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Three Cents Worth: Sales Prices Way More Volatile Than Rents

[This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller compares Manhattan's median rents and median sale prices.]

In light of Curbed's celebration of renters this week, I thought I'd match up Manhattan's median rental prices and median sales prices starting BL (aka before Lehman). I presented each in the same scale looking at year-over-year changes in media price for studios, one-bedrooms and two-bedrooms. Since 3-4+ bedrooms are wildly volatile on the sales side, I omitted them so I could match up the vast majority of each market. Yes, I know there are three to four times more rentals than sales, so inherently the data is a lot smoother, and hey, this is Curbed.

A few observations:

—Studios and 1-bedrooms seem to stick together within both markets.
—2-bedroom sales showed tremendous volatility unlike the rental market.
—Sales prices were already falling sharply relative to rentals in 3Q08 (BL).
—Rental price growth has been sliding since mid 2012, just before that crazy record sales volume set in 4Q12.
—1Q13 sales prices dipped in the aftermath of the fiscal cliff, but only temporarily - 2013 shows sales price growth up, rental price growth sliding.

What does this all mean?

Sales price trends are more volatile as the market tries to grapple with tight credit, Fed QE policy keeping rates low, economic gamesmanship out of DC, and historically low inventory. So probably not a whole lot. But it is renters week on Curbed.
· Miller Samuel [official]
· All Three Cents Worth [Curbed]