clock menu more-arrow no yes

Filed under:

A Look at Overpaying in Manhattan

New, 10 comments

[This week, real estate appraiser, Curbed graph guru, and podcaster extraordinaire Jonathan Miller analyzes the bidding war brouhahas of the Manhattan market!]

This week I took a look at metrics covering apartments that sold above list price. During the boom several years ago it was the rallying cry for the market. It's come up as a topic in a number of conversations I've had with real estate agents recently so I thought I'd look further into it.

To capture the trend, I looked at the % market share of units that closed above the list price at the time of contract (red line). Within that data set, I calculated the average % premium paid above the list price (gray columns). To meet the insanely overbearing Curbed staff, I only had enough time to go back to July 2008 - I wanted to at least capture the market pre-Lehman continuing through January 2011. I plan to build more historical data and I am fairly certain the market share for sales above list price was at least a third of all sales, probably more, during the housing/credit boom.

Takeaways

- 9.2% of Manhattan apartment sales exceeded the list price at time of sale in January 2011.
- Of those 9.2%, the purchase price was 5.3% higher than list price at the time of sale.
- While the market share for sales above list price has been rising since mid 2009, the premium being paid above list has generally fallen over the past 2 years until recently.

Additional observations

- Market share for sales above list, peak to trough, fell from 17.8% in July 2008 (beginning of the series and I am sure it was much higher before then) to 1.7% in June 2009.
- Market share has been rising ever since, reaching 9.2% in last August and this January.
- The premium paid above list price had a significant spike to 18.8% at about the moment the economic wheels fell off the global credit wagon (Lehman tipping point) and the real estate world as we knew it ended abruptly.
- The low point for the premium paid above list price was in September 2009 when it reached 3.1%.
· % Market Share of Sales Above List Price, Amount Paid Above List As % of List Price [Miller Samuel]
· Three Cents Worth archive [Curbed]