WSJ: Condo Sales Rise in Manhattan
A: Warning, the WSJ.com article is looking in the rear view mirror. So do not make the mistake of thinking this article published today corresponds to the market today. Rather, the rise in condo sales reported for August was more a function of contracts that were signed in the April-May period; when sales pace was quite more active than it is today. Since that 'active' period, pending sales actually declined steadily for the entire summer, and only started to tick UP in the last 6-7 weeks or so. Lets discuss.
WSJ.com reports, "Condo Sales Rise in Manhattan":
Manhattan's condominium sales began showing signs of recovery in August after posting steep declines in July with the end of federal tax credits for first-time home buyers. The number of condo sales increased by 12.1% in August from the month a year earlier, representing a recovery from the steep drop-off in July.Now, lets take a look at this period starting from the time where the deals that closed for August, actually were signed - likely the April, May, perhaps June time frame. Here is a chart showing Pending Sales vs ACRIS Sales trends from March 15th to the End of August:
Manhattan condo sales had declined by 34% in July--the largest drop during that month since Radar Logic began collecting the data in 2000--as the stimulus from the homebuyer tax credit wore off.
So YES, our systems show the rise in ACRIS sales (market wide - not condo only) in both July and August. If you are following UrbanDigs' pending sales trends, you can see in advance the pipeline of deals that likely will close and get recorded. This chart shows you the ACRIS Sales trends (red line) rising in July and August as a function of the pipeline of deals signed into contract 3-4 months prior. ACRIS Sales are lagging and paint a picture of a marketplace 3-6 months ago, not today!
Here is the thing you should know. While its good to have a general idea of price action in Manhattan and our submarkets for future comps analysis, use caution how far you take that information. If you are buying or selling any one property, that apartment is unique both on its own and to the building that it belongs! You should be doing an analysis IN-BUILDING, or at the very worst, in nearby buildings that are highly comparable with a unit that is highly comparable.
As you start moving outside your building, the integrity of the analysis starts to degrade. Every building is perceived by the buyers differently and valued in its own way. Things from building aesthetics, how well run the building is, building financial reserves, building amenities, school zone, what kind of retail tenants the building may accommodate, etc.. Every apartment also differs in layout, footprint, exposures, quality of views, amount of natural sunlight, etc.. In an ideal world, its always best to do appraisals and property valuations using same line sales in the same building as the target apartment! Always!
Then its a matter of doing a few adjustments like an appraiser would do:
1) Time Adjustment - how has the general market changed since last comps used. I look at contract signed date, not the sales date to do the time adjustment
2) Floor Adjustment - generall ranges between 10k-25k per floor. More for drastic changes in view/light, less for no changes in view/light
3) Renovation Adjustment - Have to do a renovation adjustment if the comparable sale was in a different state than the target apt.
4) Special Features Adjustment - Think outdoor space, well done duplex PHs, fireplaces, etc..
I discussed "Valuing Manhattan Real Estate" back in 2009 - its a detailed look at how I perform comps analysis for clients. For now, what you need to know is that the decline and recent tick up in Pending Sales, shown right here on UrbanDigs.com, is the pipeline that fuels future ACRIS sales and future quarterly market reports by all the big firms. Generally, volume leads price action. What I see now is a sluggish upcoming Q4 sales volume reflecting the slow summer that will ultimately decline from Q3-2010, and be released January 2nd, 2011.