A: As June wraps up, let me show you where the real time Manhattan stats are settling in. Also, lets take a quick look at how Q2 might shape up when the firms release their reports in a few more days.
As of now, the 30-day pace of new deals signed in the Manhattan marketplace is the mid 900s. The 7-day pace (low 200s) is starting to show a very slight 'tick down' that usually happens around this time of year - but I must admit I expected this market to slow down way more than it has so far (updated 8:57am).
Since this ticker counts real time changes as brokers update the status of their exclusive listings in RLS, first the 7-day # will show the signal and then if the trend is sustained, the 30-day # will follow.
Here is a quick look at Manhattan Monthly Contracts Signed since January 2009:
As you can see on the chart, last June we registered 866 new deals that were signed into contract. So far this June the 30-day pace is in the low 900s; but keep in mind that before the June 2011 bar gets published it will go through one more data cleansing algorithm to remove duplicates/mis-counted units. This is all for the sake of higher accuracy.
I especially like that chart because it really shows the destruction that Manhattan saw in terms of deal volume in early 2009, and the reflation in new deal volume over the past 2+ years. It also shows seasonality - its always best to measure a month's production to the same period one year prior. Month to month trends are worth tracking too, but will be exposed to seasonal noise.
Q2 - 2011 PREVIEW
Here is a quick chart showing you Pending Sales vs Active Inventory trends for Manhattan over the past 1 quarter:
The major metrics saw the following changes over the last 90 days:
Pending Sales ---> +15%
Active Inventory ---> Flat, + 0.4%
Off-Market Trends --> Flat, +1.9%
Even with inventory levels flat and less product coming onto the Active Marketplace, we saw the pace of pending sales rise 15% - signs of a strengthening market over that period of time. Our data shows that Manhattan's higher end really took off during the past quarter.
Here is a breakdown of Pending Sales 1QTR % Changes by Price Point:
Pending Sales <$1M market --> +8.9%
Pending Sales $1M-$2M market --> +15.1%
Pending Sales $2M-$5M market --> +27.8%
Pending Sales $5M+ market --> +50%
This pending sales price point breakdown really explains what brokers and consumers have been talking about lately - we will work to develop more real time data tables that show % changes like this in the near future.
We still show the pace of actual closings down from Q1 - so I think we will have to wait for Q3's report to really show any price action moves from more higher end deals finally closing. Since our median sales charts are set to a 90-day lag, I'll hold off any comments on price action as it would be an incomplete picture of what really is going on in today's marketplace. If your concerned about price action because your a motivated buyer or seller, get used to focusing on individual building activity rather than submarket or market median/avg price trends. In essence, every Manhattan building is its own little unique marketplace. If you must use something to get a relative idea of where we are now and where we came from, use the Streeteasy.com Condo Index - also set to a lag to account for delays in sales filings. Its better to wait for the full data than to analyze an incomplete month of sales.
A: Just a quick check on the real-time Manhattan ticker. Remember that this ticker picks up on relevant status updates for all REBNY members' exclusive listings (the RLS). I would say this represents between 90%-93% of the Manhattan marketplace; not counting FSBOs and non-REBNY firms. The NYTimes shows 51 listings under the "For Sale By Owner" category at the time I published this article. That amounts to less than 1% of the Manhattan Total Inventory (7,794) displayed here on UD.com. In other words this data source, the RLS, does indeed represent the Manhattan marketplace! As brokers update their exclusive listings we track the daily notable changes. The ticker updates every few hours and is as real time as we can get on what is happening in the marketplace right now.
A snapshot of the ticker at 5:45pm today:
For newbies, let me briefly explain what this ticker is telling us.
Active: 2 listings came onto the market today
Contract Signed: so far today, 0 new contracts were signed
Off-Market: 1 listing was taken off the market today
**aprox 3-4 updates remain in the day
Active: 46 listings came onto the market yesterday
Contract Signed: 25 new contracts were signed yesterday
Off-Market: 20 listings were taken off the market yesterday
Active: 417 listings came onto the market over the past 7 days
Contract Signed: 226 new contracts were signed in the past 7 days
Off-Market: 154 listings were taken off the market in the past 7 days
Active: 1,450 listings came onto the market over the past 30 days
Contract Signed: 991 new contracts were signed in the past 30 days
Off-Market: 560 listings were taken off the market in the past 30 days
I prefer to focus on the 'LAST 30-DAYS" column only because its better to identify market changes over at least a 4 week period; one week is not a trend make!
All it takes is a minute to glance at these numbers and over time you will know which way the market is ticking and where we came from. For example, back in January that 30-day Contracts Signed # was in the mid 600s. Over the course of February-April we quickly ticked up to the 900s and 1,000 levels signaling a strengthening marketplace. If there were to be a new market surge or slowdown, it would show in this ticker first. For a historical perspective of these monthly total changes, please click on the Broker Updates YoY tab in the Charts section (subscription required).
