Q2 Reports: Manhattan Apartment Sales Decline

Last year's tax credit has distorted YOY comparisons It's unclear what the trend is.

As you have said several times on here, the tax credits pulled sales of lower-priced homes forward. Therefore there are less after the tax credit. That's a pretty clear trend for that category and probably the most predictable one there was.

You've mis-understood my point. Yes, the tax credits stole from future sales, but knowing that and then taking the 2010-2011 sales decline and drawing inference to a future trend is simply not understanding the data.

No I got your point. I just think you are wrong. You could point to any number of outside events and say they undermine the ability to identify a trend. E.g. QE1 and QE2 artificially cushioned the declines in NYC so there is no trend for the last 3 years. Data requires a bit of interpretation to be understood.

Q3 will be a much different story. Medians will shoot up and the press will be talking about the next wave of fast times in the big city. This is already old news thanks to Urbandigs new reporting.

I would argue that one time events need to be asterisked to put things in context. If I was looking at YOY auto production and saw that production declined and spiked around year three , I would be very interested in knowing that a parts supplier in Japan had shut down, so I could smooth out and discount the effect.

Statistics are funny things. Right now on a national level Sales figures are very much influenced by REO inventory, and a number of people are placing less value on seasonally adjusted numbers as a result. I think S&P began releasing non-seasonally adjusted numbers for this very reason.

We live in an era where there's so much data. I just find it better to sometimes look at less data, but put what I do look at in context.

"Q3 will be a much different story. Medians will shoot up and the press will be talking about the next wave of fast times in the big city. This is already old news thanks to Urbandigs new reporting."

I thought he mainly deals with volumes but in any event I'm interested to see his take on this because he seemed to be saying that throughout Q2 as well.

First lets just understand that actual sales that occurred during Q2 will continue to roll in for the next 6 weeks. So think about how many sales occurred in Q2, but will be counted in Q3. Its a data completeness thing. Q2 comprises data for April, May & June. Right now I would say:

1. April's sales data is likely close to complete
2. May's sales data may be 60-70% complete
3. June's sales data may be 30-50% complete

In another month, May's data will likely be fully filed and by end of August I would guess that June's actual sales are completely filed. I will give you an example using yesterdays ACRIS sales filings:

1 sale from 2006 was filed
2 sales from 2010 were filed
1 sale from March, 2011 was filed
3 sales from April, 2011 were filed
10 sales from May, 2011 were filed
51 sales from June, 2011 filed

If this kind of lag continues, and it usually does, think of the sales that will roll in over the next 3-4 weeks that actually occurred in Q2 but never made it to this report. So always keep that in mind when your trying to take a quarterly report and relate it to current conditions.

furthermore, if the article came out this am, that probably means the report was completely finished and utilized all data available at that time..the sales from yesterday show up this morning on my system, so its very likely 64 sales I listed above are not included in the Q2 report we are reading about today.

Are you surprised by the report, though, Noah? I am not, having followed your twin charts of inventory and deals. It pretty much mirrored last year's activity until mid-April, at which point it started tracking above. Knowing that 6 week-lag, it's expected the Q2 report wouldn't capture all of the May activity (which seemed to cross above May 2010 numbers.)

no, not at all. I thought median sales prices might take another quarter to start inching higher, but looks like Q2 caught that action a bit early.

While we're cherry-picking, Miller Samuel says ppsf up on both a y-o-y and a q-over-q basis, which tallies with the gradual reinflation we're seeing (some of which could be seasonal). Ppsf up 4.2% from last quarter.

"Pending price index," whatever that is, up 10.6% from last quarter.

ali r.
DG Neary Realty

strange, the bloomberg report states: "The median price of co-ops and condos that changed hands in the borough dropped 5.5 percent to $850,000."

was that an error?

oops, nevermind, u were talking about PPSF

Interesting to see Noah's and Ali's take on higher-end sales pan out. The NYT story this morning said they pushed the Manhattan average up a few percent.

How about referencing the data instead of the article on the data;

http://www.millersamuel.com/reports/pdf-reports/DEmanhattansales2Q11.pdf

Looks like new developments took a big hit

Some interesting tidbits from the MS data:

* Volume is down slightly YoY, though Q2 2010 was the strongest quarter post-Lehman in terms of volume. We are up slightly QoQ. Interesting that some are trying to spin this as a weak quarter activity-wise.

* Q2 2010 had a record-breaking volume (500) of 3BRs. No other quarter since MS started collecting data even hits 400 (next closest is 375). Wonder if anyone can pinpoint why the concentrated explosion in 3BRs that quarter?

