Market Still Active - Weekly Deal Vol High
A: Weekly deal volume for Manhattan is in the low 300s for the second consecutive week, putting us on pace to easily break the 1,000+ new deals signed level for March. In the field I am seeing lots of 'contracts out' so I dont see any reason why the current pace of deal vol will dry up anytime soon. Lets quickly check in on the daily Manhattan market ticker and take a look at 1YR supply/demand trends for the city that never sleeps.
First, the real-time Manhattan Market Ticker (snapshot from midnight last night) which captures daily deal volume, daily new listings to hit the market and daily off-market listing updates direct from the RLS:
As usual, I boxed out the CONTRACTS SIGNED row so you can more easily see the latest deal volume #s:
# of deals signed Friday --> 49
# of deals signed Thursday --> 53
# of deals signed last 7-days --> 315
# of deals signed last 30-days --> 1,139
Use the below graph to interpret market conditions over the past 30-days:
The market has seen this kind of action for the past 2-3 weeks, indicating a very strong market all while inventory levels are 11% lower than this time last year. Always look at supply in relation to demand to gauge the strength of a local housing marketplace:
If demand surges and supply surges --> the rise in supply mutes the strength of the rise in demand
If demand surges and supply stays flat --> slightly stronger signal as demand continues to rise without a rise in supply
If demand surges and supply falls (current scenario) --> strong market signal as demand continues to surge even with fewer properties on the market
Let me show you the last 1YR of Manhattan Supply (red line) & Demand (green line) so you can see how the current situation is:
UrbanDigs Note: Tight supply and surging deal volume is the story of Manhattan right now. There is simply a lack of well priced, desirable product on the market right now. Real buyers who are actively looking in their targeted sub-markets are quite aware of current market conditions as low ball bids don't get desired responses and 'multiple offers in' and 'contracts out/showing for backup' updates from seller broker are common - especially downtown. As real buyers lose out on 1-2 highly desired property, you can bet that they will get more aggressive when that 3rd one hits the market - creating a cycle that tends to feed on itself. Real buyers feel a sense of urgency as they go through these kinds of situations and miss out on desired property. The question is how long this high level of activity will sustain itself given the tight supply out there. In March 2011, the market booked 1,048 new deals signed - In March 2010, the market registered 1,060 new deals signed. Current 30-day pace is 1,139. This quantifiable data should speak for itself. Some notes for buyers and sellers.
Sellers: We need product! Just beware of pricing high and missing out on the current action. Just because deal volume is high, does NOT mean the market is seeing a huge rise in price action. I would advise to price realistically and let the market work for you. If you choose to test out a higher price, fine, just re-visit that strategy in 2-3 weeks if no acceptable bids are received. Your best action will come in those first 2-4 weeks.
Buyers: I know its frustrating not having as many options as there were 1 and 2 years ago, and then losing out on a desired property. Try to keep emotions in check if you do get involved in a multiple offer situation. A good comps analysis should allow you to come up with a 3% fair market opinion for most active properties - just be prepared to go towards that higher end of the range given current conditions. If you do get a deal in place at a price that works for you, stay on top of your attorney to conduct diligence in a timely manner (4-5 business days once all docs are received) without sacrificing quality of the review. The seller is entitled to entertain offers until a contract is fully executed! My best advice for those in this part of the process is to make sure your buyer attorney communicates often with the seller attorney and sets expectations on when the contract is expected to be signed. These kinds of updates can/do save deals! The worst thing your attorney can do once deal terms are agreed to is a) disappear for 3-5 days or b) maintain radio silence during the diligence process.