A: Got a busy day but just wanted to show you the ticker as of Thursday morning, 6:38am, that is still reflecting deals from yesterday. The ticker resets for the new day at around 8:30am when first update comes in. With 90 deals in the last few days, lets keep the deals coming!
The Real-time Ticker as of Thursday morning before the day's reset:
A weekly trend of over 200+ deals is what Ive been waiting to see. Its the first time since late June's peak of activity that the 7-day totals climbed above the 200 mark. Welcome news. Now, lets keep it going because once we get to Thanksgiving we usually have another 7-8 weeks of a holiday slowdown until the next active season begins in mid to late January.
A: Sorry for lack of content lately, I'm battling a nagging cold/cough and have been working with my development team to launch co-op, condo, and townhouse charts to the UD real time system. The combination of these two is wearing on me a bit. We should go live with this upgrade by early next week. Add in that the Manhattan markets are basically "hovering" around seasonally sluggish levels and there is nothing really new to report. Which makes me wonder about sellers out there that are 5+ months on the market and may be anchored to previous market strength.
Over the last quarter, Manhattan Pending Sales has declined 29% while Active Inventory has risen by 2.1%. Over the last 30 days, Manhattan Pending Sales has declined 8.4% while Active Inventory has risen by 4.7%. The pace of the decline is slowing and there are early signs of a tick-up in activity, but nothing worth calling a trend yet.
I can say this because the 30-day ticker that tracks new deal volume for the Manhattan market is still 'hovering' around the low to mid 600s. We just can't seem to break out of this range after seeing a slight uptick from late September.
There is nothing abnormal about this when you consider seasonality and this time of year. It's easy to quickly come to a conclusion that since the Manhattan markets are not picking up as expected post-Labor Day, that prices may be adjusting. Use caution when making such assumptions without a more definable macro trend out there to affect masses of buyers interested in Manhattan property. Here is what I will say right now:
Yes, the market's new deal volume decline from late June has reached its lowest point so far
Yes, the market's continue to see monthly new deal volume noticeably lower than this time last year
Yes, there is continued uncertainty out there in macro-land that may be causing buyers to pause...
BUT, we have not seen destruction in equity markets and we have not seen levels of fear anywhere close to what we experienced in late 2008 and 2009. This is not a repeat of that time period post-Lehman. This is simply a seasonally slow time that is not seeing the bounce in volume that we got used to post-Labor Day.
In a month we will have our Thanksgiving holiday break. A few weeks after that we will have Hanukkah, Xmas, and New Years holidays that see many buyers take a break from their property searches. This is NOT our active season and although we have the tools to track the markets on a daily basis now, we must not forget about the effects of seasonality and how macro forces are currently impacting buy side confidence.
Here is the kicker: The markets have been slowing since June and outright sluggish in September and most of October so far. Yes we have seen a bit of a uptick in the past week or two, but nothing of force yet. If you are a seller who recently past the 4-5 month mark on the market with no offers, I suggest re-thinking your pricing strategy and making sure that you are NOT anchored to the way the markets were performing back in May & June.
The Manhattan markets were significantly more active April through June than they have been for the last few months - so you just can't expect that strong bid to 'bite' when there are not nearly as many fish in the pond right now! This is especially true in the higher end that saw a huge resurgence in activity earlier this year. We are now getting price discovery from these stronger deals that were signed 3-4+ months ago - but the markets are simply not as active as they were back then; warranting the caution on the sell side that I just described.
We may very well have another 2-3 months of this kind of subpar action as we enter the seasonally slower holiday season. So if your a seller under a time pressure, think long and hard about 'waiting this out' because its very possible we do not see a noticeable tick up in action until early 2012. Price accordingly and always remember, the markets dictate value and the markets are always changing - I will track and interpret these changes for you, but its up to YOU, the seller to adapt and strategize your asking price history accordingly!
A: A few agents reached out to me this week to see if I'm seeing a recent pickup in activity. In my business I am not seeing anything notable yet as my buyer clients are still having trouble finding quality, well priced inventory. But the UD real time ticker that follows every REBNY broker's listing status is finally showing signs of 'ticking up'. Lets get right to it.
