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After all the hoopla over the recent $147M sale in The Hamptons, I compiled a list of the highest priced sales around the world I could think of. It’s not comprehensive since all the sales are in the US or UK, and there are a few out there that haven’t closed yet.

Here’s a very brief Marketplace Radio piece on this phenomenon.

Please share if you know of others!

A few takeaways:

• The media coverage to actual sales ratio is staggering.
• There can’t be more than a few dozen, a few hundred or perhaps a few thousand that would be considered buyers in this space at any one time.
• These sales are a pop culture-like distraction from the growing issue of access to affordable housing in the US.

Tags: Bloomberg News, Most Expensive, Marketplace, List, Radio

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Ian Shepherdson, chief economist at Pantheon Macroeconomics as a guest on Bloomberg Television points out some key issues relating to housing and the economy. It’s a great quick overview on how housing fits into the economic recovery equation. So much for a “soft handoff,” the idea of the housing moving from dependency on low mortgage rate to thriving on a stronger economy. The ideas being projected here are that the economy may improve without housing’s help.

“It is not quite as important as the fed seems to think.” “I sometimes say the fed is almost as obsessed with housing as the labor market.”

“I’m not convinced it is absolutely essential that housing keeps charging upwards in order for the rest of the economy to grow.”

“It’s a relatively small share of gdp now in terms of housing construction and even when you add in the retail stuff related to housing.”

“It is important to sentiment.”

“They were ready to dismiss it as something temporary and clearly the worries are more deeper.”

“Mortgage rates, if they rise further as the economy picks up, housing will be under further pressure.”

“It is a paradox that the stronger the rest of the economy gets and the more worried the market gets about the fed raising rates, the higher 10 year yields will go and mortgage rates and potentially the housing market will get weaker.”

“This is a three or four year process to get back to normal.”

“Housing unfortunately will be a necessary casualty.”

“My guess is that that’s the way the fed’s thinking evolves great if we see the economy strengthening brother that housing is weakening, i think they will have to live with that and stand up and say it’s a price we have to pay in order to get the rest of the economy moving.”

Tags: Tom Keene, Bloomberg TV, Scarlet Fu, Bloomberg Surveillance, Adam Johnson, Ian Shepherdson

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Coverage of my new book “Flash Appraisals” just passed Michael Lewis’ “Flash Boys” as “Most Read” on Bloomberg Worldwide.

Ok, ok, admittedly a lame attempt at April Fools’ Day humor….but if I wrote a book…

More importantly, Bloomberg News coverage of our recently released Manhattan market report for Douglas Elliman jumped into 4th place and passed the coverage of Michael Lewis’ new book (8th place) – I’m halfway through his book and it’s a fantastic read – so is Oshrat Carmiel’s article.

The market report article has been the number 1 most emailed article all day. Apparently real estate remains the backyard bbq conversation not unlike rigged high speed trading on Wall Street.

Tags: Michael Lewis, Flash Boys, April Fool

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Ilan Kolet from Bloomberg News whipped up this chart and shared on twitter using our Manhattan luxury townhouse data.

Gotta love the visual – the 2008 Lehman collapse exemplified in the high end townhouse market in the home of Wall Street.

Tags: Townhouses, Lehman

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Had a great conversation with Tom Keene, Scarlet Fu, Olivia Sterns and guest host Strategas Research Chief Investment Strategist Jason Trennert about the US housing market. We also dabbled a bit in Brooklyn and Manhattan rents and talked NCAA March Madness picks. Always fun to come in and join the Surveillance team.

Go MSU Spartans! Go State!

Tags: Tom Keene, Bloomberg TV, Scarlet Fu, Bloomberg Surveillance, Olivia Sterns, Jason Trennert

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Had a great conversation with Trish Regan on her Bloomberg TV show “Street Smart” about the Manhattan and Brooklyn rental markets and rent versus buy. This was in connection with the February Elliman rental report we published earlier that day.

