In early summer, the Real Estate Board of New York issued a press release saying that median sale prices for Manhattan condominiums rose by 22 percent in the first quarter of 2006 relative to one year ago, while sale prices for co-operatives were up by 5 percent during the same period.
Although the figures in the REBNY release are correct to the extent that transaction data is available, those numbers don’t tell the whole story about getting a correct interpretation of real estate data.
In Manhattan, where the majority of co-op sales data is private, most prices are not made public. So price data for co-operatives is often incomplete (though that looks likely to change under a bill expected to be signed into law by Gov. Pataki making co-op sales data public), and the numbers that circulate are inadequate. At the same time, median price figures can vary widely from quarter to quarter since one very large sale can raise the median significantly. Price-per-square foot is a much more reliable indicator, though that figure, too, is often not available for co-op sales.
“Whenever a market report is released, it’s always possible to take a single statistic and harp on it,” says Greg Heym, director of research and chief economist for Halstead Property in Manhattan. “People may say, ‘Look, this area of the market is slowing, and here’s the number that shows it.’ That’s why it’s always important to use statistics like average or median price in conjunction with other indicators to get an accurate idea of what’s happening.”
Also, in Manhattan, many commercial brokerages do not use standardized neighborhood boundaries. As a consequence, the vacancy and rent data which brokerages publish in their respective real estate reports can differ widely over what may not be the same turf.
According to Maria Sciola, senior managing director for national research at Cushman & Wakefield, “When you see variations between companies, it’s usually due to how the geographic boundaries are assigned and how spaces are defined. Do they include all buildings? Is it just buildings over a certain size? Is it only buildings that have space available? Answering those questions differently can yield different results. Even with these variations, though, companies agree on the overall direction that things are going 99 percent of the time.”
Relying on national housing data can also be problematic to home buyers, says Frederick Peters, president of Manhattan-based brokerage Warburg Realty.
“Buyers should always rely on regional data because we’re just too big a country for what’s going on in Spokane or Miami to be germane to our market,” Peters said. “After the oil bust, the Texas housing market was in the doldrums for decades, but that had no impact on what was going on in Manhattan. You also need to make distinctions about why people are buying and selling. A market where second-home purchasers and investors are putting no money down is very different from Manhattan, where people are regularly putting down 50 percent when buying co-ops.”
Peters also believes that the news media should be vigilant in specifically defining the housing statistics that they discuss. Moreover, in writing about April closings, for instance, Peters contends the media should stress that those closings are really an indicator of housing activity two or three months earlier. By not doing so, Peters feels the media hypes the data as being inappropriately current.
“Making that distinction doesn’t require rocket science,” he says. “Nonetheless, it’s rarely acknowledged.”
In housing data, statistical variations abound, and the average buyer can feel overwhelmed. “You can never have too much data or too much information when it comes to housing,” says Sciola. “The challenge is being able to interpret it.”