Manhattan Record Rents Stayed Flat After Extreme Ironing Month Over Month

September 15, 2023

Let’s iron this market out.

I bring back Extreme Ironing to Housing Notes for (I believe) the third time. It’s a thing that never fails to disappoint.

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Did you miss last Friday’s Housing Notes?

September 8, 2023: Housing This Question All Day Long: What Do You Pay For Rent?

But I digress…

The NYC Rental Market Is Topping Out

I’ve been the author of an expanding series of market studies for U.S. real estate firm Douglas Elliman since 1994. The rental report series has been tracking the significant rollercoaster of the pandemic era.

Elliman Report: August 2023 Manhattan, Brooklyn & Queens Rentals

Bloomberg presented a cool chart in their coverage and I’ll throw in a lot of our own further down the page.

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MANHATTAN RENTAL MARKET HIGHLIGHTS

“Average rental prices and net effective average rental prices reached new highs.”

– Median and net effective median rental prices remained at all-time highs for the fifth time in six months
– Listing inventory declined year over year for the first time in ten months
– The number of new lease signings fell annually for the second consecutive month
– Doorman new lease signings were slightly below pre-pandemic levels, while those of non-doorman buildings were substantially lower
– New lease signings for new development rentals rose annually as those in existing buildings fell sharply
– Luxury listing inventory declined year over year for the third time in four months
– Luxury median sales price rose annually for the sixth consecutive month

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BROOKLYN RENTAL MARKET HIGHLIGHTS

“Average rent per square foot and average rental prices set new records.”

– Average rental price rose annually to a new high as median rent increased to the second-highest on record
– New lease signings declined annually for the fourth time in five months
– Listing inventory dropped by more than half year over year and well below pre-pandemic levels

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QUEENS RENTAL MARKET HIGHLIGHTS

[Northwest Region] “Average rent per square foot, average rental prices, and median rental prices reached new highs.”

– All price trend indicators surged annually to reach record highs
– New lease signings declined year over year sharply for the fifth time
– Listing inventory dropped by more than half year over year and well below pre-pandemic levels

Bloomberg TV – Thoughts On The NYC Housing Market 22 Years After

It’s hard to believe 22 years have passed by already since that awful day. I remember it vividly but still marvel at how quickly and powerfully the city recovered. My interview begins at about 1 hour, 55 minutes.

NYT – U.S. Housing Price Gains Highest At The Top Since 2000

Even before the pandemic era began, there had been faster price growth at the higher end of the housing market. The Calculator column in the New York Times uses CoreLogic data to prove the point in this great graphic.

$250 Million Was A Nice Even Number: Aspirational Pricing Seems Over

The $250 million listing at Central Park Tower in Manhattan saw a 22% price cut because it hasn’t sold. The original price was probably a strategic move for the developer to capture marketing eyeballs with an asking price that would exceed the Manhattan $238 million record if successful. Those up on these things knew that the initial price was “dead man walking” since the rest of the building sees the sponsor starting at 25% to 30% below the offering plan price before sitting down at the bargaining table. I do not believe buyers in this space would fall for this type of marketing – there’s too much transparency.

That LA development palatial mansion site that was asking $250 million for years has been repriced at $68 million. The important takeaway here is that the pricing was the marketing and had no bearing on the value itself. The problem was that these sellers all were drinking the Kool-Aid, and eventually, as more property owners drank it, this “safety in numbers” effect became the perceived value.

The Proliferation of Private Pools In NYC

Curbed pens a great piece on public pools New York City’s 15,000 (and Counting) Private Pools

The city of New York, on the other hand, has opened a total of five new public pools in the last fifty years. Over the same period, developers have built at least 434.

Highest & Best Newsletter: Dolce & Gabbana is Now a Condo in Miami

I continue to love this new Florida newsletter: Highest & Best from Oshrat Carmiel, formerly of Bloomberg News… Whether it’s Beehive, Substack, or something more homegrown, it’s got me thinking about the next steps for Housing Notes, so I will continue to follow along.

Dolce & Gabbana is Now a Condo in Miami

The best reference ever made for a new condo tower “Miami’s 888 Brickell, planned to rise to 1,049 feet, would be the highest allowed in the city by the Federal Aviation Administration.”

