Crains: Manhattan Luxury Market Still Rolling

Posted by urbandigs

Wed Dec 29th, 2010 09:50 AM

A: Quantifiable trends! That is what we want and need! Something that we can trust and verify to see whats going on out there. All too often the media will utilize quotes from the top producing teams out there that have hired PR firms to get their own business more exposure. There is absolutely nothing wrong with this and its part of big business in this fast paced real estate market. What you need to look out for is whether there is an agenda there? How many times is that top producer showcasing one of their high end exclusives as part of the story? Quite often! For me, one team's production is not a market make! So lets look at the entire market's performance instead and look for trends we can quantify to see if one segment of this market really is over or under-performing!

Crains New York reports, "Luxury apartment sales close 2010 on high note":

Nine apartments asking more than $4 million went into contract last week, according to brokerage Olshan Realty. By comparison, during last year's Christmas week, no apartments over $4 million went into contract, according to Olshan Realty's records. Among the luxury pads that went into contract during the week of Dec. 20 were a seven-room, 3,500-square-foot duplex penthouse at 200 Eleventh Ave., which was asking $17.5 million, and a seven-room, 2,900-square-foot condo at 15 E. 63rd St. for $10.5 million.

In fact, the number of luxury apartments that went into contract so far this month, 52, rose 62.5% from the same period a year ago. UrbanDigs, an analytics and consulting firm that tracks Manhattan housing activity in real-time, confirmed the strong contract signing activity for luxury apartments last week. "Contracts being signed for properties over $5 million have outpaced the number of listings that either closed or fell out of contract," said Noah Rosenblatt, founder of UrbanDigs. "There is demand for $5 million properties."
Lets look at the data and see for ourselves - and you must always note that % changes vary wildly depending on how far back you look! The trend in the past 3-months may tell you one thing, but when you look back 1 or 2 years, you may see something totally different that tells you the bigger picture of where we came from and where we are now! Let me show you in pictures when we track only pending sales for units over $5m:

Manhattan Pending Sales >$5M - 1 QUARTER - UP 34.4%

5m-pending1.jpg
*we are a real time industry, focusing on the most recent trends in the last few months - the above uptrend explains and quantifies why brokers are reporting a rise in luxury properties entering contracts. Relatively speaking from 3 months ago, there was a 34% rise in luxury properties being signed into contract.

Manhattan Pending Sales >$5M - 1 YEAR - DOWN 3.5%

5m-pending2.jpg
*this 1-yr chart puts the recent move in better perspective. Its clear that the most recent move is not as strong as the move higher in this price point we saw earlier in 2010. I think there was a typo in the article, as the 60% move up was over a 2-yr period, when compared to late December 2008 after Lehman's failure and the high end market shutdown sending pending plummeting.

Manhattan Pending Sales >$5M - 3 YEARS - DOWN 33.3%

5m-pending3.jpg
*my favorite chart is the longest term chart we have, which really tells the full story of what happened before Lehman, the destruction of the high-end post Lehman, and the reflation to a lower trading range we see today. In this new trading range, we are seeing mini waves both up and down and today we happened to be at the top of a recent wave up from the slow summer.

Full tools to quantify the movement of Manhattan inventory from one listing state to another are available to subscribers. What you need to know is that Pending sales experiences:

Loss at the tail end --> signed deals that either close or fall out of contract are no longer counted as pending...
Gain in the front end --> as listings move from ACTIVE to CONTRACT SIGNED, it is captured by pending sales...

So, the trend is a function of the net gain or loss as each day passes - so its real time! Taking a look at the first chart, the 1 quarter chart above, you see a move UP from 61 to about 83 - a net gain of 22 deals. Hypothetically, this could mean that if ten $5M+ deals closed and came out of the measure then 32 new deals came in the front end for a net gain of 22 resulting in the trend up. That is how this new system works so its important for you to understand what these metrics are telling you!

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