Q2 price appreciation: 1 - 4%

I believe a big part of the craziness has been in the new dev market. You won't see those in the data before they close later this year and the next.

so many times i have discussed this.

1. median/avg price trends are exposed to the major flaw of what types of properties close when the report is published -- for example, you are analyzing Q2 right now, which saw about 2,800 or so sales close as of July 1st. That represents prob 65% of all the actual sales that closed in this qtr and were filed by the city. The other 35% or so is yet to file in and wont be included in the reports. Should the majority of those 65% be 1brs/2brs, the median and avg #s will be low. Should the majority of those 65% be 2brs/3brs, the median and avg #s will be higher. It doesnt tell you price action!

2. all these price trends are at a lag. The first lag is the lag between contract signing and closing that can range from 2-4 months or so, with most closer to that 3 month range. Second lag is the lag from actual closing to public file from the city. Combine both of these, and the incomplete q2 stats you are viewing and interpreting now are really more of a snapshot of a marketplace 4-5 months ago or so.

3. if you are looking for Manhattan price action, which I think you are and most people are, look at the SE Condo Index which is a repeat unit regression index to try to vet out market price action over time using sale price of the same unit over time. As opposed to lumping together every sale into 1 bucket, and simply looking at the median or avg of that # and then comparing that # to 1qtr ago or 1yr ago; which is a very flawed way of vetting out market price action.

4. If your looking at ppsf trends, and they include coops I would disregard it altogether. Coops size is either incomplete or unreliable (inflated) in the rls system.

If you are going to try to quantify what you have been hearing lately, I advise you to:

a) look at the se condo index, not the avg/median/ppsf stats
b) understand that the se condo index is also at a lag to allow time for sales to file in before reporting the #. I think SE sets its index to a 60 day lag, which is fine.
c) understand that the se condo index is sale date based, not contract signed based. So, if a buyer signs a deal in Jan 2013 and it closes in May, SE will book that sale in its index for May. In that respect, the se index is also a reflection of a market 2-4 months back in time. Another way of saying this is, the current trend and #s the se condo index is telling us right now (+9.4% yoy, +1.94% prior mth) is more a function of where Manhattan was a few months ago. We have to wait 2-4 months for the index to show where we are today.

if you follow price action this way, what brokers and consumers are experiencing in the field all of a sudden start to make sense and are more accurately quantified

"Despite a continuing depletion of inventory in Manhattan apartment listings this spring that left house hunters with the fewest available second-quarter listings in 13 years, the marketplace was the opposite of stagnant. Not only were there modest upticks in median and average sales prices but, according to a report by the Douglas Elliman brokerage firm that will be released on Tuesday, the market experienced its most vibrant springtime burst of activity since 2007.

Yes, 2013 continues to have a seller’s market. Sellers received nearly 98 percent of their final asking prices, with homes spending an average of 103 days on the market, an 18 percent drop from a year ago, according to a report by Halstead Property. "

"Pamela Liebman, the chief executive of the Corcoran Group, said the average price of new development sales had taken a 37 percent jump from last year to more than $2.3 million. She said she expected the new luxury developments to “lead the way in pricing over the next 12 to 24 months.”

http://www.nytimes.com/2013/07/02/nyregion/manhattan-apartment-sales-increase-despite-reduced-inventory.html?ref=realestate&_r=0

PPSF +7.9%, that's the figure that matters.

As SE Methodology States for PPSF:

Why not just use Average Price Per Square Foot (PPSF)?

A ‘quick and dirty’ approach in tracking price movement is to just take the average PPSF of one
period a nd compare it to another period. However, this simple approach has several disadvantages and
may not accurately measure the health of the Manhattan real estate market. The mix of properties sold in
one time period may not necessarily be comparable to the mix of properties sold in a subsequent period
; they may be entirely different in terms of age, size, quality, etc. For example, as seen in this past decade during the real estate boom, inventory was tight and buyers were buying whatever units they could get, even if the quality was significantly less than desirable. In contrast, in a down marke
t like that of the last two years, buyers had their pick of properties and in general, would choose to purchase property that would be of the best quality, and would present the lowest risk in investment. As a result, the average PPSF approach can be very much like comparing “apples to oranges.”

