3BR pricing premium

What is the definition of a True 3br? Should it have 3 bathrooms to qualify? Are you contrasting it to a 2br where an L-shaped living room has been converted to an extra small bedroom?

Mouse, Find a building which has both types with similar views/light and post it for us please adjusting for renovation.

The family flights have already departed.

In my younger days I used to evaluate price per square foot as my primary metric as well. Problem is that it's hard to get accurate square footage, and not all square footage is the same. But if you're going to insist on using that, I'd also compare maintenance per square foot -- often times the 3br apartments will be cheaper from that perspective, since shares are rarely assigned on a per square foot basis.

Mouse, You will find that in cheaper mid-end luxury buildings there may not be premium for 3 vs 2. In high end buildings there still is but much smaller than it used to be due to flood of large apartments in new developments.

If available for a particular building price per share is also a good metric along with price per room, just to mix things up a bit. Of course with condos price per square foot makes more sense.

Either way this is still just one piece of the puzzle, there are many other variables that make an apartment more or less valuable/desirable and need to be weighted correctly and factored in for a full picture on value.

Keith
TBG

There's not really a premium. Larger prewar coops (7 and 8) are kinda hard to sell right now.

There's a premium, but it's hard to define it.

For one thing, how "informational" is it to say that a Classic Six which is an A-line, and has the best exposures in the building, trades at more psf than a 2/2 C-line which faces the back? How "informational" is it to say that bigger, more expensive apartments, which are generally owned by wealthier people, tend to have higher levels of renovation than smaller, more inexpensive apartments? Is it really apples to apples?

Still, if you want numbers, let's look at Jon Miller's.

In 2019, 3-BR Manhattan co-ops traded for an avg. price of $1,357/sf, while 2-BRs traded for an avg. price of $1,206/sf. So that was a 12.5% premium. On the West Side, 3-BR co-ops traded for an avg. $1,428/sf, while 2 BRs were $1,221/sf. , so that was a 17% premium.

I don't see any stats for 2020 yet; remember that we just restarted in the summer and so closing data is just coming in now, and also the mix of sales has shifted as the Pandemic economic stresses have hit different income levels very differently.

If I had to guess about my market, I'd say that you could get a 2/2 in avg condition for about $1000/sf, while a Six would be around $1200/sf, so I'd call it a 20% premium.

Most importantly, note that I said "we restarted." While there might be a truckload of inventory indicating that Manhattan has been kicked in the teeth (we probably have two years' worth of inventory when you throw in shadow properties), in reality buyers are also buying.

One fun piece of market data is that signed contracts in the $2MM - $3.99MM Manhattan co-op segment were up 16.9% y-o-y (yep, I typed that correctly) vs. Nov. 2019.

ali r.
{upstairs realty}

FP --- that's what I'm saying tho, is it an apple to apple comparison of median 2bed vs. median 3bed? When I was looking around a lot the "median" 3 bedroom in any particular segment tends to have higher finishes. My very un-scientific says survey is that the per sq ft pricing difference if you are looking at similar location, similar line, similar finishes, just one is a straight 2bd, one is a six or seven, there's fairly minimal difference. Do you get the same feeling as a broker or do you think there's a value INTRINSIC to space itself?

Thanks Ali. While the data is noisy, it seems clear there is a 10-20% premium for those larger units.

As Ali mentioned, there is a huge difference in units and the buildings they may be in. See if you can post analysis of two particular building - pick a post war 60s building, and a pre-war and making suitable adjustment for floor, light and renovations.

my impulse, sluox, is to say that you're correct, but I can't prove it!

Maybe as the fall closings come in we'll have those data points, but earlier this morning I was looking for a building that had both with recent trades and had trouble finding one.

As I was searching (I started with the West Side, since I know those buildings well) it did make me think -- my building, which is an Edwardian with the insides ripped out, doesn't HAVE Sixes, so a buyer's choices are pretty much either four-room 2/2s or seven-room combos. A lot of buildings where I did call to mind recent Six trades were built more for the luxury markets, so 2/2s weren't a thing in those buildings. Poor people could live somewhere else!

And Sevens overall certainly don't trade that much, because once you have that much room you're unlikely to sell unless there's a death or a divorce.

You could argue that we should try to look at a really big building, like 200 West 86th, but 1) those six-room apartments weren't Classic Sixes (because Deco) and 2), specifically, you have a six-room in contract there that was the steal of the century, because the finishes were so specific ... as it is, it took nearly a year to sell. https://streeteasy.com/building/200-west-86-street-new_york/15m

ali

If the buyer universe thinks that remote working/learning is here to stay in some form, one might argue that the premium for that extra room should expand, not contract.

So many listings I looked at had such funny "home offices". One was a closet (not an oversized one). One was a hallway.