Here Comes The Q1 2010 Report
A: In the next few days we will get the Manhattan Q1 report, reflecting the marketplace closings from January-March 2010. These closings were likely deals that were signed into contract 2-6 months prior; reflecting market conditions anywhere between October 2009 and January 2010. In order for the closing to be counted in the quarterly report, it must be captured by public record. Generally speaking, the lag for sale to be captured by public record ranges anywhere from a few days to a few weeks. However, there are occasions where it could take months for public record to eventually capture a prior closed sale. As always, use caution NOT to interpret the quarterly report as necessarily reflecting the market conditions at the time of report release.
The interesting thing about this upcoming quarterly report is that it will be compared to the same quarter one year prior which happened to be the report that defined the downturn. Therefore, expect significant year over year changes.
As discussed earlier in the month, "Looking Forward To Manhattan Q1 2010 Report":
"As you take a look at the chart comparing Quarterly Closed Sales Volume for Manhattan Co-ops and Condos, focus on the BLUE BAR that the upcoming report will be compared to and you will notice that it won't take much to easily beat total closings for Q1-2009 - the report that defined the severity of the downturn this market experienced.*Data Courtesy of MillerSamuel.com
I put my estimate for Q1-2010 in there as a shaded bar for easy reference. If the number comes out around the level I expect it to, the headline in mass media could read something like this ---> "MANHATTAN APARTMENT CLOSINGS SURGE 100% FROM PRIOR YEAR"...or such. So just be prepared for that."
So my expectation is around 2,400 - 2,600 sales for the first quarter of 2010; let's see how close I get.
My new UrbanDigs Analytics systems have become significantly more accurate in the last 3-4 weeks due to the implementation of a Listing Status Flow Algorithm to govern our entire database of real time information direct from the REBNY Broker Sharing Systems. It became necessary to do this to adjust for redundancies and other flaws embedded in the source data for unexplained reasons. In other words, simple 'duplicate' rules could not fully account for the double-counting of the same individual listings. As a result, all datapoints have been downsized and now more accurately reflect the state of the current marketplace. In addition, ACRIS real time feeds now control closing information and BROKER feeds were installed to confirm the status for listings with unexplained alternations of 2 or more status states. Quality of data has been top priority and I believe launch should still be on target for May 1st, 2010.
As of today, I have:
*ACTIVE INVENTORY ---> 7,604 units
*PENDING SALES ---> 2,855 units
*OFF MARKET INVENTORY ---> 8,692 units
The pipeline of sales yet to close remains strong and should carry through to at least Q2 of 2010, perhaps Q3 as well due to the lagging nature of Manhattan sales. In addition, I strongly believe time will ultimately show the progressive improvement in bids from the plunge in sales volume in early 2009 to the sustained rise in volume that started in the 2nd half of 2009.
What I am unsure of is which quarterly report will ultimately show the improvement in price action from the extreme trades at the height of fear in early 2009; but I am fairly confident that going forward from here, the rate of improvement from that extreme depressed point will slow. Keep in mind there were very few trades occurring in early 2009 as bids for property basically disappeared leaving sellers nervous and motivated to hit a low offer if one came in. If anything, the bid/ask spread for Manhattan property narrowed significantly over the course of 2009 and into 2010 from that low point one year earlier.
*UPDATE: I was just made aware a key system refresh was not complete when I quoted the updated numbers yesterday for this post. The flow algo that now governs our systems has been fully implemented as of this morning and I updated the new stats to eliminate the redundancies from broker status inconsistencies. I apologize for the initial confusion. Please consider these updates as BETA until launch.
Posted by Jim
Wed Mar 31st, 2010 01:59 PM
How is the inventory number determined?
On StreetEasy, the listings for our co-op show 11 apartments for sale -- but 3 of those have sold -- received post cards from brokers stating they have sold. They are showing up as #RES1 in the recorded sales. If StreetEasy, or anyone else, does not have accurate data -- then how can we trust the trend report? There are also apartments selling that have never been listed -- inside sales within the co-op -- two that I know of. How are those captured in the data? Again, they are showing up as #RES1. Thanks!
Posted by Faustus
Wed Mar 31st, 2010 02:07 PM
Noah- glad to see everything's going well with you and the site.
Question: given the recent turn in view away from utter bearishness, have you bought a property or taken another form of long position on Manhattan RE? If so, and if not by actually buying, how are you playing the market? Is there any other way to do it?
Posted by SteveF
Wed Mar 31st, 2010 03:06 PM
Noah,
That's my favorite chart in the whole world :) no really it is. A perfect visual. Easy to understand. Easy to see seasonality. Easy to see how the various economic conditions drive those sales peaks and troughs. Let's see where the numbers come in.