A repeat sales transaction-based index allows for an “apples to apples” approach and is more like a stock market index as it tracks price changes of the same properties (or in the case of the stock market, the same stock) over time. Since this approach compares literally the same properties,errors or biases created by variables like location, size, age, and quality, are minimized.

my add on is that if the PPSF # includes coops, the errors will be even larger. For condos in a specific building, yes I agree, price per sft is a useful metric to analyze as building trends vary across this city over time, for a multitude of reasons (financial quality, MCI needed, nearby construction, school rezoning, nearby developments disturbing views, etc.)

I think a change in the tone of the market which the numbers can't capture is that buyers in the $1 million - $2 million space, depending on what they want, now have to show up with cash -- or at least take a substantial risk to their earnest money by waving the financing contingency.

If a year ago something cost $1 million, and you could buy it with a mortgage, and now it costs $1.02 million, but you have to show up with cash, that's still a significant swing in favor of seller. Maybe the market is up "only" 2%, and that property "only" costs $20,000 more, but it feels like a very different market to buyers.

ali r.
DG Neary Realty

Noah/Ali:

1. I stand by my point of inflection thread forecasts that when all relevant data for
the 1st half of the year has been reported, that apartments in highly sought after
NYC neighborhhods will show price appreciation of 20-30% or more

2. I presently own two that are or will be on the market soon, follow their price trends
and believe based upon information I have learned about comparabe sales and from direct
experiene with prospective buyers that prices for them have risen in double digits this year

swing batter batter, swing batter batter..... swing! FLMAOz...

Nothing says strength in the market than a price going from $1MM to $1.02MM in a year..but but but inflation is at 3% and sprint is up 200% and apple is up 7.3% since my $390 scream to buy and Jan 17, 2015 $200 puts have lost 27% of its value since my call 3 days ago. I.e. W67 is up huge in 2 yrs. Ya wanna live in a "home" pretend to not have read the prior paragraph... ya wanna talk making money.... let's whip it out and measure.

Sprint is up $2.4/share to $7.05/share in a year and a half.... but the margin requirements is the same.. .WOW that must mean it's a weak market.....OMFG.

Every time I am out of SE it's comments like Ali's that keep me coming back... .Borkers. Just a never ending finanical laugh fest.

>and apple is up 7.3% since my $390 scream to buy

Friday?

West 67th:

How did you mkke out on those 300,000,000,000 or 600,000,000,000 or whaever shares of Apple you bought
now that it's heading towards a new low

w67 is up $72K on my 2.5K shares and $150K on short $500 puts. Azzzbout $220K in 10 weeks with $20 in transaction costs. Oh yeah, I can buy some puts and put a floor on it... 30yrs fixed spiked 100bps in the last few weeks.... how's them prepaid rent ETFs holding up?

>w67 is up $72K on my 2.5K shares

All this fuss for just that?

Ali, that is indeed a bad example. Do not think they are listing which are only 2 percent above comps. Perhaps you are referring to a listing which would not sell 1 year back at a 1mm but now has a cash offer 2 percent higher than ask. Streeteasy index up 10% yoy.

"All this fuss for just that?"

I think that was a typo.

Should have read $7.2K on my 250 shares.

thanks w675

1. the best comps involve sale of the same property
2. second best are sales of cookie cutter apts in same building line
3. those show clear double digit appreciation YOY for more desirable properties

4. generalized indexes disguise those sharp spikes because they bunch really hot
neighborhoods together with much slower moving or cheaper ones

Rb345, What are your thoughts on the impact of the recent mortgage rate increases on property prices going forward. Rates are up roughly 75-100bps. What percentage difference will they make vs if they had stayed at the unusually low level even for the last three years? My view is that at the current levels not much dampening as they are only back to rates a year or two back but another 100 bps higher, they will reduce the property prices by 3-4 percent per year relative to if they had stayed at low levels.

