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Three Cents Worth: Terraces Get You Outside The Box

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[This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller enjoys some fresh air.]

When Curbed came up with the Great Outdoors Week theme, I saw a rare opportunity to use a trite expression in the title. As much as many of us love vertical living, the drawback is the limited access to the great outdoors without jumping in an elevator or walking down several flights of stairs, going through the lobby, crossing the street, jumping on the subway, all the while holding a beach chair, a battery powered blender full of pina colada mix, sun screen and a good book.

In the spirit of Curbed's outdoor celebration, I took a quick look at terraces. I parsed the market by co-ops and condos sales, both with and without terraces. Balconies (nominal impact), gardens/patios (tiny market share) weren't included (hey, this is Curbed). I fully realize that general types of units with terraces are not identical to units without terraces due to amenity differences such as square footage, floor level, view, penthouse labeling, etc. I looked at 20 years in five-year increments measuring the first half of each year (since that's about we have for 2011).
What is a terrace? No, it's not a balcony that is cleverly labeled "terrace" on the floorplan. I've always looked at terraces as having something underneath them, usually another apartment. Last year I wrote about the valuation of terraces after being worn out with questions on the topic. People love their outdoor spaces.

I observed the following in today's 4-chart mashup (designed to be a "box", obv.)

· Market share for condo sales with terraces has generally been rising, suggesting that new development activity added more terraces to the housing stock. Co-ops were much more erratic with a sharp drop in 2011 for some unexplainable reason.

· Apartments with terraces have an average sales price that has been roughly $600k more than sales without terraces over the past five years?of course this premium includes other amenities that go along with the terrace package.

· The average size of a terrace has hovered around 500 square feet for the past 20 years and represents a $1,000 premium for the past five years (includes other amenities).

· General market share of sales with terraces has remained constant for the past 15 years at 10-12 percent. The 1991 5.8 percent average may have been due to the high volume of foreclosure sales occurring at that time and limited upper end sales activity that would be more likely to include a terrace as an amenity.
· Matrix [matrix.millersamuel.com]
· Three Cents Worth archive [Curbed]
· Outdoors Week 2011 coverage [Curbed]