A Quick Manhattan Market Update

Posted by urbandigs

Tue Jan 31st, 2012 10:42 AM

A: As January finishes out lets take a look at what the Real-time ticker is telling us and how the first month of the year performed.

First, a quick look at the Manhattan Market Ticker which counts:

- daily new deals signed across the Manhattan market
- daily new active listings across the Manhattan market


...and shows us a weekly and monthly pace to easily see market tick ups and downs. If the market were to start surging or shut down, this ticker will be the first tool to identify it.

ticker_jan31.jpg

I want to point out that the 47 deals signed yesterday (red box) is the highest daily deal volume that I have seen so far in 2012; hopefully a delayed start to the season. However, 1 day 'does not a trend make' so we should look to the 30-Day pace (blue box) to more broadly measure how the market is performing right now. We count 591 new deals signed over the last 30 days; relatively sluggish compared past January's.

Here is how I would interpret what those 30-Day CONTRACT SIGNED #s are telling us about real-time market conditions (read the end of this post for more details):

1) anything below 550 is a very slow market (post-Lehman was in the low 300s)
2) between 550-650 is a slow market
3) between 650-800 is normal market
4) between 800-900 is normal/active market
5) between 900-1,000 is an active market
6) anything above 1,000 is a very active market

We are in the #2 range right now and ticking higher over the last week.

There is a better way to visualize this so lets take a look at monthly deal volume for Manhattan markets going back to January 2009:

MONTHLY CONTRACT SIGNED TOTALS FOR MANHATTAN


csgn_jan2012.jpg

This is the easiest way to see a) how the month-to-month trend is doing and at the same time, b) measure the year-over-year performance. In real estate we tend to look at how this January performed relative to past January's to filter out seasonality. The above chart tells us:

1. We are trending down from last month where we booked 702 new deals signed...and,

2. We are trending down 7%-8% or so from January 2011 and January 2010's production levels.
January 2009 registered 317 deals signed and marked the height of fear in the marketplace.

Tomorrow the January bar will go live on this chart in our Monthly Charts section.

Now that we looked at pace of new demand, lets consider the pace of new supply. By looking at both trends we can come up with some relatively easy but accurate interpretations on current conditions; such as...:

SITUATION # 1 - If the pace of demand is relatively sluggish & the pace of supply surges, the market is under stress and leverage can quickly shift to the buyer. If these conditions worsen and the trend sustains itself for say 3-4+ months then its very likely deals in the marketplace are getting done at a new lower price level; as sellers who must sell are first hesitant, then forced to hit lower bids.

or..

SITUATION # 2 - If the pace of demand is relatively sluggish & the pace of supply declines, the market is not nearly as stressed as situation #1 because less supply is muting the decline in demand. Leverage likely remains balanced between buyer & seller with less options on the market for buyers to choose from. Market will continuously show pockets of strength and weakness based on the quality of the property and the need for the seller to liquidate (pricing).

We can see from the Market Ticker above that the market produced a pace of 1,513 new active listings (orange box) over the last 30 days. Here is how that compares to the last 4 January's:

JANUARY NEW LISTING SUPPLY HISTORY

January 2008 --> 1,918 new listings hit the market
January 2009 --> 2,031 new listings hit the market
January 2010 --> 1,829 new listings hit the market
January 2011 --> 1,688 new listings hit the market
January 2012 --> on pace for 1,513 new listings, down 10.3% or so from last January

With new monthly supply continuing to decline and total inventory tight, we fit into situation #2 - "Leverage likely remains balanced between buyer & seller with less options on the market for buyers to choose from".

By Q2 I will be able to delve deeper into price action across the markets once development on new sales tools are finished. In the meantime, we should see a sustainable rise in new deal volume over the next 4 months as MARCH through JUNE are by far our seasonally most active months for new deal volume...time will tell!


Talking Comps Analysis / The SE Condo Index

Posted by urbandigs

Wed Jan 25th, 2012 09:04 AM

A: I find myself getting into more and more talks about comps analysis lately and just wanted to put some thoughts into an article. My main point will continue to be: perform a comparable market analysis using the least amount of adjustable variables as possible! The more variables that you introduce that require adjustments, the more you will degrade the ultimate analysis. The simple solution to this is to stay in building, but the ideal solution is to stay within the same line of the target apartment. However, in the real world, data is not always available and exceptions must be made. Lets discuss. (originally published October 28th, 2011)

One fallacy that just rubs me the wrong way is when brokers start to justify higher property expectations using sold comps from a different building when there are perfectly good comps to use in the same building. The reasoning for this is usually always the same, "the in-building comps are too old, I never use a comp that is older than 3-5 months old". To that I say Hogwash! Let me explain.

