Three Cents Worth: A Fistful of Quarters

Thursday, April 12, 2007, by Joshua

[This week, our graph guy Jonathan Miller gives up his favorite price indicator on his way to an analysis of quarterly trends. Click on the image to expand.]

I thought it would be neat to look at the patterns of each quarter, overlapping them to see how they relate to each other. I selected average price per square foot, which is my favorite price indicator, and adjusted it for inflation. The percent change from the prior quarter was then plotted with each line representing a quarter, from 1989 through 2007.

The 1st (blue) and 2nd (pink) quarters seem to show the most volatility and are generally more positive than the 3rd (orange) and the 4th (green) quarters. The first quarter was most volatile, probably bearing the brunt of the bonus effect and the second quarter is the spring market, the most active market of the year. In fact the 1st and 2nd quarters seem to pair off as do the 3rd and 4th quarters.
· Average Price Per Square Foot by Quarter [Miller Samuel]

Filed under Market Analysis, Jonathan Miller, Three Cents Worth

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Comments (11 extant)

So why would anyone in their right mind buy in the first or second quarters? Inventory be damned, for the price difference you can fix up a less than perfect place yourself.

By Anon at April 12, 2007 11:25 AM

The graph shows the change in percentage. Do you know where to find the actual values for price per square foot ? Where were we in 1Q07, $1100, $1200/sqft? Would like to know. Thank you.

By Chris at April 12, 2007 11:52 AM

1Q07 - JAN - MARCH - was very active. I wouldne be surprised if you saw ppsf values of around

condo - $1000-1100/sft
co-op - $850-1000/sft

These are just guesses of course but you'll definitely see a higher PPSF for 1Q07!

By Noah at April 12, 2007 12:24 PM

Chris, ave ppsf (along with other info) is available on Jonathan's site:
http://www.millersamuel.com/data/

By VDH at April 12, 2007 12:48 PM

"So why would anyone in their right mind buy in the first or second quarters?"

for the exact same reasons people would spend 4 dollars on a coffee at starbucks instead of the 25 cents it would cost to make one at home.

By seven at April 12, 2007 1:11 PM

yes seven a good observation all due to easy credit
got cash?

By Mike the bitter renter with major cash$$ at April 12, 2007 1:39 PM

mike, you kinda turn me on.

too bad for me, i'm a guy...

By seven at April 12, 2007 1:52 PM

Mike:

You crack me up.

I agree you're probably a bitter renter, for sure - but major cash? Don't make us collectively laugh. What's major cash to you, douchebag? Over $5MM? Over $10MM?

By kb at April 12, 2007 3:43 PM

Deleted a few comments and banned some folks who were perhaps just a little too unhinged about this topic.

By Lock at April 12, 2007 5:55 PM

10.

nice comparison.

Consider- These are average prices per sq foot.
Given that Q1 and Q2 see transactions in better located apts (bonus effect), one will see higher per sq foot averages in these Quarters. Would like to see the numbers crunched for the same building or zip code for a better comparison.

By sandeep gill at April 13, 2007 9:56 PM

11.

Averages are very inferior estimators. If the composition of sales change (within studios, 1bd, ... luxury) your data is not telling the story you are reading.

To give you an example, our gob estimates show that the average savings rate in US for renters is 2%, while for owners is negative. So is renting the way to go? and you lose money owning?

Not necessarily... it might just mean that a small portion of homeowners are losing their shirt.

Jonathan, does the graph change a lot when you use median price per square foot within each group (studios should not be in the same bag as luxury apt, nor 2 bedrooms actually)?

I guess median price per square foot within each group is my favorite indicator! Is not more difficult to collect than the average.

Thanks!
- Julia

By Anonymous at April 14, 2007 4:02 PM