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Three Cents Worth: Manhattan Puts Best (Square) Foot Forward

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[This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller thinks in square feet.]

After a long weekend and a suggestion from a friend, I thought I'd take a different look at how we got here by measuring the total square footage sold as a market metric. It reveals a somewhat different post-Lehman perspective than would be derived from price. The blue columns represent the total square footage closed during each period that were available immediately following the period. The pink horizontal lines represent average square footage sold per period and were described with a key market attribute during that period.

The Dot-Com saw a significant change in the amount of square footage that was sold?through both larger units and more of them?lots of white box lofts in the downtown conversion frenzy. As an aside, the annual appreciation rates during that boom (25 percent to 30 percent) were larger than the appreciation rates during the most-frenzied part of the housing boom in 2004/2005 (20 percent to 25 percent).

The Bubble Era of 2004-2005 saw a lower amount of square footage sell than the preceding Dot-Com boom because of the lack of inventory, rapid price appreciation pressing the average size sold lower in the search for affordability. Although the new development frenzy began during this period, its closings were several years away. The Fed pressed rates higher beginning in 2004, creating urgency in the market for the next several years to beat rising rates.

The New Development boom of 2006 to 2008 (when the new development surge began closing in large numbers) spiked due to the unusually large square footage and large numbers of sold luxury units (i.e. Plaza, 15 CPW). This is generally considered the peak year of the Manhattan housing boom.

After a sudden sharp drop in square footage sold (new dev closings overpower re-sales) post-Lehman, the market rebounded fairly quickly to the pace seen during Dot-Com boom a decade earlier. The total square footage sold has now is just shy of the New Development era but the market feels more frenzied (to me) because of the chronic shortage of supply.
· Matrix [matrix.millersamuel.com]
· Three Cents Worth archive [Curbed]