Sometimes a good moat might sell castles in suburbia. h/t McMansionHell When a new development concept goes awry…
But I digress…
Market Report Gauntlet Week 4 Q4 2018: Hamptons, North Fork and Long Island
Douglas Elliman just released our research for the Hamptons, North Fork, and Long Island markets (I’ll have the links up shortly) covering the fourth quarter. The Hamptons and North Fork showed an acceleration of weakness and long Island showed more (but unexpected) strength.
Here are some key points for each market and some charts:
Coverage from Newsday: Report: Long Island home sales rise as inventory falls
“A shortage of listings “is what’s driving prices up, because there’s still limited inventory,” said Ann Conroy, president of the Long Island division of Douglas Elliman. “That’s what’s keeping the prices where they are and pushing the prices up.”
– Listing inventory fell to a more than fifteen year low after three straight quarters of year over year declines
– Number of sales rose year over year in two of the past three quarters
– Median sales price has not seen a year over year decline in 23 consecutive quarters
– Median sales price slid year over year for all quarters of 2018
– Luxury sales price slipped below the $1 million threshold for the first time in two years
Coverage from Bloomberg: Hamptons Listings Surge 82% in a Year, Pushing Home Prices Lower
“Would-be Hamptons buyers have been dragging their feet, betting their money is better off in the stock market, or reluctant to commit to discretionary purchases after a federal tax overhaul that capped write-offs for mortgage interest and property levies. With so much inventory, sellers will have to drop their prices to attract interest, said Cia Comnas, who oversees sales in the Hamptons for brokerage Brown Harris Stevens.”
– Median sales price stabilized as average sales price moved higher
– Number of sales declined year over year for the fourth consecutive quarter
– The ratio of sales above and below the $1 million threshold remained essentially unchanged
– Listing inventory rose sharply after twelve quarters of declines
– Luxury sales at or over $5 million reached its highest market share in three years
– Luxury listing inventory continued to rise as sales declined
…and a cool chart from Bloomberg:
“Record prices with fewer sales and more inventory.”
– Median sales price set a new record for the third time in the past four quarters
– The number of sales declined sharply year over year for the third consecutive quarter
– Listing inventory remained relatively stable, with nominal changes over the past three quarters
– Luxury price trend indicators rose sharply as listing inventory fell by half
– The market share of sales under $1 million was only price strata to rise
Market Report Gauntlet Week 4 Q4 2018: Aspen, Snowmass Village, Los Angeles, Venice, Mar Vista, Malibu & Malibu Beach
Douglas Elliman released our research for the Aspen, Snowmass Village, Los Angeles, Venice, Mar Vista, Malibu & Malibu Beac markets (I’ll get the links up shortly, I’m running behind) covering the fourth quarter. The Aspen and Snowmass Village markets showed an emphasis on smaller properties. Los Angeles and the submakets we cover remained brisk but sales are slowing. Malibu sales were impaired by the tragic wildfires late last year.
“The number of market-wide sales rose year over year for the first time in 2018.”
– Listing inventory edged higher year over year for the third straight quarter
– The number of single-family sales for the quarter matched the ten-year quarterly average
– Luxury average price per square foot slipped, consistent with the decline in average sales size
– The starting threshold for the luxury market fell to the second-lowest level in two years
“Rising sales has been on a multi-year streak as sales mix emphasized smaller properties.”
– Number of sales again surged year over year, the tenth straight quarter of gains
– Price trend indicators showed mixed results as average sales size declined sharply
– Listing inventory edged higher for the fourth consecutive quarter
– Luxury price per square foot jumped while the other indicators were skewed lower by a shift to smaller sized sales
“Overall price trends moved higher as sales slipped and inventory expanded.”
– In light of November’s wildfires, it was natural for sales activity to slow
– Number of sales declined year over year for the third consecutive quarter
– All price trend indicators rose year over year for the second straight quarter after declining in the spring
– After three consecutive quarters, of annual inventory gains, the market pace was the slowest in three years
– Total sales for 2018 edged above the total for 2017
– Despite the decline in luxury average sales size for single-families, all price trend indicators moved higher
– Luxury condo median sales price rose annually for the second consecutive quarter
This Week in Aspirational Pricing: $238 Million Buys You A Home
All heck broke loose yesterday when the Wall Street Journal broke the story that billionaire hedge funder Ken Griffin paid $238,000,000 for a 23,000 square foot multi-story penthouse at the top of 220 Central Park South. There was a bunch of interest in the story about the highest sale in U.S. history and it made for a lot of fun additional reading, a fantasy alternative to the stress of current headlines.
