Market Firming up - Indicators

The hunt for yield will intensify as we flirt with negative bond yields in the U.S. That's all.

https://www.wsj.com/articles/investors-ponder-negative-bond-yields-in-the-u-s-11565521203

Gold price up. Crypto way up.

Yields won't help much, you need to print money crazily to jack up RE price like last round.

Japan is an example, they burst the RE bubble while maintaining negative yield.

I am looking for a real 3 bedroom in Manhattan and the prices are still too high for me. It's been ten years of looking to purchase a home on streeteasy, a time when I have had three kids, got promoted four times and changed jobs twice.

I see absolutely no reason to buy in Manhattan. We are approaching the end of a 10 year economic cycle, nyc salaries continue to be under pressure (wall street bonuses), and international buyers are basically shut out of the market due to a strong US dollar on top of the new disclosure rules. Oh, and I have basically zero job security (banker) so I will only enter a contract where my carry is as low as possible.

My plan is rent til I get laid off (when I can relocate to a lower cost area) or until I can buy something with cash so I have zero carry. Right now even if I put down $2m cash, I would still have a $10k / month payment each month due to high asks and monthly fees.

I disagree the NYC market is going to turn upwards. Rather I believe the market will stagnate or fall.

Not sure if someone looking for 10 years will ever buy despite some very nice prices in 2009-10. Nothing wrong in renting if you plan to move elsewhere.

It's been falling for 2+ years...where it stops, no one knows. Then it will rise again, eventually. That's what I know.

Keith Burkhardt

I think Tomnevers just started working 10 years ago, and the RE price kept increasing and he always got bid out. He must hate obama.

@30yrs - I’ve been off SE for a few days and just catching up. We will be selling in Beekman neighborhood. Whisper until we are really ready to sell. We need occupancy for a few more months to complete renovation of new place and are not really serious about selling/showing until we have moved out, but just got the ball rolling.

So Market Pulse seems to be staying at .50 or above. Touched 0.53. At this rate, it may even be 0.55 in a month but that is getting too excited about a nascent trend. Need to see a few more weeks above .50.

what does this Market Pulse number do?

Anton: It's supposed to be an indicator of the relative health of the market.

The number 300 highlights is the metric for "existing developments". Anything above 0.5 is supposed to indicate more of a seller's market, while below is more of a buyer's market.

The metric for the overall market when you include new and recent developments is 0.45, and it's down YoY, which is the key comparison, since it removes seasonality as a factor.

"Resales are doing very good, tens of people visit one open house, with very limited resale supplies, this translates to extremely high demand"

Manhattan open house average was 2.38 this week, with over 20% having 0 attendance.

I disagree that anything over 0.50 indicates a seller's market. I have yet to see anyone post any actual evidence of this - it just sounds good. This is especially true of a market where the number is artificially elevated due to record numbers of "off market" listings.

I think market pulse around 0.50-55 is closer to normal market. 0.6 and above more like going into seller’s market. It has been higher than in 2014-15 seller’s market . But it is all a matter of opinion. Bearish 30 may say 0.75 is seller’s market as there are off market listings.

open house average of 2.38 is still very good, that means at least around 2~3 people with compete with one real buyer.

and those 0% attendance are the extremely sellers which drag the average attendance number down.

Not all visitors to open house consider making an offer. In fact, many visit for fun - perhaps more so when the market is hot. Open house average certainly does not point to any thing bullish.

Also, we need to get to or stay in the normal range before we are in the bullish range.

At this peak price market, most open house visitors are not for fun

Streeteasy Condo Index revised. Probably late recorded sales or error in calculation. Perfect example of how one needs to see a few months of data.

May 1,105,000 to 1,101,000
June 1,113,000 to 1,105,000 (uptick vs May still there)

July is 1,099,000 (down 6% from the peak)

Peak Nov 2017 1,166,000 (revised down from 1,169,000)

https://streeteasy.com/blog/july-2019-market-reports/

Resales market pulse hit 0.55. See if it can hold that level and YOY improvement in September.

Market Pulse increase do to 15% increase in off market - take away *just the increase* in off market and MP drops below .50

Condo Resale MP still stuck at 0.37 and Market wide condo MP at 0.33

Does the resale market pulse at 0.55 point to a better market vs at 0.42 it had reached a couple of months back? Not saying it is seller’s market in anyway. But if it holds at this level, it is looking closer to normal.

