[This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller wants to be a millionaire.]
I was drinking a cup of coffee bought from a bodega I was walking by (the only way I could squeeze in a bodega reference) and had a thought. After coming off of last week's scattergraph bender, I decided to apply the same approach to flesh out the price resistance that occurs at the $1M threshold. I selected a price range of equal distance above and below $1M and let the dots fly. Each dot represents a closing date and price from $750,000 to $1,250,000 from 2003 to 2011 (plus a few weeks into 2012).
From this analysis, there are clearly more sales just below than just above the $1M threshold and this pattern is undeterred by the sharp changes in prices and sales during the 2003-2012 period. In fact, the concentration of sales just below the threshold is always quite large.
The first thing that comes to mind is the New York State 1 percent mansion tax on sales of $1M or more on 1-3 family, co-ops and condos. Buyers are resistant to exceeding the threshold if they are close to it. Perhaps this also falls along the lines of retail pricing where products are priced at $0.99 instead of $1 and the $1M threshold "means" something (I doubt it).
Although the chart doesn't really show it, the most commonly occurring sales price (the mode) in this data set of $750K to $1.25M was $1,100,000. More sales occurred for $1,100,000 than at any other price. It would appear that once the influence of the mansion tax fades on establishing sales price, the next most common place to see sales cluster is $100k higher, as if the market "skips" to it. Admittedly a simplistic description but hey, this is Curbed.
It's also cool to remove the mansion tax from the discussion and see clusters of sales in $100K increments throughout the chart, especially above $1M (easier to see because of the lower density of sales).
· Prices cluster just below $1M (582 sales were $999,000 - $999,999) likely from the mansion tax.
· Most frequently occurring sales price in this data (the mode) was $1,100,000.
· Buyers tend to pay with "even" numbers", especially $100k increments.
· The sharp swing in price and sales activity since 2003 had no real impact on how the market reacted to the $1M mansion tax threshold.
· Matrix [matrix.millersamuel.com]
· Three Cents Worth archive [Curbed]