The last check on the ticker was Oct 5th, when the pace of new CONTRACTS SIGNED was:
7-day --> 143
30-day --> 598
This morning the ticker looks like this and has only registered 1 update from RLS:
7-day (black box) --> 167
30-day (red box) --> 653
So we have the early signs of a market that is picking up with the weekly pace of new deals being signed about 17% higher than it was 2 weeks ago - the 30-day pace is about 9% higher than it was 2 weeks ago, as it takes more sustainable 'market activity' to register notable moves in that metric.
So what is this telling us?? Let me try to explain what this ticker is picking up and the lag it takes to collect the data. Here is the process that occurs in the field of Manhattan real estate before the UD market ticker captures the 'signed deal':
1. Deal Sheet (a few hours): Closing Information is confirmed and gathered regarding the price/terms reached between buyer and seller. This should not take longer than 1 day unless critical information is unknown and can't be gathered at the time. Here is an article I did a while back on the warning signs of a deal that may be running away from you.
2. Due Diligence (generally 5-7 business days): Buy side due diligence process begins once all required documents are delivered by the sell side (contract of sale, offering plan, 2yrs building financials). This could take up to 2 weeks. The absolute key is to make sure there is ongoing communication between the buyer and seller attorneys as the diligence process plays out.
3. Logistics for Contract Execution (up to 5 business days): First buyer signs and then delivers docs/deposit to seller attorney for full execution. Generally this takes 1-2 business days or if planned for properly, the same day the buyer signs. But I have seen this part of the deal take over a week in some situations if buyer, seller or attorney for whatever reason needs some extra time.
4. Broker Updates RLS / UrbanDigs Ticker Captures It (varies): This last part is the key. The agent is supposed to update their listing status from ACTIVE to CSGN (contract signed) in their internal systems. This is the part of the process that nobody but the agent controls; and if the agent decides, for whatever reason, not to update the listing well then there is no mass way to communicate that a deal was reached. The data is only as good as the agent or manager that maintains it. When it comes to data quality its all about completeness, reliability, and timeliness.
ADD IT ALL UP --> If we see a tick up today on the UD market ticker, it means that Step 4 is occurring and agents are switching listing states for deals that were "cooking" the past 2-3 weeks out there! That's about as real-time as you can get without sacrificing the quality of the data and the ultimate trend that we are hoping to interpret meaningfully for clients. This is the 2nd time this month the 30-day ticker showed signs of a move higher; but it fizzled the first time after 6-7 days. Lets see how sustainable this latest move will be.
A: I recently got the OK from Inman News to publish this segment of the Inman Real Estate Connect Conference that was held in NYC back in January. Its interesting to put yourself back in time & place to Jan of 2011, before the EU issues and volatility really started to hit, and see some thoughts on the economy and the national real estate markets. Back then, the risk on trade was still going strong and talk was that EU concerns were of course, 'contained'.
For this panel, I was talking with:
- Ted C. Jones, Senior Vice President-Chief Economist, Stewart Title Guaranty Company
- Carter W. Murdoch, SVP; National Affinity Business Development Executive, Strategic Business Alliances, Bank of America, N.A.
- Joel Singer, Executive Vice President, California Association of REALTORS®,
I start speaking in the 4:40 range on the video below and wanted to talk about the fed engineered carry trade, the fed engineered bank recapitilization environment, the risk on trade and its future negative consequences when the trade reversed, and the sovereign debt issues that were yet to hit markets.
At the time I went on record as "short term bullish, medium term bearish" as the volatility was yet to boil over. Today I would switch that around to "short term bearish, medium term bullish" as the issues seem much closer to playing themselves out. This may sound bad, but its better if we purge hard and let these issues fully play out so we can fail, restructure and re-organize to set the groundwork for more stable sustainable growth in the future!
Fast forward 9 months and Greece is on the verge of default, the EU is scrambling to come up with a bank recapitilzation plan, and China is starting to show signs of slowing.