Is it better to drown in 8 feet of water or 12 feet?

To compare 2 market pulse readings you need to take into account seasonality, off market, etc. I think we are in a phase of the market where momentum outweighs everything else (just like it did on the way up). And now in addition to buyer's having the general sentiment that prices are too high we have a fairly widespread belief/reporting that a recession is likely. That is likely to counteract any further interest rate cuts.

30, When was the last time you were bullish on Manhattan resale market? I was bearish till 2009 and became bullish in 2010/11. I view current Manhattan resales market in normalizing (neither buyer’s or seller’s market) phase after a correction but need another month or two of data to confirm it. Hence, the indicators discussion. I was always bearish on ultra-luxury and remain so.

MP is rising because supply is falling due to seasonality in Manhattan. I would expect Market pulse to fall after the first few weeks of September and all that inventory that went off Market comes back online

Indeed which is why I also look at YOY figures and also want to see more data. Given the slow market we had in last 1y, off market coming back to list, and new development pressure (essentially inventory build up), I would have expected MP to be going down.

@anton, I disagree with your thought that peak prices are generating "serious" traffic. Many people who do not leave the City on summer weekends do indeed go to Open Houses for fun.

Anecdotally, I have sold the slate of listings I had in late spring ... except for a "starter" co-op -- a downtown one-bedroom. On that, I have gotten tremendous traffic in the past month -- but the "quality" is terrible -- almost entirely "looky-loos."

At best, these are future buyers who are attracted by today's interest rates, but their actual purchases will be months and months out.

Noah,
I think it will be interesting to see which units coming back went off the market "just for the summer" vs which units had gone off the market (over the last 2 years or so) "waiting for prices to improve."
As such, when the anticipated spate of listings come on, will they be at reduced prices (which I will define as "serious sellers" especially given how we have seen a number of well priced units get tons of traffic and sell reasonably quickly) or will they be at the same old prices hoping the market has improved (and how will the market react to these?)

Also, since we have seen record numbers of units go off the market in the past couple of years it is unknown exactly when any portion will come back, but there is certainly the potential at any time there is hope of an improved market for a tsunami of supply to come flooding back. How many units have gone off market in the past few years? Three times total current supply?

Using rough numbers, I think if just 10% of the units taken off market over the past few years came back on the market it would tank Market Pulse from 0.55 down to 0.35

I'll note that I think it would be bad for the market if a slew of units came back on the market testing the waters with their old prices because that will feed into buyer's perceptions that the market is flooded with product, there's no urgency, everything is overpriced, etc and will harm the ability of serious sellers priced correctly to transact.

I don't see a flood of listings as harming serious sellers. It's like the example you brought up with 24 Commerce vs 41 Barrow. The serious sellers easily stood out from amongst the noise.

I've been on the sidelines as a buyer for 3 years now. For the product I'm looking for, there are 56 listings on SE, up from around 20 in 2016. Not a single one is a serious seller. When the serious seller comes with the right property, I'll be a serious buyer.

George, What price reduction will make the 5 best priced (from a buyer’s point of view) of theses listing serious sellers?

As an example, I did my homework on a particular property and came to a price of "X", which was 88% of the list price. This was already stretching the assumptions. Our agent called the seller's agent to see where the seller wanted offers to be, and was told that the seller had recently turned down an offer precisely for my number "X", and that they expected it to sell around list, since they had already cut the price. That was in April, and it came off the market in July, presumably after the exclusive lapsed. And it was the second time that my valuation lined up nearly exactly with an offer the seller had already declined. I've also been told more times than I care to count that a property is about to go into contract, so hurry and get my offer in, and then I watch the property still sitting there months later. So I'd say that, on average, a seller is 10-15% off current list, and a serious seller is 15-20% off.

In the $3-5mm segment (guessing based on previous posts), 5-10 percent off last ask is fairly common for properties on the market at that price for more than 6 months. So you are expecting another 5 percent. Not a big gap to bridge. Perhaps both sides move a little.

Also, I remember Keith posted an example of his client who paid ask for a property he really liked after bidding much lower than ask for many properties.

@george, are you looking at the $2mm+ price point?

my last two deals have been in the $1mm-$2mm space, and the listing discounts have been 4.2% (sell side) and 9.3% (buy side). Certainly not seeing 15% off at this particular price range.

ali r.

