Disconnect between Case-Shiller and reality

Up 20-25%? Can't buy anything for $2.5M? LOL. While your point about CS may have some validity, even SE's own metric shows condo's up 7%, and that from Jan 2010, which was down 15-20% from peak. You're a broke-whore or a broke-whore stalking horse, for sure. SIZZLE! LOSING! BYE!

prices are just beginning the 2nd wave down in NYC. per tier NYC is much slower than others touching March 2009 lows, accomplishing this "feat" just now (like SF) instead of months ago.

if you look at the prices per tier you realize that's the lower tier the one that is pushing prices down for the whole ladder. the higher in the ladder you are, the longer it will be for prices to be reflected, but they will end up being reflected sooner rather than later and with a much bigger loss in $s, of course. a stock mkt crash will surely speed this process up, we will see what happens. love to watch meanwhile!

downtown, obviously there is a huge disconnect from these guys, Case Shiller and the Manhattan world. Doesn't this report exclude condos and coops? I mean for the love of God how can u measure Manhattan excluding coops and condos!? That's like a grocer weighing fruit without the fruit.

I hate all of you. This topic comes up endlessly. The C-S report is for New York Greater Metropolitan Area - Not the lesser metro, not the City Of, and certainly not Manhattan.

There IS a C-S NY area condo-only index, which you can find on the site. That is more closely correlated with Manhattan condos, but still includes condos in Westchester, Bergen, etc, etc.

Discussion of its applicability here:

http://therealdeal.com/newyork/articles/how-credible-is-case-shiller/comments

The takeaway: Noah has an enormous head.

hehe..my very own bobble head

The Streeteasy Manhattan condo index is up 7.2% yoy (which was the bottom for Manhattan condos - so far). Case-Schiller NY market index is down 3% yoy (which was a 7-year low - so far.) Looking at both graphs side-by-side, it looks like Manhattan is about 2 years behind NY metro, and hasn't plunged nearly as deep/fast.
FWIW, I don't see prices up 20-25% up against 2009, so please give us those numerous comps of places trading so much higher.

http://www.urbandigs.com/chart.php?s1=Pending+Sales&s2=&mindt=02%2F01%2F2009&maxdt=03%2F29%2F2011&Update=Update&t=Market+Trends&interval_mindt=

Let me just show you pending sales volume trends since the lows in early 2009. Now, volume does not necessarily = higher prices, but is nevertheless a good way to look at market strength or weakness. This chart is showing you the pool of listings that move from an ACTIVE state to a CSGN state, prior to closing. So you are seeing demand trends as they happen. Its clear that since the lows, this market saw a sustained reflation in volume. I would say all price points reflated since 'fear trades' in early 2009 when equity markets were 50% lower. Today, different story and each price point reflated a bit differently from the furious crash we experienced from late 2008 to early 2009. In hindsight, I think everyone was surprised at how short the fear trade period really was.

like jason said its for METRO area...

this includes Wayne, NJ and all the crap towns in between..flippin tables son

I suspect those 20-25% price hikes are actually optimistic asking prices.

"I say this as someone as someone who can't believe how little $2.5 million will buy downtown or on the Upper West Side, someone looking very hard right now and not seeing any weakness in the market"

This is a quality of inventory question as much as a price question.

Dowtnownrenter said "trading up", so I'm taking him at his word, that properties are selling 20-25% above 2009 comps. I'm sure they're so numerous he is busy organizing his information.

>think everyone was surprised at how short the fear trade period really was.<
now you know u can't include me in that statement Noah.. :)

cue aboutready to chime in and tell us how foolish we all are and to site numerous examples of not just the manhattan residential re market, but the western world in general.

cue w67 to call us unicorns, and boast about boating tell us all $500 per sq ft pricing is just around the corner.

inonada will come in next and explain how to negotiate leases, eleven succesful lease negotations in 3 months!

Very thoughtful analysis, Noah. Thank you.

Noah what does "CSGN" stand for?

Contract Signed.

ali r.

"This is a quality of inventory question as much as a price question."