Meanwhile, Barry Ritholtz discusses a recent Barrons piece questioning if the unintended consequenes of QE2 is causing the current slowdown:
While the Fed mulls more ambitious plans to tell the public how it will steer the economy in the future, perhaps the monetary authorities should reflect on the results of their recent efforts. As notes long-time Fed watcher Lacy Hunt of Hoisington Investment Management in Austin, Texas, the unintended consequences of its policies have all but superseded their professed aims. For instance, QE2--the Fed's purchase of $600 billion of Treasury securities completed in June--caused the current slowdown instead of giving the economy a boost, he writes in Hoisington's Quarterly Review and Outlook. Real disposable income was lower in August than in December, in part because of the jump in commodity costs. "While rising equity values helped a few consumers, inflation in necessities, such as food and fuel, decimated real incomes for the average family. Thus, the emergent cyclical weakness that lies ahead can be directly related to the unintended consequences of quantitative easing," Hunt says.ADDED 7:11pm 10-18-2011: Im adding this late as I ran out of time this morning. This section of the article is more true than many would like to believe. Shit is so engineered right now, that who the f**k knows what the real price for anything is? But this is how it must be. This is how it must play out if we are talking about bad companies with bad debts failing. Its very likely that the fed 'causes' a recession as an anticipated mild side effect of policy actions taken to stem a deeper problem of deflationary forces. There are unintended consequences to policy actions that we are not yet fully accustomed to - bondholders, for instance. Who gets bailed out and who doesn't? How deep are the haircuts on sovereign debt? I think and I hope that it will be harsh. Because the pain that is the root cause of these problems will ultimately take time to heal but the toxicity will instill itself deep into the mindset of that 'investment' part of all our brains resulting in 'oversold' lows in the asset itself that may linger for years. Housing as an asset class will not be looked at the same way as it did from 2003-2006. Credit will not be looked at the same way. These are the changes that will come from a boom-bust cycle, post cycle regulation and the negative side effects of fed engineering and carry trading away losses on bank balance sheets these past few years.
The Fed's current policy of attempting to flatten the yield curve by buying long-term Treasury securities and offsetting it with sales of shorter-dated paper--Operation Twist 2.0, after a similar gambit in the early 1960s--also could backfire. The FOMC minutes said the policy was expected "to help make broader financial conditions more accommodative." Translated from Fed speak, lower long-term rates will make borrowers more willing to borrow while lenders will be more eager to lend.
But, Hunt points out, ultra-low interest rates could have the opposite effect. To earn a profit, banks have to cover their costs, from payroll, overhead, taxes and "elevated" fees to the Federal Deposit Insurance Corp. Then they have to earn a spread to compensate for the risk the borrower could default. At very low interest rates, there aren't enough basis points left to lend profitably. The historical precedent is Japan, where banks would rather buy government bonds than make loans . . ."
I would argue that the so called 'unintended consequences' continue for at least another 3-5 years. But during this time might present a rare buying opportunity. Already there are markets where you can buy a home and rent it out for a profit; although not Manhattan Im afraid whose rents are rising through the roof right now.
The foreclosure pipeline continues but the cycle takes another leg towards its ultimate end. We wont know we are out of it until after its over; maybe 2015, maybe 2017. Who knows. Who cares? The world will continue to spin, business will continue to be transacted, and Im hopeful that the right direction will reveal itself and be chosen. Im just ready for the next wave of destruction if its out there waiting to strike. Greece. Spain. Portugal. EFSF. China. Whatever. Bring it on already and lets get it over with!
A: Lets give this a try as the last time I wrote about it was late August and it seemed to resonate well with readers and Manhattan brokers that follow this site. Here are simple 3-MTH Pending Sales trends for 16 Manhattan neighborhoods. Manhattan as a whole has seen pending sales trends decline 29.9% over the last 3 months, so by looking at the data below you can see which neighborhoods have both over-under performed the broader market trend.
