Futures Extend Slide / Manhattan Real-Time Ticker

Posted by urbandigs

Mon Aug 8th, 2011 08:59 PM

A: Futures after hours are sliding right now after today's bloodbath. As it looks now, markets will open down another 2.5% tomorrow. Not the best news I know, but sometimes this is the kind of open traders look for to get a nice bounce the following day. Also Im being asked if this is hitting the streets if Manhattan real estate so lets check how the real time market ticker is doing today compared with where it was 6 weeks to get an idea of where Manhattan inventory trends are ticking.

First, a snapshot of the futures markets via Bloomberg.com:


Fair value is +5 on the S&P so the pressure is even a bit further to the downside. This may not be such a bad thing though. On record selloff days, traders used to hope for a gap down the following morning which usually purges the markets of some short term pressures and triggers a relief rally. If the futures are there already, lets open down 3% tomorrow as that may setup a trading bounce by the end of the following session. Not a prediction or anything, just some old day trader talk as its not everyday you see these big volume 5%-6%+ down days.

As far as Manhattan real estate is concerned, the most real time look we have at changing inventory trends is the 30-Day Real-Time Market Ticker - which is directly fed by the RLS internal broker sharing system and updates every two hours for subscribers. Lets compare the ticker as it looks right now on UrbanDigs.com to how it looked about 6 weeks ago - so we can see the change in the trends:

SNAPSHOT: JUNE 22, 2011 versus TODAY, AUGUST 8th, 2011


I look at the 30-day moving window pace, and boxed it out above so you compare the trend from 6 weeks ago to how it is today. Its clear that:

1) Pace of new supply coming to market is DOWN
2) Pace of new contracts being signed is DOWN
3) Pace of listings being removed from the active market is UP

Since the pace of supply is falling along with the pace of demand, partially due to rising off-market trends, the recent downward trend in demand is somewhat muted and some may argue, seasonal. Recall from the months after Lehman brothers that if this market really were to experience a shock, we should expect 3 things to happen:

1) Pace of new supply coming to market will surge
2) Pace of new contracts being signed will plunge
3) Pace of listings being removed from the active market will surge

Subscribers can see this in the charts:
New Supply Surges in late 2008
New Demand Plummets in late 2008
Off-Market Trends Surges in late 2008

The reason why active inventory rises in times of market stress is because the seller pool as a whole in the market tends to swell when fear rises. More sellers, that otherwise would not list property, will look to liquidate either out of fear or out of a need to raise dollars. In fact, the seller pool will swell so much that a rise in off-market trends won't be enough to pressure supply to the downside. Think about it, if 3,000 listings come to market and 1,500 listings are taken off market, we have a net gain of +1,500 units that need to be absorbed by new demand or else inventory trends will rise.

Current supply is always a function of the pace of new supply coming to market against both the pace of demand and the pace of listings being removed from the active market!

Keep your eye on the ticker to see how it is in another 4 weeks and you'll know where the market is ticking.