Posted by Noah
Wed Mar 31st, 2010 03:31 PM
Jim - yes I know, there are errors on SE. I cant speak for them on how they designed their widget BUT I can say they did a good job considering how bad the source data was. Users must understand it will never be 100% perfect, I dont think any real estate listing is although we all want it to be.
We found many reasons for errors after 9 months in development. The 3 data sources are: REBNY Rolex sharing system for listing status updates, ACRIS, and broker feeds. On top of rules to account for dupes and other flaws, a flow algo was implemented and now governs our entire database. ACRIS real time feed governs changes from CONTRACT SIGNED to CLOSED. For flaws, flow algo kicks in first and then the broker feed is kicks in to double check the status of any one listing. We found many variations where a listing that is in reality in ONE STATE, is alternating between 2-3 states. This is likely why SE will show some listings as both ACTIVE and IN CONTRACT; or ACTIVE and OFF MARKET at same time.
In your situation, the ACRIS would auto kick in and override the ROLEX feed status for the listings that CLOSED, where the broker either forget or didnt care to change status to CLOSED from wherever it was before. We see this alot. Many listings that are in reality CLOSED, the status remains at CONTRACT SIGNED or is changed to PERM OFF MARKET for whatever reason. Data reliability is the reason why it has taken so long to launch. It was tedious and neverending. Still we are fixing final flaws after all this time. I have been doing spot checks for 6 months, calling brokers, checking multiple systems and identifying these types of flaws - then we fix it. Right now, we are VERY confident in the data. If data before was 65-70% accurate, we are likely up to 90%-92% accurate now. We should get that to 92-93% after final flaws fixed and that is great to me. Used to be 3-4/10 listings had inconsistencies, now its switches between 0/10 and maybe 1/10 as I do checks. All methodology will be released.
Posted by Noah
Wed Mar 31st, 2010 03:35 PM
Faustus - No, but I did not because honestly I cannot afford to buy a 5-6 rm, 2BR (conv 3)/2BTH in the location I want.
For me, that is what I would need to extend the ownership rate long enough to warrant a purchase. My financial stability is partially stable at best in this real estate industry and as of now, that is my main source of income. I dont trade anymore, especially for past 9 months as I developed this new system to take UrbanDigs to next level.
I hope I can provide more transparency through great analytical tools to you guys and everyone else following this market, and add stability to my revenue stream so I can go out and buy a property to grow into. For now, I just cant afford it.
Posted by Noah
Wed Mar 31st, 2010 03:37 PM
SteveF - you should really enjoy the new site then. You will get to customize the data to follow the submarkets of your choice. The platform was designed with the idea that the Manhattan Residential real estate market is highly segmented and there really is NO 1 market, rather a combination of price points that make up many sub markets.
That is why data accuracy was TOP priority here. We didnt mess around. I just heard today May 1st might be 1-2 weeks too early for launch. ARGGGHHHH!!!!
At this point after all this work, I Hate waiting!
Posted by Marshall
Wed Mar 31st, 2010 04:05 PM
Noah are pending sales part of the active inventory number
and off market inventory what does that consist of ? and how quickly (realisitically) and how many of these can become active inventory in the next 6 or 12 months and what amount of inventory do you see coming on the market rate of replacement existing and new condo inventory ? Also Im particularly interested in the 2 bedroom market on the lower east side what do we see and what should we expect thank you
Posted by Jonathan J. Miller
Wed Mar 31st, 2010 04:33 PM
I hope your bet is more accurate than my March Madness picks. ;-)
Good luck with your May 1 launch!
Posted by Sebastian
Wed Mar 31st, 2010 05:10 PM
If you go to http://streeteasy.com/nyc/sales/manhattan/has_address:1 you'll see that there are (as of 3/31) 11,855 active and pending listings in Manhattan. 50 listings more than your numbers above.
http://streeteasy.com/nyc/sales/manhattan/status:open%7Chas_address:1 gives you only active listings at 8,786, which is 2.6% higher than your numbers.
A difference of 3% when trying to measure something as volatile and opaque as the NYC real estate market is trivial.
It's good to see that someone following their own path from scratch has ended up in the same place as we were, thus confirming the quality of both our data and yours.
Posted by Noah
Wed Mar 31st, 2010 05:12 PM
Marshal:
1. NO, Pending Sales are REMOVE from active inventory trends
2. OFF MARKET inventory consists of any listing that was changed from an ACTIVE state (which includes status of active, back on market, anxious, desperate, contract out, offer accepted, etc.) to a TEMP OFF MARKET or PERM OFF MARKET state. Many times it alternates between the two, which the flow algo handles to eliminate double counting. Sometimes it changes to ACTIVE intraday or for a day and then back to OFF MARKET, so we have rules in place to account for this and confirm before changing anything internally. I do not want to reveal the exact number of days we allow to go in regards to a brokers internal LAST UPDATE. For example, what if listing is 3 months off market, 9 months, a year, two years? At what point is it not considered OFF MARKET inventory? We did some research on that and set it up accordingly. Will disclose at launch.
