Archive for NYC/NYS Economic Indicators

Douglas Elliman released the First Quarter report for Manhattan Residential Co-op and Condo sales market.  The Manhattan Sales Quarterly Survey of Co-op & Condo Sales for 1Q-2014 reported here  and summarized below was prepared by Miller Samuel for Douglas Elliman.

 “Sales momentum from a record setting 2013 carried into the first quarter, as listing inventory stabilized after three years of declines.”

Manhattan_1Q_2014_highlights

The Manhattan housing market had yet another strong quarter despite the challenges of tight credit and low inventory. Momentum from the prior quarter carried into the new year with the most first quarter sales in seven years. New development sales are beginning to enter the market helping set several price records. While listing inventory may be at or near a bottom, we don’t anticipate enough new supply to enter the market to keep up with demand this year. We look forward to an active spring market.

  • The average price per square foot of a Manhattan apartment reached a record $1,363, 23.6% above the prior year level. Price comparisons compared to the prior year quarter may have been skewed higher by the market lull that occurred after the expiration of the “fiscal cliff” at the end of 2012.
  • There were 3,307 sales, 34.6% above the same period last year, the highest first quarter total in 7 years.
  • The amount of listing inventory was essentially unchanged at 4,968 as compared to the prior year quarter total of 4,960.
  • Days on market, the number of days from the last price change to the contract date, fell by 17 days to 115 from the prior year quarter.
  • Listing discount, the percentage difference between the list price at time of sale and the sales price, fell to 2.6% from 4.3% over the same period.

Oct
17

How’s the Market? September 2012

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While Quarterly Sales Reports show closed activity for the previous quarter, monthly Contract Signed reports are the ‘crystal ball’ of closed sales to come.  Granted all contracts signed for any given month may not close in the next month, and some may not close at all but most (over 95%) will become closed sales which will become part of the next Quarterly Sales Report.

In the following charts and graphs you can see how the market stacks up against last month and this month last year.

 

 

 

 

The following charts and graphs show the quarterly comparisons for last quarter, the previous quarter and last year.

 

 

 

 

 

 

 

Today, we released our Second Quarter report for the Manhattan Residenital Co-op  & Condo Sales Market.  Manhattan Residential Co-op & Condo Sales Market Overview Q2 2012 reported here and summarized below was prepared by Miller Samuel for Prudential Douglas Elliman.

“Although Manhattan prices and sales remained stable, the decline in supply continued to present a growing challenge to the housing market.”

  • While price indicators showed modest declines from prior year levels, they were largely the result of a 6.7% jump in entry-level sales and a 3.6% increase in sales below $500,000. Median sales price declined 2.5% to $829,000 from $850,000 in the prior year quarter.
  • There were 2,647 sales in the second quarter, 8.1% higher than the 2,448 sale quarterly average over the past five years. The number of sales was essentially unchanged from the prior year levels, but there was significant disparity between co-op and condo results. Co-op sales increased 10.9% and condos declined 11.8% over the prior year quarter results.
  • Listing inventory fell 13.5% over the same period with new development inventory falling at a 20% pace, faster than 11.8% seen for re-sales. As a result, the monthly absorption rate fell to 7.9 months, the fastest market pace in more than 4 years.
  • Days on market—the number of days from the last price change, if any, to the contract  date—increased to 165 days from 136 days as falling supply helped sell off older inventory.
  • Listing discount—the percent difference between the list price at time of sale to the sales price—increased to 5.1% from 3.5% in the same quarter last year.

 

Jun
17

In the News

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6/11/12  Manhattan apartments tip furthest in favor of buyers in last six years:  Amid rising rents, buying a Manhattan apartment hasn’t looked this sensible since 2006. Citing data from appraisal firm Miller Samuel, Bloomberg News reported that in the first quarter the average cost of buying was 20.8 times more expensive than the annual cost of renting, the smallest spread since the end of 2006, when buying was 20.4 times the cost of renting. In the second quarter of 2008, the multiple was 26.7.   Read the full article at the Real Deal

6/11/12:   For Comedian, Leading Her Condo Board Is a Serious Matter:  To sit on the board of a condominium or cooperative in New York City is to exert exquisite control over your building, to decide who gets to buy Apartment 12C and to pick the color of the lobby wallpaper. But it is also a position that comes with neither compensation nor thanks, and it requires sitting through hours of bickering over questions like whether the doormen ought to wear little caps. The ranks are often dominated by retirees, real estate brokers and lawyers.   Read the full article in the New York Times 