I completely agree with this. My wife and I are similarly appalled at what $2MM can buy on the UES or UWS. Maybe 50% of the problem is disconnects between what we perceive as fair price and what sellers perceive. But the other 50% (or more) is just the dearth of quality inventory. We've seen probably 20-30 places in the last 3 months, but there was only 1 that we really, really liked, and maybe 2-3 more that we could see ourselves living in - but even those we had to talk ourselves into.

In other words, there are plenty of places that "objectively" look like decent deals for what they are, we just don't want to live there.

I bought in fall 2009. I saw the bottom in Feb 2009, then moved as fast as I could to buy after the upticks in summer 2009.

A comp to my 2 bed unit, in my building, just closed at 20% over what I paid.

There are 1 beds in my building selling AND CLOSING for 15% over what I paid.

So, yes AGAIN, NYC is up.

I do believe, however, there WILL be a slight correction in the NYC market. Watch for it in late summer, early fall, this year.

needsadvice..I'm sure it wasn't as easy as you make it sound. Lot of anxiety but you overcame your fear/doubt and scored. Congrats.

As for the rest of the country, if we are at 2000-2001 price levels, we have over-corrected. The anomaly that was the bubble has been eliminated, but the pendulum has swung TOO FAR the other way.

People are being swayed by being "underwater" or losing "investment" value, when their houses should never have been an "investment" to begin with. It's a forced savings plan, and you hope to break even over time. After years of Wall Street saying "don't try to time the market" everyone is being encouraged to stare at the market timing on their home purchases. They are being told to wring their hands and worry over paper profits.

We are at a "nothing to fear but fear itself" stage. Unfortunately, I don't see anyone providing the kind of leadership (and encouragement) that is needed to get us out of this quagmire.

Washington (BOTH parties) is busy pointing fingers rather than pointing to a solution.

there are definitely quality of product issues right now. I cant find well priced quality products for clients that did not pull trigger so far in 2011. Frustration big time. Subscribers to my Manhattan tools can see in the Broker YoY - ACTIVE BY MONTH chart section on urbandigs.com, that the pace of new inventory coming to market has been low compared to levels seen this time last year. For past 5 months, y-o-y new inventory trends are down. So if you think about it, sustaining anything close to last years demand pace given lower new inventory pace, is a sign of strength..in other words, supply should be measured in relation to demand, and vice versa.

I miss stevejhx

http://therealdeal.com/newyork/articles/how-credible-is-case-shiller/comments

The takeaway: Noah has an enormous head.

---

Other than that, as for Case Shiller Index (CSI), the other takeaway is that you should be wary of the opinion of observors who are selling competing products. While I have tremendous respect for the work of both Jonathon Miller and Noah R., they are rivals to CSI and they have an axe to grind. If you read the article, the one reasonably independent reviewer from the Furman Center said CSI was one of the best measures around.

Last year at one point, in one of the many discussions of CSI, myself (I think Pulaski) and few others pointed out that Jonathon Miller's own estimates of the drop in Manhattan prices were within 0.1 % of the CSI estimate for the NY Metro. All boats were sinking with the tide...

Today, a year later, I would argue that there has been a significant divergence in the market, as the fortunes of the upper income brackets have risen far faster than the incoming tide. Since Manhattan RE is skewed toward the high end (also other areas offering High End RE like the North Shore are up as well), it has been doing better than the rest of the NY Metro area since the end of the tax credit - which was skewed toward middle- and lower-income tax brackets.

For the record, even that simplistic picture is more complicated. There was just an article in the NY Times in the last week, pointing out that sales of studios have been stagnant in Manhattan lately. It's the middle- to high-end in Manhattan that's doing well, not studios for middle-income folks who bought when the tax credit was still available last year.

So to answer the question from the original poster, while the overall NY market metro is declining, your particular demographic segment is not. If you are willing to buy in Jamaica Queens you could probably get an awful lot for your $2M, no so much so in Manhattan.

Perhaps you could buy six or eight Manhattan studios and put slides in between them!?

sisyphean, condo studios and 1 bedrooms are doing just as well as the high end market. Look at your favorite building. Since this time last year I'll bet inventory supply has been more than cut in half, prices are listing about 15%-20% higher and asking rents are also up 10-15%.