3. Varies. Youll have to wait for that.
4. As far as 2BR market on LES, soon you will be able to see that in real time!
Posted by Noah
Wed Mar 31st, 2010 05:43 PM
Sebastian - Completely agree! Great to see! In the end, the hope is these efforts will compliment the innovative efforts and success of Streeteasy in making this marketplace more transparent!
Im on a mission to accomplish what I always wanted to, and offer a suite of data tools designed from the ground up to follow the market as a whole and submarkets in real time. I hope people find good use out of it.
Ill tell you this, I have a new found respect for how much work you guys put into the data to ensure accuracy. It was a long journey!
Posted by Malcolm Carter
Wed Mar 31st, 2010 06:18 PM
Noah, congratulations on the progress you're making. I know the broker quarterlies will parse the data, and I suspect that segmenting the data by price segment will demonstrate some not-so-subtle distinctions. I fully expect that May 1 will not demand a "Mayday" from someone with your expertise and heavy investment in what promises to be an essentially flawed system. Good luck!
Posted by Malcolm Carter
Wed Mar 31st, 2010 11:32 PM
Yikes! I mean UNflawed system, of course.
Posted by Noah
Thu Apr 1st, 2010 08:32 AM
Thanks Malcolm!! Im just curious to see what the data shows!
Posted by Eastvillboy
Thu Apr 1st, 2010 10:31 PM
Maybe some of the intelligent people here can answer this question:
WHY OWN A HOME WHEN PRICE APPRECIATION IS NOT FORECAST IN THE NEAR FUTURE?
Let's just say hypothetically you're going to take a 30 year Fixed and stay for the duration. Don't you pay for the House TWICE or more to buy it with the Interest (aka the Vig)?
People can go on and on about the Tax breaks and this and that, but Obama has already hinted at removing the Mortgage Interest Deduction. We all know this won't happen, but what if it ever did?
People say "renting is a waste of money" but isn't paying INTEREST on a massive mortgage loan also a waste of money???
Also, Renters have a HUGE leg-up in this unpredictable environment: ZERO (or LIMITED) LIABILITY
If the Boiler in the Co-Op I live in blows-up, it's the shareholders that are going to receive an assessment. If prices for Real Estate decline 20% more: what does the Renter care? If taxes on property go up, the Renter will most likely be unaffected. Of course, Landlords can inflate rents, but the last Stat I saw: Rents were up 1% from the prior Quarter.
The mania over the "Myth Of Home Ownership" was simply founded on Fast Money and prices that seemed they would never top out. Now that the future of prices is murky, I'll ask again:
WHY BOTHER OWNING A HOME???
Thanks for all intelligent input and a great blog Noah.
EVB
Posted by NYLuxuryBroker
Fri Apr 2nd, 2010 07:29 AM
Noah-
Total sales are coming in at 2384-you nailed it!
Keep up the great job:
http://money.cnn.com/2010/04/02/real_estate/Manhattan_market_prices/index.htm
Posted by Bloomberg
Fri Apr 2nd, 2010 08:18 AM
http://www.bloomberg.com/apps/news?pid=20601087&sid=aQraOQrodPxg&pos=5
Posted by Noah
Fri Apr 2nd, 2010 08:39 AM
AHA!!! Im not crazy! Thanks for links guys, will work on a follow up piece using the reports this morning
Posted by Sell Home Fast
Mon Apr 12th, 2010 01:48 AM
Professional real estate blog. Thanks for sharing this information with us.
Posted by Penny
Wed Apr 21st, 2010 10:33 PM
To Eastvillboy: I agree with your points about the over-hyped myth of benefits of ownership.
However, there still remains one clear benefit in my mind. What other investment can I make that allows me to keep $250,000 (single) to $500,000 (married) free from any capital gain tax?
This freebie will only increase in value as the tax rates get calibrated higher over the coming years.
I think most homeowners truly underestimate the cost of maintenance. Things like landscaping, roofing, snowblowing machines and pool cleaning. This raises the cost of ownership terribly and cuts into profits but no one seems to take it into account.
Still, I'm sitting on cash and scratching my head. Stocks? No, already ran up. Bonds? Pay next to nothing. That leaves....real estate, maybe at the right price.
Posted by coach handbags
Thu Aug 12th, 2010 10:04 PM
Question: given the recent turn in view away from utter bearishness, have you bought a property or taken another form of long position on Manhattan RE? If so, and if not by actually buying, how are you playing the market? Is there any other way to do it?