Real Estate is Hyper-Local

The Case-Shiller Index reporting on residential  property sales for the period of March, April, and May was published yesterday.

As noted in last month’s Geezer Rant,  because the index excludes price data on new developments, condos and co-ops,   the Index is not applicable to 99% of residential sales in Manhattan.

It’s interesting to note that the Wall Street Journal commented on this fact albeit  in the second page and 22 paragraphs into the article:

The Survey doesn’t track condominium or cooperative apartment sales, so it doesn’t take into account the majority of housing stock on New York City.

To get a better picture of the Manhattan real estate market in the second quarter of 2009, check out the various reports and press commentary published and discussed at the beginning of this month.

The Q2 Manhattan Market Overview prepared by  Miller Samuel, an independent appraisal firm,  and Prudential Douglas Elliman real estate, differentiates sales by the four major regions of Manhattan:  East Side, West Side, Downtown and Uptown. In addition to accounting for seasonal adjustments, the report also breaks out sales by new developments and resales–both very important factors in reporting median and average prices so that like sales are properly compared.

Even with that degree of Manhattan specificity, there remain neighborhoods within those regions can have quite different sales price results. For example the East Side consists of at least  seven neighborhoods including Beekman, Kips Bay, Murray Hill, Sutton Place, Carnegie Hill and Yorkville. Then there are “corridors” like the 5th Avenue and Park Avenue.

Within Manhattan there are areas, neighborhoods, sub neighborhoods corridors etc. Within those areas are specific blocks, specific buildings with specific views from specific floors or amenities which may affect property prices. Think about  a 5th Avenue apartment on a high floor facing Central Park vs.  an apartment in the same building on a low floor with no park views.

But  as Barry Ritholtz pointed out in his blog The Big Picture the “media coverage was mostly gushing” (see below),  the point is that all real estate is local, very very local and even hyper-local. Caution should be taken when extrapolating any national reports’ data  to any specific city or  town.

Front Page WSJ: Home Prices Rise Across U.S.Home prices in major U.S. cities registered the first monthly gain in nearly three years, according to a new report that provided fresh evidence that the severe U.S. housing downturn could be easing. Standard & Poor’s Case-Shiller index, which tracks home prices in 20 metropolitan areas, rose 0.5% for the three-monthperiod ending in May, compared with the three months ending in April. It marked the index’s first increase after 34 straight months of decline, and came after a variety of housing indicators has shown glimmers of hope for the past several months

Front Page NYT: Recovery Signs in Housing Market Stir Some Hope

After a plunge lasting three years, houses have finally become cheap enough to lure buyers. That, in turn, is stabilizing prices, generating hope that the real estate market is beginning to recover. Eight cities, including Chicago, Cleveland, Denver and San Francisco, showed price increases in May, up from four in April and one in March, according to data released Tuesday. Two other cities, Charlotte, N.C., and New York, were flat.

Bloomberg.com - U.S. Home Prices Rise for First Time in Three Years

Home prices posted their first monthly gain in three years in May, a gauge of values in 20 major U.S. cities showed, reinforcing signs of stabilization in a market hammered by the worst slump since the 1930s. The S&P/Case-Shiller home-price index rose 0.5 percent from April, the first monthly gain since July 2006 and biggest since May of that year, the group said today in New York. The measure was down 17.1 percent from May 2008, less than forecast and the smallest year-over-year drop in nine months.

CNN/Money – Home prices up for 1st time in 3 years

Index of 20 major cities rises on a monthly basis for the first time since July 2006, hinting that the worst of the declines may be over. The value of U.S. homes grew on a monthly basis in May for the first time in nearly three years, according to 20-city index released Tuesday. The month-over-month increase was 0.5%, according to the report from financial data company Standard & Poor’s and economists Case-Shiller. It was the first increase in the monthly index since July 2006.

Reuters - Home prices up for first time in three years

U.S. single-family home prices rose in May from April, the first monthly increase in nearly three years, suggesting prices may be stabilizing, according to Standard & Poor’s/Case Shiller home price indexes on Tuesday.