Prices were stagnet or going lower 2 years ago when rates were higher ang you think higher I interest rates won't damper this dead cat bounce?
Hmmmmm

Started a new thread for rate rise. Please post on the new thread.

In the short term, I believe that the rise in rates will cause a flurry of increased activity with somewhat higher prices. At some point 6-9 months down the road, activity will stagnate, and following that, prices will decline somewhat. What percentage - I don't know and I don't even know what the base date should be for comparison given my prediction of the forward trends and given the recent rise in prices.

"In the short term, I believe that the rise in rates"

I don't see that happening anytime soon. The fed can't afford to let that happen. This short term spike was an over reaction to Ben Bernanke statement of tapering off. Tapering off my ass that's not going to happen in fact I think it's nearly impossible to happen in the near future. He is now back peddling and wished he never said that for that was as well received on wall street as the Hindenburg.. Our country is so deep in debt that any significant rise in interest rates would cause a severe recession much worse than in 2008. No I believe short term rates are going down. In fact, I wouldn't be surprised if we had some form of an increase in QE. Let's call it QE4

>Tapering off my ass

Thought that was exclusive to Wbottom.

I strongly believe the ppsf approach is much better than the median sales approach. In both cases you are not comparing the same apts but in the psf approach, at least you control by the size of the apt, the best single predictor of the apt price. Even building to building comparison might not be that precise, as prices can vary a lot inside one building (exposure, view, ceiling height, outdoor space, layout, ...). If the goal is to know how much your apt is worth, you will never know, until you sell it. And you will only get 92% of the contract price anyways.
The best approach would probably be to use the ppsf and controlling by a few simple factors who impacts are well known (zipcode, #BR, outdoor space or not, doorman or not, condo or coop, carrying costs as % of contract price, etc).

>I strongly believe the ppsf

8 days, no response, apparently no one cares what tourists think about NYC real estate.

my 2 cents on PPSF:

-- Its useful when analyzing in building condo trends/trades/valuations, its useless/inflated/inaccurate/incomplete for coops

-- Its heavily flawed if used to gauge general Manhattan price action over time

1. the median sales price indices that brokerage firms have released are flawed for two reasons

2. first, this year's increases in capital gains tax accelerated sales of expensive apts into 2012
3. 2nd the sharp increase in prime area prices has caused increased sales in Harlem, Inwood, Wash Hts

4. each of those factors has depressed 1st half median prices in Manhattan

5. not insignificantly, Elliman reported studio prices up 19.7% YOY
6. that number includes sales in less prime as well as prime areas
7. suggesting that prices in prime areas went up over 20% YOY, possibly 25 or 30%

rb345, you must feel vindicated that w67thstreet bought 67 condos: http://streeteasy.com/nyc/talk/discussion/35745-well-well-w67-says-he-owns-67-condos

Sorry, UD, but your comments are way off base. You seem to be arguing that because there is no "perfect" measurement, then no measurement is possible.

See this:

http://krugman.blogs.nytimes.com/2013/07/14/there-is-no-true-unemployment-rate/

There is no "true" rate of measurement for anything, right down to particles - see the Uncertainty Principle.

If the sample size were large enough you could hold all of the variables you mention constant, but the sample size is not large enough. You can't hold marble countertops constant, even, and yes, no two apartments (or anythings) are identical.

Price per square foot is a reasonable way to assess prices, since what people are buying is essentially square feet of living space. You'll never control the recording lag, either.

