Manhattan Inventory: It's Miller Time!
A: Mr. Chartman himself, Jonathan Miller is back with some great stuff as he publishes is quarterly report for Douglas Elliman. Here is the link for all of this quarter's charts; 13 of them in total! In short, the data shows you how powerful blogging can be for those that read daily! As many of you know, I do my best to provide real-time reporting to you guys from street level of Manhattan real estate. I HATE lagging data, no offense Jonathan, I love yours as its by far the best and most credible data mining we have! But, I just wish we had more real time tools to analyze what is going on in the NYC real estate marketplace as it happens, rather than after. Lets start digging.
First off, recall my previous posts on the decline in buyer confidence that I reported on starting in early August, some 10 weeks ago as I first noticed signs that sales volume will probably start to slow a bit:
AUG 9th ---> "New York City real estate still needs more inventory to meet demand. While I am still assessing whether the current credit concerns are infecting us here (nothing yet other than some psychological concern), the more important trends to watch are inventory and price points. "
AUG 27th ---> "Today I would like to discuss the change in psychology that I am noticing due to the 5-6 weeks worth of headlines around the current credit/liquidity squeeze.
...Combine these changes in thinking and what you get is a MORE CAUTIOUS BUYER more willing to sit on the sidelines than to jump in and bid close to ask."
SEPT 24th ---> "However, I have a hunch that July-September sales volume will come in a bit lower than expectations (which will be proven by data released in December or so) resulting in a bottoming out of these declines in inventory. This hasn't happened yet, its just a hunch. I think the headlines of the credit squeeze, along with higher rates and tighter loan standards has had a psychological effect on the buyer pool by pouring some caution into the minds of would be buyers. In addition, I think many buyers are just flat out frustrated by what they can get for their budgets and are choosing to hang tight a bit longer.
Too early to tell, but come early 2008, I would expect these inventory trends to reverse course a bit and start to either bottom out or rise again for the upcoming 2008 wall street bonus season."
OCT 2nd ---> "This report confirms my inventory reports (Sept 24th, Sept 11th, Aug 23rd, Aug 9th) but its the sales volume that I question in the upcoming quarterly report for the months of August, September, & October. My gut is telling me that sales volume will slow resulting in a slight build of inventory for these months!"
On to the charts!
Conclusions: There is a clear tick up in listing inventory as a result of the clearer tick down in sales volume from the month of August to September! This is consistent with the tick down in buyer confidence that I have been reporting on since early August. The theory goes:
BUYER CONFIDENCE TICKS DOWN DUE TO CREDIT CRUNCH ---> BUYERS ARE MORE CAUTIOUS ---> SELLERS PRICING REMAINS HIGH AS INVENTORY IS TIGHT ---> LESS BUYERS JUMP IN ---> SALES VOLUME TICKS DOWN ---> INVENTORY TICKS UP
What started the whole trend is what I have been cautiously reporting here on Urbandigs.com; the change in buyer confidence (real-time reporting is what its all about)! It's all about the buyers! Now, this report is still overall bullish and by no means are the reversals in inventory & sales volume significant enough or long enough to establish a meaningful trend. It simply points out that confidence can change markets and makes it even more important for us to monitor these stats moving towards the wall street bonus season. Will it continue? Will it turn back around? We need more data before making any iron clad statements regarding a change in the fundamentals of Manhattan real estate.
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Comments (8)
Does sales data usually lag inventory data due to the time it takes to negotiate or get into contract? In the 2nd chart, it looks as though sales peak lag the inventory peaks by a couple of quarters.
How do you think the increased availability of condos vs # of coops will affect the overall marketplace?
Posted by anon | October 30, 2007 10:23 AM
anon - yea, it does look that way. However, Im not sure how they compile the data. If they simply count the # of closed sales each month, then you would think there is a lag. They should also have a dataset for contracts signed, so we can monitor that trend as a more forward looking indicator of what sales volume may be in the coming month or two.
Posted by Noah | October 30, 2007 10:36 AM
I hope you are drawing any conclusions from this small up tick in an historical slow period of the year. I have been monitoring a few condo buildings in the west village, GV, Tribeca, Soho and even the UES and I noticed more activity in sales at the end of this month. Condo sales in my opinion are picking up again in these areas and I believe upcoming data will reflect what I have been noticing. More and more condo listings in these areas are going into contract. Time will tell but I definitely see a pick up in activity.
Posted by Anonymous | October 30, 2007 11:11 AM
Until 96 the prices or co-ops and condos were similar. Now condos are over 1/3 higher than co-ops. What explains that divergence?
Posted by NYRE | October 30, 2007 11:18 AM
Anon - Nope, not drawing any conclusions or stating any changes here. In fact, I BOLDED the last sentence in the post so readers clearly see that I said:
"Now, this report is still overall bullish and by no means are the reversals in inventory & sales volume significant enough or long enough to establish a meaningful trend."
Just pointing out the lagging nature of the report and that this report confirms the change in psychology that I have seen since early AUG. Thats all. I think confidence has risen a bit since then as fed aggressively eased on rates and stated they are there to help if need be, and stocks rallied.
I do see a slight uptick in buyer demand as of the past week or two, but nothing substantial to report on yet. If it continues I certainly will. Thx for commenting!
Posted by Noah | October 30, 2007 11:29 AM
Layoffs might be starting to have an affect by now... friends of friends have probably shared stories of co-workers being laid off on wallstreet.. this has a strong psychological effect especially when you HAVE to have the MEGA-high income afford the mortgage...
I for one am waiting until feb/mar next year to see how many more layoffs are in the pipe
Posted by uwsider | October 30, 2007 11:47 AM
I love Jonathan Miller's charts, but I wish they would go farther back in time.
Posted by spaceboy | October 31, 2007 2:11 AM
spaceboy - aski him! Hes great like that because he is the type of guy that will spend some of his own time to give people what they want to see!
Im sure there is an email somehwere on his MATRIX site or appraisal site. If you ask, Im sure he'll make a custom chart given his time allows.
Posted by Noah | October 31, 2007 11:30 AM