Manhattan RE Needs More Inventory!!
A: As discussed 3 weeks ago, the Manhattan residential real estate market saw a slowdown across all metrics: inventory is down, sales pace is down, pace of listings taken off market is down, and pace of listings coming on to market is down. Clear signs of a seasonally slow summer. Typically the market ticks up again after Labor Day, but even that takes a few weeks to notice. Given the sharpness of this slowdown, its fairly easy to predict that activity has no where to go but up from levels seen here. As of today, I see only 639 contracts signed in the last 30 days; to put that into perspective, that is down from around 1,650 contracts signed in the month of April. There is no better measure of 'current demand' out there that I can think of than the pace of listings going from Active to In Contract.
Here is one more sneak peak at a chart that measures the monthly pace of listings hitting the ACTIVE marketplace from an otherwise off-market state; notice the slowdown in the last 4 months from over 2,500 listings coming to market to around 1,750 listings in July (updated Sept. 15th, 7:39pm):
But what about August? We need more real time data!! No problem! We designed our system to also show you the daily changes the Manhattan markets are seeing, as brokers update their listings from Active to Off-Market to Contract Signed and to Sold & Closed. In the above chart, I put a magnifying glass over August that leads to the 30-Day Broker Update box that is an integral part of our new platform. It tells you changes in the very short term. Notice that when we get more real time and see how many listings are coming to market in the past 30 days, it's down to 1,149! So, when the August bar gets added to this chart, it will likely be around the 1,200 mark - falling further from levels in July.
In short, Active inventory is declining as supply is simply not coming to market right now. Very seasonal. For Manhattan, I currently show Active Inventory at 7,013; down another 8% in the last 3 months. Expect this pace to rise again as we get past Labor Day and into October & November. In the meantime, motivated buyers will just have to deal with limited options for a few more months.
Posted by nyc_buyer
Mon Aug 23rd, 2010 01:33 PM
Can you explain the broker updates box in more detail? What is this from? Does Streeteasy power it like the tool on your site now?
Posted by Noah
Mon Aug 23rd, 2010 02:05 PM
No, all our data will come from 2 sources: ROLEX broker sharing system & ACRIS daily closed sales feed
We will no longer work with Streeteasy data. In the future, who knows. I always hope to work with them in some capacity if it means better tools for you guys in the end.
That Broker Update Box basically shows you daily changes, and 1wk/1mth changes, direct from the broker sharing system. So, when a broker uses their internal system to add/edit their exclusive listing from one state to another, it gets processed and shared to all brokers. That box has rules and flow algos in to install a governance to scrub out bad/redundant data. This ensures that no one listing is double counted, and can only be in 1 state at 1 given time. We had to do this after digging into the source data and discovering flaws for months. Its an easy way to track the real time daily changes in the market as brokers change the statuses of their listings. In general, our entire site was designed to accurately track the movement of REBNY broker listings from one state to another. We just break it down in different tables, charts, etc., and put you in control over dissecting it.
More info on methodology will have to wait until launch, but we will put it all out there.
Posted by Thisson
Mon Aug 23rd, 2010 05:36 PM
"its fairly easy to predict that activity has no where to go but up from levels seen here"
This sounds suspiciously like what people are saying about how interest rates can only go up, when they keep going down...
Posted by Noah
Mon Aug 23rd, 2010 05:55 PM
not quite the same, but there is definitely a bond bubble camp growing.
Every year sees a general 'notch up' in activity after labor day. At least for since Ive been in for past 6 years. AUG new actives will be very low..it should be easy to beat as we head into OCT-NOV, and especially after the new year.
Posted by rootless cosmopolitan
Tue Aug 24th, 2010 10:53 AM
Noah,
When you say "activity has no where to go but up" from here are you talking about the overall activity, or the numbers of listings, or the sales activity?
Is there any way to say whether the slow down is purely seasonal, or whether there is more to it?