"A repeat sales transaction-based index allows for an “apples to apples”..." that is true, but in areas where there are a lot of foreclosures / short sales (not Manhattan) that also leads to distortions. In fact, I'd say that a lot of the national increase in prices is due to the halt in foreclosures after the robo-signing scandal. In Manhattan, there simply aren't that many repeat sales to make the measurement statistically valid.

All of the ways of measuring property prices are valid; there is no magic measurement for square footage, either: I had my 2-bedroom 1-bathroom former Manhattan apartment measured at between 650 and 850 square feet, depending on who did the measurement. Actually, it was somewhere around 790.

Same for a condo I owned in Manhattan - it went from 1120 to 1350 square feet, depending on who did the measurement.

It's simply not rocket science.

Sorry, UD, but your comments are way off base. You seem to be arguing that because there is no "perfect" measurement, then no measurement is possible.

See this:

http://krugman.blogs.nytimes.com/2013/07/14/there-is-no-true-unemployment-rate/

There is no "true" rate of measurement for anything, right down to particles - see the Uncertainty Principle.

If the sample size were large enough you could hold all of the variables you mention constant, but the sample size is not large enough. You can't hold marble countertops constant, even, and yes, no two apartments (or anythings) are identical.

Price per square foot is a reasonable way to assess prices, since what people are buying is essentially square feet of living space. You'll never control the recording lag, either.

"A repeat sales transaction-based index allows for an “apples to apples”..." that is true, but in areas where there are a lot of foreclosures / short sales (not Manhattan) that also leads to distortions. In fact, I'd say that a lot of the national increase in prices is due to the halt in foreclosures after the robo-signing scandal. In Manhattan, there simply aren't that many repeat sales to make the measurement statistically valid.

All of the ways of measuring property prices are valid; there is no magic measurement for square footage, either: I had my 2-bedroom 1-bathroom former Manhattan apartment measured at between 650 and 850 square feet, depending on who did the measurement. Actually, it was somewhere around 790.

Same for a condo I owned in Manhattan - it went from 1120 to 1350 square feet, depending on who did the measurement.

It's simply not rocket science.

Sorry, UD, but your comments are way off base. You seem to be arguing that because there is no "perfect" measurement, then no measurement is possible.

See this:

http://krugman.blogs.nytimes.com/2013/07/14/there-is-no-true-unemployment-rate/

There is no "true" rate of measurement for anything, right down to particles - see the Uncertainty Principle.

If the sample size were large enough you could hold all of the variables you mention constant, but the sample size is not large enough. You can't hold marble countertops constant, even, and yes, no two apartments (or anythings) are identical.

Price per square foot is a reasonable way to assess prices, since what people are buying is essentially square feet of living space. You'll never control the recording lag, either.

"A repeat sales transaction-based index allows for an “apples to apples”..." that is true, but in areas where there are a lot of foreclosures / short sales (not Manhattan) that also leads to distortions. In fact, I'd say that a lot of the national increase in prices is due to the halt in foreclosures after the robo-signing scandal. In Manhattan, there simply aren't that many repeat sales to make the measurement statistically valid.

All of the ways of measuring property prices are valid; there is no magic measurement for square footage, either: I had my 2-bedroom 1-bathroom former Manhattan apartment measured at between 650 and 850 square feet, depending on who did the measurement. Actually, it was somewhere around 790.

Same for a condo I owned in Manhattan - it went from 1120 to 1350 square feet, depending on who did the measurement.

It's simply not rocket science.

Sorry about the repeat posts - a Streeteasy issue.

A Streeteasy issue? Why don't you just admit, you think UD's comments are way way way off base?

I respect UD - but Streeteasy burped.

I guess it can be cute when SE burps. Now when C0C0 spits up, that's not cute.

nothing wrong with a little debate here, especially on this topic....the original topic was in regards to "Manhattan Q2 price appreciation" or the lack thereof blasting brokers for the hype that seemingly is not in those #s. I think Im correct in explaining why the median/avg #s in the broker reports do not jive with what is happening in the field. Now it seems we morphed into price per sft trends.