* Despite medians all being up QoQ (including breakdowns by apt size - can't wait for swe to spin that one), the real story is that we've been hovering around 2006 prices for some time now. Which means (IMHO) that this bubble has been deflating mighty slowly. Don't think we'll see w67th's $500 psf nominally, but the words "appreciation" and "flip" won't be reentering Manhattan RE vernacular for quite some time.

truthskr, according to the report, sounds like median went down due to a shift towards smaller units. Seems strange given all the talk about the strength of the higher-end stuff.

That would make sense, still with such a large field, median should be more "averagy."

Of course, I can think of at least one occassion where a Miller Sam report needed a correction on a total computed wrong. And that was with data we could see to find the mistake.

> Don't think we'll see w67th's $500 psf nominally, but the words "appreciation" and "flip" won't be reentering Manhattan RE vernacular for quite some time.

I think we'll likely remain stagnant for the next 2 years or 'til the presidential election. After that I have no idea what we're in for, good or bad.

More smaller units shift the median down. The average prices for bigger units went up, which dragged the overall average up a bit.

sellers aren't budging either..i saw a one bedroom for $510k and made an offer of $485k and the call back was no, no no.

A year ago, RIversider was not blaming the tax credit

truth - strongly disagee, now's the time to start flippin! After the holiday I'll post why.

ieb, that was my comment. Would love to hear your explanation.

>now's the time to start flippin!

Really? Looking forward to that post, and the fireworks thereafter.

ditto. flippin? as in property flipping? I haven't seen anyone pushing that idea outside of China in a long time.

"Q3 will be a much different story. Medians will shoot up and the press will be talking about the next wave of fast times in the big city. This is already old news thanks to Urbandigs new reporting."

Wasn't that supposed to be this quarter? Or according to SteveF, wasn't that two years ago? ;-)

> strange, the bloomberg report states: "The median price of co-ops and condos that changed hands in
> the borough dropped 5.5 percent to $850,000."
> was that an error?

UD, that's the YOY. If it is 850k, the overall median is up 6.6% QoQ, but back to right where it was Q42010. 17.1% below peak, but no longer trough (though lower or at than every quarter since 2009 with the exception of last one).

Miller Samuler was quicker with the data this time.

Here are the by category numbers... some bounces in the per size, but coming off a huge decline, each size category still more than 20% down...

Size - current % off peak (maximum off peak)
Studios - currently 22% off peak (24.8% at lowest point)
1 Bedrooms - 21.1% (23.3%)
2 Bedrooms - 20.6% (28.8%)
3 Bedrooms - 28.1% (48%)
4 Bed + - 54.2% (67.3)
All Sizes - 17.1% (21%)

28.1% off of 3 bedrooms! Wow that's some good data swe!

Be advised that swe cherry picks the peak points for his analysis.

LIC, sweetie, honey, poor baby.... you don't know what cherry picking means... it means picking particular anecdotes... like specific apartments. That would be what SteveF does.

Now if you mean picking the range that shows the decline most... well, no duh... that is DEFINITIONAL to what "off peak" means...

poor baby...

LIC, there's no harm in measuring off absolute peak. To be fair, one should also measure other investments off peak, such as swe's much-cherished SSO, which, incidentally, is down 45.6% even after a nice little run of late. That's pretty awful performance. He's also completely wrong on his continued "fewer people are buying" assertions. The data show this pretty clearly.

Noah - I love your site. Here is my market observation. I work for a major NYC developer. We are in constant contact with other landlords and the major brokerage houses. In the last 6 weeks, sales have been dead. And it's more than just seasonal. And the rental market has been very slow for this time of year for the last 3 weeks. Strangely enough, rentals were actually stronger in the late winter and spring than they are now. I can't help but think this is because the major investment banks have announced possible layoffs.

^^^What he said.

OMFG! NYC RE is going down bc banks have:
1) more regulation;
2) transfer fees cut in half;
3) higher fixed costs;
4) sales/trading is readjusting to a non bubble economy;
5) $8.5B ooops my bad from BofA;
6) $500B of bad loans they ARE NOT marking to market;
7) Conforming mortgage laddering down (LESS FEES from bundling and selling to GSE's (the ONLY buyers of mortgages));
8) impending derivatives trading clearinghouse (much much much less spread);
9) hedgies getting MORE regulation and capital requirements;

Oh yeah, states and fed are starting to bellyup on top of the gyro mess....

OH lordy, please the last 3 month bump was the LAST final stand of the lemmings with cash... GOOD for W67, less lemmings to compete with when I buy my 3bdrm for cash for $500psf.... do you see the juicy listings start to come on-line as the word goes out "ppl are buying!" ? Come out come out wherever you are... you so delicious shadow inventory.... just a little peek behind that thin white t-shirt.