[Source: Not sure who to credit – found on web]
Some of the reads you should check out include:
The story that broke the news:
Billionaire Ken Griffin Buys America’s Most Expensive Home for $238 Million [Wall Street Journal]
…Reporter Kathy Clarke also broke the Michael Dell prior Manhattan record $100+ million sale a few years ago.
America’s Most Expensive Home Sold to Billionaire Ken Griffin [Bloomberg]
…the source of the epic “vertical travel” reference.
At $238 Million, It’s the Highest-Price Home in the Country [New York Times]
…That article by Stefanos Chen covers the idea that this sale has nothing to do with the current market. This was a sale representative of what I call “peak” luxury circa 2014 into 2015.
To give context to how disconnected from mere mortals this sales price was, Azi Paybarah who writes the New York Times newsletter New York Today made the context simple. He took all my data on the highest priced Manhattan residential sales for each year since 1982 and adjusted them for inflation:
The visual context is quite jarring.
Here is my updated multicolored version (not cpi-adjusted) that my Housing Note readers have seen before. I had to move my company logo to the left to accommodate the line:
Most Expensive U.S. Home Sale Ever: Billionaire Ken Griffin Closes On $238 Million New York Penthouse [Forbes]
…This is a story that speaks to the price context of this sale.
An apartment on Central Park just sold for $238 million. That’s the highest price ever paid for a home in the US [CNN]
…This story mentions my hobby of tracking these big sales that began in late 2013 when I saw so many listings over $100 million appear (and few ever sold).
The $238 Million Penthouse, and the Hedge Fund Billionaire Who May Rarely Live There [New York Times]
…This was today’s New York Times cover on Ken Griffin.
New in the Real Estate Lexicon: Vertical Commute
As mentioned above in the Bloomberg article, a “vertical travel” is something New Yorkers do every day – I’ve just never heard it described that way (bold is my emphasis).
Citadel has signed a lease to anchor a skyscraper at 425 Park Avenue, eight-tenths of a mile from Griffin’s new apartment, not including vertical travel.
When Ken Griffin travels from his new penthouse to his office, I imagine his commute, that includes “vertical travel,” looks like this:
The Value of Land Across The U.S.
The value of land, or “dirt” as New York City real estate developers call it, varies wildly accross the U.S. A research paper explores this. Price moved higher faster than the suburbs which is why I think so many super luxury towers were built in Urban markets – that’s the only way to make the acquisition feasible (because landowners saw their value potential that way.
…but I have questions:
First: From a valuation perspective, homes depreciate and land appreciates so this is somewhat confusing:
“Generally, land tends to appreciate faster than structures because when housing demand changes, you can build more structures but you can’t build more land,” Larson said.
Second: How is New York County (Manhattan) not in the top ten? Manhattan doesn’t appear in the data yet Brooklyn does. Housing prices in Manhattan are higher than Brooklyn if locations are similar. This omission seems to jump out and I can’t find a disclaimer or reference to it in the piece.
The Only Housing Collapse Is The Collapse of Context
This Bloomberg piece seemed a little confusing to me BofA Says Don’t Believe the Hype on a Housing Collapse
And quotes Michelle Meyer’s research note:
“Don’t believe the narratives of a housing collapse,” economist Michelle Meyer wrote in a note to clients on Tuesday. Meyer said the challenges facing the sector “should only be a slight drag on growth” and that “the recent decline in mortgage rates is well timed, ahead of the spring selling season.”
On the national market, existing and new home sales are falling year over year and prices are rising. Inventory is rising but still remains inadequate in many areas. Are pundits suggesting this declining condition will lead to a collapse? Is anyone saying this? Does anyone suggest we are seeing another housing meltdown?
No. What we are seeing is a housing slowdown brought on without the help of fast and loose credit policies (yet) distorting supply and demand. Slowing sales may eventually lead to declining prices. This is supply and demand and affordability in action.
This is a smart housing economist simply being adept at hyping her research notes. Let’s not get crazy here.
Sharp Decline In Sales Baffles, Sort Of.
