Looking Forward To Manhattan Q1 2010 Report
A: Lets have some fun here and take some guesses as to what to expect when the Manhattan Q1-2010 report is released in about 4 weeks. One thing is for sure, the SALES aspect of the report will likely show a surge over the prior year; making for some interesting future headlines to come in the mass media. Lets discuss.
I've discussed the progressive improvement in bids this market experienced since trades in early 2009; and many on this forum took that in the field observation as 'hearsay' without any hard evidence from lagging quarterly reports. That is fine and understandable. While many quarterly reports did catch the slowdown in the pace of decline on a quarterly basis (Corcoran's report also showed a 1% qtr-to-qtr AVG PSFT price increase in deals, although a continued decline in Median prices), it was the Streeteasy.com Q4 Report that caught an improvement in price action from the prior Q3 report:
"Overall average and median prices, which include condo and co-op resales and new developments, have continued to decline from a year ago, about 7.8% and 10.0%, respectively. However, since last quarter, price gains were made in overall average and median prices, about 5.5% and 2.0%, respectively."I always discussed that we should ignore qtr-to-qtr moves and instead focus on the prior year period to account for seasonality. Since the discussion centered around the extreme fluctuations in the market both on the downside and on the mild stabilization/reflation since then, it is the short term market observations and performance that garnered such a strong response from UD readers. In short, this market overshot to the downside at the height of fear and reflated from the lows as markets in all asset classes surged and priced out systemic collapse.
It is my belief that the next 1-3 quarterly reports will show this improvement first discussed right here on UrbanDigs.com. Timing which report snags it is difficult. As of now, my data shows 1,039 contracts signed in the last 30 Days and the $2M and under market is seeing strong buy side interest. So the market certainly continues to chug along and that will feed the pipeline of closed deals going forward. I have pending sales at 4,532 right now.
Now, what I think will be interesting is how the media handles the closed SALES component of these quarterly market reports - because the upcoming Q1 report will be rightfully compared to the Q1-2009 numbers. I am on record for estimating approximately 2,400 - 2,600 closed sales for Q1-2010. 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:
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.
As future reports catch up on how this market behaved and improved over the last 6-8 months, the current market at that time of report release may change. So the crazy thing here is that being ahead of the curve with real time reports may present some discrepancies in the future if this market's sales pace and strength prove not sustainable; which I think will be the case.
The problem is clear: WE NEED REAL TIME DATA so we can see changes as they occur as best as we possibly can. The one problem that I will never be able to solve is the lag from contract signing to closing where the deal price will be kept private until captured by public record. Therefore, the best thing I can do is to provide reports here on where I see deals happening with no hard core evidence to back me up until months later!
Comments (9)
The graph already shows that the suggested "rebound" occurred in the fourth quarter of 2009.
Posted by Brad | March 3, 2010 3:02 PM
Brad - yes it does! As discussed here starting in MAY and JUNE of 2009 as the surge in sales volume started from the nothingness that happened in late 2008 and early 2009
In May:
http://www.urbandigs.com/2009/05/contracts_continuing_to_be_sig.html
In June:
http://www.urbandigs.com/2009/06/keeping_it_real_less_bearish.html
You will ALWAYS get my real time take on the markets here, without bias. But, as sales volume started to surge in mid 2009, the deals first started to take place closer to the lower levels in early 2009. The improvement was slow to start and began in lower price points. As time went on, bids slightly improved and sales volume maintained its pace after the surge - that was surprising, no real sustained slowdown in sales pace.
After 6-8 months of strong sales volume, here we are! And deals happening today are improved over this time last year. So, the chart shows this quite clearly! An overshoot to the downside on sales volume, and a surge that sustained itself for 3 quarters so far. I think future quarterly reports will ultimately show the improvement in bids I have been discussing - and as usual, readers will interpret that report as real time when the report is released, rather than a rear view mirror presenting what already happened in the past months
Posted by Noah | March 3, 2010 3:51 PM
would be interesting to see what it would look like if you include
- avg prices (dropped?)
- mortgage rate (dropped?)
- rental prices (dropped?)
- gov't incentives
showing just the number of sales is like showing a supply and demand curve with only one side.
if the price and cost of ownership dropped from last year, it's not surprising to see the number of deals go up. imho.
Posted by peistation | March 3, 2010 11:48 PM
peistation - yes it would...we are working on all this. The chart in the above post is simply CLOSED sales data that I collect from Miller Samuel's public site and then put in a xls file and chart it...the new analytics platform is being built by the experts with real time data feeds.
Getting rental prices might be tough, but adding in AVG PPSF or RATE TRENDS should not be an issue
Posted by Noah | March 4, 2010 7:45 AM
peisstation - one more thing that many need to understand..Some of this listing side of the data is VERY WRONG and ARTIFICIALLY INFLATED..for example, listed square footage. 70% of housing stock is co-op and they dont list square footage in offering plan so brokers and owners estimate it. So building a metric around data that is questionable at best, is kind of a waste of time and money and usefulness to what Im trying to do here.
In the first few months of this project, we clearly saw what types of data was reliable and consistent and high quality, and what wasn't..one of projects focus was to build a platform around the data that we deemed highest quality so only the most accurate and best analytics can be presented to you. Adding a PSF trendline against a chart like the one I have above is great, except it will be highly questionable in terms of quality. Sure it may show trends, but the data will be very poor.
Posted by Noah | March 4, 2010 8:28 AM
i imagine that in addition to "number of closed sales", another piece of high quality data is "closed sale price".
but that number really depends on the mix of apartments sold (whereas psf is more informative and less mix dependent, but not as high quality).
for example, if high priced apartments start dropping prices and start selling in large quantities, but low end apartments don't sell as much (even if the prices fell), then it will look like prices have gone up, even if the price of every single apartment has fallen.
or vice-versa. if prices go up, but there's an investor rush on low priced apartments, it will look like prices are falling.
gosh, i wish an accurate square footage were a good, reliable statistic reported with closed sales.
Posted by steve | March 4, 2010 6:03 PM
Great blog! Very informative.
Posted by private mortgages ontario | March 4, 2010 10:36 PM
It's pretty clear that we're past the trough of the 1st and 2nd quarters of 2009....A lot of buyers and sideliners are still in denial and missed their window....
Posted by Anon | March 5, 2010 7:25 AM
Real estate blogging encourages a culture and principle of RESPECTFUL debate. Great stuff as usual…. Thanks for this.
Posted by Ivy condominium | April 8, 2010 3:55 AM