Just received this report from Prudential in NYC on the Manhattan market - 4th Quarter. I'll post the report recap, with my bold highlights. Note that the "focus on the housing market", in other words, media reporting on the bubble, is being seen as a cause of the meltdown.
Ignorance is bliss they say...
Subject: Prudential Douglas Elliman Manhattan Market Overview 4Q 2005NEWS EMBARGO:
Highlights: Overall Manhattan Market [includes entire island]
All price indicators showed double digit gains in excess of 20% over the prior year quarter but single digit gains over the prior quarter providing significant evidence that the market has "shifted gears" to more modest appreciation levels.
The average price per square foot exceeded $1,000 this quarter for the first time, reaching $1,002 per square foot. However, the number of sales dropped sharply as the amount of inventory available saw modest gains as compared to the prior quarter.
Over the past 15 years, the average drop in the number of sales from 3rd to 4th quarter has been 6.7% so this drop was larger than usual.
The modest uptick in mortgage rates, mixed economic news and the focus on the housing market since last quarter appears to have caused a "pause" in transaction activity.
However, bonus income from the financial services sector, important to the Manhattan real estate economy, is expected to add additional demand to housing over the next two quarters as evidenced by the additional contract activity seen at the end of the current quarter, especially in the luxury sector.
Average Price per Square Foot increased 28.5% to $1,002 (a record) over the prior year quarter result of $780 and was up 1.8% above the $984 seen in the prior quarter.-Average Sales Price increased 20.3% to $1,187,404 over the prior year quarter average of $987,257 and was up 3.3% from the prior quarter average of $1,149,813.-Median Sales Price increased 25.6% to $760,000 over the prior year quarter median of $605,000 and was up 1.3% from the prior quarter median sales price of $750,000.-The number of sales dropped 27.2% to 1,574 units from the prior year quarter total of 2,161 units and dropped 21.2% from the prior quarter total of 1,997 units
Listing Inventory expanded 52.1% to 5,964 units from the prior year quarter total of 3,922 units and was 3.5% above the prior quarter total of 5,764 units.-The number of days it takes to sell an apartment increased by 4 days to 137 days as compared to the prior quarter average of 133 days. In the prior year quarter, it took 41 fewer days or 96 days on average to sell a property.-Negotiability remains limited, rising slightly to 2.5% for the quarter, from 2.2% last quarter and 1.5% from the prior year quarter.
January 04, 2006
Follow-up NYC: Prudential Douglas Elliman Manhattan Market Overview 4Q 2005
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4 comments:
Keith,
I am a big fan of Housing Panic, link my Matrix site http://matrix.millersamuel.com to you and author the market study that is the subject of this post.
I requested that the press release be sent to you. There are a number of reasons why the market is going through changes here, most of which were addressed in the study. Prices here have always been above national levels here so thats not a reason to predict a bubble.
However, I am curious as to why you think that "bubble speak" does not have some element of a "self-fulfilling prohecy" to it, since buyer psychology is an inherent component of market value. I suspect you have seen this already, as news outlets are now changing the phrase "bubble bursting" to "soft landing." There is definitely an element of herd mentality with the media. Of course I am not suggesting that the media caused a housing bubble, but it does seem like it can have an impact that can not be discounted.
What is your reasoning that the impact of media coverage not relevant? Or is that not what you mean?
I believe media coverage is indeed relevant (including the bubble blogs) - more awareness that the mother of all bubbles is upon us leads homeowners and homebuyers to question their irrational behavior
the media doesn't cause the bubble. speculation, greed, economic ignorance, faulty fed policy, corrupt mortgage bankers, realtors, appraisers and builders, easy credit and herd mentality caused the bubble.
but the media plays a role - in reporting what has happened, and what is happening. Thus it (aka awareness) ushers in the popping of the bubble.
what is truly funny though is the "if the media would shut the F up, this bubble could go on and we'd all be better off" mentality we hear (from realtors especially)
kind of like "if the witnesses would be quiet, we could keep robbing banks"
thanks for the release today. very interesting goings-on in NYC
I do believe we have a new "talking point" (i.e. another straw to grasp at) in this article: put "lots of end-of-year bonus money soon to be put to use" on your Bingo card as something we're gonna hear over and over again for a while.
Of course that is valid only at the high end, where this guy is dealing, I guess. But an easy conclusion from the article -- fewer sales but prices still high -- is that there are fewer "lower-priced" homes being sold.
I just got the new NEW YORK mag when I returned to my Murray Hill rental. You would not believe the FULL PAGE COLOR ads developers and realtors have in this issue. They are emptying the clip to sell. Oh, and they have absurd claims like the one building where you only have to dial one number to get "room service" from the pseudo-luxe restaurant on the ground floor. Good for a laugh.
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