Market

January 31, 2008

Closing Bell: The Psychology of Pricing a House

Round numbers may be bad for business when it comes to selling a house, according to three profs from Cornell University. The current issue of The Atlantic Monthly picks up the story:

The authors showed their subjects a listing for a house along with various prices, and asked whether those prices seemed high or low. Precise prices like $391,534 were seen as cheaper than round ones like $390,000, even though the round prices were actually lower. The authors then examined more than 27,000 real-estate transactions on Long Island and in South Florida and discovered the same effect at work in real-life deals. In South Florida, having at least one zero at the end of the list price lowered the final sale price by about 0.72 percent compared with houses listed at a similar price, three zeros lowered it by 0.73 percent, and each additional zero lowered it another 0.39 percent.

Can any readers back this up with anecdotal evidence?
Primary Sources: Pound Foolish [The Atlantic]

January 29, 2008

What the Heck Is Going On in Carroll Gardens?

This is getting weird. Despite a softening market all around, there's been a rash of new listings in Carroll Gardens that have defied all logic and precedent. Starting with 44 1st Place (which in retrospect is probably the best deal of the lot) for $3,842,500, they've just kept coming: A 3,100-square-foot house at 78 3rd Place for $3,495,000? A 16-foot-wide one at 40 2nd Place for $2,800,000? And now a three-story house at 329 President Street for a $3,600,000? What is going on here? One common denominator: Corcoran is the listing agent on all these places except for 1st Place. Coincidence or conspiracy?
329 President Street [Corcoran] GMAP
HOTD: 40 2nd Place [Brownstoner]
HOTD: 78 3rd Place [Brownstoner]
HOTD: 44 1st Place [Brownstoner]

January 11, 2008

Impending Rate Cuts: Good News for Real Estate Market?

Are predictions this morning that the Federal Reserve will cut the federal funds rate by up to 3/4 of a percentage points in the coming weeks likely to have much impact on the local real estate market? While a reduction in the Fed's benchmark rate is no guarantee that longer-term rates and, by extension, mortgage rates will drop and a Fed cut won't necessarily make it easier to get a mortgage in the wake of the sub-prime crisis, there's likely to be some psychological boost to the market. In New York, it seems like good timing given that those bonus checks will start clearing in the next couple of weeks. Think it's meaningful or a lot of hot air?
Fed Chief Signals Further Rate Cut [NY Times]

January 7, 2008

Stuck in the Middle

An article in this week’s Crain’s looks at how real estate prices and taxes are making the city increasingly unaffordable for the middle class. The rising cost of housing, in particular, has meant that families making between $80,000 and $150,000 a year are finding it more difficult than ever to make ends meet. Higher real estate costs in Brooklyn, for example, have put the borough out of reach for many middle-income earners. A person profiled in the article who makes $60,000 a year “looked all over Brooklyn” before deciding to rent in Astoria. "Five years ago, [landlords] in Park Slope would have come to you," he says. Interestingly, the story also notes that the city’s recent prosperity has contributed to a widespread sense of entitlement, thus making people believe that their incomes should stretch farther. "People used to squeeze kids into one bedroom; now everybody thinks every kid should get his own bedroom," says Nicole Gelinas, a fellow at the Manhattan Institute.
Unaffordable NY: Tough Choices at $150,000 [Crain's]
Photo by ultraclay!

January 3, 2008

Corcoran ’07 Market Report: Brooklyn’s Still Up

The Corcoran Group released its year-end market data today, and the brokerage’s stats show the ’07 Brooklyn market making healthy (if not huge) gains over 2006. The median sales price on all condos and co-ops was up 7 percent last year, to $590,000, while median townhouse values rose 2 percent in ’07, to $1.2 million. The really fun part of the report, however, is its breakdown of how various neighborhoods have fared, sales- and price-wise (see chart on jump). The big winner? Brooklyn Heights, where the median price shot up 19 percent, to $1.3 million. Cobble Hill/Carroll Gardens, on the other hand, showed a median price decrease of 9 percent, going from $950,000 in 2006 to $860,000 in 2007. And Park Slope’s median price slipped from $999,000 in ’06 to $928,000 in ’07. We have a few reservations about this report, including that it doesn’t specify the total number of sales it tracks, that it only compares year-over-year values, and that it basically only covers the priciest brownstone neighborhoods—though we have to give it up for the big C for devoting so much ink to Brooklyn sales data. The article in the Times this morning about the record-setting fourth-quarter Manhattan market notes that Brooklyn's gains were more "stable" than Manhattan's. “Brooklyn showed its maturity this year because the appreciation was much more steady,” said Corcoran Group president Pamela Liebman. Anyhow, do these numbers jibe with pricing trends you’ve noticed over the past year?
Apartment Prices in Manhattan Defy National Real Estate Slide [NY Times]
Photo by threecee.