300_Mercer is pretty close. Maybe this is 30's point, but I see no need to "move a little" when there are 50 to 60 properties listed and about 1 per month selling. About 2 years ago, I was $50,000 apart with a seller and we both refused to budge. He got his $50K two months later, but I'm so glad I didn't win the property after watching the market continue to fall. That taught me that I have to be disciplined, and if I stretch the numbers and come to a price of X, I shouldn't try to bridge any gaps. It's not 2014 anymore. Sellers can bridge gaps if they want to sell.

I can tell from personal experience that you will move up when you really like a property. Otherwise, there is no rush. When we were buying the apartment we live in some time back, I bid on several properties but none of the bids was high enough to get done despite the market being squeamish. Finally, when we really liked an apartment, we bid 5% more than I thought its value was according to my metrics. That 5% is nothing compared to the joy we get living here and fluctuation in the mortgage payments due to rates and I am glad we waited.

Personally speaking, for me buying a home is 50% about the emotional component. I want to love it and I want feel good about owning it. If you want to try to micromanage a purchase and walk away from deals over 1 or 2 or 3%, that's certainly your prerogative.

I was 300's broker on that deal, he pulled the trigger when everyone was saying not to buy. But it was interesting to watch his demeanor change when he found a home he loved. Luck shined on him, and he's got to be up 40%+

And I'm a guy who started The Burkhart Group in 2007 to offer discounted rental commissions because I didn't think it was a good time to buy. It wasn't until early 2009 that I put together a model for buyers. Front porch will remember I was very bearish in the early days. Now I love owning real estate and I'm looking to purchase my third investment property. Just like stocks it goes up and down, but hold it long term and you do quite well. And with a primary residence you get to live in it and enjoy it throughout the market fluctuations.

But to each his own said the farmer who kissed the cow.

Keith
TBG

I think buying resales (not ultra-luxury) to live in with 7 year horizon (without stretching your financials) is a no brainer with current low rates and stock market fairly high.

Could the resale prices go down another 5-10 percent, yes.

Can you get a buying broker rebate to offset? Yes.

Can you calculate value of living in an apartment your family loves, not having to move (assuming you do not have wanderlust), customization in terms of percentage of property price? I can’t. It depends on how much money you have. If you are rich, value is very high.

Can equity market crash 50 percent? Yes.

Can you get better investment returns? Yes, but if you are genius making very high returns, you will have plenty of money to spare for an apartment.

keith how much commission discount do you offer buyers / sellers

To elaborate a bit on the factors made the decision for me. We wanted a large living/dining room (more than 1000 sq ft), large open kitchen and high ceilings but with enough bedrooms. View not important to us for the price one has to pay for it in the area we wanted. Low maintenance, extremely important. We got all this in move in condition (not newly renovated) and central ac. Hence, easier decision to move up.

I've told people for decades that the last $X in your negotiation is going to come out in the wash: what matters is when you buy and when you sell. Anyone who got the best deal imaginable in 1987 was still screwed in 1992. Anyone who way overpaid in the 1990s was still fine in the 2000s. Anyone who bought in 2009 is great today. Etc.

In all those cases it doesn't matter if you bought for a few bucks more or less, it's overshadowed by market gains or losses. But that also means if the market crashes, getting a good deal won't save you.

George,
Re:88% offer, this is what I am talking about regarding the market. You and at least one other person made that offer, yet the seller elected to take it off the market rather than transact. That has been happening with TONS of properties over the last 3 years. Now, most people don't put their property on the market on a whim (we all know way too many people have been flipping apartments every couple of years and expected that to go on forever *). So for the tremendous amount of off market units, a certain percentage have a want to sell but couldn't wrap their heads around getting less than they expected. Over time 2 things happen: 1) For a reasonable percentage of them, that "want" goes stronger and for a reasonable sub-percentage of those turns into a "need", and 2) the longer prices remain down it's harder to shrug it off as a "temporary market dip" and the acceptance that it's the new market reality sinks in (similar to 5 stages of grief).
It's the rare piece which actually goes "permanently off the market." almost everything goes temporarily off the market till one of two things happens: 1) prices improve, or 2) the seller's motivation "improves." There has been so much product which has gone temporarily off the market in the past few years that (in my opinion) it is highly likely that some non-i significant portion will come back on with highly motivated sellers and those will "make the market." 2 examples we saw of this recently were 66 Madison and 975 Park. As/if this becomes more prevailing it will make the market.