6/13/12  American buyers join foreigners in flight to city’s luxury market:  Wealthy Americans have been lost in the hysteria over foreign buyers descent upon the city’s luxury real estate market, but in the last week domestic buyers have returned with a vengeance. The Wall Street Journal noted that two apartment deals totaling $110 million closed Monday to foreign buyers.  Read the full article at the Real Deal 

6/14/12  Hospital for Special Surgery Unveils Plan for New Building:  The Hospital for Special Surgery unveiled plans Wednesday to build a 207,000-square-foot, 13-story ambulatory care facility.  The proposed building would included three floors of operating rooms for ambulatory surgeries — where patients stay up to 23 hours — along with a floor for recovery.  Read the  full article at DNAinfo.com

Apr
16

In the News

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4/9/12 Lux Life:  3 Pads sold for over 20M last week: Despite the Easter and Passover holidays, the affluent pulled out the stops in Manhattan, snapping up the former Fifth Avenue homes of a famous financier and a copper heiress.  Read the full article at Crain’s New York Business

4/12/12:  Audits Find Flaws in City’s Property Assessments:  The audits note that for many years the city used one methodology, called net income capitalization, to determine property valuations. For the 2008-9 fiscal year, the city switched to another method, called gross income multiplier. Then, without advance notice to homeowners, it reverted to the original methodology for the 2011-12 fiscal year. Read the full article in the New York Times

4/13/12  Exclusive 1st Quarter 2012 Elliman Report for the Miami, Florida Market:  The Miami housing market experienced the highest market share of non-distressed sales in several years, with a surge in both condo and single-family sales activity. The luxury and the non-distressed markets both continued to see upward pressure on prices. Distressed sales activity is expected to pick back up over the next year, which will help the market gain better footing for the long term. Foreign buyers continue to play a key role in driving sales demand, incentivized by the weak US Dollar. We anticipate an active Miami housing market over the next several quarters.  Read the report from Prudential Douglas Elliman 

 

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Apr
13

How’s the Market? March 2012

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While Quarterly Sales Reports show closed activity for the previous quarter, monthly Contract Signed reports are the ‘crystal ball’ of closed sales to come.  Granted all contracts signed for any given month may not close in the next month,  and some may not close at all but most (over 95%) will become closed sales which will become part of the next Quarterly Sales Report.

In the following charts and graphs you can see how the market stacks up against last month and this month last year.

 

 

 

 

 

Apr
01

Mortgage Market Trends for Month ending March 31, 2012

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 MARKET RECAP

One week’s worth of data does not a trend make. We say that because of renewed concern the housing rally is set to peter out because of a burst of sub-par news.

The news on lower existing and new home sales was disappointing, to be sure, but hardly a foreboding omen. The news on pending home sales, which tracks contract signings for existing homes, wasn’t all that bad either. The index was down 0.5% in February, but the index has been up for the most part over the past six months. Sometimes a little perspective is needed.

Pessimism was further heightened by the S&P/Case-Shiller home price index, which showed another price decline. Month-over-month, the average price declined 0.5 percent in January. Year-over-year, the average price is down 3.8 percent.

The fear properties in various stages of foreclosure and delinquency will continue to roil the market is on the rise. We are not terribly concerned though; the attenuating factor being foreclosed and delinquent properties are a well-vetted, well-understood variable. More important, it’s an improving variable. Data from CoreLogic show that faster REO-clearing rates and improving employment and low mortgage lending rates point to a sustained housing-market recovery.

In our opinion, frustratingly low appraisals and too-stringent lending standards are more pressing issues for many buyers and sellers. Loosening the tethers on both, and particularly the latter, would go a long way toward keeping the recovery on course.

A strong economy would also go a long way toward sustaining the recovery. The good news is the economy continues to grow. The final number on gross domestic product shows that the economy grew 3.0 percent in the fourth quarter of 2011. This latest reported quarter was much stronger than the 1.8 percent growth reported in the third quarter of 2011.