#1 - First off, when trying to find out where the market is today relative to a closed deal do NOT go by the sale date of the comparable sale! Rather you should focus on when the sold comparable was SIGNED INTO CONTRACT to see how the market has changed since! Sure the deal may have closed 90 days ago, but for all you know the deal was signed into contract 7 months ago and had a delayed closing!

Here is an example:

-- Unit is signed into contract April 2011
-- Unit closes August 2011 after a delayed co-op board review and closing

Market conditions at the time of contract execution is what matters most; not the market conditions when the deal ultimately closes.

#2 - By leaving the building and using an outside building's sold comparable for an analysis, you are introducing the following variables that are impossible to quantify:

a) building service level
b) building financials
c) banks willingness to lend to building based on bldg's unique characteristics
d) building amenities
e) building policies & restrictions
f) building type (yes, I had brokers compare an ACTV co-op to a SOLD condo to argue for a higher bid from my client)
g) school zone

etc..How any one buyer values changes in Building features noted above is highly subjective! So, do yourself a favor and focus on sales in the same building as the target unit where these variables are constant!

#3 - By leaving the building and using a different unit altogether, you are introducing the following variables:

a) different layout
b) different size
c) different carrying costs
d) different exposure / views
e) different levels of natural sunlight

etc..

Think of the "Im using a recent sale in another building" argument now? Rather than keep all those variables constant by staying in-building and adjusting for a) floor, b) time, and c) renovations, you would have to adjust for 11-12 additional variables that quite frankly nobody has any means to quantify anyway? In Manhattan, every building is its own little unique marketplace.

Do not degrade a comps analysis and make more work for yourself simply because a highly relevant sale is 'deemed' too old to look at.

In today's world, we have different companies spending vast amounts of money to sanitize data and build all sorts of applications so that brokers & consumers have incredibly useful tools to help service their clients. We at UrbanDigs like to consider ourselves one of these technology companies, Streeteasy is the father and started it all, RentJuice is making ground in the landlord management business, Buyfolio built an amazing broker streamlining tool, and NabeWise is full of interesting neighborhood information. But the tool I am referring to for this discussion is Streeteasy's Repeat Sales Condo Index for Manhattan.

By only using repeat unit sales and a bunch of 'magic dust', as SE calls it, we have a tool that allows us to track Manhattan price action fairly accurately - by far, its the best tool out there for doing time adjustments on any comparable market analysis. To me, the index fits very nicely into how this market has behaved in the years up to peak, and in the years after peak. Sure there are outliers and individual sales that buck the trend, but in general, its a trustworthy tool to get a good idea of how today's market compares to a point in time in the recent past.

Here is how I do time adjustments when putting together a Comps Report for a client:

--TARGET UNIT 17A ASKING $1,500,000

--SAME LINE COMP UNIT 20A (3 floors higher and in similar condition) SOLD FOR $1,375,000 & DEAL SIGNED ON OCT-2009
*Many brokers would ignore this in building same-line, same layout, same views, same renovated comparable sale simply because its 2 years old - I would argue against that because its very likely the closest match to the target unit!

Then I go to SE's Condo Index and compare today's # with where the index was when the comparable unit was signed into contract on OCT-2009 (story from August 2011 so #s are from that time):

se_condo_index.jpg

Then its just some simple math as I point out on the above image:

STEP 1: Subtract 1,855 - 1,760 = 95
STEP 2: Divide 95 / 1,760 = 0.0539
STEP 3: Convert 0.0539 into percentage 5.4%

This is not trigonometry! Its simple math that any broker can do. So according to the SE Repeat Condo Index, the market today is roughly 5.4% higher than it was back in late 2009 - and that kind of jives with most brokers' experience in the field over the last two years or so as we saw a progressive reflation from early 2009 lows.

Simply apply the 5.4% to the comparable sales price you are analyzing: $1,375,000 * 0.054 and you come with a positive time adjustment of $74,250 - added together equals $1,449,250. That leaves you with 1 last adjustment for being two floors higher. Two floors is likely not a drastic difference in light/view so lets say $15,000 per floor, or a floor adjustment of $30,000 and you got your fair market price opinion done!

$1,449,250 - $30,000 (floor adjustment) = $1,419,250

I would expect bids to come in around the $1.42m range for this target apartment that is on the market asking $1,500,000 and I didnt have to worry about adjusting for a different building, a different layout, a different apartment size, different views/sunlight, different carrying costs, different bldg amenities, etc! Its a clean analysis using the most recent bid for the closest match to the target property that we have data for; without exposing the analysis to variables that otherwise would degrade the analysis!

CONCLUSIONS: Just because a past sold comparable is more than 6 months old doesn't make it useless! In fact, its significantly more useful than switching apartment lines or worse, switching buildings to justify a deal price. If you have to use a different line in the same building, fine, but then the job is to find relevant apartment types to compare; i.e., 2BR/2BTH vs other 2BR/2BTH sales in the bldg in different lines. We have tools at our disposal today to help us do these reports and to adjust for time, that we did not have years ago; so I urge you to USE THEM!! Like anything new, it will take some time to get comfortable with a new method over what you are used to but in the end I strongly believe the service you provide will benefit. Only go outside the building when there is no data to analyze, as these types of analysis (townhouses, walkups, etc) are the most challenging ones to produce.