* As people churn on the way up they tend to focus on the buy and sell prices and ignore the tremendous closing costs in and out. But when the market turns they lose what the market when down *plus* closing costs. So it's fairly common to see people surf markets up making lots of trades, always buying a little more than they can really afford counting on gains to bail them out, but in the end losing backs all their gains and more when you factor in all the closing costs.

Another point of anecdata: closing today, sub-$1 mm space, less than 1% off list.

ali r.

@bpc you can call or email me.

Keith

Ali,
If you factor in the renovation, how much less than the last sale in that line in the building was the sale?

The sale was three-tenths of one percent lower than the 2015 acquisition by this seller -- that was an intra-family transfer, and the price it took place at was determined by multiple broker BPOs, one of which was mine.

The renovation had been done prior to that transfer, so in a sense it "doesn't count" (or the depreciation of it explains why the sales price was fractionally lower in 2019.)

Other than that, it's a record price for that line in that building -- as it should be, because it's the topmost floor, so it has the best light of that line, and it was in beautiful condition.

I buy that the market's weak, believe me, but I just don't see the lower price points suffering the way the higher price points are. Even back last year, which I think was the worst of the pain, I triumphantly negotiated 8% off list on a perfect apartment -- and promptly got gazumphed by an in-building buyer who paid list. Under $2 million, I just don't see anything selling at 12% off.

To be clear, I'm looking at units needing substantial reno and listed in the $4m range, plus or minus a million or two. There, -12% isn't exactly a low ball.

George,
There's a new listing which came on the market in Gowanus today which looks like it could be a decent return (not my firm's listing).

I think that the "% off" mentality is part of the problem why properties linger. Buyers seem to want a standard % off the listing price, and I think Sellers are aware of that and it further feeds their motivation to overprice.

I think that a tremendous number of listings are wildly overpriced, particularly at higher price points. Some of the metrics on the Olshan report are so extreme as to become comical (e.g., average discount from original listing to last listing price of contracts >$4mm last week was 11% - who knows how much a greater discount at the actual contract price; average of 565 days on the market). However, I think that a "serious" seller in that price range would have a tough time pricings a new listing because the market has become so silly with sellers overpricing and then trickling down the price over the course of the many months thereafter.

TeamM,
I absolutely agree. I think a lot of metrics used can be counter productive to deals getting done. People over focused on $/SF, so listings just increase the square footage. People focus of "average negotiability" then look at 100 properties, pick the one who's asking price is at market, and then say "but I read on average sellers are negotiating X% off."

I think that's why, as I mentioned earlier, if a slew of listings come back on the market at aspirational prices it will hurt the market. Because buyers will show they can be just as silly as sellers can, and because there are still a lot of buyers out there who are still angry about the market of a few years ago and how buyers were treated and are actively looking for excuses to behave badly in retaliation. Is that rational? No. But as Keith pointed out and awful lot of the decisions made when people buy Real Estate are based on emotion. That worked well to seller's advantage when the market was on the way up; to think it won't do the opposite on the way down is a bit pollyannaish.

To be clear, when I say an emotional component, I don't mean in an irational sense. I mean it in a way that people connect with a home, that they want to raise their family in, create memories in and enjoy their life in.

That said we're currently 200k apart on a listing that's north of $6m (condo resale in Brooklyn). It's not officially listed yet, we had previous dealings with the broker so got a heads-up. It's a stunning home, price is top dollar, but I was just informed the sellers going to roll the dice and pass on our all-cash offer. We'll see.

What you offer is all relative to what they're asking. If you're mispriced by 10% on the upside, my bid is 12% lower than ask, that's not a low ball, that's a reasonable bid. It's all about perspective. What I've recently experienced with a few of our listings, if buyers perceive them to be priced 'too high', they're simply passing on them. Our sellers mentality was keep it where it is people will make a bid. But I had a feeling something else was going on. As soon as we put the word out a deal could be done at x, we had accepted offers at that revived ask, which was about 1.5% lower than the listed ask.

Keith
The Burkhardt Group

I don't want X% off. I just want a 4% cap rate. That usually means some material % off.

George, Are you able to post a sample listing and your calcs? I would think that at 4% cap, your bid will be 20% below the ask for a townhouse needing reno.

4% cap rate on a Brooklyn brownstone? That might prove difficult. But if you find one that you're going to pass on, please share it!

