Does width drive real estate value?
Published: Jun 17, 2013
One known fact about New York City townhouses is this: the wider, the better. But how much does width actually impact a property's price per square foot?
From looking at data compiled between July 2010 and March 2013 for 214 Manhattan townhouse sales, we can say that it seems like the overall closing price per square foot has more to do with location and layout than width.
For example, the 50-foot-wide Harkness Mansion at 4 East 75th Street was sold for $36 million in 2011 at $1,682 per square foot. In 2012, a 12.5-foot-wide townhouse at 153 East 78th Street sold for $6.1 million or $2,083 per square foot.
Nevertheless wider homes carry a certain prestige. Aside from the increased potential in the layout, there is an element of legacy connected to the acquisition of wider mansions. These were crafted for the rich gentry of the Gilded Age, who sought to reproduce an American version of the palaces of Europe.
Speaking of increasing value, the S&P/Case-Shiller house-price index of 20 big metropolitan areas for March climbed 10.87 percent from a year earlier, beating expectations for a 10.2 percent rise. Also of note, this is the fastest pace of increase since April 2006. Phoenix again had the largest annual increase at 22.5 percent followed by San Francisco with 22.2 percent and Las Vegas with 20.6 percent. Miami and Tampa had annual gains of 10.7 percent and 11.8 percent respectively while New York saw a 2.6 percent rise.
Given how hot Miami's market is, many properties are getting snapped up as soon as they are listed, often at asking price or above. This trend is also occurring in New York City, particularly given the city's current inventory crunch - the worst in recent memory. At the end of the first quarter, there were just 4,960 co-ops and condos in Manhattan for sale - a 34 percent decrease from 7,560 in the same period of last year according to appraisal firm Miller Samuel. Current inventory is around the levels of 2004, before the real estate boom gathered steam. Inventory peaked in 2009 and has been falling ever since.
The current inventory crunch is the consequence of several factors: The slowdown in construction following the financial crisis and the fact that banks are still more likely to finance rental projects versus condos and demographics. New York is adding about 50,000 residents a year, but the number of homes being added was 10,599 in 2012, compared with a recent high of 33,911 in 2008. Low crime rates, improved subways and more family-friendly amenities are among the factors fueling the city's popularity.
This is it for today, dear readers. I am available to answer your questions and provide you with more information on New York City, Miami and U.S. real estate.
• Riccardo Ravasini is a real estate maven and an active agent in New York and Miami. He grew up in Italy where he studied business and finance at Bocconi University in Milan before moving to the U.S. He enjoys assisting people in the search for the perfect rental apartment as well as international buyers looking for smart investment properties. Contact him at 1-917-214-2509, 1-917-214-2509 or firstname.lastname@example.org. Email email@example.com.