Cheers!


Manhattan Neighborhood Supply Trends

Posted by urbandigs

Sun Jan 22nd, 2012 09:57 AM

A: As we get into the final days of January, lets take a quick look at how supply trends have been faring across Manhattan. In this post I will show you the "% CHG" in Active Supply trends for all Manhattan neighborhoods over the last three months & the last 12 months. The 3-mth trend will tell us how recent supply trends feel 'in the field' right now as buyers and their brokers seek out new product to see. The 12-mth trend will give us a broader view of the neighborhood's supply trends and tell us where we are today relative to the same time last year. In general, so far there has not been the usual surge in supply that we got used to for the month of January in this marketplace. Lets discuss.

The data doesn't lie so lets get right to what the new supply (active inventory) #s are telling us. Remember, our "Active Inventory" trends count all active exclusive listings by REBNY agents that are shared through the Rebny Listing Service:

1) are brand new to the market
2) have been re-activated from a prior "off-mkt" listing state
3) have been updated by the listing agent once in the last 30 days
4) have been "Active" on the market for less than 2 years


NEIGHBORHOOD SUPPLY TRENDS: 3-MTH & 1-YEAR % CHG
*sorted by 1YR % CHG

Tribeca: 3-MTH -7.6%, 1-YEAR +23.5%
East Harlem: 3-MTH -8.6%, 1-YEAR -2.8%
Upper West Side: 3-MTH -13.2%, 1-YEAR -3.8%
LES/East Village/Union Square: 3-MTH -18.3%, 1-YEAR -4.7%
Upper East Side: 3-MTH -7.4%, 1-YEAR -4.9%
Midtown West/Clinton: 3-MTH -12%, 1-YEAR -6.6%
Midtown East: 3-MTH -13.2%, 1-YEAR -7.2%
Murray Hill/Kips Bay: 3-MTH -11%, 1-YEAR -8%
Fidi/Civic Center: 3-MTH -17.4%, 1-YEAR -8.8%
Battery Park City: 3-MTH -5.6%, 1-YEAR -9.3%
Chelsea/Midtown South: 3-MTH -10%, 1-YEAR -10.8%
Gramercy/Flatiron: 3-MTH -25.7%, 1-YEAR -13.6%
Soho/Noho/West Village: 3-MTH -22.3%, 1-YEAR -14.5%
Harlem/Morningside Heights: 3-MTH -14.1%, 1-YEAR -18.5%
Inwood/Wash. Heights: 3-MTH -9.7%, 1-YEAR -21.9%
Harlem/Hamilton Heights: 3-MTH -12.6%, 1-YEAR -31.1%

This should visually tell the whole picture of the last 12 months of Manhattan supply trends! Sellers, we need more listings!!!

General Conclusions: With the exception of Tribeca that showed a noticeable year-over-year rise in supply (10.8% rise in co-ops, 27.2% rise in condos), every single neighborhood experienced a drop in supply from this time last year. This is consistent with discussions over the course of 2011 regarding 'Monthly New Supply' trends and the conclusion that "we are simply not seeing the levels of new supply come to market that we saw in 2009 and 2010".

Typically this is the time of year when 'new stuff' starts to come onto the marketplace. Right now we are on pace to show a monthly total of 1,195 new listings for this January. For some perspective, the last four January's showed the following new supply hit the market:

January 2008
: 1,918 listings came to market
January 2009: 2,031 listings came to market
January 2010: 1,829 listings came to market
January 2011: 1,688 listings came to market
January 2012: ???

Again, the real-time ticker shows us on a monthly pace for 1,195 new listings to hit the market. I would expect this # to rise as we close out January, but I'm questioning if we are seeing enough new supply to break the 1,688 level that we booked for last January. Time will tell.

One might make the predictive statement that with less supply coming to the marketplace, it will be more difficult to see a rise in new deal volume. Frustrated buyers waiting for new supply may decide to put their search on hold until market dynamics change and more supply starts to come on. It's too early to analyze new deal volume right now because its very possible that 100s of deals are currently "in the attorney process" right now; which is impossible to track since brokers very rarely use the 'Accepted Offer / Contract Out' listing status.

This is the major reason why the uptick in new deal volume tends to start in February - first the stuff comes on, then the buyers bid, then the attorney's get going, then the deal gets signed and only then do we capture it. I'll start to dig into this years bonus season production as we get closer to mid February.