Where is anything even remotely 4% cap in Manhattan or Bk (if using true carrying costs)?

4% is the new -2%. I don't think I'm crazy because (1) I stretch the numbers already, (2) my numbers are about in line with other offers sellers are getting, (3) I'm looking at value add properties in off-prime areas, and (4) we can't assume any price appreciation anymore. Look at what Blas is doing to the schools for starters...

With the new Rent Stabilization regs we are going to have to see a return to cash-on-cash returns vs upside returns because there are no longer upside returns to any great extent (see the other thread re:multi-family volume). What I'm seeing is offers >30% off prior (already down >20% from peak) sales prices to create current sensible returns at current numbers. Example: 12 family in Woodside would have sold @$2.8MM a few years ago, had contract out @$2.2MM just prior to regs change, offer @$1.5MM after.

This is a bit of hearsay, but one of my buyers told me his friend walked away from 5 contract deposits totalling $1.5 million rather than closing and immediately being down $7 million under the new regs.

30 - completely agree that the price per sq ft nonsense leads to similar poor incentives. There seems to be a desire to try to normalize the variables in a way that doesn't reflect reality or the product. Price per sq ft is a helpful metric for certain types of real estate transactions if you can normalize the other variables, but I think most of those transactions are for commercial use. When looking at homes with such wild variations in usable space, floorplans, rules on measurement, etc., it is just another artificially manipulated metric that I think creates friction in the market and is used by buyers and sellers to justify approaches.

TeamM, What should be the metric if price per sq ft is to be ignored completely? In another thread, we discussed number of rooms but it only works for pre-war built exactly the same way and for the substantially similar room sizes.

https://streeteasy.com/building/the-saratoga/20a

$1400 sqft for ho-hum UES condo built in the mid-80s with a noise problem by vagrants in the public space below

Sounds like we have an answer to 30yrs' question about whether listings coming to the market will continue to be aspirational or reflect today's market realities...

In a co-op price per share can be helpful metric. I also like to look at price per room, of course there are variables that have to be taken into consideration.

Price per square foot is certainly a good baseline but it's not everything.

I think 30 will agree when we first started doing this in co-ops you never mentioned price per square foot. It was all price per share.

Keith Burkhardt
TBG

For price per share, you can only compare it to other apartments in the building.

Price per share can be way off as well. Sponsors are only obligated to allocated shares "rationally and reasonably" which is interpreted extremely loosely, and is fixed for all time once the plan is in effect. Over time the relative values of units change, but share counts don't. So for example in many older conversions you originally had 2-3 bedroom units selling for less than double the price if a studio. So today the $/share will be wildly different since those units are typically multiples in sales price (this is also why combination units may have very different maintenance fees than natural units of the same square footage within a building). You also had Sponsors who plaid games with share allocations depending on vacancy and rents (which gave an indication of what sales prices they would be able to get from purchasers).

Obviously $/share also doesn't account for renovations, which can result in rather large price swings.

None of the above should be construed that I don't use share count as a value metric, but the problem with all these metrics is that there isn't a single one of them which can be used in a vacuum, and all too many of them do get used that way. And it almost always leads to game playing. Perhaps Keith will back me up when I say as soon as people started to use $/SF for Coops, we began seeing square footage inflation.

There is clearly inflation in square footage but it is not rocket science to recalculate the square footage using your own standards. However, comps will also need to be calculated the same way. Bearish incredible smart spreadsheet expert people commonly make the mistake of adjusting the sq footage of the unit they are bidding on using their own metric and comparing the price per sq ft to the rest of the market without adjusting the comps. There is no other metric which is a better that $ per sq ft and number of legal bedroom combined as an objective baseline with suitable mostly subjective adjustments (light, view, location, layout, reno, cc+taxes, etc) unless you have a comp in the same building of the same line. Of course, it would be better if there were govt imposed standards to calculate square footage as they exist in many other countries.

Hear hear! I'd like a law that either says the advertised sq ft is that which the homeowner uses for tax assessment purposes or a law like this: https://fr.m.wikipedia.org/wiki/Loi_am%C3%A9liorant_la_protection_des_acqu%C3%A9reurs_de_lots_de_copropri%C3%A9t%C3%A9

Realtors would freak, which I see as a good thing.

I think most realtors will welcome Govt standards for sq footage but not developers or owner who bought at inflated square footage. Fewer issues for realtors.