In this fast paced vertical market, fact is every building is its own little marketplace. Over time some buildings outperform the broader trend, some start to underperform.

All Im saying is you cant trust PPSF data if coops populate the stat. Period. I know enough about the rls data to confidently say that sft data for co-ops is incomplete and inaccurate. Enough to warrant exclusion. For condos, yes, the #s more closely jive with whats happening in the mkt over time. But personally, I still prefer the se index.

Just a few things I want to point out about the Manhattan market, excluding times of serious stress.

a) studios tend to trade at a lower ppsf than larger 1brs, 1brs tend to trade at lower ppsf than larger 2brs, and 2brs tend to trade at lower ppsf than classic 6s, etc.. Generally speaking. Im sure in mid 2009, studios started to reflate first while larger apts were still cutoff by lack of demand and shut down of credit markets. But in general this tends to be the case.

b) school zones, proximity to parks/subways, service level, bldg financial condition, property type (elev only, walkups, virtual doorman, full service, etc.), amenity level all contribute to why 1 bldg may trade at a higher ppsf than another. Simply lumping all these together and trying to vet out price action over time I think combines too many variables and loses its effectiveness.

When it comes to valuing any 1 target unit, always stay in building. When it comes to determining where the broader market is now compared to a past point in time to vet out mkt price action, Im still going with the se index.

And i agree, there is no 1 perfect tool.

jive = 1. Glib, deceptive talk; bullshitting. 2. Slang or street jargon.
jibe = 1. Change direction by moving sails (ask W67 for more details). 2. Agree.

While there is lots of jive in the statistics, the real question is whether a particular way of measuring jibes with the relevant reality.

Since schools and subway entrances do not change much and very few elevator buildings become non-elevator, it is probably safe to ignore these factors if you are trying to identify price trends. In contrast, if you are appraising a particular apartment, they are more important than the fact that prices tend to track inflation over multi-decade periods.

Similarly, brokers routinely lie about square footage. But unless you think the morals of the broker community not merely bad but getting worse, their jive is irrelevant to the trend. Indeed, even if you do think that broker jive is worse than it used to be, isn't it likely that most brokers long ago reached the jive limit? This may be why the SE index and the condo and coop ppsf trends tend to jibe over even moderate periods (to the extent that the trend lines differ, it is generally fairly obviously because the condo index is more influenced by new construction of high end property).

Of course, in the short term, different measures are likely not to jibe. This might be important if you are trying to decide whether to buy this week or in a month; not so much so if you are trying to figure out whether investing in NY real estate is likely to be profitable over the next decade or so.

Coz the dark side win, quote:

=====================================

Hello. My name is Ed Snowden. A little over one month ago, I had family, a home in paradise, and I lived in great comfort. I also had the capability without any warrant to search for, seize, and read your communications. Anyone’s communications at any time. That is the power to change people’s fates.

It is also a serious violation of the law. The 4th and 5th Amendments to the Constitution of my country, Article 12 of the Universal Declaration of Human Rights, and numerous statutes and treaties forbid such systems of massive, pervasive surveillance. While the US Constitution marks these programs as illegal, my government argues that secret court rulings, which the world is not permitted to see, somehow legitimize an illegal affair. These rulings simply corrupt the most basic notion of justice – that it must be seen to be done. The immoral cannot be made moral through the use of secret law.

I believe in the principle declared at Nuremberg in 1945: "Individuals have international duties which transcend the national obligations of obedience. Therefore individual citizens have the duty to violate domestic laws to prevent crimes against peace and humanity from occurring."

Accordingly, I did what I believed right and began a campaign to correct this wrongdoing. I did not seek to enrich myself. I did not seek to sell US secrets. I did not partner with any foreign government to guarantee my safety. Instead, I took what I knew to the public, so what affects all of us can be discussed by all of us in the light of day, and I asked the world for justice.

