On the eve of the release of the major brokerages' third-quarter Manhattan real estate market reports, we had a chat with Jonathan Miller—real estate appraiser extraordinaire, mastermind of the Elliman report, Curbed graph guy, lowly blogger and overall swell dude (even if he lives in Connecticut). His iChat kept crashing, so we went old school and rung him up on the horn. Presented below, some snippets from what was one of 25,000 interviews Miller has done over the past 24 hours.
CURBED: What's the biggest headline here, JMillz?
Jonathan Miller: It's two things: the lower level of sales, and the story with inventory. The focus, in my view, is where inventory is going. A lot of the data isn't relevant anymore because of the events of recent weeks. People are looking forward, not backwards.
So what do you think about the inventory situation?
It's actually in a favorable position given the circumstances.
As we head into this uncertain period—and Wall Street layoffs continue, and bonuses become smaller or nonexistent—we're going to see the new development conveyor belt stop. Inventory now is higher than last year, but less than two years ago. Because of the credit markets, we're going to see the new development conveyor belt stop. That bodes well for existing projects that have been slow to be absorbed.
So inventory is up, but it's not like OH MY GOD INVENTORY IS UP.
Right, the level that it's at right now, it's higher than last year but 8.1% below two years ago. It's not bloated and it's not low, it's somewhere in between. It's not like Miami or other speculative markets. To me that's the story. The price numbers show a modest increase, but I'm not sure that's even relevant.
But people love talking about the prices. How did the median stack up to last quarter?
The median sales price was down 9.4%, but the median usually falls between the second and third quarter. I only put the prior quarter numbers in because people ask me for them all the time. It's really the prior year quarter that matters. All three main indicators are up, but they're single-digit increases. We've had a few straight quarters of double-digit increases because of the skew of high-end new developments. That's been mostly pushed out of the system now.
So where are we headed?
I see weakness over the next year because of these external influences of credit and Wall Street employment, but I don't see it as catastrophic. It's the best position we could be in given the circumstances: modest inventory with fewer new apartments coming to market. Curbed readers are hoping for a sharp correction, but that's not happening.
Do you see any chain of events happening where a sharp correction would take place?
I'm not saying it wouldn't happen, I just can't think of a scenario where it would. Based on what's happened the past three weeks, though, anything is possible. If you see any big movement, it'll be right after the new year, because the bonus money is supposed to be off sharply from where it's been. The fourth quarter coming up may be more of the same. It's usually the weakest quarter of the year. I'm already thinking more about the first quarter and second quarter of next year.
Let's get serious for a minute. You toss these reports together in 10 minutes, don't you?
I slave away. It's almost all me. I just sit in a chair with my MacBook Pro and just crunch it out.
Wow, how 'bout that product placement?
And of course my iPhone 3G is right next to me at all times.
In your opinion, what's the most surprising finding in this report?
There were no surprising findings this report. This is what we anticipated. A lower level of price appreciation, because the surge of high-end new development is leaving the system, and a decrease in activity. And that's what happened.
Is there any segment of the market, or neighborhood, that you're most concerned about?
Not at all. It's universal. It's about credit. I'm not worried about one particular thing. I think we should be concerned about everything.
As the most quoted real estate authority in New York, do you field calls for comment every day?
Five days a week, usually during business hours. Even during Rosh Hashanah, but I'm not Jewish so it's OK.
Sum up the report in one sentence.
Expected results that show evidence of favorable positioning for the expected weakening of the economy.
That's really more of a phrase. Who's going to win the World Series?
The Yankees aren't in it, so what does it matter? I'm only thinking about the Jets.
· Market Reports: Prices Up, Sales Down, Worry Prevalent! [Curbed]For more stories from Curbed, go to curbed.com.