I'm sure I have told this story before, but since it applies...
I was selling a 2 be condo on West End Ave which was 1050sf. There was another on the market which was something like 975sf, but the broker had listed it as 1100sf. Someone had made an offer on the other unit which was not accepted, so their agent convinced them to make an offer on ours. But the agent insisted we should be selling for less money since it was smaller than the other one. Even though the percentage of common interest, the common charges, RET, and SF listed in the Offering Plan we're all less on the other unit (plus anyone with a brain could both measure from both floorplans which were available, and simply walking through either unit gave the same result). The only place the other unit was larger was in the lie told by the listing broker. Yet still......

From broker's perspective, the problem is you get punished for telling the truth. If you have a 700sf 1 br and actually call it a 700sf 1 br no one will come see it "because it's too small" based on all the 800sf 1 br's they have seen.... Which are actually 650sf.

One thing I really do not like about French law is low ceiling height inclusion - presumably to allow mansard roof. We checked into a nice hotel and they gave us a large room on top but 50 percent of that room was under average 6 foot ceilings. We naturally requested a change. Otherwise it is pretty good.
https://en.m.wikipedia.org/wiki/Loi_Carrez

The French Law excludes space where an adult cannot stand upright, but it doesn't apply to hotels. (Sorry.)

Realtors would freak bc (1) They would need to commission actual size measures, not made-up BS, prob at their expense and risk, (2) they would have to explain to sellers that their 1000 sf place is actually measured at only 750, (3) it would take buyers time to adjust to actual sf measures.

On a trip to Paris last month, it was clear agents don't shy away from true size. Just out of curiosity I perused the online listings, no problem listing a one bedroom at 300 square feet (28 sq.m).

30 is correct when square footage started showing up in Co-op listings it was the wild West. Initially no one would list a one bedroom under 800! I think after a couple of lawsuits that were lost by big brokerages for overstating square footage, things got better. For a while square footage disappeared from Co-op listings. But it is back.

we've got a lift in coming on in Gramercy that streeteasy has at 1300 from previous agent. It's obviously closer to 1100. Unfortunately other similar listings have the 1300 square foot posted, so then you got to address that to any potential buyer who will be beating you down based on that false information.

I remember a good friend of mine rented an apartment in Chelsea, two bedroom two bath she was told was 1200 square foot. When she had the floors redone and they measured it came out to about 875. even as a renter it gave her a pit in her stomach thinking she was now living in a paltry little apartment:)

I think it would be wonderful if we all dealt in the reality of the math. and simply accept all of our one bedrooms are in 800 square feet and our two bedrooms are 1200!

Keith Burkhardt
TBG

Sorry for the terrible grammar and spelling!

Your friend shouldn’t fee so bad as kitchen, bathrooms, closets, interior walls etc do take up at least 150-200 sq ft.

On the French law, I think ceiling height below 8 feet should be only be measured for selected area like a bathroom, closet or kitchen with min height of 7 foot. That is where French law is too generous.

Lots of interesting thoughts here. 300 - to answer your question, for the most part, I wouldn't replace the metric with anything. I think that the best information is a very accurate floorplan with accurate measurements + a price.

I understand the appeal of trying to create metrics to translate various homes into relative comps, but I think that price per sq ft is such a rough metric and there are such abuses that it hurts more than it helps.

Well, IIRC TeamM is looking at townhouses for single-family use, and I believe that the comparative there has generally been width. 18-footers comp to each other, not to 20-footers, etc.

That's assuming both 18-footers are on comparably desirable blocks. The virtue of townhouses is that you can get somewhat comparable sqft estimates bc you just look at the building envelope times number of floors above grade, then add or subtract for the size of the garden, roofdeck, condition, etc. Where we really need a standard for measuring sq ft is in smaller condos/coops/rentals where every little square foot counts.

However even in townhouses, a 16' Italianate will generally have larger rooms and more square footage than an 18' Federal.

Agree that it is much easier to measure the gross square footage of a townhouse as the floor level footprint is easily available or measurable. The same goes for full floor anything which tend to get sold as gross foot print.

Even for townhouses, I think that sq footage is a misleading metric. The usable space can vary widely depending on the layout and the ability to easily alter the layout varies widely based upon the construction.