It was windy and 18 degrees outside so I think I look a bit disheveled. But always fun to connect with everyone at Bloomberg whenever I visit (and maintain my Foursquare mayorship of the “green room”).

Tags: Bloomberg TV, Trish Regan, Street Smart

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Since we have another cold snap in our midst, I thought I talk about cold weather and housing trends.

Back in early January, the US experienced what has now become a household phrase – “The Polar Vortex” and extreme weather has morphed its way into recent housing reports as plausible explanations for a slow down in some of the results.

Buyer perspective: Imagine a couple looking to buy their first home and decide they will begin looking right after the New Year. The dreaded Polar Vortex hits and it is too uncomfortable to run around looking at houses in freezing temperatures, so they postpone until the weather warms up in a month or 2.

Seller perspective: Imagine a homeowner who decides to put their home on the market and they experience searing pain from the cold by simply going to the grocery store. They can’t imagine a buyer coming to look at their home in the severe weather and don’t want their home to sit, so they postpone until the weather warms up in a month or 2.

In both scenarios, I would venture to guess that no one would say:

WOW, this weather is severe. I’ve rethought my (buying or selling) decision and will cancel the idea for a few years because the weather is too cold right now.

or

WOW, this weather is severe. Staying warm in my home right now made me realize that I rushed to make my decision and will no longer (buy or sell) for a long time.

Consumers can better relate to the weather than macro economic theory so throw it into the title of a news article:

NBC News: Spring Thaw May Not Heat up This Housing Market
Bloomberg News: Cooling U.S. Home Sales Only Partly Due to Weather: Economy
Fox Business: Housing Freeze: It’s Not Just The Weather

If we isolate the housing market to new construction (which represent about 15% of sales historically) then it gets a lot more plausible – ie permits, starts etc. can be more affected by the weather on a pragmatic basis.

But that has little or no impact to the vast majority of housing consumers.

Here’s one way to visualize the potential impact of weather to retail sales activity (translation: slow down, spring back) in Business Insider.

Context, people, context.

Tags: CNBC, Polar Vortex, NBC, Fox Business, Housing Recovery, Bloomberg News

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[Click to view presentation]

Matthew C. Klein does an amazing presentation on the housing cycle (h/t Barry Ritholtz) – think of it as a Kahn Academy presentation on visual steroids.

Bloomberg View’s “Bubble to Bust to Recovery.”

Required viewing.

Tags: Case-Shiller, Barry Ritholtz, Bloomberg View, Matthew C. Klein

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There was a terrific Bloomberg News story by Oshrat Carmiel: Manhattan Trophy Home Sellers Test Buyer Limits on Price that delved into the disconnect between reality and perception of the luxury housing market in Manhattan. I talk about this phenomenon on Bloomberg Radio’s ‘Taking Stock’ with Pimm Fox and Carol Masser.

It all began with Sandy Weill’s $88M sale of 15 Central Park West PH20 to a Russian Oligarch back in late 2011 that closed in early 2012. He was reportedly purchasing the unit for his 20-something daughter to crash when she wasn’t at her home in Monaco but it was more likely a divorce strategy. The home sold for $13k per square foot, 30% more than the recent $10k ppsf record previously set within the building (ie definition of an outlier).

Combine this outlier with the dearth of high end new development until recently and this 13k ppsf threshold became a new pricing tool for hopeful sellers and real estate brokers of large properties. The $100M resale penthouse listing at CitySpire was the new symbol of “outlier pricing” phenomenon. Other examples of aggressive pricing are cited in the Bloomberg story.

Despite the fact that this nearly $100M subset represents a tiny sliver – a handful of listings and sales – in the overall Manhattan market, consumer (buyers and sellers) have been subjected to a buzz saw of news reports about trophy properties giving the impression that properties like this comprise most of the housing market.

In reality there have only been a handful of contracts signed near the $100M threshold at buildings like One57 and 432 Park Avenue (the near $100M townhouse contract doesn’t count because it’s roughly 1/2 the ppsf of those apt sales)..and otherwise the overall Manhattan market seeing very modest price growth.