A: A quick check on Manhattan sales volume, as measured by daily ACRIS sales filings. Please remember that this chart is set to a 90-day lag because the sales volume line chart is based on the actual sale date, not the filing date with the city register.
Please don't forget the 90-day lag we set our ACRIS Sales line charts to to adapt to the lag between ACRIS filings and actual sale date. Everyday the city register (ACRIS) files new sales and UrbanDigs processes them and makes daily sales prices available to subscribers. Those sales actually took place weeks if not months ago. The best way to explain the challenge in properly displaying sales volume here on UD is in the following way:
Right now, the month of May probably is somewhere between 60%-70% complete in terms of actual sales that closed in May and what the city registered already filed. Unfiled sales simply have to wait and there is not much we can do about it. In another few weeks, the month of May will be closer to 80%-90% complete. By August, I would say most of the sales that actually closed in May are now filed, publicly available and measured here on UrbanDigs.Therefore, if I publish a bar chart or a line chart on May's sales volume today, it would be an incomplete picture that would require future revisions as un-filed sales ultimately filter through. Rather than do that, we set the sales volume charts to a lag.
With that said, here is the latest view on Manhattan PENDING SALES vs ACTUAL SALES PACE:
In terms of volume, Q2 is still waiting to follow the lead of our Pending Sales trend. The time shift is clear in the chart because generally speaking there is a 2-4 month lag between contract signed date (when it gets counted as a 'Pending' Sale) and the actual sale date. And then we have to wait for the city register to file it.
Data from UD shows that there are plenty of high end deals waiting to close, so its very possible the summer will reveal the action in the higher end segment of the market that has been so hot the past 4-6 months. When the report does come out either in Q2 (July 1st) or Q3 (Oct 1st), it will be reflecting past market action - always keep that in mind. From what I see now, the market is still quite active. Once I see the 30-day pace of new deals signed sustainably fall below the 850 level, (read this article on how I interpret the UD tools), I'll know the market might be cooling a bit as we enter the summer. Time will tell!
A: This is exactly why I love real time accurate data tools for the Manhattan markets. Josh Barbanel is out with his latest piece on the Manhattan housing market and UrbanDigs tools are quantifying what is going on in the field in real time. That is what its all about. In short, Manhattan's high end market is outperforming the lower end and Tribeca in general is seeing a spurt in activity for deals over $5,000,000.
The WSJ.com reports, "Apartments in Manhattan on Split Paths":
Most of the Manhattan apartment sales market stumbled in the second quarter although there were signs of strength for expensive luxury units, city records show. Brokers say the sales of lower-priced apartments remain particularly sluggish. "Except for the upper end, the tenor of the overall market is not as positive as it was a couple of months ago," says Pamela Liebman, the president of Corcoran Group.Let me show you how the UrbanDigs platform displays these forward looking signals to you.
Also, the data show how the Manhattan market, with its concentration of wealth, high-paying jobs in finance and affluent foreign buyers, remains much stronger than the faltering housing market across the country and even in the other boroughs.
At the upper end, buyers are rushing to do deals. UrbanDigs.com, which tracks sales in contract, says the number of pending sales that are in contract but haven't yet closed is running 38% ahead of a year earlier for apartments selling for more than $5 million, far ahead of lower-priced apartments.
Ms. Liebman says that in one two-day period last week, buyers working with brokers at a single Corcoran office signed contracts to buy two houses, a condo, and a downtown loft, each listed for more than $10 million. But the pace of these sales--including a triplex loft on Prince Street that went for $25 million, and a three-bedroom apartment at 15 Central Park West that sold for $24.5 million--have been increasing, creating a sense of excitement in the market.
First, we are tracking Pending Sales by price point; i.e, the pace of new deals entering contract all over Manhattan based on the last ask of the property's listing. Therefore, we can track this forward looking indicator of demand by price point to see how the high end markets are performing relative to the lower end markets.
Below is a chart comparing Manhattan Pending Sales for the Sub $1M and the $5M+ market; notice how the $5M+ market is up 49.5% in the last 12 months while the lower end market is down 5.7% in the same period:
Although the lower end takes up a much larger percentage of total pending sales, the percentage change is what I am using to interpret the trend of each price point. This way I am able to tell which segment of the marketplace is seeing the most activity.
Now, lets get more granular. The article references a triplex loft on Prince Street in Soho, but from what I am hearing its the Tribeca market that is really on fire. So, I go to UrbanDigs.com CHARTS --> SUBMARKET Trends Tab --> and I pull up a chart that will show me:
PENDING SALES IN BOTH TRIBECA & SOHO/NOHO/W VILLAGE OVER $5,000,000
The line chart above really tells the full story, but to summarize it briefly for you I can confirm that over the past 12 months:
a) Tribeca $5M+ pending sales is UP 243% and stands at 24 units
b) Soho/Noho/W Village $5M+ pending sales is down 54% and stands at 5 units
Keep in mind that the UrbanDigs measure of pending sales excludes all listings that have been in contract longer than 180 days without an associated ACRIS closing. Also, our systems were engineered so that when a listing has been filed as sold & closed, we will remove it from our pending sales measure whether or not the agent updated the listing via RLS. This was all done to enhance the accuracy of our charts.
