Manhattan Market Reports, Hurt So Good

Jonathan Miller, author of a popular Manhattan housing report for Douglas Elliman, recalls that when he first reported a slowdown in the sales market, way back in 2005, disbelieving brokers called him, griping about the validity of his numbers.

“You could feel the tension in the brokerage community, because it was the first issuance of bad news after a huge run-up from 2003 to 2005,” Mr. Miller, president and CEO of appraiser Miller Samuel, said.

The quarterly housing reports wield an oddly powerful grip on the public’s perception of the market. Even though the data is partially dated by the time the reports are released, they are really the only documents that diagnose the state of the real estate market writ large.

During the housing boom, the reports were a broker’s best friend, and with the documentation of quarter after quarter after quarter of historic growth it’s not hard to see why. But now the bloom is off the rose, and analyzing the reports has become as joyless for brokerages as reading election polls was for McCain supporters last fall.

The numbers are what the numbers are.

Last week’s reports were the first to recount a post-Lehman Manhattan. Shocking absolutely no one, virtually all of the important sales metrics were moving in the same direction: down.

There were fewer sales, with Corcoran reporting a 52 percent annual decrease in quarterly closings from 2008 to 2009; and apartments that did sell went for far less than last year, with a 20.8 percent drop in the resale market’s median sales price, according to the Elliman report. And with few analysts predicting a hasty recovery, these housing reports are quickly turning into trimonthly bulletins of the industry’s interminable slog back to simply normal.

But if the reports lose favor among the brokerages, they are likely to pick up interest among consumers, who, for the first time in forever, are finding that the data tilts in their favor. The reports were viewed with more than a healthy bit of skepticism during the boom—or, at the very least, treated voyeuristically as financial pornography, for the vast majority of New Yorkers could never hope to afford what the reports dryly called the average-priced apartment.

“During the upside, I would chuckle because commentators on Curbed would call me part of the real estate industrial complex,” Mr. Miller said.

During the boom, it wasn’t just difficult for the data-heavy reports to get a fair hearing in public; judging from some of the comments from public forums, it was impossible. The reports, and the industry behind them, were viewed too much like cheerleading.

“Is there any source of accurate information regarding NYC real estate sales? Asking [real estate] firms about the state of the market is like asking Bernie Ebbers how WorldCom is doing,” wrote one anonymous Curbed commentator in response to the 2008 second-quarter reports.

“This ‘report’ is a joke,” wrote another. “It’s propaganda designed to increase buyer interest. There is no standard of accuracy or integrity whatsoever.”

Accusing the industry of Pravda-esque propaganda was easy when the markets shot ever upward, especially since three of the major reports are published by brokerages and much of the data compilation takes place behind a Vatican-like veil.

But the validity of the reports in the public’s eye has been proven now that, hey, they actually do show negative numbers. The industry, after all, has little to gain from touting misery.

According to industry analysts, more consumers are perusing Web listings, perhaps an indication that bad news is actually good for business. “Since January of this year, there has been an increase in traffic on our Web site,” Sofia Kim, the vice president of research at real estate Web site StreetEasy, said. “We are continually breaking our own records, which I think is due to a lot of latent demand out there.”

And what if brokers are indifferent to their firms’ reports? Is that so unbelievable? “Professionals want to see accurate information,” Gregory Heym, in-house author of Halstead Property and Brown Harris Stevens’ reports, said. “People have this notion that the reports are beneficial only if they are positive, but that’s simply not true because if a report is inaccurate, it doesn’t benefit anybody.”

Either way, the reports have leap-frogged in prominence since Barbara Corcoran started what was probably the first regular one, during the 1981 recession (the Corcoran Report was released every six months then). The reports, like houseguests and fish, have been around so long they’ve started to smell. But the public has warmed to the whiff, oddly enough, in these troubled times; others have, too, apparently. 

“I have gotten a lot more interest in the reports this time around,” PropertyShark founder Matthew Haines, who collaborates with the Corcoran Group, said. “Only it’s from the press.”


Manhattan Market Reports, Hurt So Good