Perhaps as a general sifting point square footage can be helpful (e.g., even with an 80% error in the numbers, there's a stark difference between a 1500 sq foot property and an 8000 sq ft property) but I think that trying to comp properties based upon sq footage and price per sq ft is not a great approach.

But George, there are still problems with square footage as an apartment measurement: Square footage in low-amenity condos doesn't compare to square footage in high-amenity condos, let alone to co-ops. And then layouts fall in and out of fashion... in the price range I work, a lot of Fives that can allow a third bedroom sell for very high prices per sf, because the buyers are valuing the number of bedrooms (this goes to Keith's point, above). If you buy a "low" price per sf apartment, you might be getting a bargain, but you also might be simply paying fair value for something that doesn't have much potential to appreciate, and you might find that out at resale.

I believe that appropriate percentage of amenities should be added but does it include lobby? That is why in many countries there is a concept of gross and net square footage (French law is net square footage). Check some listings in HK.
I like square footage and bedroom combo.

The concept should be net private sq ft. Adding outoor space, amenities, hallways, and square footage for the view are all misleading. No two pieces of real estate are ever perfectly comparable, but at least a standard measure of size would provide a baseline.

https://www.wsj.com/articles/after-rush-to-beat-new-tax-manhattan-luxury-apartment-sales-slump-11567342801

The rare time when I want a WSJ subscription to get past the paywall. Is this article anywhere else? I can't seem to find one that is not paywalled.

It is old news as July high-end contracts/closings were very few to due to higher number of sales in June (for example Bezos who closed within a couple of weeks of contract signing) before transfer/mansion tax increases kicked in on July 1.

Latest UD numbers seem to indicate that the market is neutral at best, and still declining at worst.

As of Yesterday, YoY
Supply: 15.9%
Pending Sales: 7%
Market Pulse: -8.2%
Days on Market: 23.5%

For August, YoY
New Supply: -4.3%
Contract Activity: 0%
Off Market: 5.5%

One thing the averages are not showing is that when sellers absolutely need to sell it is taking large discounts for anything but "A" properties to transact. The reason it is not showing (yet, anyway) is that most sellers are simply withdrawing their property from the market instead of taking losses, but that doesn't last forever.

The bottom line is the market is pretty shi*** right now. Especially if you purchased a mediocre property in 2014 or 2015. The good news is the entire market and economy is not collapsing. Transactions are taking place still fairly robust numbers all things considered, for the chosen properties.

A pretty good time to be a buyer. A crappy to ok time to be a seller......

Keith Burkhardt
TBG

Maybe not fully relevant - bc the people moving out are generally on the lower income scale - but this pattern is definitely picking up and it's not just NYC. It's LA/SF as well. SALT is having an impact.

https://www.theatlantic.com/ideas/archive/2019/09/americas-three-biggest-metros-shrinking/597544/

it is not about SALT at all, it is about income inequality

California, in general, has the most fleeing when you look at the data. It's amazing the housing market is holding up. We ski out in Colorado every year, making small talk i'll speak about how much Denver has changed, if I am speaking with a local, they 'blame' it on California, primarily Los Angeles! Lol.

SALT makes a slight difference at the margin (in terms of rent vs buy), combined with the mansion tax, several tax abatements expiring, foreign "issues", etc.

While there is clearly significant income inequality in NYC, I don't think it is drastically different today than it was 2 years ago.

More critically, are we entering a larger phase in American society? Basically the reversal of the previous urbanization? These waves have come and gone in the past, if it is that, it could be a significant headwind. Particularly as working remotely becomes easier.

I don't think we are anywhere near this (nor do I think it will happen), but just pointing out that Urban flight is largely what killed NYC tax base and led to the financial problems of the 1970s.

I think one unappreciated factor is the rapid change in the asset management industry. As more and more investors allocate to passive investing, the industry of people in this city who have made a living off of unsustainable management fees diminishes, which has knock on effects for middle and back offices as well. I don't have the numbers at my finger tips but I think this is an appreciable current that the city is navigating. One notable move was Alliance moving to Tennessee, which allows for a step-down in cost structure. There may be some front office people remaining in Manhattan, but there are fewer of them, I would bet. I can't imagine a 'White Flight' situation, but I think there's a slow sideways reckoning as all of these factors add up.

Jas, While the changes in the asset management industry you mention are correct, do not forget expansion in private equity, fintec and tech sector. There were very few Apple, Google or Facebook employees 10 years back in the city.

Continuous outsourcing will keep them all