How to Interpret The Trend: The Anatomy of a Chart

Posted by urbandigs

Wed Jan 18th, 2012 01:26 PM

A: Interpreting real-time Manhattan charts could at times be very confusing, leaving us to wonder what the ultimate market signal is that we may be missing. Between positive and negative correlations and seasonality, are the charts telling us that the market is weakening, strengthening or simply 'bouncing around'? Enter Ana Maria Sencovici, agent at Douglas Elliman and publisher of The Apple Peeled, who had the great idea to discuss "How to Interpret The Trend: The Anatomy of a Chart" here on UrbanDigs. I knew a long worded discussion with numbered points might be difficult for some to digest, so it was Ana's idea to visualize a basic Manhattan chart and simply circle different trends with an explanation of the market signals it may be telling us. A thousand thanks Ana for the help in putting this discussion & visual together!

Lets take a simple look at Manhattan Pending Sales vs Active Supply trends since January of 2008, and see how we can break down different trends over the last 4 years:

AnatomyofChart1.gif

The basic trend types as outlined in the above image:

#1 The Positive Correlation - occurs when both supply and demand trends rise or fall together.

When they are rising together its a sign of a pickup in general market activity and usually a moderately strong market signal. We usually see a positive correlation in the first 4-5 months of the calendar year as new supply comes to market and buyers step up deal signings.

When they fall together its a sign of broader market sluggishness as both the pace of supply & demand decline. When sellers lose confidence that they can secure a strong big in the current marketplace, they have a tendency to remove their listing from the market. Those that must sell for whatever reason will make up the bulk of supply as those testing the market fade away.

#2 The Negative Correlation - occurs when both supply & demand trends are in opposing directions. Generally indicates an ongoing shift in the marketplace either to the upside or downside:

Positive Market Signal: when supply falls but pending sales rises
Negative Market Signal: when supply rises but pending sales falls

#3 Off-Market Seasonality - occurs when supply falls sharply but the pace of demand stays relatively constant.

Might indicate a slight leverage advantage to the seller as supply tightens up, but more than likely it is a general market pause as sellers use a holiday break or slow summer market to "freshen up" a listing. As supply falls, many buyers tend to pause as well until more inventory comes back to market.

#4 Gap Narrows - occurs when one measure outpaces the other and effectively "closes the gap" between the two. Could indicate either a positive or negative market signal:

Positive Market Signal: when the rise in pending sales outpaces the rise in new supply and may eventually cross if supply falls enough
Negative Market Signal: when the rise in supply outpaces the rise in pending sales OR the fall in pending sales outpaces a fall in supply. Turns into a more negative signal as the lines cross if pending sales falls enough

There you have it! I'll hope this generates some questions, especially if my conclusions need editing? Would love some opinions as interpreting the Manhattan trends is what this site is all about!!



Bonus Bummer: Another Test for the Manhattan Market

Posted by urbandigs

Tue Jan 17th, 2012 02:12 PM

A: Wall street bonuses are starting to creep in and talk is that comp is down between 20%-60% or so, a huge range. Job losses in credit at the big banks are concerning as fixed income got whacked. All the worries about regulation post credit crisis and how the 'securitization revenue game is finally over' seems to becoming reality for 2011 bonuses. Articles talk how bonuses this year are expected to be at their lowest levels since 2008 levels. Translating to the Manhattan markets, how will this affect the depth of the buyer pool and new deal volume; especially in the $2M+ segments of the market? Time will tell and I'll be tracking it. We should note that since 2011 saw such a surge in high end deals over $5M between March and July, I think we have our work cut out for us to break those levels when we ultimately compare market performance on a year over year basis. Off the bat, I would expect Q3-2012 to have a hard time beating Q3-2011! So expect poor year over year numbers down the road. This is simply another test for the Manhattan marketplace, especially the high end, as we head into our 'active' selling season.

I discussed thoughts on this year's bonus season back in September and here are the bullet points that I am hearing from my contacts today:

#1: Overall Comp down between 20% and 60%
#2: Retention bonuses very hard to come by right now compared to years past
#3: If 2010 was 2/3 cash, 1/3 deferred then 2011 looks to be 1/3 cash, 2/3 deferred - in other words, cash component of comp is down again
#4: Deferred bonuses from years past are vesting into a down stock market for banks - what compensation was worth in 2010 is worth noticeably less today
#5: Fixed income job losses at big banks - talk about how all the jobs derived from the 'profit machine' from the securitization process seem to disappearing

This has a tendency to impact confidence among those wall streeters looking to buy or sell, upgrade or downgrade, as they wait for their compensation package to come in. I'm even hearing whispers of situations where the "bonus is that you get to keep your job".

From my end the chatter seems consistent so I welcome any outside opinions on the topic.

Here are the recent articles discussing the 2011 Wall Street Bonus Season:

WSJ.com: "Bank Pay to Be Lowest since 2008" -

"As banks prepare to report fourth-quarter results and make final bonus decisions for 2011, total compensation is likely to be the lowest since 2008, when the financial crisis destroyed some firms and left many survivors on government life support.

