Black Dog: The Manhattan Housing Market Moonshot

Kids these days – they don’t appreciate the rock classics. Ha. Well, that’s some incorrect conventional wisdom that gets obliterated in the parking lot:

But I digress…

Manhattan Apartments Sell At Their Highest Total In More Than 32 Years

I’ve been the author of the expanding market report series for Douglas Elliman since 1994. Manhattan is the first market I covered for them and that is where both Douglas Elliman and my firm Miller Samuel began. The only difference is that they started in 1911 and we began just a tad later in 1986. Do you want to see how Manhattan prices looked in 1911?

The big story for Manhattan in the third quarter of 2021 was the idea that the market has recently begun to claw back after the pandemic lockdown in Q2 2020. Manhattan is outperforming the region, becoming the outlier to the other extreme.

The New York Times story Manhattan Apartment Sales Surge to Three-Decade High said it best:

More apartments were sold in Manhattan in the third quarter than at any other time in the last 32 years, in the latest sign that New York City real estate is set for a faster-than-expected recovery, according to new market reports.

Having worked in Manhattan since 1985 and co-founding our company in 1986, faster recoveries are nothing new: 9/11, The Lehman Moment, Superstorm Sandy, and now COVID-19.

Bloomberg News coverage on the report: Manhattan Homebuyers Send Sales Soaring to Best in Three Decades had a chart (2 versions) that made it readily apparent that the recovery was something big.

And Wall Street was very interested, making the article the 3rd most read on the 350K Bloomberg Terminals worldwide.



Elliman Report: Q3-2021 Manhattan Sales

Co-ops & Condos
“Sales levels surged annually at a record rate to the highest total in more than thirty-two years.”

– Sales more than tripled annually to the highest quarterly total in more than thirty-two years
– Listing inventory fell sharply from the prior-year quarter but remained above the third quarter decade average
– The market share of bidding wars rose to its highest level in three years
– Months of supply indicated the pace of the co-op market was the fastest seen in four years
– All co-op price trend indicators moved above the prior-year level and from the same period two years ago
– All condo price trend indicators fell annually, sharply skewed by the drop in average sales square footage
– Condo listing inventory declined from year-ago levels but was consistent with the same period two years ago
– The highest market share of luxury bidding wars in at least five years
– New development sales more than tripled from the prior-year quarter and nearly doubled from the same period two years ago


Elliman Report: Q3-2021 Northern Manhattan Sales

“Sales and price trend indicators continued to rise year over year.”

Co-ops & Condos
– All price trend indicators rose year over year, with average sales price setting a record
– The number of sales more than tripled while listing inventory rose to a new record

– All price trend indicators pressed higher year over year as sales more than tripled
– Listing inventory nearly tripled as the average sales size skewed lower

The Best Thing For High Housing Prices Is…High Housing Prices

That saying has been making the rounds lately. We are seeing housing conditions ease a bit but still quite intense. The disparity between conditions for buying and selling remains particularly wide. This is captured in Fannie Mae’s National Housing Survey and its Home Purchase Sentiment Index (HPSI).

Supply Chain Problems Or Not, The Inflation Surge Is Massive

While I present all of the Douglas Elliman market report results in nominal terms (not adjusted for inflation) I watch the impact of inflation in today’s dollar’s (real terms) too.

The spike of inflation since April is quite intense. Much of it seems to be related to supply chain problems but I wonder how long that can be used as an explanation, although I realize it’s a bit early and other variants like Delta are bound to pop up in the future. Adjusted for inflation, Manhattan housing prices are circa 2012, just before the massive development surge began.

Definitive Proof That ‘Aspirational Pricing’ Was An Actual Thing

This week at One Beacon Court, the former condo of the new owner of the New York Mets came on the market shortly after he sold it. The back story on it is what caused me to burst out laughing because it signified how depraved the “aspirational phenomenon actually was. I coined the phrase circa 2012 after starting to see high-end listings arrive on the market with asking prices which had no bearing on reality. Mansion Global did a piece on this phenomenon back in early 2016:
The Pitfalls of Aspirational Pricing.

In the case of Steve Cohen’s former penthouse condo, the numbers get quite extreme. The property came on the market in 2013 for $115,000,000. I remember thinking to myself at that time, “What? At best, they’d be lucky to get a quarter of that.” Before that in 2012, we saw a listing at City Spire Condominium, the first to crack $100 million and I had the same “a quarter of that” feeling.