Existing home sales fell 6.4% seasonally adjusted which is unusually large.
Real estate brokers are trying to figure out why sales of existing homes plunged in December.
If you notice on the NAR data release, the number of sales fell 11.7% YOY WITHOUT SEASONAL ADJUSTMENTS. In other words, the number of sales was almost 12% lower than the same period last year in their raw form. We are seeing this in nearly all of our regional research coverage. I contend the uncertainty of regulatory policy (tariffs) and the new federal tax law, as well as higher mortgage rates earlier in the year (and possibly late year financial market volatility) caused many buyers to pause on their decisions.
(For earlier appraisal industry commentary, visit my old clunky REIC site.)
Mining Appraisal Data
Here’s an FHFA/AEI research paper that mined data from more than 16 million appraisals. There seems to be a lot of mining going on these days to fuel research and more profits. The appraiser’s role is being phased out at the same time. I presented the Washington Post piece earlier in these Housing Notes.
OFT (One Final Thought)
Hat tip to the padre.
Brilliant Idea #1
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– They’ll be love vertical commuting;
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– And I’ll collapse.
Brilliant Idea #2
You’re obviously full of insights and ideas as a reader of Housing Notes. I appreciate every email I receive and it helps me craft the next week’s Housing Note.
See you next week.
Reads, Listens and Visuals I Enjoyed
- America’s Most Expensive Home Sold to Billionaire Ken Griffin [Bloomberg]
- American Billionaire Ken Griffin Buys London House Once Asking £125M
- Walker Tower penthouse tied to 1MDB scandal gets another staggering price cut
- Broadway Playwright Neil Simon’s Collection of NYC Apartments up for Sale
- Lawmakers Promise Fresh Push to Overhaul Housing Finance [The Wall Street Journal]
- Analysis | Detailed data show the value of land under homes across the country [Washington Post]
- Billionaire Ken Griffin Buys America’s Most Expensive Home for $238 Million
- BofA Says Don't Believe the Hype on a Housing Collapse [Bloomberg]
- The unusually large drop in home sales has real estate agents baffled [CNBC]
- Home Sales Dropped in December; Price Increases Slowed [The Wall Street Journal]
- Hong Kong tops list again for least affordable homes [Financial Times]
- Parksville [Atlas Obscura]
- New listing absorption softens more as pending sales slip [Seattle Bubble]
- Monthly Housing Market Upgate [RBC Economic Research]
- Visualizing the Top Global Risks in 2019 [Visual Capitalist]
- Are UK house prices heading for a post-Brexit meltdown? [Financial Times]
- Why Nobody Wants to Buy the Most Expensive Property in the World [Town & Country]
- Fannie Mae and Freddie Mac regulator discussing plan to end conservatorship [MarketWatch]
- Stock Market Volatility Left No Clear Winners in 2018 [Barron's]
- Warning to Appraisers: AMC asking Appraisers to Violate State Law [VaCAP]
My New Content, Research and Mentions
- Most Expensive U.S. Home Sale Ever: Billionaire Ken Griffin Closes On $238 Million New York Penthouse [Forbes]
- The waning number of Hamptons buyers are going big [The Real Deal]
- Home sales slow on the East End [Long Island Business News]
- Douglas Elliman Releases Q4 2018 Greater Los Angeles and LA Submarkets Sales Market Reports [CityBizList]
- El precio más alto pagado por una casa en Estados Unidos: un apartamento por 238 millones de dólares [Erie News NOW]
- Real Estate Investments Are Never ‘Recession-Proof,’ but Some Are Safer Than Others [Mansion Global]
- Căn hộ siêu sang ở Mỹ giá 238 triệu USD, tin nổi không? [TUOI TRE]
- House-hunting in the Hamptons this year? There's a lot more to choose from [Brick Underground]
- Hamptons Listings Surge 82 Percent in Year, Pushing Home Prices Lower [Newsmax]
- Most expensive home in the US sells for $238 million to Ken Griffin [CNN]
- Éste es un buen momento para comprar una casa en los Hamptons [Yahoo! Finanzas]
- Hedge Funder Buys $238 Million Central Park South Penthouse, Making It Most Expensive Home In U.S. [Gothamist]
- Tallest Chart in the History of Manhattan Real Estate, Continued [Matrix Blog]
- Hamptons Homebuyers Have Their Pick of Deals in the Beach Towns [Bloomberg]
