Manhattan Inventory Check
A: This is for spunky; some of you should know what I mean by this. Curbed had Jonathan Miller's inventory charts a few weeks ago that I would like to revisit. Looking at my real time Manhattan inventory tool, powered by Streeteasy, I see rising inventory but still not enough to change the supply/demand imbalance right now that favors sellers. Lets break it down a bit more as a mid month review.
UrbanDigs NYC real estate data & charts is in BETA for another few months. For now, charts will only show daily readings going back 2 weeks so please bear with us as we tweak this tool to be of the highest accuracy for your future analysis. Daily readings, whether small or large, should be taken with a grain of salt as we finish our BETA testing. Overall though, the data seems to be accurate enough to discuss in posts like this one.
Here is the trend over the past few weeks:
Now, lets go back to Miller Samuel's chart a few weeks ago that showed total inventory trends up to January 2008; click chart to enlarge:
JAN 2007 TOTAL INVENTORY - 6,000
JAN 2008 TOTAL INVENTORY - 5,500
YEAR-OVER-YEAR % CHANGE - down 7% or so
6-MONTH % CHANGE - up 22% or so
Ok, I'm not a fan of using year over year changes for analyzing inventory because it doesn't take into account the change of investor sentiment accurately, and is going back too far in time and to me that doesn't make much sense. I'm way more interested in more real time trends, say the last 3-6 months, and what inventory is doing here as an indication of more real-time investor sentiment and marketplace supply.
When I look back a year ago, inventory is LOWER! When I look back 6 months ago, inventory is HIGHER. The current trend seems to be up. Going back in time, the bonus season of 2007 (JAN-APRIL) was very active (yes, I wrote about that numerous times right here on urbandigs), in my opinion more active than today's environment, and as a result sales volume was very strong. When you have strong sales volume, you will see a decline in inventory in the months following as deals close and listings are sold off. Combine this with a seasonal slowdown during summer months, and Jonathan Miller's inventory chart for APRIL-JULY 2007 makes a lot of sense. During this time, we saw inventory decline sharply largely a result for deals closed during the active bonus months prior + lack of new product coming to market entering the summer.
Then came September, some 5-6 weeks AFTER the credit crisis began and surfaced to media headlines and stock markets. If we look at inventory since August 2007, we see a rise of about 22% (4,600 units to about 5,600 units today), but lets be fair and check out what happened during these months in past 3 years.
AUGUST through JANUARY MANHATTAN INVENTORY TRENDS
AUG 2004 - JAN 2005 ---> down 9% or so (5,400 to about 4,900 units)
AUG 2005 - JAN 2006 ---> up 18% or so (5,300 to about 6,300 units)
AUG 2006 - JAN 2007 ---> down 12% or so (7,100 to about 6,200 units)
AUG 2007 - JAN 2008 ---> up 22% or so (4,600 to about 5,600 units)
Certainly we can say it's a trend worth reviewing! What makes this time around different of course is the macro environment, the lending environment, credit markets, and investor confidence. I have stated before that I think 2008 will be the year Manhattan inventory reverses course and rises, breaking the declining trend since the top in mid 2006. The main reason: a drop in buyer confidence leading to slower sales volume.
By no means is current inventory favoring buyers, we are still tight and there still is not enough options out there for buyers; an environment that favors sellers. But we must follow these trends and see how they react to the changing environment if we are to be ahead of the curve should fundamentals change here in our great city!