Peak Millennial, So Instead Lets Talk About A $2 Million Housing Market Record
For the past couple of months I’ve been speaking to NYC real estate agents about millennials and their impact to the housing market. My last event was a few days ago where I reached critical mass on the topic and I don’t want to talk about it anymore. After I left to return to the office, I got a call from a journalist about another topic and we got to speaking about the millennial discussion frenzy. She too was getting tired about the topic and mentioned all the pr pitches for new development projects she received. The angle seemed to be how well suited millennials were for that particular project. While we were speaking, she received yet another millennial email pitch.
There you have it. Peak Millennial.
And yet millennials are not that special…except for my four sons. I should make an April Fool’s day reference today. But happily it is also the birthday of my third oldest son. He’s a millennial (sorry).
1Q 2016 Manhattan Housing Market Report Published
Today Douglas Elliman published our Manhattan research for 1Q-2016. There was a lot of interest in the story for a number of reasons:
- The Average sales price broke the $2,000,000 threshold for the first time in the 27 years I have been tracking the market (sorry, I’m not a millennial). I know everyone likes it when we break thresholds of even numbers, but really, this $2 million is just a number. I remember back in in 2004, when the average sales price of a Manhattan apartment was cracked the $1 million threshold, I was being interviewed by a Japanese TV channel on the street in Midtown Manhattan and was asked what the meaning of reaching this threshold really meant. I pretty much said what I feel now. It’s an incremental number that makes us pause and reflect on the market. But the next day we move on and focus on more important stuff. Not sure if this ever aired in Japan. 😉
- With the slow down in contract signings within the super luxury new development market ($5M and above), many were wondering if there would be a correction. The super luxury housing market in Manhattan cooled off quite a bit about a year ago. It has taken about a year for market participants to talk openly about it instead of tiptoeing around it. The momentum of five years of frenetic development activity made it hard for the market mindset to shift gears quickly. But now the challenge is to articulate the market change in the correct context. New development contract signings above $5 million, referred to as super luxury, has cooled off considerably. However that threshold represents 8.9% of the market. Ironically this market is the reason we cracked $2 million. Super lux contracts signed in 2013-2015 and early 2015 within buildings whose construction is now completed, are entering the market in large volumes. In fact, new development closings are up 94.1% YOY and much of that is skewed to the super luxury market. There were 60 sales to close at or above $5 million in 1Q16. Throw in the re-sale market which comprises 78% of all sales that has limited but rising inventory and prices have continued to rise. About 48% of all sales that closed in the first quarter were at or above list price.
Something Scarier Than A Haunted House
You’ve Got Another Chance to Buy the $1.25 Million New Jersey Mansion That’s Being Watched by a Maniac Thirsty for Young Blood [NY Mag]
SEO friendly headline aside, I think this situation, if true, is far more scary than a visit from a ghost out of Davey Jones’s locker. The idea that there is a stalker who threatens you and any prior owner of a home is awful. A little over a decade ago, my wife and I were in a bidding war for a home and we lost. We found out later that the reason the sellers were leaving was due to the nightmare neighbor next door. Phew.
Stop Dissing Apple Maps, It Was Google Maps This Time
Maybe. I am always amazed how people are completely dependent on technology to the point that common sense isn’t considered. Imagine coming home one day and someone accidentally demolished it.
Big Mac Prices See More Appreciation
There was a fun piece in Realtor.com:
How Much Have Housing Prices Gone Up in 30 Years? Hint: Less Than a Big Mac
There have been studies that show how long a fast food hamburger can last so this index is a fair comparison.
There is not a U.S. Appraiser Shortage
Here are the numbers as presented by Dave Bunton of the Appraisal Foundation. Read it.
