did coop prices really slip? reading beyond the headlines
Q2 reports are coming out, so The Press simplifies
Christine Haughney’s NY Times piece today probably reflects what the consensus media reaction will be to the various market reports issued today. In Co-ops Slip, but Condos Lead Rise in Manhattan Apartment Prices she talks about “the stark divide” in prices between coops and condos, but I think her better point is about what is selling: “More buyers are choosing condominiums over co-ops and are paying far more for them, according to studies being released today”.
When the full data comes out, I strongly suspect that this “stark divide” is almost completely the result of – as she put it – “to some degree, it just shows that apartments sold in the quarter included a lot of small co-ops and a number of large condos, according to Brown Harris Stevens”.
condo sales to coop sales is not apples to oranges
The average condo prices skew high quarter after quarter because the new development being sold is skewed so far to the deluxe market, with what constitutes “essential luxury” amenities and details being re-defined up again and again. Coops are pretty much same-old-same-old, so you would expect a high-end gap between coops and condos to increase.
My guess is that comparing the (say) 2 bedroom coop market on (say) the Upper West Side to the re-sale of pre-1997 2 bedroom condos would show much less of a gap.
flash: brokers love to talk
Most of the article is broker-babble trashing coop boards (starting with “brokers said that co-ops are also depressing their own prices because their boards require so much liquidity and assets that many buyers from overseas and people who work in finance are instead choosing condos”), but the
not everyone is depressed about ‘depressed’ coop prices on Park or 5th or CPW
two pieces of data about coop sales – one at the front of the article about price-per-room and one at the end about the high-end — do not support declining coop prices:
In fact, in terms of average price per room, that brokerage [Brown Harris Stevens] found that postwar co-ops on the East Side remained the same and those on the West Side increased by 3 percent
Why is this buried at the end, instead of being more directly opposed to the broker-babble about coops depressing prices??
Manhattan’s wealthiest buyers are paying even more money to get the most prized trophy homes, and they are not deterred by co-op board rules on assets. Brown Harris Stevens data showed that prices for co-ops with more than four bedrooms rose by 19 percent to an average of $7.016 million, compared with the same period a year ago. [here is the BHS Q2 report]
Actually and IN FACT, the most exclusive coops have always “depressed” their prices, in exchange for exclusivity. These folks are smart enough to know (if not, they have financial advisers earning big bucks) that when they insist on someone having $15mm in the bank after they buy a $5mm apartment they are reducing severely the pool of potential buyers (demand) and, therefore, the market price. But — in at least many of these buildings – that trade-off is welcome because (a) most of their wealth is not represented by their coop shares and (b) they value very highly the ability to live only with People Like Us. So even if you have the $15mm in cash, if your grandfather did not go to prep school with their grandfathers, you are not likely to be approved as a purchaser.
You could look at it as upper class stratification. High-end coops are increasingly for people of a certain caste, while high-end condos are for “anyone” with money. But I digress….
wait for details
Look for detailed data in the coming weeks (probably) explaining that more new and large condos changed hands in the second quarter, while the mix of coops sold skewed older and smaller. Hence, “average” condo prices are up, while “average” coop prices are down.
Also look for wide variance in the data reported by the various firms. Why can’t we all just get along (and use the same data)??
© Sandy Mattingly 2007
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