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Tracking 24 Years of Manhattan Sales and Rental Prices

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This week, real estate appraiser, Curbed graph guru, blogger, and newsletter writer Jonathan Miller looks at 24 years of Manhattan price data.

It's been a while since I dropped in on Curbed with a Three Cents Worth post but since I'm currently huddled next to an air conditioner, I really needed to take my mind off the heat and humidity. I thought I'd reach back into history and trend the year-over-year changes in the Manhattan sales and rental markets. I presented the median rental price and median sales prices by quarter back to 1991 measuring their year over year percent change. I'm surprised I haven't done this before since there is so much discussion about the relationship between the two markets, and whether it's better to rent or buy.

Looking at the numbers, a few key points jump out.

Volatility
Sales prices are far more volatile than rental prices. The dot-com and housing bubble for the sales market was completely bananas. Sales price gains in the late 1990s were higher than during the credit/housing bubble. From 1997 to 2000, housing prices across the board generally doubled, yet I think this short burst was largely overshadowed by the U.S. housing/credit bubble that followed.

Follow the Leader
I'm wondering whether it is a myth that the rental market leads the sales market. While it seems logical that an improving economy would more likely generate quicker demand for rentals, the state of credit might change things up. During the housing bubble when credit was easy to get, from 2001 to 2008, sales price gains seemed to lead rental price gains. Now sales and rental prices are rising together and credit has over corrected and remains irrationally tight.

A Steady Grind
Over the past few years, prices of both categories are slowly rising. Rental and sales prices are at or near record highs, and there doesn't seem to be near term relief in sight. Definitely not cool.
· Three Cents Worth archives [Curbed]
· Miller Samuel [official]