Who could have seen that coming?

"Inventory Glut Of Ultra Luxury Homes Hits Greenwich, Over 4 Years Of Supply"

" ( ) while it is difficult to correlate real estate sales and general net worth of Greenwich's hedge fund-based residents, it appears that there isn't much appetite for local housing purchases. On the other hand, that there is such an inventory glut also shows that nobody is too desperate to cut prices to sell at any cost. Following this trend over the next several months will likely provide additional clues into how hedge funds truly measure their own relative strength as we enter the second half of the year."

http://www.zerohedge.com/article/inventory-glut-ultra-luxury-homes-hits-greenwich-over-4-years-supply

"While the number of condos and co-ops sold slipped by as much as 14% during the quarter compared with the same period a year earlier"

oh, the poor souls who bought at the peak.... whether RE or the S&P.

You can be an idiot in any market... (it just isn't as obvious in the bubbles)

swe, volume actually dropped 3.8% from last quarter, but you've always had trouble with math and cherry-picking.

poor, poor souls...

Yes, tell us: when did you buy all your SSO?

Definitely March 2009, right?

Gone a few days with lots of work, and I come back to ... more JuiceDrivel!

"Q3 will be a much different story. Medians will shoot up and the press will be talking about the next wave of fast times in the big city."

First, JuiceDrivel doesn't like medians - unless they suit his cause. Second, yet again, JuiceDrivel claims to live in the only building in the city where COMPS ARE UP 20%!

Since Eisenhower.

HAHAHAHAHA!

Hey Juicy, I forgot: how's your reworked loan working out? If you learn Italian, I can help you get some additional income....

No response, swe? Shocking.

Correction to my volumes comment: we're actually slightly UP from last quarter, and slightly (again, 3.8%) down from Q2 2010, which is the busiest quarter on record post-Lehman. But hey, you've been using Miller Samuel data for all your "points" over the years, yet go cherry-picking through an article to pick the data source most favorable to your brand of spin - no big deal.

poor, poor, bjw.... still obsessed with me.

Nah, just asked you a couple pretty easy questions, which you seem to have trouble answering. Deflection works well in those instances, and I have to admit, you do excel at that. Carry on...

wow, you're really committed to this...

What, Streeteasy? I mean, how hard is it to answer? You clearly have no trouble posting here. It's nothing personal - just trying to understand where you're coming from.

oh my lord, still going...

Still nothing then? Just like your pal, steveF! Good luck with SSO.

holy crap, still going...

"truth - strongly disagee, now's the time to start flippin! After the holiday I'll post why."

ieb, let's hear it!

swe, shooting for a new record on consecutive useless posts? Keep it going buddy!

and going...

Still waiting for swe to show some comps that show 3 beds down 28%. Just one will do. Can swe do it?

Steve, I could use a few extra bucks, let me know when you want me to translate stevejhx to the rest of NY.

Speaking of those down 28% 3-bed comps, JuiceDrivel, where's them "up 20%" units in your (reworked mortgage) building?

I know you can use use a little help income-wise, so start with this: "Ratei e risconti passivi" and "fondi rischi ed oneri." You should be intimately familiar with both of them already.

Oh! Here's another one: "Debiti verso banche."

Or, "Rifuiti palazzi appartamenti."

HAHAHAHAHAHA!

"Rifiuti," BTW, when you go to look it up....

JM: It depends on what you consider a comp. A dedicated cherry-picker could say this C7 line is down 40%. He'd be wrong, but he could say it.
--------- Recorded Sales ---------|--------- Previous Listings ---------
02/03/2011 #11E $1,500,000 -11.5% |↓ $1,695,000 2 beds 2.5 baths
10/21/2009 # 9E $2,150,000 -13.8% |↓ $2,495,000 2 beds 2.5 baths 1,800 ft²
04/18/2008 #12E $2,500,000 + 2.0% | . $2,450,000 2 beds 3 baths 1,800 ft²
http://streeteasy.com/nyc/building/the-alameda-255-west-84-street-new_york

There are even more dramatic examples in East Side land-lease buildings that have run into financial trouble. They don't say much about general market movement, but they do serve as a useful reminder of the downside risk associated with certain purchases.

JM, since 3BRs are down 28% on average, you'd think he'd be able to find a comp that's down MORE than 28%, no? But as you probably noticed above, he has a lot of trouble answering questions.

and going...

Wow, you're really committed to not answering. I guess when you can't back out, your "strategy" can distract from that fact. Keep it going buddy!

bjw will apparently respond to anything I post. Let's try this..

zippity doo dad...

One could just as easily say that you're responding to anything I post. Without actually addressing the real estate topics though, impressively enough.

Zippity ay.