Notice how the "Soho/Noho/W Vill" submarket only has 5 listings counted in the $5M+ measure of pending sales. This is why we grouped together some smaller known neighborhoods in Manhattan, to make up a single 'submarket' for tracking purposes. When you get too granular with real-time data, sometimes the sample size of the group (or neighborhood) contains little to no data to produce a worthwhile chart. Imagine if we only tracked West Village $5M+ trends? The sample size of the chart would be so low that the trend would be impossible to really track. Think about it, if the trend went from 1 to 3, the % change would +300% and one might mis-interpret that segment of the Manhattan market to be on fire. In reality, that's not really the case.
As it stands now, there are plenty of high end deals in contract awaiting closing. This leads to me to believe that the Q2 and Q3 report might see some positive median/avg price action once these higher end deals are filed and counted in the soon to be published reports of the larger firms. Time will tell! In the meantime, I'll continue to track real time inventory shifts here at UrbanDigs.com.
A: I hope this post makes it out to most of the brokers out there with a presence in the Manhattan sales market. Interpreting real time trends is the hardest part of launching a platform like this. Nobody expects anyone to become a market statistician overnight and a users first experience with new tools are usually confusing and frustrating. Just like with any new service, with time, understanding the signals these tools are engineered to tell you will become more natural. As I chat with colleagues and subscribers, I consistently here how they don't really pay attention to 'Off-Market' trends because they don't quite understand what it was telling us about the current markets. This post hopes to explain what the off market charts on urbandigs.com are telling us.
First, the methodology of UrbanDigs Off-Market Inventory:
A listing is actively counted as "Off-Market" if it meets the following criteria:
1) Changes from an ACTIVE listing state to an OFF-MARKET listing state. Generally this occurs as the listing agent enters a broker status update of TOTM (temp off market) of POTM (perm off market) through the ROLEX sharing process.
2) Remains in an OFF-MARKET listing state for up to 270 days. Once a listing has been off-market longer than 270 days, it is no longer counted in the UrbanDigs Off-Market trends. **We placed this setting at 270 days because we did not want the measure to be too sensitive to real time changes - instead, we wanted to try to filter out seasonality so that true market shifts could be more easily interpreted.
And then the usual UD data cleansing process that removes duplicates, stale listings and other integrity issues that can infect accuracy. So thats it.
Basically, off-market trends are telling us the behavior of sellers! Just like pending sales tells us the pace of buy side demand (behaviors of buyers), off-market trends tell us a bit of the sell-side story. Are sellers failing to get their property into contract and instead choosing to REMOVE THEIR LISTING from the active marketplace?
Most agents keep it simple and only choose to track both supply and demand trends. But off-market trends are the missing piece. In the real world, Active Inventory can and does fall due to Off-Market trends rising; makes sense right, if 1000s of listings all of a sudden are removed from the market then Active Inventory should be pressured to the downside? But if you didn't track off-market inventory, you might mis-interpret the fall in supply as a sign of strengthening demand. So, tracking off-market trends is as worthwhile a trend to follow as any because:
a) in times of seasonal slowdowns, sellers will choose to REMOVE their listing from the market and we will see Off-Market trends rise
b) in times of strength and seasonal upticks, sellers either find a buyer and go to contract OR keep their listing on the market while activity is hot and we will see Off-Market trends fall
c) in times of serious market stress, we will see sellers quickly take property off the market and Off-Market trends will surge - this happened in late 2008 and early 2009. It's almost as if off-market trends are like the vix of Manhattan real estate, rising fast in times of fear and falling low in times of complacency.
Think about it, the seller and the hired selling agent have way more information about the success of the current pricing strategy than anyone else. They know if action is high or not and they know at what levels bids are coming in. It would be wise to use that information to assess current marketing strategies. The rest of the marketplace (the buyers and their buying agents) are left to do their own diligence. If a listing is getting tons of calls and OH traffic, it would be silly for a seller to take the listing off the market.
Selling real estate in Manhattan is a numbers game! Get the most traffic you can into the property, and you raise the potential for both an offer to come in and that offer to be as close to ask as possible; maximum exposure = maximum profit potential.
If the seller gets no action and is unwilling to adjust their price, the next move is probably going to be to take it off the market and wait for another time to re-list.
Take a look at two UD charts that measure Off-Market trends. First, the monthly bar chart showing you the pace of listings removed from the marketplace:
I love this chart because it so clearly shows that when the Manhattan market was at its highest stress levels, the pace of listings being REMOVED from the active marketplace surged (the arrows in the chart point this out). The purple/blue bars represent the first 5 months of 2011; notice how the monthly pace of inventory being taken off the market is down significantly. This tells me that sellers are either going to contract or keeping property active on the market - a sign of strength.