@ SteveF: Thanks, I did have moments of doubt, but I am old enough to think long term. . .

steveF. Where are you getting your data? If you look at Jonathon Miller's Manhattan Absorption Rates for 2010 and 2011 on his website, the under $500K inventory is higher in ALMOST all categories (Feb 2011 is most recent period posted on URL below, compare it with August 2010) now than it was six months ago after the expiration of the Housing tax credit.

http://www.millersamuel.com/charts/

Also to clarify a point from my original posting, I am now starting to think that in the current economic conditions that CSI NY Metro is becoming less representative of Manhattan than it has been in the past few years.

sisyphean absorption rates sound really cool.
However I like to look at actual comp listed inventory. Everyone says "you can't go by the list price" sure you can. Brokers are not going to waste their time listing overpriced properties. Of course some will, so you eliminate the highest priced and lowest priced and you look at the rest. List prices are much higher than last year and there are minimal price drops if any happening with contracts going out. Of course I like to look at market reports and those funky Miller charts on curbed but it always comes back to the listings(competition).

Quality inventory....

is it ever different? Was there a recent time when there was a plethora of quality well priced inventory? Usually it's train loads of dreck and an occasional jewel.
For 2M and 3 bedrooms one can expect something rather pedestrian. It's simply economy of scale.

i have no axe to grind...trust me. The more kinds of tools that exist, the better it is for all of us. I encourage you or anyone else to build better tools to track Manhattan real estate or to analyze price trends! Id love to see it and Ill subscribe to it.

Falco - um, I would actually say it is. In early 2010, for about 4-5 months I found that my clients had some nice choices. Granted they went to contract rather quickly, but in my opinion I find there were more higher quality products to choose from then I see out there in todays market. Doesnt necessarily mean market is seeing huge price jumps, which its not. The improvement was progressive and I feel had a slight respite during late summer/early fall period..of course, quarterly sales reports will show this at a 6 month lag or so

> Everyone says "you can't go by the list price" sure you can. Brokers are not going to waste their
> time listing overpriced properties.

ROTFL.

Is this a new low for SteveF? Probably not.... but it certainly is funny.

> Everyone says "you can't go by the list price" sure you can. Brokers are not going to waste their
> time listing overpriced properties.

ROTFL.

Is this a new low for SteveF? Probably not.... but it certainly is funny.

"I miss stevejhx"

don't feel so bad for him..

He's raking in $$$$$$$$$$$$$$$$$$$ in with his rental website.. scaring people into buying and perpetual renting is paying off HUGE for him...

rents up 10%, nice commish stevie.

oops, scaring people "from" buying

In the end, case shiller *is* reality, at least the closest we have to it. Before Shiller, folks were completely misguided about RE.

Now, that being said, its metro, not Manhattan, for many reasons. That's why the majority of folks on the board watched Manhattan medians (well, until the bulls stopped liking what they said ;-)).

But there is still something to learn here. The national picture is NOT good. And the claimed complete disconnect of Manhattan to the rest of reality was shown to be a steaming pile of bs.

Will manhattan follow exactly? Of course not. Hell, the other cities don't even follow each other. The trends can differ. Manhattan fell later. Some placed fell more because they grew more before. Some fell less because they never really great.

But its no reason to put heads in the sand. Fact is, for all the talk of recovery, national prices went down AGAIN and are down 3% since last year. Combined with actual economic recovery (and an improving stock market) seems to signify that the rest of the country is catching up to what many of us were saying for a long time.. that RE prices had broken from the real fundamentals, and when speculation was beaten out of the average american (which it seems to have been) that prices would move closer to economic realities (like incomes)... or, worst yet, overcorrect.

We're in the 8th to 9th inning in this mess. The rate of increase in new seriously delinquent loans is decreasing. What we're seeing are more loans going into foreclosure and being liquidated. Bottom line....The pipeline is being flushed. In all likelihood by this time next year we'll be saying the worst has passed.

