Tribeca Co-op vs Condo Market / Flaws of Small Sample Size

Posted by urbandigs

Wed Jan 11th, 2012 09:43 AM

A: Wanted to have a quick discussion about a common problem that I often encounter when discussing UD real-time data tools with fellow brokers and clients. Lets use the Tribeca market as an example so the discussion can be a market update as well. Every broker out there would like to be able to provide accurate information on exactly what their client is buying or selling into. For example, what is happening in the Tribeca, $700,000 to $850,000 price range, 1br/1bth, postwar full service doorman condo market that allows pets and has a building roofdeck. So they ask me if I can add in that functionality but I try to explain that if they get too granular in their request for real time charts on a Manhattan submarket, that there will not be enough data to push forth a worthwhile trend - the result could be very high % change numbers and a useless chart that either under or over-exaggerates what is really happening out there. For me the debate has become whether to build an interface that only goes so far but still pushes forward the highest quality trend OR let the user chart whatever they want and know that 1,000s of useless chart combinations exist. Lets discuss.

Being in a service industry, Manhattan brokers want to give their clients what they ask for; and who can blame them. From building policies and amenities to manually entering in a small price range. But when it comes to charts on this marketplace, it's best to focus on quality than granularity. For those that don't know:

Granularity is the extent to which a system is broken down into small parts

For Manhattan charts this would mean the extent to which we allow you to slice & dice the Manhattan market to see whats happening (think bedrooms, bathrooms, postwar/prewar, apt size range, price range, bldg type, bldg service level, roofdeck, building policies, etc.)

Sample size
refers to the number of objects in the sample

For Manhattan charts this simply means how many units are either active, pending or off-mkt.

For our interface on UrbanDigs you can't let the user get too granular or else you will risk having too many charts with very low sample size rendering the trend useless.

Lets check in on the Tribeca marketplace and compare pending sales trends for both co-ops and condos:

tribeca_coopcondo.jpg

Some facts:

Fact #1 - This is showing you Demand trends (Pending Sales) for the entire Tribeca Co-op & Condo Market!
Fact #2 - There are only 5 Tribeca Co-ops Pending right now!
Fact #3 - Over the last 2 years, Pending Sales for Tribeca Condos are +8.7%
Fact #4 - Over the last 2 years, Pending Sales for Tribeca Co-ops are -45.5%

Now lets see what happens when you want to see only the Tribeca Co-op market with 2+ bathrooms and priced between $1M-$2M (getting more granular):

tribeca_coopcondo22.jpg

Only 1, and the chart is basically useless. The trend went from 4 to 1 and is down 75% over this time period. If 1 more unit goes to contract, it will go to 2 and show a quarterly rise of 100%. Useless.

Interpretations might be:

Interpretation #1
- Tribeca 2+ Bath Co-op Market must be really weak
Interpretation #2 - Tribeca 2+ Co-op Market likely has little to no supply

I understand this is a section of Manhattan that we all know has hardly any inventory, but that is the point of the discussion.

This is the reason why we have chosen not to add the following details to our chart interface (at least at this time):

- building service level (f/s drmn, p/t drmn, elev only, walkup)
- pet policy
- private outdoor space
- prewar/postwar
- smaller price ranges
- building amenities (roofdecks, pools, storage, etc.)
- monthly carry maximums (maintenance + re taxes)
- flip tax (yes, I even get asked to be able to chart out only buildings with flip tax)

etc..Imagine how many chart combinations will be useless..you will try to give the client exactly what they want but you'll have no idea what it really means in the end? The point is to build a system that gives you customizability and does not sacrifice showing you meaningful trends.

For this case, I would advise my client to focus on the broader Tribeca trend when discussing buy side or sell side strategies since we have significantly more data on it.

Would love some thoughts on the topic...


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