2013 $115,000,000 ask
a series of price cuts
2021 $29,500,000 ask
2021 $30,500,000 sales price after bidding war
2021 $36,000,000 re-listed

The insanity of the pricing trend for this condo should not be lost on anyone, at least aspirationally.

Compass Stock Price Is Half Of Its Initial Offering

I’ve always questioned the merits of startup brokerage firm Compass since it is clear to me and my peers they are essentially a traditional real estate brokerage company. But they were able to emphasize their technology chops to latch on to the fintech boom and help garner a higher valuation. The current idea that they would acquire ancillary services to improve efficiency/profits is what traditional brokerage firms have been doing for decades.

Yet now it’s not just me. In the court of public opinion (make that investor opinion), their business model is not sparking excitement or confidence as evidenced by their stock price – in one of the biggest housing booms in decades.

If my initial premise for their overvaluation is wrong, please tell me (and all global investors) why. I truly want to understand. And what about all the agents that took stock options instead of cash for a portion of their commissions? Doesn’t that mean they ate a 50% discount if the price doesn’t recover?

Manhattan Views From My New Favorite Instagram Account

Getting Graphic

My favorite charts of the week of our own making

My favorite charts of the week made by others

Upcoming(Past) Speaking Events

I was invited by Goldman Sachs to speak at their 9th Annual Private Real Estate Conference on the ‘Apartments’ panel. Originally it was supposed to be on stage at Goldman’s downtown headquarters but went remote due to the then rise of the Delta variant. Maybe next year!


(For earlier appraisal industry commentary, visit my old clunky REIC site.)

The ASC Wants And Has The Funds To Make USPAP Free! And More!

This press release is seismic for appraisers so please read it:

Press Release: Appraisal Subcommittee (ASC) Board Approves Fiscal Year 2022 Budget of $9M including nearly $5M in Grant and Technical Assistance Funding

With the context of TAF’s bat-shit crazy letter, here are some key changes in the relationship between TAF and ASC:

ASC wants USPAP to be free, enable diversification of the ASB and AQB which are NOT diversified and never have been and they want to study alternatives to the insanely wasteful two-year USPAP update policy.

$1M in grant funding was made available to the Appraisal Foundation. These funds could
be used to defray the costs of the Appraisal Standards Board (ASB) and Appraiser
Qualifications Board (AQB) and for additional projects such as providing trainees and
credentialed appraisers with a free or reduced cost copy of Uniform Standards of
Professional Appraisal Practice (USPAP), diversification of their Boards, and studies of the
current Appraisal Foundation revenue model.

The “review and monitoring” authority ASC was given in Title XI was clarified so they could continue to “monitor and review.”

Additionally, there were revisions to the policy on monitoring and reviewing the Appraisal
Foundation. ASC staff will attend public meetings as observers of the AQB and ASB as well
as the Board of Trustees. ASC staff will be available for these meetings on an as-needed
basis and will continue to provide written public comment on the Appraisal Foundation’s
work product.

Appraising is Not Rocket Science

With all the coverage about the South Dakota governor browbeating a department head to force her daughter’s approval as a state-certified appraisal after her application was rejected (something that no other appraiser got to do), we might forget one key point in the discussion made in this piece: Is it too hard to become an appraiser in South Dakota?

Appraisal Designation Oversupply

When an organization creates and maintains designations, it is incumbent upon that organization to constantly brand it, in order to maintain public awareness in a way that benefits its members. Some organizations only look at issuing new designations as a source of revenue and let them slide into oblivion until it is too late. The other day I was renewing my membership in WERC (I’m a CRP) and I noticed the long list of designation selections on the application and saw some that are missing (My Counselors of Real Estate (CRE), shouldn’t be on it since it skews toward commercial in valuation.)

Think about supply and demand here – something appraisers think about every day. How does an organization differentiate other than saying “our organization is amazing and we’re the best?” That falls on deaf ears outside of that organization.

OFT (One Final Thought)

On August 1, 1981, MTV was launched. Here are the first two hours. Apparently the “M” on “MTV” stood for music. Production quality and hairstyles have come a looooong way since 1981.

Brilliant Idea #1

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Brilliant Idea #2

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See you next week.

Jonathan J. Miller, CRP, CRE, Member of RAC
Miller Samuel Inc.
Real Estate Appraisers & Consultants
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