- Compradores têm bons negócios imobiliários nas mãos nos Hamptons [Economia]
- $238 Million Dollar Apartment Sold, Most Expensive Ever [Inquisitr]
- The resi world reacts to Ken Griffin's record-setting buy at 220 CPS [The Real Deal]
- Luxury Housing Market in Aspen, Colorado, Chilled [Mansion Global]
- Malibu, California, Sees Sharp Fall in Home Sales After Fires [Mansion Global]
- Die Häuser überschwemmen den Markt in den Hamptons [Technoglitz]
- NYC penthouse sells for $238 million, setting national record [am New York]
- Report: LI home sales rise as inventory falls [Newsday]
- Most Expensive U.S. Home Sale Ever: Billionaire Ken Griffin Closes On $238 Million New York Penthouse [Forbes Middle East]
- 10 things you need to know before the opening bell (SPY, SPX, QQQ, DIA, F) [Business Insider]
- Homes are flooding the market in the Hamptons [Business Insider]
- At $238 Million, It’s the Highest-Price Home in the Country
- The New York City homebuying guide [Curbed NY]
- Why South Florida Mansions Are Hotter Than New York’s (Podcast) [Bloomberg]
- Will Amazon move will be prime for LI housing? [Newsday]
- The Biggest Residential Mega-deals of 2018 [The Wealth Advisor]
- Reforma fiscal de Trump impulsa ventas inmobiliarias millonarias al sur de la Florida en 2018 [Miami News 24]
- First Look Inside the World's Highest Apartments at Central Park Tower [City Realty]
- FiDi is flooded with condos and sales are tumbling [The Real Deal]
- Suburban Co-ops and Condos Are Outselling Houses [Habitat Magazine]
- Downtown Boston housing market pulls away from rest of the city—way away [Curbed Boston]
- Can Extell make Central Park Tower the most expensive condo in U.S. history? [6sqft]
- For $18.5 Million, a Studio Where Ziegfeld Dreams Were Invented [The New York Times]
Recently Published Elliman Market Reports
- Elliman Report: Miami Coastal Mainland Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Miami Beach + Barrier Islands Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Fort Lauderdale Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Boca Raton 4Q 2018 [Miller Samuel]
- Elliman Report: Delray Beach Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Jupiter + Palm Beach Gardens Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Wellington Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Palm Beach Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Venice + Mar Vista Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Malibu + Malibu Beach Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Los Angeles Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Aspen + Snowmass Village Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Long Island Sales 4Q 2018 [Miller Samuel]
- Elliman Report: North Fork Sales 4Q 2018 [Miller Samuel]
- Elliman Report: Hamptons Sales 4Q 2018 [Miller Samuel]
Appraisal Related Reads
- Working Paper 19-01: The Price of Residential Land for Counties, ZIP codes, and Census Tracts in the United States | Federal Housing Finance Agency
- Are Builder Premiums Really Worth What They Charge? [Birmingham Appraisal Blog]
- Class Valuation names John Dingeman chief appraiser [Housingwire]
- The Proposed Bifurcation of the Appraisal Process. Who Benefits & Why? [VaCAP/Appraisersblogs]
- Algorithm vs. appraiser: Estimating a home's value can be complicated. Here's what sellers should know. [Chicago Tribune]
- Being neutral, price per square foot, and the Governor’s new digs [Sacramento Appraisal Blog]
- How to Prepare For a Real Estate Appraisal [Max Real Estate Exposure]
- Tom Kelly: Appraisers are not building inspectors [The Spokesman-Review]
- Birmingham Real Estate Market Update-2018 vs 2017 [Birmingham Appraisal Blog]
Extra Curricular Reads
- PODCAST: Crocs: From Punchline to Fashion Line [Household Name]
- 10 Best Documentaries About New York City [Nonfics]
- A cheery tale of Chilean cherries [Economist]
- The Secrets of Lyndon Johnson’s Archives, by Robert A. Caro [The New Yorker]
- How the Slice Joint Made Pizza the Perfect New York City Food [The New York Times]
- Guy Realizes That The 'Large' And 'Small' Beers At Applebee's Are Basically The Same Size [Digg]
- The Pirate Radio Broadcaster Who Occupied Alcatraz and Terrified the FBI [Narratively]
- Inside the Car Company That's Resurrecting the DeLorean [Popular Mechanics]