Inventory Down, Sales Pace Hovering
A: So, November will close out with the usual holiday slowdown as the past few days saw very low activity. It still appears that November is on pace to beat out October, a sign of solid action out there considering where we just came from. If your a buyer and ran into 'multiple bids' and 'contracts out' situations lately, your not alone. However, I would expect demand to stay somewhat muted for the next 4-6 weeks; opposite of what we have seen the past few months. For now, my eyes are on the seasonality of December where we usually see a surge in Off-Market trends.
Here is a chart showing you ACTIVE Inventory vs PENDING Sales for Manhattan since October 1st:
As the chart shows, inventory is down and the pace of sales is hovering at current levels after a nice move up - a strong sign considering the action we had the past few months. That increase in activity is building a nice pending sales pipeline that is more likely to get captured in the future Q1-2011 report, NOT the upcoming Q4-2010 report that is released Jan 2nd, 2011. The Q1-2011 report will reflect closings recorded from Jan-March.
I would expect a number of listings that have not sold and dont have a time pressure to sell, to be removed from the market as we get into mid December; usually to be brought back on the market around mid-January. So lets watch how that plays out. In the meantime, savvy buyers can try to utilize the usually slower month of December to try and nab a good property without interference from other motivated and qualified buyers.
Don't underestimate the psychology of many buyers out there. What I mean is, buyers tend to hate when they lose out on a great property to a higher bidder. However, when that happens it justifies the buyer's taste in property and their submitted offer; as well as the perceived liquidity for what appears to be a sought after product.
But when that same buyer finds a property on the market for 60+ days, that hasn't sold and has no other competing bids in, they tend to question why this property may not be gathering outside interest? In addition, they question their offer for what may be perceived as a less liquid, less desirable product. So, they want to get a great deal but they also want a product that is highly desired and where multiple bids are coming in right below theirs; justifying the level of their offer. This is a fantasy land situation that never happens in the field. It's always easier to conduct a one-on-one private negotiation where the seller risks losing the deal if you walk away. Getting that leverage should be welcome, so don't look down on it if you find yourself in that situation.
The contrarian in me loves to look at the slower times during the calendar year as opportunities to more effectively bid for desired property. And the upcoming 4-6 weeks is no different. I just hope the good stuff is not removed from the marketplace until after the new year!!