Yet none of the trophy apartment resales are selling at this new price point. Sellers have been testing the waters to see if someone across the globe will be willing to pay for something here, that in relative dollars to their home market is a good deal or they hope they will get lucky and these buyers will over pay.

Apparently these trophy sellers haven’t used the Internet.

UPDATE
Just got this feedback emailed from a real estate agent: In every neighborhood and property class “testing the waters” is an age-old technique that has enough utility to go on forever. As an agent, I prefer the price that results in a quick sell but I never turned down a client who insists on an absurd Ask. In most such cases, I have picked up a few customers and sold them something else they could afford before the “outlier” ran out of inquiries and the seller dropped its price or took it off the market. I like it when journalists report activity at the extremes of price and value because it helps me to identify the evolving dimensions of the market.

____________________________
Bloomberg Radio’s ‘Taking Stock’ with Pimm Fox and Carol Masser
Bloomberg News: Manhattan Trophy Home Sellers Test Buyer Limits on Price

Tags: Pimm Fox, Superstorm Sandy, Bloomberg Radio, Carol Masser, Taking Stock, Forbes, Radio

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Had a great discussion with Mark Crumpton on his show “Bottom Line” about the slowing US housing market. You can see this in the quarterly results:

The median existing single-family home price increased in 73 percent of measured markets, with 119 out of 164 metropolitan statistical areas (MSAs) showing gains based on closings in the fourth quarter compared with the fourth quarter of 2012. Forty-two areas, 26 percent, had double-digit increases, two were unchanged and 43 recorded lower median prices.

The storyline of the last 2 years has been “Housing is Back!” yet prices were rising based on fed policy, not due to fundamentals like income, employment and access to credit. I have been labeled as a bit bearish on the “recovery” but I’m really not. I look at this slow down as a good thing for the long view on housing. We need to have sustainable housing growth (ie sales and prices) and 13.7% YoY price gains are in start contrast to economic fundamentals.

During our interview we were interrupted by the signing ceremony with President Obama for the new minimum wage act, so Bloomberg TV spliced the two parts together quite nicely. This is the second or third time one of my interviews has been interrupted by the President of the United States. Yes, I’m ok with that. 😉

Tags: Bloomberg Bottom Line, Mark Crumpton, NAR, National Association of Realtors

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Here is an interview I recently did for Bloomberg Television’s In The Loop on the first phase of the long awaited and sorely needed Second Avenue subway line. I had also looked at this data about two years ago.

For the show I crunched closed sales data for the 4th Quarter of 2013 versus the same period in 2009 and provided a similar time frame for the rental market. I defined the impacted subway zone as the Upper East Side neighborhood between Third Avenue and First Avenue extending from 96th Street to 59th Street. Areas out side the zone were simply those to the east and west of it but within the neighborhood. I realize that simply taking the average price of all transactions in each of the zones are subject to skew. However given the large size of the zones, I think it is a reasonable way to extract some sort of impact.

Based on the results, the subway zone fell behind the areas outside the zone during the 4 year time span.

West of Zone
Sales Prices +14.7%
Rental Prices +7.7%

East of Zone
Sales Prices +12.2%
Rental Prices +9.1%

Tags: Bloomberg TV, Second Avenue Subway

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Always fun (and refreshing) to talk housing with Tom Keene, Sara Eisen and Scarlet Fu on Bloomberg TV’s Surveillance. I always watch or listen to the show on their apps as part of my morning routine. Got to meet and hear great insights from Jim O’Neill, Bloomberg View columnist and former chairman of Goldman Sachs Asset Management as well.

Did I tell you I am still the mayor of the Bloomberg Cafeteria on Foursquare?

Tags: Case-Shiller, Tom Keene, Sara Eisen, Bloomberg TV, Scarlet Fu, Bloomberg Surveillance, Goldman Sachs, Television, Housing Prices

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