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Three Cents Worth: All Real Estate Is Local

[This week, our graph guy Jonathan Miller shows why New Yorkers should quit worrying about the rest of the real estate world. (What rest of the real estate world? Rimshot. -ed.) On the graph below, the purple line represents the year-over-year change in the average Manhattan sales price, while the green line represents the same figure for the entire U.S. Click on the graph for a free McMansion (and larger type).]

When reading about housing statistics, and listening to pundits, one of the things that really grates on me, has been the tendency to apply national statistics to local markets. Every month there are studies being released and misapplied. Frankly I think most people, including myself, don't see how these national results necessarily correlate to the local market. They require a lot of extra explanation to be relevant. More often they show a long-term trend that perhaps might apply to the local market.

To borrow and modify a famous phrase, "all real estate is local."

To make my point, I charted the percentage change from the prior year quarter average sales price for both Manhattan and the U.S. The U.S. data was taken from the Office of Federal Housing Enterprise Oversight (OFHEO). (You know, the department that oversees the Fannie Mae and Freddie Mac that was asleep at the switch when Fannie Mae had some well-publicized problems a few years ago.)

There should be no surprise in the pattern shown in the chart. The national stats were a smooth upward trend and the local stats showed a heck of a lot of volatility. The point of all this? National numbers do not tell the local story. They are too watered down.
· US vs. Manhattan: Change in Avg Sales Price [Miller Samuel]