This week, the latest slew of market reports, covering property sales in the first quarter of 2017, were released by real estate brokerages and market analysts in the U.S. and around the globe.
While these reports can help industry insiders and agents get a sense of where individual markets are at any point in time, and place current market dynamics within a larger context, the data can also help potential buyers make decisions about where to invest, what type of property to buy, and how hard to negotiate on price.
“Our market reports are something that buyers can use to really understand where opportunities are arising, and get a sense of how they need to adjust their expectations to the current market conditions,” said Jay Parker, the CEO of Douglas Elliman’s Florida Brokerage. “While we know that most real estate decisions are driven by emotion, these reports can help buyers make a more sophisticated, data-driven purchase.”
Experts say a good report will offer many entry points—charts and graphs for those that are visually minded; hard data for those who want to see the numbers; and text, both in bulleted format to give the highlights and longer paragraphs to provide some background, for those people that want to know the story.
“Most researchers acknowledge that while we love data, other people often need someone to clearly explain what it says,” said Lucian Cook, head of U.K. residential research at London-based Savills. “Providing an accurate explanation of what the data means is when there’s real value in research.”
That means if you don’t understand the report, it isn’t the right one for you.
And if it seems needlessly long or overly detailed, you should also move on. “The size of the report doesn’t speak to the value of its contents,” Mr. Parker said, noting that three or four pages for a quarterly report is about right.
As for the reports themselves, the most expansive ones look at global real estate trends so that buyers and agents can get a sense of where it might be worth their time to consider investing at any point in time.
This type of data is captured in Knight Frank’s quarterly Prime Global Cities Index, which ranks 39 cities around the world based on their price performance. In the first of three pages is some text explaining the findings with five bolded takeaways. On the second page is a world map with a color-coded key showing price growth (or weakening) by color. And on the third page is the actual index, which ranks cities from 1 to 39.
What’s interesting is that in addition to showing growth over three, six and 12 months, this final graphic also shows the overall market direction, to give potential investors a sense of where the market is headed.
“For each of these markets, you could write 10 to 20 pages worth of research,” said Liam Bailey, global head of research at Knight Frank, where there are about 100 researchers, “but we’re trying to pull together the headlines for investors and agents so at a very high level, they understand what’s happening.”
After consuming this report, Mr. Bailey said that a potential buyer might drill down to a more local report, compiled by Knight Frank or another company, to get a sense of a city’s market dynamics on a more granular level. Most would-be investors take about 12 months from when they start researching markets to pulling the trigger and making a buy, so going through some of this distilled data and research is a good place to start.
But no report will replace the on-the-ground broker or agent, Mr. Bailey said. “If you’re looking to invest in real estate, you really need both,” he continued. “The report offers something to base a conversation on, and a way to challenge a broker if they tell you something that disagrees with the findings. It gives your discussions some grounding.”
If a potential buyer has a sense of where they want to purchase a property, they can skip directly to a local market report, like one that Douglas Elliman releases quarterly for properties within the brand’s U.S.-based footprint, stretching from New York City to South Florida to Los Angeles.
Jonathan Miller, the chief executive of New York-based appraisal firm Miller Samuel, has been writing these Douglas Elliman reports for 23 years, he said, and his independence and neutrality (because he is not an employee of Douglas Elliman), is something he thinks sets these reports apart from the pack.
“When things were good, our reports showed that the market was good. And when things were bad, the reports said they were bad,” Mr. Miller said, noting that this transparency is powerful. “My goal is to provide the proper context, because without it, the data can be manipulated to paint a picture that is either rosy or gloom and doom.”
What he does with these reports, he said, is toe the middle line. The market-wide results, which always look at the same data points, like listing discount, which Mr. Miller calls negotiability; average sales price and price-per-square-foot; and median sales price, which he said he prefers because it removes outliers; are consistent, dependable and never biased.
“I have no skin in the game. I’m just trying to give people a sense of what’s happening, to provide a reference point, and to keep it transparent,” he said. “Market reports are a way to do that, and then the broker or appraiser values the individual property, and links it to what’s happening more widely.”
At Savills, where Mr. Cook said there’s a research team of about 25 people, the in-depth, annual Prime London & Country report, which, like the other reports includes a mix of graphics, data and text, is perfect for the luxury buyer who wants a deeper understanding of why the market is acting the way that it is. This 28-page document includes a deep dive into market movement at different price points, and some justification for why investors versus. affluent first-time buyers versus. downsizers are making certain decisions, as well as a five-year outlook.
When a buyer is armed with this information and has this base knowledge, they may feel more confident in their decision to buy, informed about where to start their bidding, and supported to say enough is enough if the seller isn’t negotiating the way the market report says they should be, Mr. Cook said.
Like this glossy London report, there’s a similar—although at 52 pages, much longer—Miami Report that Craig Studnicky, principal at ISG World, has been publishing every year since 2009.
Back then, Mr. Studnicky said his motivation to go through the Miami sales data was to challenge the media’s reporting that there were 25,000 unsold new condos on the market, representing 10 years of inventory. After going through a painstaking process to count every vacant unit, he found that there were closer to 11,500 units for sale, which he thought might take five years to sell. “By September 2011, it was all gone, and mostly absorbed by South Americans and Canadians,” he said.
Since then, he’s published this annual report, which details everything you’d ever want to know about Miami from a real estate investment perspective, like the number of people moving to the area, where investors are coming from, and new residential, commercial and municipal projects on the horizon, Mr. Studnicky said.
Most recently, he presented this content to Chinese brokers who wanted to learn more about why they should consider selling Miami.
For those less interested in the full package, he also publishes a quarterly, two-page report detailing new condo sales and absorption rates, broken out by the South Florida city or neighborhood.
