The Wealthy Are Into Housing, Get Used To It

April 17, 2015

Perhaps the most talked about aspect of the housing today has been the challenge of affordability for many homebuyers. A decade of stagnant wage growth and tight credit has made the prospect of owning a home more difficult to many. And it seems like it happened over night. Only a few years ago we were reeling from the aftermath of the housing crash yet now we are talking about housing prices being out of reach for many.

For my weekly Three Cents Worth column on Curbed New York I looked at Manhattan housing prices from the cost perspective of trading up to a larger home. I analyzed the median sales price of the difference between home sizes over a 25-year window after adjusting for inflation. It’s become financially more difficult on a relative basis to move from a small apartment like a studio to a 1-bedroom than to move from a 3-bedroom to a 4-bedroom.

3cw4-14-15

Throw in a little grandiose billionaire talk from a hedge funder like Bill Ackman after he bought a condo at One57 in Manhattan for $91.5 million and it becomes sand in the wound.

I thought it would be fun, so myself and a couple of very good friends bought into this idea that someday, someone will really want it and they’ll let me know.

And yes, he got a deal,

But get used to it. The global phenomenon creating more high net worth individuals is projected to expand significantly over the next decade and the U.S. is where many of those investors are headed.

Knight Frank, the largest independent residential property sales firm in the world, launched their annual Wealth Report this week in New York. The research was developed with the help of Wealth-X and the global trends for the Ultra High Net Worth Individuals (UHNWI) with investible assets of $30 million or more – is quite amazing.

– 26% of UHNWI are planning to buy residential property in 2015
– While London dominates investment activity in 2015, New York will dominate over the decade
– Of top 10 cities with greatest projected growth in UHNWI, 7 of 10 are in Asia
– 33% of UHNWI Russians plan to change domicile in 2015, 12% in Asia

 

Look At The Housing Market With A Grain Of Sand [Literal Edition]

This week’s release of five market reports, our latest research for Douglas Elliman (I promise no “hot” market or “day at the beach” references) covered the South Florida housing markets of:

  • Miami Beach/Barrier Island Sales As seen in the past several quarters, rising housing prices in the Miami Beach and Barrier Islands pulled additional inventory into the market. Listing inventory increased 19% to 4,376 over the same period. Overall price indicators showed double-digit gains as both condo and single family moved higher. The median sales price for all property types increased 13% to $437,750 from the same period last year.
  • Miami Coastal Mainland Sales Low inventory and a decline in lower priced distressed sales caused price indicators on Miami’s coastal mainland to surge. Median sales price for all property types jumped 18% to $242,000 from the prior year quarter. Condo price gains continued to outpace single family gains as new development product is absorbed. Condo median sales price surged 35.5% to $210,000 and single family median sales price increased 7.3% to $268,250 respectively over the same period.
  • Bocan Raton Sales Overall housing prices in Boca Raton were mixed as luxury market prices rose sharply. The average square footage of a condo fell 11.3% to 1,423 square feet as median sales price fell 10.7% to $134,000 respectively from the prior year pattern.
  • Fort Lauderdale Sales Overall condo and single family price indicators for Fort Lauderdale edged higher as luxury prices were mixed. The median sales price of a condo increased 0.8% to $257,000 and the median sales price of a single family home rose 3.5% to $294,950 respectively from the prior year quarter.
  • Palm Beach Sales Price indicators in the Pam Beach market moved higher as listing inventory declined. The median sales price of a condo edged 0.9% higher to $552,500 and the median sales price of a single family home jumped 37.9% to $4,275,000 respectively from the prior year quarter. This occurred despite the decline in the average size of a sale.

Next week is the last of our first quarter 2015 market report gauntlet, releasing research covering Los Angeles, The Hamptons, North Fork and Long Island in New York, Fairfield County in Connecticut (with a new sub-market report for Greenwich). I’m especially excited about our newest addition to the series and my favorite place to ski: Aspen, Colorado.

Let’s go down that slippery slope together.

Jonathan Miller
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants

ps Please feel free to share.  If you get tired of all the charts, real estate commentary and articles presented in each weekly note, just opt out.  I always appreciate feedback so please email me.
pss Bloomberg’s Tom Keene and Michael McKee spoke about the passing of the legendary radio host Ken Prewitt. I nearly cried. Ken was the best. He would always grill me on the basics of housing and never forgot his listeners.

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