I also agree with SWE that Manhattan is not following the national picture.

of course unemployment is still through the roof, state and municipal governments are just beginning to cut back, the federal budget deficit is an unapproachable morass and we have just entered a new undeclared war.

but all is well; manhattan is an island after all.

People never learn. It is a fact that prices are rolling over throughout rest of the country and people say, "Manhattan is an island", or "there is too much money here", etc. It is all so 2007, early 2008 and quite sad that people continue to actually believe this non-sense. Sure, things move slower here but I think it has been sufficiently proven that NY is not immune to the problems the rest of the country/world are facing. It has also been sufficiently proven that most people do not learn a damn thing from history, obviously.

All is great in Manhattan, columbiacounty. The well to do remain well to do, and those with high incomes continue to earn and spend. Manhattan is an island after all, and those attracted to this island are those who can afford to be here, and those who can't do well here just simply can leave the island. What I can't figure out though, you sold your stocks at the bottom of the market two years ago and lost the majority of your money, have a destroyed career, embarassing personal life, and have no future to speak of... why are you still here? Just use some of the bridges and tunnels. Or are you even here? Is your posting name some sort of hint where you actually are?

SWE- Well said.

As for the disconnect from Manhattan, and the odd patterns of other cities, another HUGE piece of the puzzle often missing from these discussions is the Mortgage side of the equation.

You could break the national market into different segments.

Some of the ones that seem to be slowing in their declines are - anecdotally - those where investors are starting to buy up low-end properties for rentals.

Paradoxically, the main strength in the NY Metro market at the moment seems to be in high-end properties (disproportionately in Manhattan) that are being purchased as residences for higher income families. The unfavorable CAP rates in Manhattan (and to a lesser extreme in NY Metro) make the likelihood of investors underpinning the NY Metro and/or Manhattan market unlikely.

I'd be willing to bet that the low-end of the market in NYC (both Manhattan and Metro) will continue to languish. After five straight months of declines in CSI, I'm prone to quote Yogi's old line, "It ain't over till it's over."

"Now, that being said, its metro, not Manhattan, for many reasons. That's why the majority of folks on the board watched Manhattan medians (well, until the bulls stopped liking what they said ;-))."

Or, more accurately, swe tried to discredit any superior measure because it conflicted with his agenda

"Will manhattan follow exactly? Of course not. Hell, the other cities don't even follow each other. The trends can differ. Manhattan fell later. Some placed fell more because they grew more before. Some fell less because they never really great."

Wow, that is the backpedal of the century

Oops. How could I forget CC? The guy who won't be happy till the vast majority of humanity is crying in their cheerios on a daily basis.

Juice, juice, still fabricating things I said. Still waiting for you to point out where I said Manhattan would go down 50%, as you claimed I did. Been waiting months now.... how 'bout it? Or are you going to finally retract.

> Wow, that is the backpedal of the century

Point out where I said the opposite, juice.

> Or, more accurately, swe tried to discredit any superior measure because it conflicted with his agenda

No, completely inaccurate, this happened before the measure in question was even introduced!

Try again, Juice. You're 0 for 5 today.

> SWE- Well said.

Thanks

> As for the disconnect from Manhattan, and the odd patterns of other cities, another HUGE piece of the puzzle
> often missing from these discussions is the Mortgage side of the equation.

Good point... but there are also job factors, regional factors. Like Buffalo was in such bad shape to begin with, it never ran up and never collapsed.

> You could break the national market into different segments.

I agree.

> Paradoxically, the main strength in the NY Metro market at the moment seems to be in high-end properties
> (disproportionately in Manhattan) that are being purchased as residences for higher income families. The
> unfavorable CAP rates in Manhattan (and to a lesser extreme in NY Metro) make the likelihood of investors
> underpinning the NY Metro and/or Manhattan market unlikely.

Agreed. Might also be why we're seeing the shift to renting.

> I'd be willing to bet that the low-end of the market in NYC (both Manhattan and Metro) will continue to
> languish. After five straight months of declines in CSI, I'm prone to quote Yogi's old line, "It ain't over
> till it's over."

I don't doubt that.