At Goldman Sachs Group Inc., many of the roughly 400 partners can expect to see their 2011 pay cut at least in half from 2010, according to people familiar with the situation. Pay for some employees in the New York company's fixed-income trading business will shrink by 60%, with some workers getting no bonus, these people said.

Morgan Stanley is expected to shrink bonuses for some investment bankers and traders by 30% to 40% from 2010, said people familiar with the matter. Pay worries have been mounting up and down Wall Street for months amid lower trading revenue, languid deal-making, new regulations and anxiety about the global economy. Other pressures include weak financial-company stock prices and sour public sentiment that culminated in the Occupy Wall Street encampment in New York."

BusinessInsider.com: "Morgan Stanley Cash Bonuses Will Be Capped At $125k" -
Responding to a difficult environment for Wall Street, Morgan Stanley plans to tell employees this week that bonuses will drop sharply, with cash payouts capped at $125,000, according to people familiar with the matter.

Some top executives will receive nothing now, deferring their 2011 payouts until the end of this year.

The New York-based bank, run by Chief Executive James Gorman, will defer the portion of any bonus past $125,000 until December 2012 and December 2013, according to one of the people familiar with the matter. Mr. Gorman and the other nine members of Morgan Stanley's operating committee, the firm's ruling body, will defer their entire bonuses for the year, this person said, collecting them later.
NYMAG.com: "Wall Street Bonuses Will Be Way Down" -
"Companies definitely have to realize the party as they know it is over," explained an analyst. Another said, "Obviously this is not a good year for Wall Street compensation and an awful lot of the pressure is going to fall on managing directors," while one warned, "We do not expect a robust recovery in 2012." All of the doomsday forecasting goes along with estimates of a 27 to 30 percent fall in compensation overall, with employees at Goldman Sachs and Morgan Stanley possibly seeing their pay for the year halved.

The smaller numbers are owed to "lower trading revenue, languid deal-making, new regulations and anxiety about the global economy," and come amid layoffs industry-wide.
It is what it is and Manhattan will do what its going to do, regardless of discussing reality on a site like this. The question really becomes, "where are bids coming in today in all segments of the market and are sellers hitting those bids?"...this is the question that we typically have to wait 2-3 months to find out as deals go to contract ultimately close and become public record.

As of now, here is a quick look at Manhattan Pending Sales (green) vs Active Supply (red):

bonus_seasons.jpg
2011's active season lasted until mid June and the high end stayed hot until early August - how will this year compare?

My thinking is that we won't be able to beat out 2011's active season in part due to the topic being discussed. Here are the #s we have to beat along with how I interpret deal volume:

2011 MANHATTAN MONTHLY DEAL VOLUME
January 2011 saw 647 new deals signed - slow market
February 2011 saw 844 new deals signed - normal/active market
March 2011 saw 1,048 new deals signed - very active market
April 2011 saw 1,006 new deals signed - very active market
May 2011 saw 951 new deals signed - active market
June 2011 saw 988 new deals signed - active market

In terms of monthly new deals signed, interpretations should be as follows:

1) anything below 550 is a very slow market (post-Lehman was in the low 300s)
2) between 550-650 is a slow market
3) between 650-800 is normal market
4) between 800-900 is normal/active market
5) between 900-1,000 is an active market
6) anything above 1,000 is a very active market

Mid month right now the 30-day pace of new deals signed is a weak 581. I'm expecting this # to rise noticeable as the last two weeks of January play out. Time will tell and I'll continue to monitor new deal volume/supply and sales trends as 2012's active season unfolds.


So...How's the Market Doing? Expect Ticker to Jump

Posted by urbandigs

Fri Jan 13th, 2012 09:08 AM

A: So the market managed to pull out 702 new deals in December. This is relatively flat compared to last December but down 17% from December of 2009. The 2009 market was crazy volatile and saw a delayed seasonality as buyers waited for stability before jumping back in - so no surprises there. All in all this seems very normal to me. If Manhattan had a VIX, we would be around 17-18 now. Back in 2009 it was probably over 50. Buyers today expecting to price in future downside risks from events that have not played out yet, are finding this market very frustrating. Just finding well priced quality product is proving difficult. The side effect is more demand for rentals. Have you seen the latest rental #s published? You got average rent rates up 9.5% from last year with vacancy rates back below 1%! Renters can kiss mass landlord concessions good bye for the next year or so. It really is amazing what this market is able to sustainably absorb. Anyway, lets take a check on the ticker and see how recent deal volume is doing and explain why we should expect a jump in the 30-day 'contracts signed' # as we finish out the last 2 months of January.

