When it comes to a real estate market, there are always the typical metrics: sale prices, rents, vacancy and so on. But I’m always interested when somebody looks at the market in a different way and comes up with other kinds of metrics.
That’s why I was intrigued when I stumbled upon this post by Sam Floy, where he looks at the concentration of coffee shops and friend chicken shops across London in order to determine which neighborhoods are in fact “up and coming.”
To give you a taste, here’s his coffee shop map:
His thinking was that if a neighborhood had a high density of coffee shops, a low density of fried chicken shops, and relatively low house prices, then it could probably be thought of as up and coming.
Coffee shops are often considered to be leading indicators of urban change (i.e. gentrification), and, well, friend chicken places I guess speak to a different kind of neighborhood.
These sorts of playful studies aren’t going to tell you exactly which numbers you should be plugging into your development pro forma. But I think unconventional analyses can sometimes tell you a bit more of the story behind the numbers.
Just a few days ago, The Federal Reserve Bank of San Francisco published an interesting research study where they argue that this U.S. housing boom is different than that of the early 2000s.
During the last boom, U.S. home prices peaked in 2006 and then dropped about 30% in the wake of The Great Recession. Since then prices have rebounded – almost to their pre-recession levels. This has some people asking whether this story is headed towards the same ending.
“We find that the increase in U.S. house prices since 2011 differs in significant ways from the mid-2000s housing boom. The prior episode can be described as a credit-fueled bubble in which housing valuation—as measured by the house price-to-rent ratio—and household leverage—as measured by the mortgage debt-to-income ratio—rose together in a self-reinforcing feedback loop. In contrast, the more recent episode exhibits a less-pronounced increase in housing valuation together with an outright decline in household leverage—a pattern that is not suggestive of a credit-fueled bubble.”
And here’s the chart:
Source: Flow of funds, Bureau of Economic Analysis (BEA), CoreLogic, and BLS. Data are seasonally adjusted and indexed to 100 at pre-recession peak.
Whenever you’re starting to feel like real estate prices in your city are getting out of hand, just turn your attention to New York. It’ll make you feel better.
The New York Times published an interactive overview of the Manhattan real estate market today. It was spurred on by the fact that the average residential sale price in Manhattan just hit $1.7 million (a new record) and that there’s a growing number of 8-figure apartments being bought up.
Last year half a dozen apartments sold for more than $50 million in the One57 tower at 157 West 57th Street. (The New York Times calls this building the “undisputed center of Manhattan residential extravagance.”)
Here’s one of their diagrams showing the number of residential sales over $10 million in 2009 and then in 2015:
And here’s another one of their diagrams showing the bottom and top 10% of the current market:
It’s interesting to see the clustering in certain areas and also the lack of clustering at the high end around the top of Central Park.