A Striking Perspective on New York City Property Values

June 24, 2015

Property values across the U.S.

The graphic below shows how the 50 states compare in terms of total property value.

The map on the right is a cartogram – the land area of each state has been substituted for its total property value.

Hover over the maps to bring up more information.

Property value in the U.S. is very concentrated. About half of the total value comes from the top five states: California, New York, Florida, Texas, and Pennsylvania, respectively.

 

Property values within New York City

Here is the same graphic for New York City, broken down into the five boroughs, with Manhattan further broken down into neighborhoods.

No surprise the densest concentration of property value is around Central Park.

Considering how tiny the Upper East Side actually is (that small strip to the right of Central Park), it is pretty striking to see how large it becomes in the second map.

 

New York City vs U.S. property values

Putting the two pieces together, the graphic below shows how New York City’s property values compare to those of the states.
Hover over the map or the names in the margins to bring up information about a location.

  • In this graphic, New York City and the United States are on the same scale. So the sizes of the neighborhoods / boroughs / states are directly comparable with each other.
  • The colors represent each area’s total property value.

A few of the things that jumped out at me:

  • At 305 square miles, New York City makes up only 0.008% of the total land area of the U.S., yet its $1.5tr of housing value is about 5% of the Nation-wide total. Only four states are worth more than New York City, one of which is New York State.
  • Manhattan‘s housing alone is worth about $733bn, which would make it the 14th most valuable state in the country. Manhattan measures only about 20 square miles, 7.5% of New York City.
  • Brooklyn‘s homes are worth about $350bn. As a state, that would put its rank right in the middle, above Alabama and below South Carolina.
  • What I found most striking of all was the value of some Manhattan neighborhoods. The Upper East Side, which occupies less than one square mile, has an astounding $96bn of housing value. That places it above Staten Island and the Bronx as well as above six states: New Hampshire, North Dakota, South Dakota, Vermont, Wyoming, and Alaska.

New York City property values have been underestimated

Underestimated value of NYC real estate
Wikipedia reports the total property value as $802.4bn. In reality, the residential property alone is worth double that amount (source: Wikipedia, NYC ’07-’08 Tentative Assessment Rolls)

As far as I am aware, this is the first reasonably accurate estimate of neighborhood and city-wide property values in New York City.

Because of an odd idiosyncrasy in the New York City property tax system, the “market values” that the City assigns to real estate are not market values at all. For condos and coops, these values are generated by an antiquated pricing model, which underestimates true property values by as much as 95%.

An extreme example is this $100m penthouse, the most expensive sale ever in NYC. Despite having been purchased just six months ago, its official “market value” is reported as only $6m.

This use of the term “market value” has understandably led to some confusion, and these figures often get erroneously used as estimates of actual property value, such as in this Wikipedia entry.

Oddly, the information online about New York City rent tends to overestimate reality.

Calculation of New York City property values

The New York City property values are based on actual sale prices from 2014. Property value estimates for the rest of the U.S. are based on the Lincoln Institute’s Land Prices by State and information from the Census (or more precisely, from the Minnesota Population Center)

NYC Valuations Compared With Reality
On average, condos and coops sold in 2014 were valued by the New York City Dept of Finance at less than 20% of their actual sale price. For units worth more than $10M, that figure drops below 10%.

The NYC Department of Finance releases an annual report containing estimated “market values” for every piece of real estate in the City. To estimate the amount by which these valuations underestimate the true property values, I compared them against actual sale prices from 2014.

After segmenting by property type and sale price, I calculated the average ratio of market value to actual sale price for each group. The results are in the chart above.

  • Across all price ranges, condos and coops were undervalued by a greater amount than houses or apartment buildings.
  • For all four property types, higher priced units / buildings were undervalued by more than those with lower prices.

Applying those same ratios to every residential property in New York City, here is how the aggregate values come out, as compared with the 2014 market values from the Dept of Finance.

Market Values vs Estimate True Value

 

 

There are many other consequences of New York City’s strange property valuation system.

  • This New York Post story, for which I contributed the figures, covers a $100M penthouse whose tax bill is only $17k.

 

Update 7/9/2015: I have since created another cartogram, animated, that displays New York City’s total property value in comparison to other counties (created using Carto3F, among other tools).

Map of county-level housing values

 

My latest project, Elementus, aims to bring transparency to the cryptocurrency market. Check out our blog for some crypto-related data visualizations.

 

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Max Galka

I'm an NYC-based entrepreneur (my newest project: Blueshift) and adjunct instructor at UPenn. I'm fascinated by data visualization and the ways that data is transforming our understanding of the world. I spend a lot of time with my face buried in Excel, and when I find something interesting I write about it here and also as a Guardian Cities and Huffington Post contributor.
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  • Scottilla

    “For all four property types, higher priced units / buildings were undervalued by more than those with lower prices.”
    Interesting! Rich people are taxed at lower rates than poor people.