Now look at this Off-Market line chart for the past 3 years:
In the beginning of the chart, you can see the surge in off-market trends as the Manhattan market started to shift as a result of the credit crisis. Levels remained elevated until about August 2009, where the measure started to fall - it was at that point that the Manhattan market was starting its reflation. The blip up in late 2009 was seasonal because you can see a quick reversal in early 2010 - sellers took property off market in December, likely for holidays, and put it right back on the market in January/February 2010. Since then, its been a progressive decline in off-market trends to present day, signaling a strengthening market.
Give these tools time! I will continue to put blog posts up on how I interpret these charts, and if you continue to pay attention and use the tools for your buyers and sellers, you'll start to get real good at interpreting the signals!
A: My friend and colleague Ron Gitter published a great Q&A on the Manhattan housing market that got published on Huffingtonpost.com. I just wanted to share it with UD readers as it covers the current state of the Manhattan market, how we have compared to prior years, where we are today from the bottom in early 2009, the issue with lagging sales data, and a brief touch on the fed engineered reflation trade that has powered sentiment and high yielding asset classes for the past 2+ years. Thanks to Ron for working hard on a great Q&A session.
Click Here for Full Interview
RG: Has Manhattan hit bottom?There is much more in the article!
NR: I think the Manhattan market actually bottomed back in early to mid 2009, when fear was highest and deals that did take place reflected the steepest discounts from peak levels. Since then, it has been a progressive improvement starting with the lower end. The data shows that the high end really started to get hot in late 2010 and continued into early 2011.
RG: Can you reach any conclusions on how much of a decline in apartment values has occurred in Manhattan "post Lehman," that is, since September 2008?
NR: Well, despite the limitations to evaluating "median" pricing and "average" pricing data, both of which have flaws, the decrease in residential real estate value in Manhattan since the crash looks something like this:
Properties under $1,000,000: currently down 7-10% (down 15-20% at the bottom)
Properties up to $2,000,000: currently down 9-12% (down 18-25% at the bottom)
Properties up to $5,000,000: currently down 12-15% (down 20-30% at the bottom)
Properties above $5,000,000: currently down 15-20% (down 25-35% at the bottom)
RG: What are the hottest areas of Manhattan in terms of sales this year?
NR: In terms of pending sales this year, Gramercy/Flatiron, Upper West Side and Tribeca, in that order.
RG: What were the average number of contracts signed per month in 2011? How does that compare to 2010 and previous years?
NR: To be consistent, let's compare the average number of new contracts signed for the first five months of each year since 2008:
2011 -- 899 new contracts signed per month;
2010 -- 957 new contracts signed per month;
2009 -- (post-Lehman) 583 new contracts signed per month;
2008 -- (pre-Lehman) 1134 new contracts signed per month.
A: Just wanted to do a little chart add-on to this Sunday's featured NY Times story on Hamilton Heights. This post looks at both Pending Sales and Active Inventory trends for Hamilton Heights since January 2008.
From NYTimes.com, "Hamilton Heights: Awaiting A Bounce":
CALL it the Columbia effect. The university is breaking ground on a satellite campus in Manhattanville, the once-industrial area north of 125th Street on the Far West Side, giving Hamilton Heights, the neighborhood next door, an extended turn in the limelight.There is more in the article. Now lets take a look at how this section of Manhattan has been performing for the past 3+ years. Our system expands a bit and includes parts of Central Harlem in this submarket.
As the wrecking ball claims more and more of Manhattanville's motley collection of warehouses and garages, Hamilton Heights, largely unknown to those who have never cracked the 100s on the No. 1 train, is preparing for an influx of teachers, students and support workers. It is also anticipating the higher real estate prices that usually come with proximity to an Ivy League institution. What is missing is new construction -- the exception being a six-story midblock condo on West 135th Street, near Broadway, that was completed in 2002.
Mr. El sees housing developers following close behind the opening of the new campus. He said he had been talking to a "hotelier who will remain nameless" about buying the site of an old theater at Amsterdam Avenue and 149th Street to build a condo.
"He said, 'How much do you think you can sell condos for up here?' and I said, 'Well, I've sold condos for $1 million,' " Mr. El said.
When the new Columbia campus is finished in 2050, Manhattanville will have a striking new look. Glass towers housing the business school, labs and classrooms will replace workaday brick structures, meatpacking warehouses and even a Studebaker plant. Sidewalks will be broadened and planted with trees.
The first phase, including the business school and a science center designed by Mr. Piano, is to be completed by 2015. Columbia has promised to put stores on the ground levels of some of the buildings. Many hope the university's arrival inspires entrepreneurs to open more restaurants along Broadway, the area's main retail strip.
