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Three Cents Worth: Analyzing Manhattan Sales by Price

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[This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller employs not quite 50 shades of purple.]

As we're recovering from a really nice long weekend and are hopefully ready to enter the fall season, I labored (sorry) over a donut analogy for this chart and ended up with Shades of Purple instead. We've had a lot of hype pointed at the top of the market and I addressed the seldom discussed strong sub-million (studio) market a few weeks ago?but we haven't talked about the middle much. These market share numbers represent the share of each segment at the end of each quarter when I reported them in our market reports?I didn't go back and re-crunch to adjust for inflation (hey, this is Curbed). Here's the breakdown of market share:

Shades of Purple (sales market share by price):
· Violet: Market share of sales greater than $4M.
· Pink: Market share of sales from $1M to $4M.
· Lavender: Market share of sales less than $1M.

2001-2008 (Rising Prices, Low Interest Rates Begin to Rise)
Back in the 2001 recession and in the quarters immediately following 9/11, the middle and high end of the market expanded as the sub-million market contracted even though the entry level was the first to "wake-up" after 9/11. This was a combination of rising prices and rising mortgage rates (the latter began after 2003) taking share from the sub-million market. This trend lasted seven years during the housing boom (also known as a period where everyone lost their minds).

2008 (Housing Market Price Then Peaks, Quickly Falls)
The peak of the housing market by price occurred in the first half of 2008 and the seven-year market share trends by sales changed quickly as prices collapsed.

2008-2012 (Strength at Lower End, Stability at Upper End)
The jump in share in the less than $1M and above $4M (the latter in 2009) began to rise as the middle of the market continues to slip. This was due to a combination of falling prices and falling mortgage rates. Hence, my donut analogy; stable on top, strong on bottom and weak in the middle. I'm not trying to overstate the middle of the market's weakness. I see it more in the context that it is not expanding like the upper and lower end did.

Takeaways
· Low end: Expect a fairly strong sub-million dollar market as long as mortgage rates remain at record lows (i.e., stable at current levels).
· Middle: The "weak middle" is still strong relative to 10-years ago - it's just not moving around a lot since the new market began in 2008.
· The top end of the market hasn't changed all that much in market share over the past decade, especially over the past 3 years despite the recent hype.

· Matrix [matrix.millersamuel.com]
· Three Cents Worth archive [Curbed]