Here is a quick look at the Real-time Manhattan Market Ticker, showing us Daily/7-day/30-day views of new supply to come to market and new deals being signed:

Untitled-7.jpg

As of this writing (last night), over the last 30 days the Manhattan market has seen:

979 new listings come to market (blue box)
651 new deals signed into contract (red box)

This is the most accurate way to check mid-month to see how that month is trending. For some perspective, consider this:

JANUARY NEW LISTING SUPPLY HISTORY


January 2008 --> 1,918 new listings hit the market
January 2009 --> 2,031 new listings hit the market
January 2010 --> 1,829 new listings hit the market
January 2011 --> 1,688 new listings hit the market
January 2012 --> ???

Its clear that at this point we are way under trend for new supply for this time of year. Sellers, are you listening? By looking at the market ticker above, I can tell that so far January is on pace for 979 new listings to hit the market; significantly less than past January production. But there is one bright spot regarding how the 30-day ticker works that we should point out.

The 30-day ticker that is counting 979 new listings right now is currently tallying up information between the dates of December 14th to January 12th - which is the past 30 days. We all know that the last 2 weeks of December didnt see any new listings come in, so there are 2 weeks of very weak data embedded in that 979 total. As we finish out January those weak last days of 2011 will be filtered out, as new data comes in the front end to replace it. Remember, its a 30-day tally and every day it moves one notch forward gaining the new information today and losing the 30th day's information in the tail end. The point? Expect this # to rise noticeably over the next 2 weeks as the weak end to December is filtered out of the count.

The way I know this is by looking at the same market ticker but focusing on the 7-day trend instead of the 3-day trend...here take a look:

Untitled-8.jpg

Manhattan saw 450 new listings come to market over the last 7 days (green box)!

If this weekly pace continues we should see over 1,800 new listings come to market by months end. This is how you use the weekly trend to see which direction the monthly trend might tick in the future. Expect that 30-day New Active # to jump from 979 today to well over 1,000 over the next few weeks. Same logic goes for the 30-day Contract Signed #.

The interesting twist as of now is that the same is NOT true for the current weekly pace of Contracts Signed. Weekly deal volume is on par with the current 30-day trend of 651 deals signed. If history is any guide, deal volume will ramp up as we get into February and buyers have a chance to bid on new property that comes to market. First the inventory comes on and then the deals follow.

So far this past week, lots of listings are coming on...so lets keep that trend alive because this market needs new product that is realistically priced! Buyers are waiting!!!




Tribeca Co-op vs Condo Market / Flaws of Small Sample Size

Posted by urbandigs

Wed Jan 11th, 2012 09:43 AM

A: Wanted to have a quick discussion about a common problem that I often encounter when discussing UD real-time data tools with fellow brokers and clients. Lets use the Tribeca market as an example so the discussion can be a market update as well. Every broker out there would like to be able to provide accurate information on exactly what their client is buying or selling into. For example, what is happening in the Tribeca, $700,000 to $850,000 price range, 1br/1bth, postwar full service doorman condo market that allows pets and has a building roofdeck. So they ask me if I can add in that functionality but I try to explain that if they get too granular in their request for real time charts on a Manhattan submarket, that there will not be enough data to push forth a worthwhile trend - the result could be very high % change numbers and a useless chart that either under or over-exaggerates what is really happening out there. For me the debate has become whether to build an interface that only goes so far but still pushes forward the highest quality trend OR let the user chart whatever they want and know that 1,000s of useless chart combinations exist. Lets discuss.

Being in a service industry, Manhattan brokers want to give their clients what they ask for; and who can blame them. From building policies and amenities to manually entering in a small price range. But when it comes to charts on this marketplace, it's best to focus on quality than granularity. For those that don't know:

Granularity is the extent to which a system is broken down into small parts

For Manhattan charts this would mean the extent to which we allow you to slice & dice the Manhattan market to see whats happening (think bedrooms, bathrooms, postwar/prewar, apt size range, price range, bldg type, bldg service level, roofdeck, building policies, etc.)

Sample size
refers to the number of objects in the sample

For Manhattan charts this simply means how many units are either active, pending or off-mkt.

For our interface on UrbanDigs you can't let the user get too granular or else you will risk having too many charts with very low sample size rendering the trend useless.

Lets check in on the Tribeca marketplace and compare pending sales trends for both co-ops and condos:

tribeca_coopcondo.jpg

Some facts:

Fact #1 - This is showing you Demand trends (Pending Sales) for the entire Tribeca Co-op & Condo Market!
Fact #2 - There are only 5 Tribeca Co-ops Pending right now!
Fact #3 - Over the last 2 years, Pending Sales for Tribeca Condos are +8.7%
Fact #4 - Over the last 2 years, Pending Sales for Tribeca Co-ops are -45.5%

Now lets see what happens when you want to see only the Tribeca Co-op market with 2+ bathrooms and priced between $1M-$2M (getting more granular):

tribeca_coopcondo22.jpg

Only 1, and the chart is basically useless. The trend went from 4 to 1 and is down 75% over this time period. If 1 more unit goes to contract, it will go to 2 and show a quarterly rise of 100%. Useless.