From UrbanDigs.com Charts > Neighborhood section:
My interpretation of this chart would be that this area of Manhattan had its real reflation between mid 2009 and mid 2010. While early 2011 has been ok, the 1yr trend is down 31%. I can see that at the peak of the 2010 active season, this submarket had a total of 83 pending sales. Today the measure is at 58. I would say over the last 12 months that Hamilton Heights has been under-performing the broader market.
A: Long time readers of UD know how long we spent scrubbing the RLS data to build the real time tracking platform you see here today. I now progress was slow, but when it comes to engineering out data integrity issues embedded in 30,000,000+ broker status updates over 6 years, you can imagine how daunting a task it was. Make no mistake about it, the reason we spent 14 months data mining (mid 2009 to late 2010, site launched in October) was because we knew that the reports the brokers and consumers use to track the marketplace were 100% dependent on the quality of the listings data. The UD 'data cleansing process' is the secret behind all the tools available to subscribers and chart accuracy is our ongoing primary mission. Afterall, the reports are only as good as the data behind the scenes.
The Wall Street Journal discusses how "Online Real-Estate Listings Can Fall Short" today and states:
As home buyers cautiously re-enter the market, they're arming themselves with information found online far more than what existed pre-housing crash. A record nine out of 10 house hunters searched online last year, according to the National Association of Realtors.Granted this article was written about MLS's across the country, it still applies to the way Manhattan listings are shared.
But with this great migration online has come a new set of obstacles, including errors, out-of-date information and properties that are listed on the Web but aren't actually for sale. The most common problems are simply errors...
For example, some real-estate agents keep listings on their personal websites long after they've sold; when home buyers contact the agent inquiring about the property, they're instead pitched new properties that might not meet their criteria, says Leonard Baron, principal of real-estate consulting firm LPB Services.
Such lagging information is more common with smaller firms' websites and could be a function of real-estate agents simply forgetting to update those listings, says a spokesman for the National Association of Realtors.
Either way, for buyers, it's a waste of time.
We should always be reminded that when it comes to processing 1000s of listing updates a day from 100s of different agencies, errors occur! The goal should be to consistently stay on top of evolving new issues that pop up with time. Trust me, the firms and the brokers are aware of it and I always speak out to the industry to UPDATE YOUR LISTINGS!! Its for the better of everyone that data is up to date and accurate! Deep down, I believe that all the major firms care way more than many think about data quality.
Without divulging too much, I can tell you a few integrity issues that have affected the Manhattan listings data:
1) Errors in the sharing process
2) Internal system triggers / Redundancy
3) Stale/Obsolete Listings
4) Violation of natural flow of listing process / ACRIS as verify point
Let me explain.
1. Errors in Sharing Process
To join the Rebny Listing Service (RLS) you must be a Broker A and choose one of the vendors that handles data sharing. Your choices are Realplus, OLR, BrokersNYC, and RealtyMX. Most firms use either Realplus or OLR. Therefore, all data and status updates from these vendor clients (the brokerage firms) are sent to a processing mechanism that takes in the update and then delivers it back out to all REBNY member firms. This is how an agent's listing at say Halstead is eventually shared by a broker at another firm.
Sometimes there are errors in this vendor sharing process. Here is an example of one individual listing exposed to this integrity issue at 505 West 47th, Unit 4EN:
Imagine how a reporting platform would deal with such issues? Due to this error alone, this listing can and likely is counted dozens of times as a new status change is processed. Even the price and the maintenance are constantly switching. There are varieties of this kind of problem and all had to be dealt with individually. Its not as simple as removing duplicates! If you want accurate charts, you need to adapt to the poisons that are doing more damage than good to the measured data.
2. Internal System Triggers
Our sharing system has internal triggers when a listing expires that can affect the status of that listing. This will result in some listings switching to an Off-Market state, when in reality the listing is still either ACTIVE or IN CONTRACT. Unless this is properly engineered, a listing can be placed in the wrong category and measured incorrectly in the data reports.
3. Stale/Obsolete Listings
A major issue. As I write this post I see that OLR shows Total Manhattan Inventory at 10,800. Our systems show Manhattan Active Inventory at 7,824. That means that OLR is 25% higher than UrbanDigs' measure of Manhattan supply.
I would guess the main reason lies in how the settings to measure what is counted as an 'Active Unit of Inventory' are tweaked. In the UrbanDigs platform, every listing state has rules that define when a listing should NOT be counted due to a lack of status updates by the listing agent.
I don't want to give away our proprietary settings, but I assure you the proper research was done in order to figure out the best settings for each listing state (i.e., active inventory, pending sales, and off-market inventory). Just as the WSJ.com article states, "around 21% of the data agents individually submit for posting on real-estate websites isn't updated when changes are made to the price or when the property is sold". That applies in our market as well and the UrbanDigs real time platform was engineered to focus on the freshly updated listing information being processed in the front end, while ignoring the ongoing obsolete information going out the tail end. Every day our charts/data tables take in fresh updates and spit out obsolete ones! That is why our platform is so sensitive to real time changes that are occurring as you read this. It is also why our charts tend to 'fit' together and compliment each other; i.e., pending sales properly leads the pace of ACRIS sales.
