Q3 in the Books - Manhattan Sales Vol Rises

Posted by urbandigs

Wed Oct 5th, 2011 09:45 AM

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.

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, here is the actual data for the Manhattan real estate market showing you PENDING SALES vs. ACTUAL SALES VOL:


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.