“We live in a data-driven world, where people want to take in quick bits of information before they make decisions,” he said. Market reports can help them do that.
Here is a look at other news from around the world compiled by Mansion Global:
San Diego Home Prices Have Hit Their Highest Point In A Decade
Driven by tight supply, a brisk local economy, and buyers hoping to lock down a mortgage before interest rates climb higher, the San Diego County median home price reached $515,000 in March, its highest point in a decade, according to a new report from CoreLogic. The number represents a 7.7% year-over-year increase, but still falls below the area’s 2005 peak of $517,500, which would be $644,487 as of 2016 when adjusted for inflation. However, there were 4,369 active listings on the market in San Diego in March, the fifth lowest number since 2009. (Los Angeles Times)
Britons Reportedly Buying Fewer Spanish Properties Post-Brexit Vote
While British tourism in Spain hit new highs in 2016, since the U.K.’s vote to exit the European Union, fewer Britons have been buying homes in Spain, according to to the nation’s Association of Land and Commercial Registrars. British buyers looking to vacation or retire in Spain still make up the bulk of the nation’s foreign buyers, but while they comprised 21% of foreign purchasers in 2015, that number fell to 19% in 2016, a drop thought to be tied to both the weakening pound and uncertainty about Britain’s future relationship to the E.U. British buyers generally represent 2.5% of all home buyers in Spain, the highest ratio of any foreign nation. By comparison, French and German buyers each represent 1% of Spain’s total home purchases. (Reuters)
Sales Will Soon Resume At Trump Tower Mumbai
Indian developers, the Lodha Group, are gearing up to resume sales at the 75-story Trump Tower Mumbai, after putting a pause on marketing following the November U.S. presidential election. “We made a conscious decision to not sell in the immediate aftermath of his win because we didn’t want to be seen as taking advantage of the changed political circumstances,” said the firm’s managing director Abhishek Lodha. “We will start sales in June or July.” The building is currently 60% sold and slated to be completed in 2019, with high-end features including a “golden-curtain” facade, membership with a private jet service, and access to a seven-acre private park. Lodha has been reporting record sales numbers even amid a slump in India’s luxury market following a recent government crackdown on high-denomination currency, and sales in Trump Tower may be seen as something of a test for the company as it considers a potential IPO. (Bloomberg)
Residents Of Luxury London Tower File Claim Against Tate Modern
After buying in the tower in part for its proximity to the Tate Modern’s latest Switch House extension, five residents of luxury apartments in the Neo Bankside towers have filed a claim against the museum on the grounds that one of the 10th-floor outdoor viewing terraces in the new building has now put their glass-walled homes under “near constant surveillance.” While officials from the Tate suggested putting up “a blind or a net curtain,” residents are pushing to have the museum put up cordons on the southern side of the terrace to prevent looky-loos from peering into their multi-million dollar apartments. The Neo Bankside developers were well aware of the details of the Tate’s expansion when they first built apartment—and indeed, specifically voiced their support and used the museum as a selling point in marketing materials—but the case may set important precedent as far as residents being able to shut down a nuisance they were aware of prior to purchasing. (The Guardian)
Londoners Pay Premiums of Up to 93% for Views of the Thames
A view of the Thames is the most coveted amenity among homebuyers in London, a new study from Cluttons property consultants finds. The report also finds that rentals with a view of the river command a premium of over 40%. Further east in London, the waterfront premium is less dramatic—42% at Wapping, 33% at Limehouse and Rotherhithe, 25% on the Isle of Dogs, and 19% at Canary Wharf. The cheapest location to buy a home overlooking the Thames is Rotherhithe, where homes have an average price of £505,000 (US$651,000). (Evening Standard)
Dubailand Was City’s Most Popular Neighborhood In Q1 2017
Readily available inventory, more affordable rents, less traffic, and an influx of new development and retail amenities have all combined to boost the popularity of Dubailand, which was the most popular neighborhood for Dubai residents to move to in Q1 2017, according to a report from moving and home services platform ServiceMarket. The neighborhood was the fifth most popular neighborhood for movers in Q1 2016, and now accounts for 13% of all move-in requests, part of a growing trend of residents flocking away from the city’s high-rises and toward more suburban-style communities. Besides Dubailand, the most popular areas to move in the first quarter were Dubai Marina, Downtown Dubai, Jumeirah Village, and Sports and Motor City. Within Dubailand, the most popular neighborhoods for movers were the Mira community, as well as Remraam, Mudon, and The Villas. (Khaleej Times)
In Palo Alto, 900-Square-Foot Home Sells for $623,000 Over Ask
Proving just how hot the market is in California’s Silicon Valley, a 900-square-foot home in Palo Alto, which is likely to get torn down, sold for $623,000 over its asking price. The 1930s-era house was listed at $1.927 million in February and sold in April for $2.55 million. (Curbed San Francisco)
Miami Developers Lean On Celebrity Performances To Help Sell
Luxury developers in Miami are coming up with creative means to combat the problem of excess inventory and sluggish sales, and are increasingly turning to star-studded celebrity performances as a lure for potential buyers. “If units were selling at the absorption rate they needed to sell, the developers wouldn’t be spending their money doing [concerts],” said Mayi de la Vega of One Sotheby’s International Realty. “When these things go viral, Miami benefits from it.” Paramount Miami Worldcenter recently hosted a show starring Jackie Mendez and Andrew Tosh (who also perform a song used in one of its new marketing videos), while the Porsche Design Tower hosted an invitation-only surprise Alicia Keys performance in March, and this week, Dezer and Related Group hosted a $1,000-per-ticket show benefitting the Andrea Bocelli Foundation, held at the beachfront sales center for the Residences by Armani/Casi tower in Sunny Isles Beach. (Miami Herald)
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