Op-ed by Pam Liebman
RISMEDIA, Sept. 22, 2008-Those who follow the news of the housing market closely know that, over the past few years, Manhattan has bucked the downward trend of U.S. residential real estate as its property values climbed and luxury properties sold with alacrity. But as the skies darkened over the rest of the country, anxious eyes turned toward Gotham with a growing sense of unease; pundits received the news of Manhattan’s steady progress with a “when-will-the-other-shoe-drop?” dread.
In 2008, we’ve begun to see a slower pace of sales as the credit crunch rocked the financial industry and buyers have found it more challenging to obtain mortgages. How deep these events will strike at the market nobody knows, but they sharpened a demand for greater and more accurate data that was whetted by the events of September 11, 2001 and has grown steadily over the last seven years.
The Corcoran Group produced its first Corcoran Report in the early ’80s and ever since the company has been well-established as an authority on residential real estate activity in New York. But over the last seven years, reports have proliferated and there are now a number of competing voices that circulate such data. Without a single objective resource to turn to for verification, consumers may not know what to believe.
That’s why, in order to capture the fullest and most accurate data-set we could, Corcoran approached PropertyShark.com about becoming our collaborator in producing The Corcoran Report.
As the landscape of Manhattan’s residential market has shifted over the last eight years from one dominated by cooperative buildings-where residents own not real property but shares in the cooperative-to one increasingly influenced by a wave of new condominiums offering individual ownership, reckoning market data has become even more complex. We have sought to inform homeowners about the relative value of their property while also educating potential buyers about what they might spend for different property types, but it is impossible to contextualize the average home within a sales environment increasingly dominated by luxurious new condominiums.
To address that gap, we made two fundamental changes to the way we approach our data. The first involved regarding all of the transaction data with a healthy dose of skepticism and seeking confirmation from PropertyShark about the information we possessed. We carefully combed through both data sets, eliminating duplication, resolving contradictions, isolating only arms-length sales and combining them into a final list of closings.
Second, we chose to separate resales from new developments for the purpose of generating statistics. New development closings typically lag behind the market by one to two years and are, therefore, a poor barometer of what happens when a seller lists the home he/she has lived in for 10 years.
Moreover, brand-new, highly amenitized luxury properties are much more likely to sell at a higher price point than the average property competing on the open market. In the Q2 Corcoran Report, therefore, we examined resales in isolation while our colleagues at Corcoran Sunshine analyzed new development property sales.
All of this comes at an important moment. There has been much discussion of the slower level of sales activity this year and, with sales off 38% from the same time a year ago, the second quarter provides perhaps the starkest example yet of the caution that has overtaken the market.
By contrast, Manhattan prices continue to appreciate in both the resale and new development arenas, demonstrating once again the resiliency of residential real estate values in the borough. It may be difficult to say where things are headed, but fortunately for the public, market activity has become more transparent than ever.
Pam Liebman is president and CEO of The Corcoran Group.
For more information, visit http://www.corcoran.com.