4. Violation of natural flow of listing process / ACRIS as verify point
Our daily ACRIS sales feed has multiple functions in the UD tracking platform. One of these functions is to act as the "verify point" for real time inventory data.
No longer can stale listings "infect" our charts. We engineered our systems so that as sales data becomes publicly available, it will override any listing state in the Manhattan RLS feed. So, if a broker fails to update a listing to SOLD, we will do it as the sale is filed with the city register and all charts will be updated accordingly. In addition, no one individual listing can ever be counted in more than one listing state (active, pending, off mkt, closed) at any given point in time. In the end, its all about data integrity.
Which brings me to the final point. If the data is not up to UD quality standards, then we will NOT build reports/charts around it. This is what brokers and consumers need to get used to. Here are two biggies:
1. Size per square foot - Fact is, 70% or so of the Manhattan housing stock is co-op. Most of the firms/agents in the RLS leave the "SFT" datafield blank. Those that are entered are estimated and usually artificially inflated. Condos are much better at having this information provided. Either way, building any chart that shows avg price per sft or median price per sft is going to be exposed to
a) big time incomplete information and,
b) the inflation rate for co-op data that was estimated and published.
There is a reason every website has a variation of the following disclaimer: "All measurements and square footages are approximate and all information should be confirmed by customer."
QUESTION: Do you really want to spend your time analyzing a chart that uses such incomplete or inflated data?
The answer should be no. The numbers may look pretty, but the foundation underneath that supplies the information for the chart is very weak. Try to only use price per sft trends for condo buildings where the square footage is confirmed in the offering plan.
2. Using # of Bathrooms, not bedrooms, for Inventory Breakdowns - Looking at all the source data, we see it all. I can't tell you how many 2BR apartments, are listed with only one bathroom. There are also plenty of 3BR apartments with less than two bathrooms. The reason is because sellers want agents to market their property in the best light possible, even if that means adding a 'BR' to the total count when there is a possible conversion space available. This flaw leads me to believe that 'Bedroom Count' is over-inflated.
QUESTION: When generating a chart for 3BR apartments in the UES, do you really want units of inventory with less than two bathrooms to be included? What about when generating a chart for 2BR apartments in Midtown? Do you really want listings with only 1 or 1 1/2 bathrooms to be included?
The answer should be no. You want to generate a chart that shows you a trend that is representative of the actual submarket you are buying or selling into. That is what its all about, and that is what we focused all our attention on delivering. Real-time, dynamic yet very accurate charts that the user can customize. If you have a 2br/2bth apt in UES, you only care about other 2br/2bth apartments and how have the supply/demand trends been in that granular submarket! You don't want units of inventory that don't belong infecting the trend you are analyzing.
So, we looked at every unit we can breakdown apartments by and settled on 'bathrooms'. Think about it, when do agents over-inflate the number of bathrooms in an apartment? Hardly ever! Its as high quality a unit to build a chart with as possible from the source database.
This site is still a work in progress but the hard part, the data mining and scrubbing process, is done. Now at least you have real time tools that you can trust, specifically engineered for the Manhattan housing marketplace. That is where our mission started and will continue in the years ahead. Expect tons of more reporting tools in the next 6-12 months.
A: My friend Mitch Askinas over at Warburg Realty recently put up a nice little discussion that complimented Fred Peter's recent discussion on Manhattan seasonality. The general topic was how seasonality flattened over the decades as smaller apartments "entered the sales mix". I would love to hear from buyers out there of all price points, to see how you view the summer market? Are you staying here and continuing your search for a new home or are you taking the summer off?
In Mitch's recent discussion, "The Summer Slow-Down Myth Exposed", a few tips for both buyers and sellers are mentioned:
It is considered common wisdom that the summer presents both sellers and buyers with the annual seasonal slowdown, both in the number of listings coming to market and in the number of contracts signed. This is said to be the case due to the mass exodus of residents leaving the city for their Hamptons homes, European villas or Jersey Shore.I would only compliment this by saying how important a proper pricing strategy is for any market that is exposed to some level of seasonality. The market dictates value, not the seller or the broker. And its the buyers who are submitting the bids that dictate market trends. Where are the bids? That is the question all sellers should be asking if you have been on the market for 3+ months with little traffic and no bids received.
Now, while this might be true for those millionaires living among us (and there are plenty, to be sure), this is certainly not the case for the bulk of the properties responsible for a vast majority of sales volume nowadays, (buyers and sellers of apartments under the $1.5 million mark). Buyers in this range are quite serious and frustrated by the general lack of quality inventory, while sellers are motivated to make a deal and move on with their lives. The more people understand this reality, the less likely this "common wisdom" is to become a self-fulfilling prophecy. So what does this mean for everyone?
