Tuesday, September 20, 2011

July Manhattan Market Update:

 Lets get right to the freshest data available on the pace of new supply and the pace of newly signed contracts to see how the Manhattan market performed in July compared to both the prior month and the year ago period.

First, lets look at the pace of new supply coming to market on a monthly basis:

new_active_july2011.jpg

Conclusions: This is now the 10th consecutive year-over-year monthly decline of new supply to hit the market. If it feels like there is not that much new supply out there, your right. The data shows that the current pace of fresh, new listings hitting the Active marketplace right now is way down from both last month, and the same period last year. Inventory remains tight which means there is even less high quality product out there that is priced to sell quickly. This is adding to downward pressure on inventory levels right now.

Second, lets look at the pace of new contracts signed on a monthly basis:

july_2011csgn.jpg

Conclusions: We saw a big drop in new deals signed in July, to 713. This is down from 988 last month and mostly in line with July 2010's total of 760. Seasonality is likely the main reason for this after seeing 4 consecutive months of between 950 - 1,150 new deals signed. Its not easy to sustain 950+ new deals signed, especially with less product coming to market each month; as evidence by the first chart above. We should expect a tick down in new demand as we get into July & August and we are seeing that right now. It happens to be occurring as equity markets get hit with fresh fears of a possible economic slowdown - so I can understand why some out there think this might be a sign of a new slowdown to hit the Manhattan market. It's just too soon to tell considering the strong levels we are coming from the past 4 months.

Finally, here is a 1QTR view of Manhattan Pending Sales vs Active Inventory:

pend_vs_actv2011.jpg

Conclusions: Both pending sales and active inventory levels are down around 9% over the past 3 months. The only metric seeing a relative uptick from a few months ago is Off-Market trends; which makes sense given this time of year. Usually as we enter the slower summer months, the pace of listings being removed from the active marketplace rises; and off-market trends are showing that right now. So, active inventory is being pressured to the downside by two main elements:

1) less and less new product coming onto the active marketplace,
2) rising off-market trends as sellers take active listings off the marketplace

A declining pending sales should be an upward pressure to supply, but the above noted two elements clearly are overpowering the downtick in new demand the market is seeing right now. Active inventory is also exposed to frequency with which brokers update their listings, as the UrbanDigs platform implemented a rule that only counts a listing as 'ACTIVE' if the exclusive listing agent regularly maintains the 'actv' status internally; if the agent doesn't update in 30 days, the listing is dropped out of our count of active inventory. So, we could also be seeing a rising # of listings going stale that could also be pressuring supply to the downside. 

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