It's good to see industry analysts confirming what we predicted roughly two months ago. A recent MSNBC articleindicates a surprisingly quick rebound in the Manhattan apartment market as of late. As consumer confidence builds, stability strengthens in the market as stated in our August Manhattan Condo Report and NYC Square Footage and Median Price Differentials report.
In our August report, we projected a sales activity and property values increase in the months of July, August and September.
Source: AccuriZ.com
The recent MSNBC article indicated a sales increase of apartments and co-ops between 46 and 69 percent from the second to the third quarter, with the number of New York's unsold apartments falling from the peaks of April. Our projections of a 4th Quarter level of stability are appearing to be valid. In the real estate market there are few trusted sources and AccuriZ has been proven to be an authoritative source consistently.
For more statistical reports on property data from public records and property valuations click here.
The Manhattan Condominium Market is about to "shock the skeptics". There have been numerous reports published by noted "Manhattan Experts", but a recent article in Crain's Business week begs of the question "Who is manipulating What and Why? (See the NYC Square Footage Report) (See our repsonse to the Crain's Business Report)
Has a "Shadow" fallen on the NYC condo market, or is it just another game of smoke and mirrors? We thank the New York City Department of Finance for enabling those who have the desire to do the actual analysis, assuming one has the ability to do so. The Department of Finance has provided public records of rolling sales history since 2003. This represents all property sales in New York City; not listings, not possible listings and not sales that didn't close or the seller backed out. But Real Sales data!
DoF also provides public records on the Assessment Rolls for Class I, II, III and IV Properties. From this Assessment Roll we can find out how many properties exist in each borough and when the property was built. An individual with some basic computer skills can than run a query to append the sales file with the Assessment file.
Once completed, a further level of skill is required; not a lot of skill, but just a little. Invalid sales should be stripped out of the analysis. An invalid sale would be a property that transferred for less than $1,000 dollars. As a seasoned valuation analyst, I would actually go an additional step and remove all sales that sold for under a $125 per square foot in Manhattan. The simple fact is that such sales would not be representative of the market and do not come close to representing the actual cost of construction.
So common sense prevails. In the end, a valid set of property data and sales is available for analysis. The table below indicates that the average and median sales price for condos is declining at a rate of about 8% for the first six months of 2009. This is much lower than some reports have indicated, but HOLD ON.. there's more.
Source: AccuriZ.com
Source: AccuriZ.com
The chart above considers the rolling average of sales from July 2008 to July 2009. We have applied this data to adjust for the over correction in the markets and the seasonal affect of winter sales. Based on the trend line, we are projecting that for the months of July, August and September sales activity will increase and property values will adjust upward. Furthermore, the 4th Quarter - which usually shows weaker activity and valuation - will indicate a level of stability.
In short, when you analyze data with a known common factor such as "Square Footage", manipulation of the data is difficult. Combine this with an open policy of NYC to provide data free for analysis when it used to cost over $20,000, analyst can now openly check one another.
There is a true check and balance and the latest reports about the Manhattan market are misleading.