3-MONTH PENDING SALES TRENDS
East Harlem: +10.9%
Murray Hill/Kips Bay: -17.6%
Chelsea/Midtown South: -19.2%
Inwood/Wash. Heights: -22.2%
Harlem/Hamilton Heights: -24.4%
Upper East Side: -29%
Harlem/Morningside Heights: -29.7%
Midtown East: -30.6%
LES/East Village/Union Square: -34.8%
Upper West Side: -37.1%
Midtown West/Clinton: -41.7%
Soho/Noho/West Village: -42.3%
Fidi/Civic Center: -42.6%
Battery Park City: -46.2%
There is a bit more red (deeper red I should say) this time around than from 7 weeks ago but we should mute this trend a bit as July, August and September tend to be the weakest months in the calendar year for new deal volume. With that said, new deal volume tends to tick up in October as new inventory comes to market in September - well we had the uptick in supply but Im yet to see any sustainable uptick in new deal volume. The 30-day new CONTRACTS SIGNED ticker is still hovering between the high 500s and low 600s; noticeably lower than the 749 new deals signed level we saw last October. Sellers should take note and adjust asking prices accordingly if there is a time pressure to sell - at the same time, quality bids should be given more consideration when new deal volume has been underperforming y-o-y trends.
Here are the leaders and laggards:
The Leaders --> East Harlem, Gramercy/Flatiron
The Laggards --> BPC, Fidi, Soho/Noho/W Village, Midtown West, UWS, LES/E Village, Tribeca
Its quite interesting to see the changes from the last post on this topic: AUG. 24th - 3-MTH Manhattan Sub-market Pending Sales Check. Specifically, East Harlem went from the bottom of the pile last time to the top of the list today. Other notable 3-month neighborhood demand trends include:
CHELSEA: trend declined from +9% in late August to -19% today
FiDi: trend declined from -5% in late August to -42% today
GRAMERCY/FLATIRON: trend rose from -13% in late August to +4% today
Manhattan continues to prove that it is a highly segmented marketplace with different neighborhoods and price points doing their own thing. I'll try to do this kind of check every few months so you can see which neighborhood demand trends are making notable moves in either direction.
A: Way too soon to call this a 'market shifting' trend, but 11 days into October and I'm yet to see any meaningful uptick in the pace of new contracts signed for all of Manhattan. The market just continues to be in 'pause' mode after a strong Q2. Looking at the bigger picture, most of the larger firms did in fact report on the Q2 to Q3 rise in both Median and Avg sales prices; largely a function of strong pending sales trends 4-6 months ago. Since pending sales leads ultimate sale volume and the quarterly reports capture lagging sales price trends, we should focus on pending sales for a real time indication of market performance. Always remember that the market will do what the markets wants to do, when it wants to do it - regardless of any talk about real time interpretations of sites like UrbanDigs.com. Since Manhattan markets are seasonal, we should know when to use caution before interpreting real time inventory trends as something that is causing a general move up or down in price action. Lets discuss.
The 30-day pace of new deals signed continues to linger below 600. If we are to see the market tick up or down noticeably, the ticker will be the first UD tool to capture it.
For a frame of reference, here are the total monthly contracts signed for the last 6 months:
April 2011 -- 1,006 new contracts signed
May 2011 -- 951 new contracts signed
June 2011 -- 988 new contracts signed
July 2011 -- 713 new contracts signed
August 2011 -- 734 new contracts signed
September 2011 -- 571 new contracts signed
Performance in April, May and June produced the strong closing results in July, August & September. Take a look at this MANHATTAN SALES VOLUME chart that reflects this Q2 to Q3 rise in closings:
*ACRIS sales volume charts are set to a 90-day lag to account for delays in document filings
First the deal is signed and then 2-3 months later the deal closes. So, looking at a chart like this is like looking in the rear view mirror of your car, you are looking at what is behind you not ahead of you. If you want to know whats happening right now, focus on leading pending sales trends.
UD Tip: The way to interpret what any one month's production of new deals signed might be signaling, compare the month's total new deal production to the same period 1 year prior. For example, in October-2010 Manhattan produced 749 new deals signed while October-2009 produced 931 new deals signed -- however, as we approach mid-Oct right now the 30-day pace of new deal volume is still under 600. This leads me to interpret that as of now the market remains sluggish compared to past October numbers.