The employment data support the notion the economy is growing. Yes, we are aware that Federal Reserve Chairman Ben Bernanke recently warned that improvements in the labor market may not be sustained, but we think otherwise nonetheless: Job creation has accelerated in recent months. Concurrently, jobless claims have decelerated. In fact, the latest report on weekly jobless claims shows the four-week moving average falling to its lowest level in four years.

Of course, the state of the economy always impacts credit markets. Interest rates dropped this past week when Bernanke stated he thought the economy has yet to reach full-recovery mode. Investors equivocated and money moved from stocks and commodities into U.S. Treasury securities. The mortgage market responded in kind, and we saw lending rates drop five to 10 basis points across most offerings.

We can’t say for sure how long rates will stay down. We’ve seen a marked increase in volatility in lending rates in March. We think volatility will remain high going forward, which is why we feel impelled to say that the risk of waiting for lower lending rates outweighs the benefit of substantially lower lending rates materializing.

The Most Persuasive Sign it’s Time to Lock and Load

Economist Hyman Minsky is the author of a persuasive short monograph titled “The Financial Instability Hypothesis.” Minsky basically states that the longer a market appears stable, the less stable it actually is because of excessive speculation and leveraging of that market.

We’ve been in a 31-year bull market in U.S. Treasury securities. That is, long-term real yields – yields adjusted for inflation – have been trending down since the early 1980s. A recent analysis by Credit Suisse shows that real rates on long-term Treasury securities are down to 50 basis points, or 0.5%.

Such a low rate doesn’t compensate for opportunity cost and time value. In fact, the real interest rate is so low today, even the early 1900s can’t boast of such low rates.

We’ve been in a very long bull market in bonds. Long sustained trends tend to lull participants into complacency. In turn, complacency tends to ratchet up the use of leverage. We don’t know how much leverage there is behind this lending market, but we suspect more than there was 30 years ago Carry trade – borrowing short term to buy long-term credit instruments – has been a very lucrative, easy-money trade over the past decade.

The point is, 31 years is a long time, record lows don’t last forever, and neither does easy money. If Minsky’s hypothesis holds, the odds interest rates could rise in the near future is much higher than many borrowers think.

Graph Courtesy from NY Times in an article by Vickie Elmer April 1, 2012.  Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.

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Mar
18

In the News

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3/13/12  Luxury Manhattan sales market set to slip following Wall Street’s compensation declines: 
The high-end Manhattan real estate that has propped up an otherwise stagnant sales market, is likely to begin a decline of its own in 2013 and 2014. According to data from the New York State Comptroller’s office and Miller Samuel CEO Jonathan Miller cited by Bloomberg News, the top 10 percent of the Manhattan condominium and co-op market tends to follow the pattern set by Wall Street bonuses two years earlier.”  Get more informaiton at TheRealDeal.com

3/14/12  Rent Study Finds NYC Cheaper Than Long Island, New Jersey:  “In what will be a surprise to many New Yorkers, the city isn’t the most expensive place in the country to rent a modest two-bedroom apartment, a new report released has found. In fact, it’s not even the most expensive rental market in the region.”  Read the full article in the Wall Street Journal

3/15/12  Pension Reform Announced:  “Governor Andrew M. Cuomo, Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos today announced the passage of a sweeping pension reform plan that will save state and local governments more than $80 billion over the next 30 years.  New York City taxpayer savings will account for $21 billion of this savings.  Our legislative leaders have shown extraordinary determination and deserve immense credit for addressing the critical fiscal challenges facing state and local government.”  Read the Governor’s Press Release and Mayor Bloomberg’s Statement

 3/15/12  NY State lawmakers to allow casino gambling:  “New York state lawmakers have agreed to legalize public casinos and will amend the state constitution to allow seven new casinos to operate, lawmakers said on Wednesday.”  Read the full article at Reuters.com

 

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Mar
09

How’s the Market? February 2012

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While Quarterly Sales Reports show closed activity for the previous quarter, monthly Contract Signed reports are the ‘crystal ball’ of closed sales to come.  Granted all contracts signed for any given month may not close in the next month,  and some may not close at all but most (over 95%) will become closed sales which will become part of the next Quarterly Sales Report.

In the following charts and graphs you can see how the market stacks up against last month and this month last year.

 

 

 

 

Jan
01

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.