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  • ezra abrams

    OUTSTANDING
    if there was an emmy or oscar for blog posts, you would be in the 2015 running

    I wish all those “smart” PhD economists, etc, had half a grain of commonsense to use maps that are equal value (area on screen proportional to value plotted) vs equal area
    no one seems to get this incredibly important point ( I have written the N Y Times about this half a dozen times; they won’t even admit that equal area maps are wrong and misleading)

    • http://metrocosm.com/ Max Galka

      Thanks! Appreciate even being compared to the NY Times. 🙂

      For some reason, cartogram maps are hardly used. As long as they don’t deform the shape into being unrecognizable, I think they communicate the information much better than a map that uses only color.

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  • Mike

    This data is only for residential property, correct? Commercial and industrial property are left out, so the comparison might be a bit misleading. Also, one factor concerning Texas is the fact that it is a non-disclosure state that relies mainly on property tax for its revenue (since it has no income tax), the only state for which both of these facts are true. The result is that residents live in fear of the county assessor finding out how much they actually paid for their property, and hence are likely to report lower figures to the census (where Lincoln gets this data).

    • http://metrocosm.com/ Max Galka

      Yes, it is only residential property.

      The last thing I want is for this to be misleading. Would you mind telling me a bit more about why you say that?

      I chose to look at residential real estate because it is easy to define and measure, and because everyone understands what it means. Including industrial, commercial, and agricultural land would have added many x-factors such as the value of factory equipment, natural resources, etc. And didn’t think it would have been such a meaningful thing to measure anyway.

      You could go even further and add in the value of infrastructure, or the value of privately owned physical property. You would then be measuring the nation’s capital stock. That would be interesting too, though very different from residential real estate.

      Interesting point about Texas. The Census is confidential, but it is not crazy to think people would not want to take the chance.

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  • David

    A very compelling visualization technique. How about doing the equivalent, but based on population, rather than area? Because housing is more directly related to population than it is to geography, this would emphasize the dependence of housing on location by factoring out population density. I think it would illustrate disparity more accurately.

    • http://metrocosm.com/author/mgalka/ Max Galka

      Could you please tell me more about what you have in mind? Is your suggestion that the area of the counties be scaled in proportion to their population (rather than their housing value)?

      • Colin

        I think what he’s saying is change the color coding to represent value/population, rather than value/area. Nothing with the scaling. So, instead of the Upper East Side being $131b / square mile, it’d be $131b / (x) residents. Would be interested in seeing the differences myself.

        • http://metrocosm.com/author/mgalka/ Max Galka

          Ok, I understand. Thanks for clarifying.

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  • Brad Hershbein

    Max,

    This is a great map and interactive. Kudos! However, I think the land areas in the top (state-level) interactive are actually total areas (including water). See https://en.wikipedia.org/wiki/List_of_U.S._states_and_territories_by_area#cite_note-2010census-2. (Or, from the original source: http://www.census.gov/prod/cen2010/cph-2-1.pdf.

    Thanks again for making the cartograms.

    • http://metrocosm.com/author/mgalka/ Max Galka

      Thanks Brad. Yes, you are correct. They are indeed total areas. Need to correct the wording in the graphic.

      Thanks for the correction.

  • Ryan

    I’d love to see this comparison to other countries.. NYC to Australia, NYC to New Zealand, Canada, Egypt, Honduras..etc.

    • http://metrocosm.com/author/mgalka/ Max Galka

      Had the same thought myself, but have not been able to find a good data source.

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  • http://ifrudkip.blogspot.com/2015/04/if-by-rudyard-kipling.html AFateWithoutDestiny

    In all honesty I am impressed by this map. Saw it on washington post, best thing ive encountered from them.

  • Andrew

    Definitely try this by population – take a look at this map (http://prag.ma/code/d3-cartogram/#popest/2011) when scaled by population – it’s similar to your map of housing values. It doesn’t change the observation that there’s a lot of total dollar value in property on the coasts. The five states that you list contribute 37% of the total population, so I’d expect them to contribute a large share of the property value as well (as someone said above, property is correlated more with population than with land area).

  • Edward Olson

    Wonderful information, thanks
    I hope I understand this correctly, it’s only residential property?
    If you include nonresidential, Manhattan would skyrocket even more.
    I imagine some “properties” would be almost impossible to calculate:
    e.g. Liberty Island – the Statue of Liberty
    Hoover Dam

    • http://metrocosm.com Max Galka

      Yes, that’s correct. It’s only residential for the reason you mention. Commercial / industrial / agricultural property values are hard to come by, let alone something like Liberty Island. I thought residential was a good place to draw the line.

      I think you’re probably right that Manhattan would look even bigger if you did include it all. Though with structures like the Hoover Dam out there, who knows.

  • Handle_MZ

    You say the Upper East Side is less than a square mile. But Wikipedia and the city-data sites on google’s front page agree that it’s closer to 2 – 1.76. Do you have a different definition of the boundaries, or are you just counting the developed land and ignoring streets and sidewalks, or is there perhaps some other explanation?

    • http://metrocosm.com Max Galka

      Yes, the definition is different. In Wikipedia, the Upper East Side includes Lenox Hill and Yorkville. Here, Lenox Hill and Yorkville are broken out separately.

      There is no official definition of NYC neighborhoods, so neither one is incorrect. The ones used here are Neighborhood Tabulation Areas, which the definitions used on the nyc.gov website: http://gis.nyc.gov/census/.

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