The following commentary is in repsone to a recent Crain's New York Business article titled "Shadow units cast pall" by Amanda Fung. The article discussed a glut of "shadow inventory" in New York City, particularly in Williamsbug and Manhattan. Sources claimed that Manhattan had more than 10,000 unsold condos. Based on my findings, the data and information being presented in the article proved to be misleading, if not out right false. Here is part of the response. The entire response can be seen HERE. Remember, real estate is three things: Cyclical, Seasonal and Emotional. Amanda In the 25 years that I have been valuing and analyzing real estate, the term "Shadow Inventory" has never been presented before. What I gather is that this is a buzz word used to discuss inventory that has been built, is under construction or just coming on the market. This has never been called Shadow Inventory, but pending inventory. Because the property data being presented in the article contradicts reports I have prepared and published, I started to review the information by outside sources that was provided to you in more detail. The 18 month supply issue baffles me because I simply cannot determine where this comes from. Also, the "glut" of Williamsburg has me confused. Analysis of construction activity, public records and sales activity clearly indicate that Manhattan alone absorbs about 9,000 new condo units a year. For 2009, sales activity indicates an annualized absorption of about 6,000 units. This would be 3,000 off the peak, so again how does 3,000 fewer units sales compute to 10,000 unsold units. Also, the 7,000 plus units coming on line in 2010 will be absorbed into the market based on Historical Sales and building Activity. Your article is an amazing coincidence for me, because hours before I read it, I completed an in-depth analysis of Williamsburg/Greenpoint condo market for a client. What I discovered was not a "glut" of housing, but incorrectly priced housing. My clients project was listed by a real estate agent with unit values $100,000 above the market and incorrectly stated square footage. My firm has been arguing this point for years, it is all about the data. Based on the recommendations provided, the client relisted the units at the prevailing price per square foot rate for walk-up condo units of $550 psf. He has already received four inquiries, with one being a serious buyer. He did not receive a single call on the building in the past three months. My analysis does not indicate that this community is in a "bust stage". The following is a summary of my analysis that was provided to the client: "454 sales have occurred in the Williamsburg/Manhattan market in the past year. There are 192 sales classified as walk-up condominium projects with an average sppsf of $570.86 and Median of $569.17. Given the location of your property, I recommend listing at $550 psf for 1 Bedroom Units and be prepared to accept 10% less. Development around your complex will draw buyers, but there is a correlation to subway proximity and value. Hence the 10% lower acceptance. The number of new units coming on the market is meeting the demand of residents from the Lower Eastside, notably NYU students who cannot afford to rent or buy in Manhattan. Over the past 10 years, NYU has acquired many housing units south of 23rd which has driven up housing costs. After 9/11 Williamsburg/Greenpoint experienced a revitalization effort that has brought a new wave of construction and demand for the area. Current market conditions mean that you have to price correctly, the prior listings could have potentially hurt your efforts, creating a distress situation perception in the market." According to your article, Jonathan Miller states that there are 10,445 unsold condo units in Manhattan, plus another 7,000 coming on-line. He calls these shadow units. According to the New York City Department of Finance, for Manhattan there are: Class I Condos: 198 total units Class II Condos: 100,173 total units A total of 26,699 units were constructed since 2000. This represents over 25% of all condominium units. Mr. Miller is stating that 10% of all condos are vacant or unsold? And by unsold, does that mean there is a current owner who wants to see or can't sell? Based on Mr. Miller's comments, 10% of all condo's are on the market in Manhattan, with another 7% coming on. This just does not factor correctly and here is why: Since 2003 there has been no more than 10,000 valid sale transfers per year of condominium units in Manhattan. (See table below). Mr. Miller states that there are 10,445 unsold units in inventory which appears to be a normalized number, so what is the point. This isn't of much significance given the history of sales for condominium units. As a matter of fact, all units constructed since 2000 have been absorbed into the market within a very finite time (less than 6 months). Following is more information to support our data points: Since August of 2008 there have been 10,076 condo sales in Manhattan. This represents 10% of all properties. When only usable sales are considered, (indicated square footage over 200, valid sale price over $10,000), the number is reduced to 5,407 sales or 5.4% of all condo properties with an indicated Average Sales Price of $1,805,328 and Median of $1,089,527. The variance is rather significant. Analysis of 2009 Sales Only shows 1,764 valid sales with a Average sale price of $1,656,783 and Median of $1,025,000. Perhaps the use of the Average and Median Sale price is confusing some, because the Sale Price Per Square Foot provides a totally different view of the market. Square Footage has a significant impact on the values, with less than a 7% variance between Mean and Median, and property values from 2008 to 2008 are only down 4%, not the 30% levels being reported by some. And we cannot just rely on the Average and Median Sale Price alone.
