FYI: The August data for S&P/Case-Shiller’s home price indices was released today, and it showed month-over-month growth of 0.42% for both the 10-city and 20-city composite indices. Year-over-year versus last August, the 10-city was up 4.33% while the 20-city was up 5.13%. As shown below, Phoenix, New York, Tampa, Dallas and Seattle grew the most month-over-month, while San Diego, Las Vegas, and Cleveland grew the least. New York was up the second most month-over-month, but it’s up the least year-over-year at just 1.73%. Is the monthly reading a sign that New York is finally set to see a pick-up in prices?
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/home-prices-approaching-new-highs-august-2016-case-shiller-numbers/
Comments
From Investopedia: "Each index measures changes in the prices of single-family, detached residences..."
That would all but exclude Manhattan real estate. Manhattan real estate is figuratively as well as literally an island unto itself. I found some statistics on owner-occupied single family attached and detached homes in NYC. Not exactly what C-S is measuring, but close enough and still useful for showing that Manhattan is unique.
Manhattan (25% of NYC housing units): 5% single family owner occupied units
Brooklyn (30% of NYC housing units): 39% single units
Queens (25% of NYC housing units): 53% single units
Bronx (15% of NYC housing units): 39% single units
Staten Island (5% of NYC housing units): 77% single units
Lil' suburban Staten Island may have been given three times the weight of Manhattan. Its single family owner occupied units constituted 4% (= 5% x 77%) of NYC housing; Manhattan's units constituted 1.25% of NYC housing. The quote and all data except for percentage of NYC housing units are from the most recent HUD housing market report for New York. The NYC housing breakdown is from the 2014 New York City Housing and Vacancy Survey.
You can find the city-by-city HUD reports here:
https://www.huduser.gov/portal/ushmc/chma_archive.html
Price is often impacted by supply.
In a world were central banks "buy up" assets in the equity and bond market so too do federal agencies like HUD. They backstop the U.S. real estate market. There mission is a stabilize price and value of real estate. This benefits financial institutions (higher loans...higher interest payments), local/state agencies (higher assessments...higher tax collection) and developers (higher comps...higher unit prices). Agencies that hold distressed properties off the market (for period of time...are often is a process of pre-foreclosure or foreclosure). If HUD takes over the property it is often in its interest to release these properties at a manageable rate (as to not over supply and potentially lowering overall property value). If these properties remain occupied during most of this process these properties are less likely to be vandalized, but often do suffer from maintenance fatigue.
There are quite a few properties that HUD "brings to the market". A buyer often deals with a local HUD certified real estate agent. Here's are the present inventory of HUD properties (mostly single family) across the U.S..
Here's the HUD property search website:
hudhomestore.com/Listing/PropertySearchResult
Select a state, select search, then I like to use the map feature and zoom in on the area you are interested in.
The HUD Comprehensive Housing Market Analysis I cited is a study of the entire regional market, created to "assist and guide HUD in its operations. The factual information, findings, and conclusions contained in the reports could also be useful to builders, mortgagees, and others concerned with local housing conditions and trends."
That's the description given on the HUD city-by-city page I cited. HUD may use this analysis in pricing its inventory, but it reflects the market as a whole.
"Price is often impacted by supply". I seem to remember that from econ 101. Also something about price being impacted by demand. I'm not quite sure, but I think that the two are supposed to meet somewhere.
Actually, the housing market seems more complicated than that. There's behavioral economics. People are loathe to sell their homes when they are underwater. It's irrational IMHO, but real. Why would you be willing to sell a $500K home for $1 above your mortgage or your buying price, while you would stubbornly refuse to sell it for $2 less? Yet that's how many people seem to behave.
My point was simply that any index that excludes co-ops and condos (not to mention multi-family houses) completely ignores Manhattan. And if you ignore Manhattan, you are not getting an accurate picture of NYC housing prices. Just as if you only look at HUD properties, you are not getting a complete picture of the entire regional market. (As you wrote, HUD has objectives beyond maximizing price received.)