Manhattan Seems to be in 'Hover' Mode / Sellers Anchored?

Posted by urbandigs

Tue Oct 25th, 2011 09:31 AM

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!