This is expected given recent volatility in equity markets that seem to be pricing in uncertainty in EU and concerns over slowing global growth. For the past 10 weeks, US Treasury markets have been pricing in slower growth. Bloomberg reports that "Bond Yields Show 60% Odds of U.S. Recession":
The bond market indicator that has predicted every U.S. recession since 1970 shows that the economy has about a 60 percent chance of contracting within 12 months.I agree. Seeing 10yr yields approach 1.5% a few weeks ago was outright scary. I'm hoping that doesn't happen again because if it does that means something hairy is going on; either a Eurozone event or real bad #s out of China to me are the most threatening possibilities out there right now.
"The adjusted curve is giving a powerful signal for an upcoming U.S. recession," said Ruslan Bikbov, a fixed-income strategist in New York at Bank of America, one of the 22 primary dealers of U.S. government securities that trade with the Fed. The so-called Treasury yield curve, adjusted for distortions caused by the Federal Reserve's record low zero to 0.25 percent target interest rate for overnight loans between banks, shows that two-year notes yield 20 basis points, or 0.20 percentage point, less than five-year notes, according to Bank of America Corp. research.
JPMorgan Chase & Co. economists said in an Oct. 7 report that they see "a soft growth picture, but one that is not falling into recession at the moment." The firm, also a primary dealer, forecasts the 10-year note yield will end the year at 2.25 percent.
"We are in a world of lower growth expectations, but that said, the long end of the curve is actually too flat now relative to where it should be," said Srini Ramaswamy, a New York-based analyst on JPMorgan's fixed-income research team.
A: UrbanDigs subscribers got an early look at what was to come prior to these quarterly reports, but lets review anyway. In short, sales volume is noticably higher from last quarter and we saw a slight uptick in Average Sales price due to rise in pending sales for the $5M+ market that was discussed over the summer. As these deals ultimately close, the reports catch them at a lag. What you need to know is that quarterly reports review data on the market at a 4-6 month lag. Current pending sales is down significantly pressuring the pipeline for future Q4 sales volume. Its all about what is happening right now!
First the news, as the NYTimes reports "Flat Prices but More Manhattan Home Sales":
The Manhattan real estate market remained resilient in the last three months, with prices holding steady and sales volume going up, despite the wild gyrations of the stock market over the summer and continued fears of global economic crisis.Now, here is the actual data for the Manhattan real estate market showing you PENDING SALES vs. ACTUAL SALES VOL:
The median sales price for Manhattan apartments held steady, with the city's largest brokerage firms finding median prices of between $850,000 and $911,333, according to sales reports that will be released on Tuesday. The number of sales during the quarter, however, was up by more than 15 percent compared with the same time last year.
Ms. Liebman said the market slowed briefly in early August, after a credit rating agency downgraded the nation's debt rating and the financial markets took a series of unpredictable swings. "But we've become much more used to that type of volatility," she said. "If that had happened a couple years ago, we would have lost hundreds of deals, but as it was, people paused for a few days and then came right back."
Now, as you can see from the chart the red line (actual ACRIS sales) follows the green line (Manhattan pending sales) to a 'T' at a 2-3 month lag - this makes sense as it takes a few months for a deal to go from contract signed to closing, and a few more weeks/months to get recorded in public record. It tells us that the UrbanDigs development team properly scrubbed the RLS database and is tracking Manhattan pending sales accurately and in realtime!
The market actually started to tick down in July and progressively slowed over the course of July, August and September to get to where are today. The chart clearly shows that. The sales line charts are near its peak right now due to the 'pent up' deals that were signed between April and June. This years active season peaked out at the end of June.
I do not see the the comeback in new deal volume that Pam Liebman is discussing after a 'brief' slowdown in August. I say this because we engineered a Market Ticker (for subscribers) that tracks daily production in the Manhattan marketplace - i.e., so I can see how many deals were signed into contract everyday. I follow this ticker everyday so I'm very confident when discussing current market conditions with my buyer clients and on this blog.