UPDATE A well informed long time friend and appraiser colleague gave me the head’s up that the use of the word “credentials” by the author in the following chart is a bit misleading. The article interchanges the word “credentials” with “appraisers” yet 27% of appraisers have more than 1 credential (i.e. licensed or certified in more than one state). For example, I am licensed in 2 states so I would count as 2 appraisers within the chart. The actual number of individuals who appraise is about 79,000 or 19% less than the number of credentials. And there are many people with credentials that don’t actively appraise. Still, the premise is the same, there are plenty of appraisers, just not enough that are willing to work for half the market rate in an AMC dominated bank appraisal market.
More Charts On The Manhattan Housing Market
My apologies to all my non-NYC readers but you have to admit, this market is fascinating to watch.
Here are a few more of the charts I’ve created on the market:
If you need something rock solid in your life (particularly on Friday afternoons), sign up for my Housing Note here. And be sure to share with a friend or colleague (or millennial). They’ll immediately want a Big Mac, you’ll feel satiated and I won’t be an April Fool.
See you next week.
Jonathan Miller, CRP, CRE President/CEO Miller Samuel Inc. Real Estate Appraisers & Consultants
Reads I Enjoyed
- Jeff Blau says building on Billionaires’ Row is more like “gambling than investing” [The Real Deal New York]
- Fed Up With Unsolicited Offers, Bed-Stuy Man Puts Up ‘Not For Sale’ Sign [CBS]
- Why townhouses in Manhattan could be a safer bet than apartments [FT]
- Brooklyn Land Prices May Be Dropping, But Some See A Soft Landing Ahead [Bisnow]
- New dev vs. existing buildings (Mar. 2016) [NeighborhoodX]
- Low-Income Renters Squeezed Between Too-High Rents And Subpar Housing
- You’ve Got Another Chance to Buy the $1.25 Million New Jersey Mansion That’s Being Watched by a Maniac Thirsty for Young Blood
- How Much Have Housing Prices Gone Up in 30 Years? Hint: Less Than a Big Mac – Real Estate News and Advice – realtor.com
- A Shortage of Appraisers? [Appraisal Buzz]
- Lenders `Freak Out’ at London Luxury Home Woes, Hike Loan Costs [Bloomberg]
- 2015 Population Winners: The Suburbs and the Sunbelt [Jed Kolko]
- It’s time to dispel the biggest myth about millennials [Business Insider]
- The Bronx is Booming: The Housing Market in the City’s Fastest Growing Borough is Heating Up [NY1]
- The wrong home was accidentally demolished based on a Google Maps error [BGR]
- Classic New York Streetscapes, Then and Now [Untapped Cities]
- Daily What?! The False Myth of the Redstone Rocket in Grand Central Terminal [Untapped Cities]
My New Content, Research or Stuff
- The Average Price of a Manhattan Apartment Is Now Over $2 Million [Curbed NY]
- Manhattan Apartments Now Cost Around $2 Million [Fortune]
- Average Manhattan apartment costs $2m, and developers are to blame [Guardian]
- What real estate crash? Manhattan apartments now average $2 million [Yahoo Finance TV]
- Another Condo Bust Looms in Miami [WSJ]
- Manhattan Gets Pricier as New Yorkers’ Wealth Grows [WSJ]
- Luxury condo developers hold onto units, while homes under $1 million fly off the shelf [Crains New York]
- Manhattan Average Home Price Crosses $2M Mark for First Time [DNAinfo]
- The average Manhattan apartment now costs over $2M [The Real Deal New York]
- Hell without the L?: Here’s how real estate players are bracing for the train shutdown [The Real Deal New York]
- Manhattan real estate breaks new price records [CNBC]
- Exotic Marble and Opulent Finishes Lure Buyers [New York Times]
- Manhattan Apartment Prices Top $2 Million While Condo Glut Looms [Bloomberg]
- Elliman Report: Manhattan Sales 1Q 2016 [Miller Samuel]
- Luxe condo slowdown isn’t trickling down to middle market [The Real Deal New York]
- The highs and lows of high ceilings [Brick Underground]