March in the Books - Monthly New Deal Vol Highest on UD Record

Posted by urbandigs

Mon Apr 2nd, 2012 08:37 AM

A: Manhattan continues to shine in regards to new deal volume, which is the best way to get a feel for the current 'pace of demand' in the marketplace right now. Today's activity will ultimately fuel future quarterly reports and from what I am seeing I think its safe to expect solid Q2 and especially Q3 reports in the near future. The UrbanDigs monthly tracking systems show that March-2012 booked 1,213 new deals signed, the highest monthly total for any month of March since we started keeping track in 2008. Given continued tight supply conditions, the market probably "feels" even more active if your an active buyer, seller or broker.

With sales reports lagging 4-6+ months, the only way to see what's happening in the field right now is to look at real-time inventory trends. That is, is a large amount of new supply coming to market? How is current deal volume? Is the pace of new supply outpacing new demand or vice versa? Since the contract price is only known to the parties of the transaction we will not know price discovery until a) the closing occurs and b) the city publicly files the transaction - a lag that can be 4-6+ months. By then, the market may be producing very different kinds of supply/demand numbers in the field. So lets get right to this real-time information and see what's really going on out there.

First, lets check in on Total New Supply by Month for the entire Manhattan marketplace (in other words, how much stuff is coming on the market each month):


Because of seasonality, its best to look at a month's production relative to the same month in past years. If I were to count how much new product came on to the Manhattan market in the months of March since 2008, it would look like this:

March 2008 --> 2,094 new units came to market
March 2009 --> 2,070 new units came to market
March 2010 --> 2,040 new units came to market
March 2011 --> 1,932 new units came to market
March 2012 --> 1,759 new units came to market

The trend of declining supply should be clear. But what's even more clear is when you look at each month's bars over the past few years - do you see declining monthly trend of new supply since 2010? On a monthly basis, there is simply "less stuff" coming to market! Last month was the first month since almost a year and a half that we saw a rise in 'month-to-month' new supply to hit the market. That rise only lasted 1 month, as March 2012 produced 9% less supply than March 2011. The result is Manhattan total supply down around 11% from a year ago and 10.2% from 2 years ago.

Lets now move the focus on to Monthly New Deal Volume for Manhattan since 2008:


New Deal Volume for Manhattan in the month of March is:

-- up 15.7% from last March-2011
-- up 39% from February-2012

All with tighter supply. Today's buyers know fairly quickly when a good deal on a property presents itself. Its a special bonus for sellers because the market should tell you rather quickly whether or not you are priced realistically. Its up to you and your broker to recognize when your not priced right and how to adapt before market action slows down. This level of new demand ultimately will be self-defeating, and no trend lasts forever so sellers are advised to take advantage. Buyers are paying for views, private outdoor space, and renovations right now -- so if you have none of these and are not seeing any action, check your price!

Back to measuring the pace of demand, if I were to count how many new deals were signed in the Manhattan marketplace in the months of March since 2008, it would look like this:

March 2008 --> 1,141 new deals signed
March 2009 --> 650 new deals signed (post-Lehman woes)
March 2010 --> 1,060 new deals signed (post-Lehman recovery)
March 2011 --> 1,048 new deals signed
March 2012 --> 1,213 new deals signed

Its fair to say most of these deals signed will ultimately close over the next 2-4 months and likely be counted in the Q3-2012 report. Which is another way of saying that the Q3-2012 market report released October 1st, 2012 is really reflecting market conditions happening right now!

For observations on price action, we have to go by 'brokers feel' based on what is being seen in the current marketplace and possibly looking at last asking price of listings that go to contract. The issue with the latter is that there is often a noticeable difference between the last asking price and the ultimate contract price where the bid came in. Analysis of what price points are going to contract is helpful when discussing which segments of the market are currently seeing the most demand. For now, this is the best way I can sum it up:

Manhattan 3-MTH Pending Sales % Change for UrbanDigs Price Points

Manhattan Overall (baseline) --> up 33.1%
Manhattan <$1M --> up 32.1%
Manhattan $1M-$2M --> up 40.6%
Manhattan $2M-$5M --> up 32.1%
Manhattan $5M+ --> up 13%

The $5M+ market, while active, seems to be the least active out of the all the price points the UrbanDigs system tracks. Subscribers can check on hyper-local trends in the UD Submarket chart tab. We will work to expand all chart functionality in the near future to give you more flexibility in your chart searches - we just always must keep in mind that when it comes to real-time stats, having a large enough sample size to push forth a meaningful trend is always a concern. If you get too granular on a real-time pending sales or supply chart, your sample size will be way too low and ultimately become meaningless.

Rock on Manhattan, rock on!