Interpretations might be:

Interpretation #1
- Tribeca 2+ Bath Co-op Market must be really weak
Interpretation #2 - Tribeca 2+ Co-op Market likely has little to no supply

I understand this is a section of Manhattan that we all know has hardly any inventory, but that is the point of the discussion.

This is the reason why we have chosen not to add the following details to our chart interface (at least at this time):

- building service level (f/s drmn, p/t drmn, elev only, walkup)
- pet policy
- private outdoor space
- prewar/postwar
- smaller price ranges
- building amenities (roofdecks, pools, storage, etc.)
- monthly carry maximums (maintenance + re taxes)
- flip tax (yes, I even get asked to be able to chart out only buildings with flip tax)

etc..Imagine how many chart combinations will be useless..you will try to give the client exactly what they want but you'll have no idea what it really means in the end? The point is to build a system that gives you customizability and does not sacrifice showing you meaningful trends.

For this case, I would advise my client to focus on the broader Tribeca trend when discussing buy side or sell side strategies since we have significantly more data on it.

Would love some thoughts on the topic...


Checking in on Manhattan Price Action

Posted by urbandigs

Wed Jan 4th, 2012 12:57 PM

A: With Q4 in the books and the major brokerage firms releasing their quarterly reports, lets take a quick peak at Median & Average Sales findings and trends. Also, please consider the Q4 price action as a preliminary estimate, subject to future revision as more Q4 sales roll in after the reports publish date. I'll briefly discuss.

The UrbanDigs system tracks sales trends like everyone else except with one exception: we set our sales data to a 90-day delay! The fact of the matter is that 100s of sales that actually closed in Q4 of 2011 have not yet been filed with the city register and not included in the report. This means that the price trends will paint an incomplete picture until enough time passes to allow for all Q4 sales to become publicly available.

There are two ways to combat this problem:

1. Revise the reports/findings as more data comes in
2. Postpone releasing findings until most of the data is in


We chose the latter for the UrbanDigs system. Therefore, we should come to the following conclusion regarding Q4 sales figures published today:

Consider the Median & Average Price Trends a PRELIMINARY #, that likely will be revised as more data rolls in and future reports are released. I checked with a few major firms about this and it was confirmed that Q4-2011's findings will be revised in future reports. That means when it comes to Q4-2012's report released this time next year, the Median & Average Price trends for this most recent quarter might change.
Just like our country's GDP #s come in as Preliminary Estimate --> Second Estimate --> Third Estimate --> Advanced Estimate (click here to see what I mean), Manhattan sales figures should be similarly revised as quantifiable data rolls in at a lag.

For more timely market conditions & trends, we must look to changes in inventory as Manhattan property goes through its life-cycle of ACTIVE to OFF-MKT to BACK-ON-MKT to IN CONTRACT and ultimately to CLOSED. This way we can track the pace of deals signed, the pace of new inventory coming to market, and the pace of listing inventory being pulled from the market - and break down that data/trend anyway we want.

Moving on. For sake of ease, I consolidated Manhattan's MEDIAN & AVERAGE SALES trends from the major brokerages & streeteasy.com into this one visual that will show you how Q4-2011 ended as well as Qtr-to-Qtr trends and Year-over-Year trends.
manhattan_sales_table.jpg
Links to each report are below.

This jives with what UrbanDigs real-time trends have been telling us for the past few months. I'm on a mission to get Manhattan brokers to adjust to this tracking system so they always have the entire marketplace in the palm of their hand. Understanding how to interpret the tools and trends is an ongoing process, but I'm doing my best to explain how I use these tools in blog posts.

It was easy to see back in mid-November how today's reports would shape up by watching the leading indicators on this site. The discussion on November 14th, "Market Ticking Up / Looking Ahead to Q4" goes into more detail and displays a Pending Sales vs Actual Sales Volume chart with the following conclusion:
pending_acris_nov2011.jpg


Conclusions from this chart: The pace of newly signed Manhattan deals started to slow from its peak in July and eventually bottomed out in October. The pipeline of 'pending deals' today is significantly lower than 3 months ago leading to the conclusion that Q4 sales volume will most likely be much lower than this past Q3. I would also expect slight qtr-to-qtr drops in both median and avg price action given the makeup of deals waiting to close for Q4 - i.e., all price points saw a decline in pending sales during Q3.
Any agent can utilize these same tools to track any segment of the Manhattan market in real time. Market transparency, its a good thing and as more innovations are launched, the efficiency of the marketplace should improve. A plus for everyone involved in this crazy game we call Manhattan real estate!

