the coming months.
Pricing – for everyone – remains the front-burner concern. The NAR reports that the median sales price in the first three months of the year was 4.6 percent lower compared to the first quarter of 2010. Prices have declined in 118 of the 152 metropolitan areas included in the NAR’s report. We are quick to note, though, that year-over-year comparisons are irrelevant when one quarter is advantaged by tax credits and another quarter isn’t. We will be much more interested in data from the second half of this year compared to the second half of 2010.
The good news is that lower prices have helped rejuvenate sales volume. Total home sales increased 8.3 percent to a seasonally adjusted annual rate of 5.14 million units in the first three months of 2011 compared to the last three months of 2010. Our economic textbooks haven’t failed us on this market process: lower prices produce higher demand, and, therefore, help to clear inventory.
Admittedly, our textbooks have been less prescient on mortgage rates. Despite obvious price inflation in consumer, producer, and financial markets; strong job growth; and worries over the United States ‘ fiscal conundrum; mortgage rates (as well as most U.S. Treasury rates) continue to fall. Indeed, we are now looking at 30-year fixed-rate mortgages near a five-month low, well below 5 percent.
Obviously, other factors are at work here, and it could simply be a supply and demand imbalance and surprisingly strong demand for U.S. Treasury securities that are keeping mortgage rates low. Whatever the cause, we still don’t think they will hold. There are simply too many variables favoring higher rates, and none more influential than the Federal Reserve’s eventual need to shift to a tighter monetary policy from an expansionary one.
This isn’t to say we couldn’t be wrong, but if we are, then some of our economics textbooks might need a rewrite.
Could Home-Price Insurance be a Contrarian Indicator?
SmartMoney ran an interesting article this past week on insuring against a drop in home prices. In short, the article focused on how underdeveloped the market for hedging and insuring against falling home prices is and how it is starting to develop.
Up until recently, the only way to insure a home against falling prices was to buy futures contracts on home prices in 10 metropolitan areas, including Boston, Miami, and Las Vegas. Of course, if you didn’t live in one of the 10 metropolitan areas, you won’t be perfectly insured. If you lived in Reno and bought futures contracts based on home sales falling in Las Vegas, you could still lose if Las Vegas home prices rose while Reno home prices fell.
Today, firms are beginning to sprout around the country offering direct insurance for local markets. One, Home Headquarters, a nonprofit, sells insurance at a cost of 1.5 percent of the home’s value for homes located in Syracuse , New York . More firms are set to enter the market this year.
This tells us something: new products (and articles about them) tend to proliferate toward the end of a strong trend – either down or up. Perhaps this latest data point on insuring against falling home prices, combined with all the other negative data points on housing, is a sign the end is near in a good way.
Graph Courtesy from NY Times in an article by Maryann Haggerty May 19, 2011. Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.
All Real Estate is Local. Very, Very Local!
Posted by: | CommentsTruth, lies and statistics!
Earlier this month, Zillow released its Q1 Real Estate Report. Many in the press joined in and cried gloom and doom.
The hysteria was best summarized by a Curbed article that listed the 10 Most Depressing Things Mentioned in The Zillow Report. Perhaps real estate prices continue to decrease in Phoenix, Los Vegas, Tampa, etc., but in New York City, especially Manhatan, it’s just not the case.
You would be misled if you simply looked at the Zillow Home Value Index for New York Metro data and assumed it had anything to do with Manhattan Residential real estate sales.
| MoM | QoQ | YoY | |
| New York Metro | -.5% | -1.6% | -5.3% |
But if you focus on coops and condo sales which account for over 99% of residential properties sold in Manhattan vs single family homes , you’ll see that in New York City there have been significant price increases.
| MoM | QoQ | YoY | |
| New York Coop+Condo | +2.3% | +7.5% | +19.2% |
As previously discussed with regard to the Case Shiller report discussed here, the Case Shiller report excludes new developments, condos and coops. At least the Zillow report has that data available (perhaps not new development) but you have to dig for it.
All real estate is local. So local, in fact that certain neighborhoods, blocks, buildings and even specific apartments have their own hyper-local real estate data.
Manhattan Residential Rental Market Report First Quarter 2011
Posted by: | CommentsToday we released First Quarter sales report for the Manhattan residential rental market. Manhattan Residential Rentals Market Overview Q1 2011 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.
- In the first quarter of 2011, 36.8% of rental transactions had a landlord concession.
- The average concession when provided was one full month of free rent.
- The median rental price of a Manhattan property, after considering concessions,
if any, was $2,808, 7.4% higher than $2,616 in the prior year quarter. - There were 25.6% fewer new rental listings available in the first quarter, falling to
3,874 from 5,204 in the same period last year. The amount of new rental inventory
was essentially unchanged from the prior quarter. - Days on market—the number of days from original list date to lease signing—was
40 days, less than half the 86 day average of the prior year quarter.
Manhattan Co-op/Condo Residential Sales Market Report First Quarter 2011
Posted by: | CommentsOur Q1 Manhattan Market Overview which was released today and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman
- There were more sales in the first quarter of 2011 than in any first quarter in 3 years or since the credit crunch in 2008. There were 2,394 sales in the quarter, 0.4% more than 2,384 in the same period a year ago and 4.3% more than 2,295 in the prior quarter.
- Median sales price for the first quarter was $782,071, down 9.9% from the same period last year.
- Price per square foot averaged $1,025 in the first quarter, slipping 1.3% over the same period.
- The amount of active listing inventory is at its lowest level for a first quarter since 2007.
- There were 7,605 listings in the first quarter of 2011, 5.3% below the 8,027 listings in the same period last year.
- The percentage difference between the listing price at time of contract and the contract price—the listing discount—slipped to 4.5% from 5.3% in the prior year quarter.
- The number of days between the change in the list price, if any, and contract date—known asdays on market—edged 4 days longer to 127 days from 123 days in the same period last year.
Manhattan Coop & Condo 10-Year Sales Trend Analysis
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Our 2001 to 2010 Manhattan Residential Sales Trend Analysis which was released Thursday and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman
- Price indicators show stability with mixed results
- 2010 was second only to 2008 in both Median sales price and Average sales price which was considered the peak of the Manhattan Market
- Median sales price for 2010 was $880,000, 3.5% above the 2009 median sales price of $850,000 and more than double than the median sales price of
- $430,000 in 2001
- Average sales price rose 4.6% to $1,457,255 in 2010 from $1,393,001 in 2009
- The key reason for the increase in these metrics was due to the shift in the mix towards larger apartment sales
- 2009 referred to as the “year of the first time buyer”
- Entry level apartment sales were the first to gain traction
- Average square footage of an apartment sale in 2010 was 1375 square feet.
- Number of sales above 10,000
- There were 10,060 co-op and condo sales in 2010, the third highest one year total of the past decade
- The 2010 total was 35.4% higher than 7,430 sales in 2009
- Market conditions saw significant improvement in the second half of 2009
- Listing inventories ended 2010 up 5.6% encouraging individuals who removed their listings in 2009 to re-enter the market
- The monthly absorption rate declined to 8.6 months from 11.1 months and below the 9.3 month decade average
- Days on Market, Listing Discount fall with rise in sales activity
- Days on market fell below the 133 day average of the past decade in 2010
- It took an average of 119 days to sell a property in 2010
- Down sharply from 179 days in 2009
- Listing discount fell to 7.1% from the ten year high of 10.2% in 2009 but well above the 4.2 average of the past decade
- Days on market fell below the 133 day average of the past decade in 2010