John Watch, President & CEO AccuriZ.com
The current building supply in New York City is in balance. (In response to Crain's NY Business, "Shadow 
Units Cast Pall")
According to the US Census and other public records on property data, there were 3.328 million Housing Units for NYC in 2008. Of this, 61,000 rental units were held vacant and 26,500 owner occupied units held vacant. The total number of units held vacant in NYC is 2.6% of the total housing units. This is well below the National Average of 13.8%. (See the Housing In Crisis report for more details).
Remember that Real Estate is three things: Cyclical, Seasonal and Emotional. Population growth is over 390,000 people since 2000. This represents over 43,750 individuals per year or 16,203 New Households per year. Growth in Housing Units from 2000 to 2008 consisted of 29,006 new Class I Structures for a total of 53,567 new housing units. Class II and Class IV properties increased by 3,472 for Walk-up and Elevator Apartments accounting for over 97,583 new housing units and there were 26,699 new condominiums built. All told, this property development can accommodate a population of 461,167 individuals with an average Household Size of 2.7.
This does not consider the temporary housing for college students and foreign workers. Nor does it accurately reflect that most condominium units are owned with a population size less than 2. If one considers the unique trends of Manhattan, the current building supply in New York City, as stated above, is in balance.
New York City does not have a Shadow Inventory, just smart investors. Why sell when the housing market is weak? Hold on a year and get at least 10% more for your property. We are confusing a smart investor/developer with a property owner who panics. When you can rent and wait out the market, that is smart. Developers, unlike banks, know that dumping product drops values.
Where did all of the common sense go? Sales activity is down because unless you need to sell, you sit tight. Determining current housing market values based on reduced sales activity is not only misleading, but just flat our irresponsible.
For more information regarding the housing market, property searches and real estate reports, CLICK HERE.
A new AccuriZ report titled "Square Footage and Median Price Differentials," highlights the property data and sales activity of New York City and the differnces between median sale price and price per square foot. Below is an excerpt from the Staten Island section of the report. To see the full Staten Island report, as well as the additional boroughs, CLICK HERE.
Real Estate is like a set of Russian Nesting Dolls. Analysts tend to focus on the entire market, with minimal effort given to the underlying components. As you examine various segments of the markets, different pattern emerge. Generally in real estate there are three rules: Location, Location and Location. And in the current market, if you do not have to sell you don't.
It is comprised of three elements: Cyclical, Seasonal and Emotional. . The present market comprises of all three, which is extremely rare.
Public records show that Staten Island is experiencing the slowest value decline of all of the Boroughs at -5.17%. In complete opposite of the other Boroughs, Staten Island is experiencing a greater decline in the Single Family market, but showing increases in two to three family units, as well as properties with a residential unit and commercial unit.
I am a valuation consultant operating a website that tracks and analyzes property values in the Northeast, Southeast and Southwest.
I have been conducting data analysis and statistical profiling in the real estate industry for over 25 years. Developed customized software applications which are adjusted for each user to meet there specific needs. Started MJW consulting, Inc in 1989, in 1998 started Accuriz LLC. Over the past ten years these companies have morphed into a single source for accurate property data and valuation consulting.
Market Valuation Trend Analysis based on stratification levels determined by market participants. Provide value estimate on Hundreds of Thousands of properties at one clip, usually in under 30 days.
"I have both worked with John as a team member on a very difficult and large town wide revaluation program and I have retained John's services as an appraiser and as an expert witness before State Administrative Agencies. John has shown in each and every capacity to be hard working, extremely knowledgeable, well prepared, organized, technically savvy, and good with the public. He always delivered on time and as promised. It is uncanny how often his property valuations are dead-on accurate. I highly recommend John trust his opinion and will retain his services again when the occasion arises." December 19, 2008
Top qualities: Expert , Good Value , On Time
Daniel Tartaglia
hired John as a Appraisal and Valuation Services in 2003 , and hired John more than once
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
Powered by the ActiveRain Real Estate Network
© 2012 ActiveRain Corp. All Rights Reserved