ADD-ON: We show Manhattan inventory at 6,319 as of today January 4th, 2011. This is down 6.7% over the last year and down 14.8% over the last 3 months. I'm seeing inventory trends all over the map in these reports and at much higher levels. Elliman's inventory levels seem closest to our count. This is now the 14th consecutive month that the 'year-over-year' pace of new supply has declined! In other words, we are simply not seeing the levels of new supply come to market that we saw in 2009 and 2010. This lack of new supply is keeping pressure on inventory levels and frustrating many buyers who expected more 'choices' of well priced, quality products in their targeted submarket. Subscribers can further break down the data to see how their local neighborhood and price point have been performing.

=======================

Market Report Links for the above sales table

Streeteasy Q4-2011 Report

Corcoran Q4-2011 Report


Elliman Q4-2011 Report

Halstead Q4-2011 Report


2011 Manhattan Co-op vs Condo Neighborhood Review

Posted by urbandigs

Tue Jan 3rd, 2012 09:48 AM

A: So which neighborhoods outperformed and which underperformed in 2011? Lets take a quick look at 1YR demand trends for Manhattan neighborhoods below 96th Street that UrbanDigs tracks to see if it was the co-op or condo segments that shined.

I broke down these trends to show you the pace of demand for both the co-op and condo markets for Manhattan neighborhoods below 96th over the course of 2011. I put the years inventory trends for the neighborhood in parenthesis. Generally speaking, when interpreting demand trends we should also be cognizant of supply trends - for example, if pending sales falls 25% over the course of a year but supply falls 40% over the same time, then the decline in demand is "muted" by limited supply. On the other hand, if pending sales falls 25% over the course of a year but supply rises 20%, then that is a clear signal of weakness in that local market.

How has pending sales trends performed for the co-op + condo markets of Manhattan's most popular neighborhoods in 2011? The data is below with a link to each chart (subscription required):

Format = Neighborhood: Pending Sales % change for 2011 - (supply % change for 2011)

Upper East Side Co-op Market: Pending Sales +10.6% (supply down 2.2%)
Upper East Side Condo Market: Pending Sales -5.7% (supply down 16%)
*link to chart

Upper West Side Co-op Market: Pending Sales +14.3% (supply down 4.1%)
Upper West Side Condo Market: Pending Sales -7.8% (supply down 2.8%)
*link to chart

Tribeca Co-op Market
: Pending Sales -14.3% (supply up 25.8%)
Tribeca Condo Market: Pending Sales +57.4% (supply up 46.6%)
*link to chart

SoHo/NoHo/WVill Co-op Market: Pending Sales -1% (supply down 19%)
SoHo/NoHo/WVill Condo Market: Pending Sales -3.7% (supply down 18.8%)
*link to chart

Murray Hill/Kips Bay Co-op Market: Pending Sales -21.5% (supply up 3.1%)
Murray Hill/Kips Bay Condo Market: Pending Sales +30.8% (supply down 27.9%)
*link to chart

Midtown West/Clinton Co-op Market: Pending Sales +22.7% (supply up 16.5%)
Midtown West/Clinton Condo Market: Pending Sales -12.2% (supply down 25.7%)
*link to chart

Midtown East Co-op Market: Pending Sales +20.8% (supply up 8.5%)
Midtown East Condo Market: Pending Sales Flat (supply down 13.5%)
*link to chart

Lower East Side/East Village Co-op Market: Pending Sales +4.6% (supply down 5.2%)
Lower East Side/East Village Condo Market: Pending Sales -60.6% (supply up 1%)
*link to chart

Gramercy/Flatiron Co-op Market: Pending Sales +3.1% (supply down 11.9%)
Gramercy/Flatiron Condo Market: Pending Sales +12% (supply down 17.2%)
*link to chart

Financial District Co-op Market: Pending Sales +40% (supply down 43%)
Financial District Condo Market: Pending Sales +88.5% (supply up 2.5%)
*link to chart

Chelsea/Midtown South Co-op Market: Pending Sales +26.9% (supply down 2.1%)
Chelsea/Midtown South Condo Market: Pending Sales +32.8% (supply down 17.5%)
*link to chart

THE LEADERS

FiDi Condo Market - saw pending sales rise 88.5% over the course of 2011
FiDi Co-op Market - saw pending sales rise 40% and supply fall 43% over the course of 2011
Murray Hill/Kips Bay Condo Market - saw pending sales rise 30.8% and supply trends fall 27.9% over the course of 2011
Chelsea/Midtown South Condo Market - saw pending sales rise 32.8% and supply down 17.5% over the course of 2011

THE LAGGARDS

LES/East Village Condo Market - saw pending sales fall 60.6% and supply rise 1% over the course of 2011
Murray Hill/Kips Bay Co-op Market - saw pending sales fall 21.5% and supply rise 3.1% over the course of 2011

Let's see what the new year brings in! Cheers and wishing everyone a Happy, Healthy & Prosperous 2012!