Existing Sellers: If you've been on the market for more than a few months, you might be considering pulling your property off the market and waiting it out unit Labor Day. Don't! Instead, use this opportunity to freshen up your listing: 1) re-run your comps to make sure your price is competitive; 2) look at the apartment with a fresh set of eyes as it relates to staging, and 3) consider taking new pictures, particularly if you have outdoor space that looks greener now than it did a few months ago.
New Sellers: Remember, waiting until the fall to list, while it may mean more traffic, also means more competition. Consider listing now full-steam ahead to take advantage of the general tightness in the market and today's low interest rates to woo buyers. Just because you're getting fewer buyers coming through the door doesn't mean that they are any less motivated; quite the opposite. Those buyers coming to you now are likely to be more serious than during other times of the year, as they're giving up barbecue and beach time to visit properties. Should any offers arise, engage them fully and negotiate every step of the way.
Buyers: The hot summer months don't mean you need to put your search on hold until the leaves start turning. If you've been in the market for several months and have not been finding properties in your price-point, you can leverage this time to test out wider negotiation margins for properties you do like. Furthermore, those savvy sellers who do list now (read above) are likely to understand the market well and are also likely to be priced correctly. Lastly, know that you are taking advantage of historically low interest rates. Who knows where rates will be in the fall? Work with your broker to stay on top of new listings as they come online so you can pounce on them, should they be the right fit.
If the market is seeing 1,000+ new deals signed the past few months and a seller feels they missed out on the action, you have to wonder how much more difficult it might be to procure a strong bid if that pace falls to 800 or lower? As Mitch states to existing sellers above, "rerun your comps and make sure your price is competitive"! For me, its all about pricing. You price right and the market should do its thing and get a buyer for you relatively quickly. You price high and test the market, and traffic is slow and the listing gets stale as the pace of demand runs away from you.
In every market there are different types of sellers: sellers that are testing to see if they can get a high #, sellers that would like to sell but dont need to, sellers that have a time pressure to move, and sellers that are forced to liquidate immediately to raise cash. Im sure there are more types but you get the picture. If a motivated buyer hangs around during the summer, they should be rewarded with an advantageous negotiating environment upon finding their desired property to go after. The question remains, how motivated is that seller??
The summer slowdown is not upon us by any means as I write this. For now, its just a discussion on historical trends as we get into the hot, humid months of June through August. When we see the 30-day contracts signed ticker fall below 850 or so, chances are the slowdown is taking place. Both buyers and sellers should tweak their strategy a bit to adapt when that happens. Until then!
Great stuff Mitch, thanks!
A: I finally got connected yesterday after closing on a vacation home in Southbury, CT. I was able to enjoy 9 days of internet freedom but now it's back to work. Lets get up to speed on what the Manhattan housing market has been doing. This post is longer than usual but I encourage all brokers to read this, especially those that subscribe to UD real time Manhattan tools.
The last discussion was on May 30th and touched on the topic of seasonality that Manhattan tends to experience; that is with no major macro issues affecting us, active markets to start the year and generally slower summers. Before I get into the latest data, I want to direct you to Warburg Realty's wonderful President Fred Peters, and his most recent blog post, "Fred's View of Manhattan Real Estate":
When I was first paying attention to real estate, in the late 70s and early 80s, there was little for sale, not because the market was so tight (interest rates were, after all, at 18%-an inhibitor if there ever was one!), but because there just wasn't that much inventory. There were few condos. Most of Broadway was still low rise rentals, much of West End was still rental, and most of the postwar units east of Third Avenue were rentals as well. There was no such thing as Tribeca and SoHo was for artists. In those days our business was highly seasonal.Fred is an amazing source of wisdom, experience and knowledge when it comes to Manhattan real estate. I love the direction he is taking his firm. When it comes to how the markets changed in 30 years, he IS the 'expert'; so I listen. I tend to get very analytical when it comes to tracking Manhattan real estate, and my views are more consistent with a 'trader mentality'. With that said, let me explain how I interpret the tools I built here on UrbanDigs and what I consider the signs that indicate a strong and weak market.
Everything changed with the massive amount of co-op conversion and construction which took place between the late 1970s and 1986. Over the arc of that decade, owning became more of an aspirational New York City desire.
This had a big effect on seasonality. Increasingly, as smaller apartments entered the sales mix, the seasonality curve flattened. It didn't disappear, but it flattened. If you are buying a one or two bedroom, you probably don't care that much whether you are buying it in January or July. You are not spending the summer in the Hamptons. So while there is a dip in purchasing after June 15th or June 30th, there are other factors which more significantly dictate how busy a summer is likely to be. t is always slow between December 15th and January 10th, similarly between August 15th and Labor Day. But other than that, economic factors dictate overall market activity much more than weather patterns or vacation times.