What will happen with the market when the "recovery"-meme falls fully apart because people realize that the recession is back? I think it's very likely that it is. I also hypothesize that the partial rebound of the New York real estate market in 2009 was based on psychology to a large degree, on the believe that the worst was over and the economy was recovering. However, it's possible that the 2008 downturn was just the first recessionary phase of a longer depression and that the current economic downturn will be more prolonged and painful than the initial 2008 downturn, which was counteracted by unprecedented stimulus by the government in 2009. This could do heavy damage to the psychology in the market.
I read the excuses by some commenters to the blog posts by you and your fellows here, why prices in Manhattan would stay at around current levels and wouldn't come down much more from here. Manhattan was special, foreign buyers are keeping prices up etc. Then I wonder what are the excuses for the other boroughs of New York? For instance, sales prices in the Bronx are still more than 40% higher than they were 5 years ago, according to Trulia. As for Manhattan, the ratio of median home price to median household income is still at 11 to 13 in Manhattan. I very much doubt this will be sustainable. It probably would have to come down 30 to 50% to get back to historically normal levels. The numbers tell me that prices are still largely inflated in the overall New York market. And the economic environment to sustain such inflated prices isn't there. In summary, I'm optimistic regarding the New York real estate market.
Noah, you keep up the fine work on your tools. I look forward to using them once they will be available.
Posted by Noah
Tue Aug 24th, 2010 11:32 AM
Hey root...I was referring to the pace of SIGNED DEALS + NEW ACTIVES from levels right now.
Right now I have - 655 contracts signed in last 30 days and 1,152 new actives in last 30 days..
I would expect both of these figures to rise noticeably over the course of the next 2-3 months. To me its seasonal. If the active-pending ratio started to rise, I would think there was more to it. We are working on more tools that measure activity relative to one another so that we can interpret the moves more accurately..Active to Pending Ratio is one of these. The fact that it is staying low tells me its seasonal.
If as we go on, new actives rise and demand stays low, then that ratio will bump up and may signal something else at play.
The reflation in 2009 was more a function of the extreme distress that overshot to the downside and was not sustainable. As we reflated, the market equalized itself to where it should be, and where it should NOT be was trading in an Armageddon scenario like it was in early 2009. I do think this process will be longer and last many years, and in that time, we will see seasonality and minor bumps up and down with general psychology and economics/equity markets. But I dont think we are fully out of the woods yet
Posted by rootless cosmopolitan
Tue Aug 24th, 2010 12:24 PM
Noah, thanks. In the light of today's existing home sales release, and the country-wide collapse in sales for July it reported, I suspect there is a little bit more going on than a purely seasonal summer drop. We will see.
Posted by Noah
Tue Aug 24th, 2010 12:46 PM
well I do think the months leading up to April were overextended..especially for us..When we usually see 1000-1200 signed contracts a month, we saw 1400-1650 signed contracts..so I think it overshot up, then overshot down and will soon stabilize a bit higher from these levels..Manhattan that is..but, worth watching. If it doesn't, something aint right and yes, this drop was a big signal!
Posted by Fred
Wed Aug 25th, 2010 10:14 AM
one thought I haven't given enough to is the impact of the expiring tax cuts. if they do expire or if the administration gets its way, it's going to reduce the overall capital available significantly. conversely, if they are extended, that liquidity could find its way into the market. just a thought.
Posted by Pocket Listings
Thu Aug 26th, 2010 11:43 AM
Noah,
Just curious. I'm out here in San Francisco, but have seen on the news about the new tower by Pelli Clarke Pelli going up "900 feet" from the Empire State building and it will be taller. Is that building going to be residential, office, or mixed? And if it just got approval, what are the chances of it actually becoming a reality?
Posted by winnie
Sat Aug 28th, 2010 10:27 PM
Nice graphs Noah! Looking forward to the launch!!
Posted by John UWS
Tue Aug 31st, 2010 12:04 AM
Poor Fred, I come back to NYC and after all this time, Fred is still a renter....some things never change....
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