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.