Here is a snapshot of the Manhattan Real-time Market ticker as it looks right now:
Focus on the boxed out row which shows you CONTRACT SIGNED production in the marketplace; basically...
TODAY --> no deals registered yet today after the first update; ticker updates 7x a day
YESTERDAY --> Manhattan registered 33 new deals signed
7-DAY --> Manhattan registered 143 new deals signed over the last 7 days
30-DAY --> Manhattan registered 598 new deals signed over the last 30 days
If the market were ticking up noticeably, the 30-day # would pop from high 500s to high 600s or into the 700s - that is yet to occur. Rather, current new deal volume has been anemic for the past 3-5 weeks, which is why the top chart on Manhattan pending sales shows a sharp recent decline - leading me to believe the future pipeline of closings will be weaker than Q3. It has only been the last 3-4 days that I have noticed new deal volume tick up to the tune of 20-30 or so a day! That has been the most action Ive seen in the last few months and the 7-day totals and the 30-day totals should start to reflect that action soon if the trend continues.
This is why I love that ticker! Since one day or even 7 days is not a trend make, you can simply look at the 30-day trend totals to see if any sustainable action is taking hold in the marketplace. That 30-day total will ultimately produce a monthly total which is then produced in our Manhattan Monthly Bar Charts, so you can analyze month-by-month and year-over-year performance.
I reported on this on Monday when discussing "September in the Books...So How Are We Doing??" - click the link for a view of Manhattans Contract Signed & New Active monthly bar charts:
"The skinny is, pace of new supply is still lagging and pace of demand is right on par with September of 2010 - which is anemic but normal for this time of year. October is usually the time that we see a month to month uptick in demand, as last year saw a 28% rise in monthly signed contracts from September to October. Hopefully we follow that same pattern in 2011, but as of now the 30-day pace of new deals signed is still below the 600 level. "I'll try to do a piece on the latest median pricing trends but for the most part, I think the market is trading a few basis points lower than deals signed in early 2011, due to uncertainty and volatility in tradable markets. Europe is still a mess and both equities and bond markets seem to have been pricing in slower global growth since late July - stay tuned how this EU situation plays out because it can very easily trickle down and affect the bids for Manhattan property if worst case scenarios come to pass.
A: Got a busy next few days ahead so now that September is in the books, Ill just give you a few of the latest updates to our Manhattan Monthly Market charts. The skinny is, pace of new supply is still lagging and pace of demand is right on par with September of 2010 - which is anemic but normal for this time of year. October is usually the time that we see a month to month uptick in demand, as last year saw a 28% rise in monthly signed contracts from September to October. Hopefully we follow that same pattern in 2011, but as of now the 30-day pace of new deals signed is still below the 600 level. Even though supply is up, its not rising nearly as much as it did post Labor Day in 2010 - a sign that we need more quality, well priced listings to hit the marketplace. As for my business, I continue to have buyers that are frustrated with the lack of options in their submarkets.
Manhattan Monthly Contracts Signed chart (showing how many listings went into contract by month):
Manhattan Monthly New Active Listings chart (showing how many new and back on market listings hit the marketplace):
For full access to all real time analytics including the daily Manhattan market ticker, neighborhood inventory trends, submarket inventory trends, the latest sales prices, and more, please subscribe here.
We are working on some new upgrades to the UD tracking platform and plan to release Co-op, Condo, and Townhouse inventory chart options in the next 3-4 weeks. If there are charts for the Manhattan marketplace that you would like to see but are not available either here or elsewhere, please email me any suggestions. We got some great new tools in development but as always, user feedback is greatly appreciated to make this site better and better.
A: I just wanted to give my colleague Esther Muller a plug here for her upcoming course on Social Media. Esther Muller runs the RealEstateAcademy, is the NY Real Estate education queen for our industry and the go-to place for all agent's continuing education needs. Details are below for any agent interested in how to best utilize social media to enhance their brand presence and expand networking online.