That moral decision to tell the public about spying that affects all of us has been costly, but it was the right thing to do and I have no regrets.

Since that time, the government and intelligence services of the United States of America have attempted to make an example of me, a warning to all others who might speak out as I have. I have been made stateless and hounded for my act of political expression. The United States Government has placed me on no-fly lists. It demanded Hong Kong return me outside of the framework of its laws, in direct violation of the principle of non-refoulement – the Law of Nations. It has threatened with sanctions countries who would stand up for my human rights and the UN asylum system. It has even taken the unprecedented step of ordering military allies to ground a Latin American president’s plane in search for a political refugee. These dangerous escalations represent a threat not just to the dignity of Latin America, but to the basic rights shared by every person, every nation, to live free from persecution, and to seek and enjoy asylum.

Yet even in the face of this historically disproportionate aggression, countries around the world have offered support and asylum. These nations, including Russia, Venezuela, Bolivia, Nicaragua, and Ecuador have my gratitude and respect for being the first to stand against human rights violations carried out by the powerful rather than the powerless. By refusing to compromise their principles in the face of intimidation, they have earned the respect of the world. It is my intention to travel to each of these countries to extend my personal thanks to their people and leaders.

I announce today my formal acceptance of all offers of support or asylum I have been extended and all others that may be offered in the future. With, for example, the grant of asylum provided by Venezuela’s President Maduro, my asylee status is now formal, and no state has a basis by which to limit or interfere with my right to enjoy that asylum. As we have seen, however, some governments in Western European and North American states have demonstrated a willingness to act outside the law, and this behavior persists today. This unlawful threat makes it impossible for me to travel to Latin America and enjoy the asylum granted there in accordance with our shared rights.

This willingness by powerful states to act extra-legally represents a threat to all of us, and must not be allowed to succeed. Accordingly, I ask for your assistance in requesting guarantees of safe passage from the relevant nations in securing my travel to Latin America, as well as requesting asylum in Russia until such time as these states accede to law and my legal travel is permitted. I will be submitting my request to Russia today, and hope it will be accepted favorably.

If you have any questions, I will answer what I can.

Thank you.

that aint no jive.

Apparently the statistics cannot relay the truth. It can only be parsed by a 'professional.' That's why w67 wants to take a different tack.

w67 is a simpleton. Sprint bought at $2.4 went to $7.2 in little over a year and half.

Sometimes jive monkeys throwing darts beats a professional money dude any day.

Scale also matters. $2.1 mm gain whilst nyc re barely floats with 3% 30 yr fixed. That 3% should scare anyone that's been in finance more than 10 yrs.

W67 still can't wrap my little brain around that number... It's a re buy signal! Especially new condo construction. Come on more lemmings, w67 just needs 200 more!

http://streeteasy.com/nyc/talk/discussion/35745-well-well-w67-says-he-owns-67-condos

I still do not understand why PPSF is not the best method. Its what the BLS uses when computing local housing inflation. And over time, coops will be in the new and old stats, and so whatever distortions would be evened out.

>stevejhx, urbandigs

It is statistics, we would not be able to make rockets fly if not for them, so it is kind of rocket science... You just have to have in mind that science has a model, observation errors,... Being a good scientific is to be aware of everything.
Concerning the repeat sales approach, you might have foreclosures, or (for instance when the capital gains rate was going to go up) mostly people who made money selling, ... I also wonder how this accounts for new dev too.
In the end, no method is apples to apples. I think the regression controlling for the 5 or 10 biggest factors influencing the price would both be simple, accurate and provide enough points to not be too volatile

are you a good scientific?

Hi C0C0. TheTourist is ignoring me like Jason the Retard is too.

so...why do you respond to my question to him?

Does not street easy condo index try to adjust for all the factors being debated above? Every index has its flaws but it seems reasonable.

lets all ignore each other.

kind of like being in congress.

>kind of like being in congress.

I like my congressperson.