Thank you, Streeteasy.com, for introducing a Condo Market Index (CMI) for sales in Manhattan. No longer do we have to contend with Case-Shiller’s imperfect index, which covers the entire city and surrounding suburbs while ignoring apartment sales.
In the chart above, the bottom line represents condo sales volume in all of Manhattan starting in January 1995. Click to expand and to link to a detailed table of prices by the downtown, midtown, Upper West Side and Upper East Side neighborhoods.
Unfortunately, the property-search Web site does not provide a similar index for co-ops. Says StreetEasy:
Co-ops are jointly owned among all the shareholders and therefore, the values of individual units are difficult to separate from the value of the entire corporation.
Additionally, the data currently available is much more reliable for condos than it is for co-ops. It was not until 2006 when the NYC Department of Finance required that co-op sales disclose the full purchase price. Even still, obtaining unit numbers for co-op units have proven unreliable and difficult.
In terms of market share, condos made up 50.2% of all apartment closings in Manhattan, while co-ops made up 49.8%, from January 2006 through August 2010.
Notwithstanding, the freely provided CMI represents a great leap forward in understanding Manhattan real estate. For example, Case-Shiller’s data indicate that the metropolitan region’s home prices peaked in June 2006, while the Condo Market Index shows that the peak occurred in Manhattan alone in March 2008.
Also new this week is a database providing market trends in terms of pending sales, listings taken off the market and closed sales. You’ll find the numbers at UrbanDigs.com, where Noah Rosenblatt allows you to slice and dice free by time period, price and listing status. For $20 a month, subscribers can get even more info.
Streeteasy’s data conforms with what most brokers in Manhattan say that they have experienced. They include me, who is especially gratified to see that my analysis was correct of trends during the third quarter and thereafter.
The CMI shows a spike in sales volume at the beginning of the year and a rather dramatic drop as the year went on. In the third quarter, sales volume was significantly higher at its start than toward the end. However, the median price paid for condos started climbing after June.
According to the CMI, the median price in June was $995,000. It has kept rising since then, reaching $1,198,220 in September. At the same time, activity dropped precipitously from 703 closings in June steadily to 359 in September.
The median price (as opposed to the CMI) was higher than in September only in March 2009 ($1,232,620), October 2008 ($1,191,350), May 2008 ($1,279,940), April 2008 ($1,221,900) and December 2007 ($1,241,130). Bear in mind that these statistics represent closed sales, so the collapse of Lehman Brothers in September 2008 may be reflected only in the 2009 number.
Without getting too much into the weeds, the methodology (which you can read at length) makes the index pretty credible. Instead of using price per square foot, a measure for which Streeteasy research director Sofia Song and her colleagues cited several disadvantages, the CMI depends on repeat sales. Their definition of a repeat sale is at least one pair of transactions for the same property in the 15 years’ worth of closing data from January 1995. In defending this approach, the group stated:
A repeat sales transaction-based index allows for an “apples to apples” approach and is more like a stock market index as it tracks price changes of the same properties (or in the case of the stock market, the same stock) over time. Since this approach compares literally the same properties, errors or biases created by variables like location, size, age, and quality, are minimized.
Of 101,775 records of sales data in city records, Streeteasy was able to use 58,696 repeat sales records for 25,291 different properties. Amazingly, six of the apartments averaged seven sales each in the 15-year period.
Streeteasy says it plans additional research to improve the data. One area indicated for investigation is a way of obtaining more timely information, perhaps by using sales listings data, time on market and price changes before properties go into contract. A second area mentioned is the possibility of adjusting for seasonality.
Look for Streeteasy’s updates at the end of each month.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022