Showing You Why The Q3 Report Will Reveal Improvement
A: Hey guess what, the quarterly reports are lagging! For a list and explanation of the 7 main reasons why these reports are a view into the rear-view mirror, click the link. I want to show you why the Q3 report is the clear winner in regards to showing the improvement this market experienced. I also want to explain why these reports should NOT be used to interpret what may currently be going on with our marketplace upon release.
The two main reasons why the Q3-2010 report will be one to look forward to is:
1) Year-over-Year Comparison to Q3-2009 - It was the 3rd quarter report of 2009 that defined the downturn, a few months after the real trough in our market, as public record finally caught the sales that were signed into contract earlier last year. We are now heading into these defining reports, making y-o-y trends easier to beat.
2) Public Record Yet To Catch The Full Improvement - Due to the lagging nature of these reports, as time passes we will see how this market behaved for months that already passed. I can tell you that JAN-MARCH 2010 were very strong as tight inventory and strong demand caused some competition amongst buyers. The result was a sharp decline in days on market trends and listing discount measurements; as seen in the chart in my post, "Misinterpreting 'Bidding War' Statements From Brokers". With time, quarterly reports will gradual catch up with the progressive improvement right as we head into the two y-o-y reports that defined the downturn this market experienced.
The combination of these two forces will result in fairly positive reports, likely showing the first y-o-y price gains from the fear trades early in 2009. The Q3 report has the better chance of reflecting these yearly price gains based on when the data was captured.
Looking at the chart below, which shows you the Quarterly Average Sales Price Trends from 3 top Manhattan brokerages, we can visually see that Q2 and Q3 2009 reports were the weakest ones reflecting the adjustment we had.
I think time is on the reports side as ACRIS slowly catches up with the closed deals signed into contract many months ago; which are later reflected in these reports. My advice is to interpret the reports at your own risk when they are released, as its highly likely there will be a disconnect between conditions at the time of the release and what the report tells us about the state of the marketplace.
Posted by Fred Peters
Wed May 26th, 2010 11:49 AM
This is exactly on target Noah and thanks for reiterating it. The news on the market always lags 60 to 90 days behind actual conditions on the ground.
Posted by Noah
Wed May 26th, 2010 12:43 PM
Love seeing you visit the site and commenting Frederick! Your very welcome..I know your a data guy and all about transparency, so I know you will love the analytics platform Ive spent just under a year working on. Ive come to realize why there was hesitation to find the gold in the data (just a huge task to do what needed to get done to scrub the data properly), but hopefully with time this industry works to enhance accuracy right at the source: the brokers.
Im in EU for the first 2 weeks in June, as I have to get away from all this stuff or I'll go insane, but when I get back Ill be in touch so you can be one of the beta testers prior to launch.
Thx again Frederick!
Posted by OT
Wed May 26th, 2010 08:11 PM
Noah - what impact, if any do you think these reports will have on the psychology of buyers? Not the hard-core junkies that frequent your site or other real estate blogs, but the general population of buyers? I remember seeing a 5% bump in what we expected to get for our property due to a serendipitously timed NY Times article in early 2007.
If you don't get to respond or post again before you travel, bon voyage, and enjoy Europe - you are smart to get in and out before it gets too hot and crowded!
Posted by Noah
Wed May 26th, 2010 09:56 PM
Hey OT..Well, the way I think about that is that at any given time, a solid percentage of the buyer pool out there listen to headlines..especially those about Manhattan real estate and state of the market. And those headlines in NY Times and Bloomberg and WSJ.com are around those quarterly reports.
Now, the pool changes with time. Some buy, some dont, new ones come in, etc..but its the same TYPE of buyer that is impacted by these reports. Then there is a % of the buyer pool that has been looking for a while, reads blog like urbandigs, and is less swayed by these quarterly reports and any headline effect, because they understand WHY the reports are lagging and not really predictive about where the market is now or may be heading. You call these the hard core junkies.
So, to answer your question, YES, I honestly think a good portion of buyers out there are swayed by these headlines and when they read them, especially the positive ones, they are more confident in submitting an aggressive offer than if they were not so positive. All about confidence. Since the market is made up of such a deep and varying pool of buyers from literally all professions and all across the globe, you never know when one will bid that extra 5% to secure a property right after a headline confirms what they may have been thinking prior about the strength, or weakness, of this marketplace.
Thanks for the well wishes!
Posted by Mbt
Wed Jun 2nd, 2010 10:34 PM
I think another reason fees are not being paid and free months not offered is that prices have come down. Apartments are moving but part of the reason is that prices came down to a point at which they will move.
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