Oct
27

Third Quarter 2011 Long Island Sales Report Released

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Today 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.”

  • 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.
  • 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.
  • 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.
  • 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.

Jun
10

Week in Review: News You Can Use June 10, 2011

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  • Foreclosures fall 38% in May for New York City according to data from PropertyShark.com, the total number of residential foreclosures fell last month from May 2010, however co-op apartments made up 79% of all new foreclosure auctions scheduled. Read it all in Crain’s New York
  • Federal Reserve publishes Beige Book June 8, 2011 “The Second District’s economy has continued to expand since the last report, though at a somewhat diminished pace.”
  • City’s Design Sector grew 75% the past decade:  “More designers are employed here than in any other U.S. city, thanks in part to an explosion in recent years of Brooklyn-based companies, said the report, released on Wednesday by The Center for an Urban Future, a think tank in Manhattan. It noted that the number of Brooklyn-based firms spiked from 257 in 2001 to 433 in 2009, for a 70% increase”.  Read it all in Crain’s New York.
  • The Bullish Case for the U.S. Economy  “Investment strategist Robert Doll says America’s edge is faster population growth, companies that are global in scope, and a culture of innovation and entrepreneurship.”  Read it all in the Wall Street Journal.

Jun
09

New York City Consumer Confidence Up

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Consumer confidence has always been, in my opinion, one of the major leading indicators for the real estate market in New York City. When people feel bullish about the future they are more likely to buy a coop or condo in Manhattan. Great news for sellers.

Overall Consumer Confidence increased in eight of nine New York State MSA’s (metropolitan statistical areas) in the fourth quarter of 2010, according to the latest Quarterly Consumer Confidence survey released today by the Siena (College) Research Institute (SRI).  At 70.4, the New York City region had the highest overall consumer confidence of the nine regions, and the Binghamton region had the lowest, at 58.4.  Current and future confidence increased in eight of the nine regions. 

  • New York City region had the highest overall consumer confidence of the nine regions
  • Consumers in New York City and Long Island are most bullish about the future
  • With this consumer stability and in some case increased optimism, we have pent up demand beginning to register in plans to buy especially computers and furniture with home buying showing some signs of life.

Although the May report shows a decrease of current confidence 66.3, there was an increase in future confidence to 72.7

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Dec
02

Federal Reserve Releases Beige Book For New York

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New York-Federal Reserve Beige Book 12-2-2009

On Wednesday December 2nd the Federal Reserve released the Beige Book for the Second District–New York. Below are the report’s highlights regarding New York City.

  • The Second District’s economy has shown further signs of improvement since the last report, though the labor market remains soft.
  • Residential real estate markets have been mixed since the last report, but generally weaker, especially at the high end of the market; New York City’s sales and rental markets have been particularly weak.
  • New York City’s housing market has continued to weaken: while sales activity for existing apartments has rebounded from depressed levels, sales of new units remain very sluggish. Selling prices for existing units are reported to be down roughly 25 percent from a year earlier, with even steeper declines at the high end
  • New York City’s rental market also continues to weaken, with contract rents in Manhattan falling roughly 10 percent over the past 12 months; moreover, when concessions are factored in, the decline in effective rents has been a good deal steeper.
  • There are signs of a pickup in tourism activity in New York City.
  • Consumer confidence among New York State residents edged down in both September and October, after reaching its highest level in more than a year in August.
  • Tourism activity in New York City has picked up since the last report
  • Manhattan hotels report that occupancy rates exceeded year-earlier levels in both September and October, for the first time in more than a year
  • Hotel room rates climbed by substantially more than the seasonal norm in September and October, though they are still down 15-20 percent from last year.
  • Broadway theaters report a pronounced pickup in attendance as well as revenue

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New York State Department of LaborManhattan’s October 2009 unemployment rate remained at 9.2% from September but has has increased  3.7% from October 2008.

New York City’s October unemployment rate as a whole ticked up .1% from last month’s 10.2% rate but up 4% from 6.3% reported in October of 2008.

Worst hit was the Bronx at 13.4% (+.2%), followed by Brooklyn 11.1% (+.1), Queens 9.2% (+.1%) while Staten Island remained the same at 8.9%.

The New York State Department of Labor reported the state’s rate of unemployment is the highest since April of 1983.

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