And wow – now that’s a bathroom…

Narrowest House In Manhattan

This house at 75 1/2 Bedford Street is only ~8.1 feet wide inside (9.5 wide outside) and was built in the neighbors driveway in 1873 during a housing boom. Every time this gets sold, its receives a lot of media love due to its history and narrowness. Years ago we appraised an 11′ wide townhouse on East 64th Street on the Upper East Side and for some reason, they installed an elevator which essentially took all the usable space from the half of each floor. You can’t really appreciate the narrowness of this home until you walk by it.

Super Luxury Sales Levels Normalizing After Heady Pandemic-Era Boom

Mansion Global covered the release of Knight Frank’s “Super-Prime” report which said that

In the 12 cities monitored by the agency, super-prime sales—defined as US$10 million and above—were down 11% quarter over quarter between April and June, the data showed. Annually, deals dropped 13%.

I track U.S. sales at or above the $50 million sales level, and transactions are returning to pre-pandemic levels if we forecast 2023 with approximately 25 sales when the dust settles on New Year’s Eve.

Speaking Events

Tuesday September 19th 11am ET – Next week Noah & John of Urban Digs host a conversation about outdoor space with me. Is it a coincidence that this event happens to fall on Talk Like A Pirate Day? Aye.

Getting Graphic

My favorite housing market/economic charts of the week made by us

My favorite housing market/economic charts of the week made by others

Kastle card swipe data charts

Remember that Kastle charts are overstating occupancy* because their pre-pandemic occupancy benchmark was 100% which is simply incorrect (*measures card swipe activity as a proxy for occupancy).

My favorite random charts of the week made by others

Appraiserville

The Rappattoni MLS Has Not Been Switched Back On In Cincinnati

For those that missed this, Rappattoni was subjected to a ransomware attack this summer but has restored service to their entire MLS network. That should be the end of the story. Now the real estate industry should be thinking about system redundancy so that the clients of these systems have a back up plan when a system goes down. The livelihood of real estate agents and real estate appraisers depend on it. Given the nature of evolving technology, more and more MLS systems will be exposed to nefarious attacks in the future.

The Cincinnati Area Board of Realtors has decided to extend the pain to their members by taking the opportunity to switch to a new software provider, Perchwell, which will not be ready for another 2-3 weeks. I’m not sure of the logic here. The board’s responsibility to its members is to get back online immediately so their members can make a living. I’m told Rappattoni is ready to go. The board is just trying to do a hybrid program with Perchwell. In reality, the Board should be pushing a mad scramble to restore the original service, like all the other regions that use Rappattoni, did.

The Board has not been transparent about making the decision to switch software but did say the data has no “integrity.” Which is it? Does the data lack integrity and that is the reason for the switch? Or is it because the Board likes the Perchwell software and are using the time as the opportunity to make the switch while badmouthing Rappatoni?

Wow – whoever advises their PR, gets a fail.

Phil Crawford’s Voice of Appraisal Podcast Talks Crisis In Cincy

The website summary…

The Cincinnati real estate market is in crisis as the damage from the Rappattoni cyber-attack continues. The Cincinnati Area Board of Realtors are stuck between a rock and a hard place as they push to replace the Rappattoni system with a new software called Perchwell. Emotions are running high in the Queen City and appraisal delays are coming if something doesn’t change quickly! Appraisal quality will be questioned for months and possibly years by the GSE’s! These are tough days for all involved. Let’s get through it!

OFT (One Final Thought)

A tenant’s NSFW plan to keep rent down…

Brilliant Idea #1

If you need something rock solid in your life (particularly on Friday afternoons at 2 p.m.) and someone forwarded this to you, , or you think you already subscribed, sign up here for these weekly Housing Notes. And be sure to share with a friend or colleague if you enjoy them because:

– They’ll iron it out;
– You’ll take up extreme ironing;
– And I’ll see if the rent stops rising.

Brilliant Idea #2

You’re clearly full of insights and ideas as a reader of these Housing Notes. Please share them with me early and often. I appreciate every email I receive, as it helps me craft the following week’s Housing Note.

See you next week!

Jonathan J. Miller, CRE, Member of RAC
President/CEO
Miller Samuel Inc.
Real Estate Appraisers & Consultants
Matrix Blog
@jonathanmiller

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