1. The Monthly Pace of New Deals Signed
This is my 2nd favorite chart to watch, but I'm writing about it first for this post. I prefer to prioritize the pace of demand over the pace of supply. The reason? Well, in an ideal world we would be able to track in real time where the 'bids' are coming in. In other words, all those contracts that are being signed today and are awaiting closing, where did the bid meet the ask? Are prices rising or falling? That data is not publicly available outside of the parties involved in the transaction. So we are forced to wait 2-4 months for the closing + 2-4 weeks for ACRIS to file the sales record. When we get price discovery, its a rear view mirror unit of information that really represented the market as it was 3-5 months ago.
For me, that is not acceptable. Therefore, I prioritize "new deal volume" as the most real time indicator of current market conditions. In other words, how many deals are being signed! Lets take a look at this now:
As you can see, May's data came in a few days ago at 951 new deals signed. This is down from last month and also down from the same month exactly one year ago. This monthly production bar chart is my 2nd favorite tool to follow on UD to get a sense of how the Manhattan market is doing. Here is a quick guide to what # signals what interpretation:
1,000+ - Very Active. If new deal pace is over 1,000 per month, the market is on fire! Once you get to this pace of new deal volume, it tends to get more difficult with time to sustain. Usually we only see 1-3 months in a calendar year with 1,000+ new deals sign per month and that tends to come in the March-May period
900-1,000 - Active. If we are seeing between 900 and 1,000 new deals signed, the market is quite active. This is where we seem to be right now, down a tad from the last few months. If we get closer to that 1,000 level, you know the market is getting very active.
800-900 - Above Normal. This pace is more active than normal and tends to occur and tends to occur in February's to start the active season and June's to end the active season.
650-800 - Transition months/Normal Market. I would not call this pace 'very active' but I would also not call this pace 'slow'. Its right in the middle.
550-650 - Slow. If monthly new deal volume falls into this range, the market likely feels slow and brokers usually start to chat about difficulty in getting strong bids to come in.
Less than 550 - Very Slow. When Lehman failed we saw the pace of new monthly deals fall to a low of 317 and 484 in January & February of 2009 respectively. That kind of pace signals a completely dead market and a market that likely is seeing a price adjustment. Always look for sustainability. If you see 3+ months of under 600 new deals signed, something bad is going on in real time and chances are buyers are tweaking their bids due to a fall in confidence/affordability. The question always remains, will sellers hit that bid?
I always use this general guide when interpreting UD monthly contracts signed bar charts.
2. The Real-Time Market Ticker
My favorite tools by far is the Real-Time Manhattan market ticker. I guess its the trader in me. Every day new contracts are signed and I wanted to build a tool that tracks this 'broad market' performance. Its as real time as you can get. Lets take a quick peak at how the market has changed since the slower Memorial Day holiday:
As you can see in the boxed out area, in the past two days alone we saw over 100 new deals signed! Now, since two days or even 1 week is not a trend make, I focus on that right most #; the 30-day moving window pace. The ticker is showing that in the last 30 days (figure May 8th through June 7th), we have seen 992 new deals signed. If you re-read the guide I posted above, that fits into the 'Very Strong' category and is about to breach that 1,000 mark. In other words, buyers continue to step up and sign deals for Manhattan property at a very strong pace!
I watch this ticker every day. While the daily production is quite interesting, I focus on the 7-day and 30-day #s. When you see the 7-day # fall to below 200 and the 30-day # fall below 900, you will know the market is starting to slow. So far, since March this has not happened and before that the market was on an uptrend to levels we see today. As of now, there is no summer slowdown yet!
3. Pending Sales Line Charts
Finally, I like to look at the bigger picture via the Manhattan pending sales line charts. Pending sales is not monthly production like the bar charts. Rather, pending sales measures the pool of listings in the Manhattan marketplace that are 'in contract' and are awaiting their closing. It is a more accurate, yet slightly less real-time measure of Manhattan demand. It will follow the trend that the real time ticker and bar charts are telling us. If the market were to slow drastically, it would show up in all three of the tools discussed in this post.
Let's look back 3+ years and you will see how this market has performed before the crisis hit and how we did after:
I marked Lehman's failure with a vertical red line, for easy referencing. I love this tool because it is a very accurate representation of demand in this marketplace. It also shows seasonality nicely in terms of new deal volume. So far the 2011 active season is just a tad below last year's peak levels - and all this is happening with less product on the market! That is why this market never ceases to amaze me. With less new product coming to market every month, buyers are still stepping up to buy. Inventory levels are flat compared to 1 year ago, but Off-Market trends are way way down. If you think about it, new product that comes to market is either going to contract or staying on waiting for a buyer - less product is being removed from the market. This is another sign of strength as sellers tend to remove their property when the market is dead or bids too low. Not the case in today's market.
I know its a lot to digest, but nobody becomes an expert overnight. Continue to use these real time tools and you will get more and more comfortable with the interface and the interpretations. It's all about staying ahead of the curve with the best data available on the market today. When the market does adjust, at least these tools will show us in real time. Always remember, the data doesn't lie!