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Three Cents Worth: The Manhattan Black Thursday Keystroke

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[This week, real estate appraiser, Curbed graph guru and podcaster extraordinaire Jonathan Miller samples some bad souvlaki.]


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The sudden 1,000 point fall in the Dow yesterday was temporarily dubbed "Black Thursday" before the market rebounded. Assuming most of it wasn't due to a rumored $16B trader error on P&G (theory: lunchtime multi-tasking with peanut butter on fingers has been proven to sharply raise chances of incorrect keystrokes on computer terminals), it appears largely due to the drop in investor confidence related to the unraveling of Greece's economy. They say it's not cool to pay taxes there.

I plotted the average sales price for Manhttan co-ops and condos back to the late '90s (red line) and adjusted it for the difference between the dollar and the euro (gray line). The blue columns represent the discount between the unadjusted and adjusted sales prices.

Since we haven't completed the second quarter yet and housing prices are generally stable at the moment, I used the Q1 2010 average sales price and adjusted for today's euro-to-dollar relationship to get the Q2 2010 chart points. The discount has fallen by nearly half since the fall.

In late November 2009 when the dollar was especially weak, the exchange rate was 1.51 USD to 1 Euro. Then we began to see talk about "foreign investors taking Manhattan" which was largely tiresome sales hype.

Today's exchange rate is 1.263. While there is still a large discount to European buyers, it is not enough of a spread to attract as much attention as last fall. It's somewhat ironic that the strengthening dollar is more about the euro's weakness.

It is hoped that an EU bailout of Greece will stabilize their economy, reducing potential economic damage to the EU's other member states. But that doesn't solve anything. It merely kicks the can down the road - something banks in the U.S. are especially good at.

In other words, don't look for Irish (or Greek) carpenters to invade Manhattan anytime soon.
· Manhattan Co-op/Condo Average Sales Price (Euro Converted) [Miller Samuel]
· Three Cents Worth archive [Curbed]