Fewer Listings Coming to Market & Going Off Market

Posted by urbandigs

Fri Apr 29th, 2011 09:49 AM

A: The main differences between this years active season and last years, is that this year we are seeing fewer listings come to market and fewer listings being removed from the market. These two forces are canceling each other out as the pace of demand is very similar to this time last year - resulting in similar supply levels as last year. This is why buyers are probably frustrated with the lack of options to choose from in 2011.

I'm going to show you two charts here to support this interpretation of state of today's Manhattan market. What you need to know is that ACTIVE inventory is affected by three general forces:

1) Listings going to contract and selling - moving to a PENDING state
2) Listings being removed from the market - moving to a OFF-MKT state
3) Listings coming on the market - includes both new property and listings back on market

Makes sense right? At all times these trends are changing and UrbanDigs.com tracks all of them for you to see.

If sellers all of a sudden decide NOT to sell, for whatever reason, and batches of exclusive listings are taken OFF-MKT, we should expect to see inventory levels fall. The same can be said if a ton of listings all of a sudden go to contract, causing inventory to be pressured to the downside.

Compared to the 2010 active season (lets say Jan-May), this is what is going on:

PENDING SALES --> Mirroring 2010's pace, FLAT year over year
NEW ACTIVEs COMING TO MARKET --> DOWN, (pressures supply to downside)
LISTINGS BEING REMOVED FROM MARKET --> WAY DOWN, (pressures supply to upside and cancels out downside pressure from fewer new actives coming to market)
TOTAL ACTIVE INVENTORY --> FLAT year over year

That is how I would sum up this market. Fewer listings coming to market, fewer listings being removed from the market, yet pace of demand is mirroring 2010's pace which was strong. Let me show it to you in charts:

PENDING SALES MANHATTAN

Looking at this chart of Manhattan pending sales from Jan 2010 shows us how last years 'active' season compares to this years. Talk about seasonality in this marketplace! We are approaching last years peak and should reach if it current pace of new contracts signed sustains itself for a few more weeks. Usually, demand pulls back a notch or two as we get to end of May and once your into June the market just seems to put on the brakes until after Labor Day. Buyers and sellers should understand this now that you can track this market in real time!

pending_may.jpg

ACTIVE vs OFF MKT TRENDS MANHATTAN

active_offmkt.jpg

The monthly bar charts of new listings coming to market also confirm that there is 'fewer stuff' coming to market this year compared to last year. Buyers and sellers should adapt accordingly; especially if there is a time pressure to buy or sell.


Inflation? Not The Wage Kind! What's Gold Telling Us?

Posted by urbandigs

Thu Apr 28th, 2011 09:29 AM

A: I've been making a concerted effort to stay away from macro discussions and focus UrbanDigs content entirely on Manhattan real estate. Today, I just feel the need to stick a change of topic in. I hope I can get some of the older readers to chime in on what seems to be very confusing times. Inflation, QEIII/IV/V, what are the metals telling us and all that goes with it.

Lets start out with a 5-YEAR chart of Spot Gold prices, courtesy of Kitco.com:

gold5yr.jpgFlashback, to the height of the credit crisis back in February of 2009 - "How In Is Gold?" when gold was trading at about $950 or so:

"THE CORE OF THE GOLD TRADE LIES IN THE DEBASEMENT OF ALL FIAT CURRENCIES TO COUNTERACT THE GREATEST WAVE OF CREDIT DEFLATION SEEN SINCE THE GREAT DEPRESSION

For the next few years while global fiat currencies are systematically debased, via central bank printing to counteract local slowdowns, the future whiplash-inflation trade (maybe 2012-2013) will be slowly building as the Kondratieff Winter plays out. It seems logical that the gold trade is a multi-year trade; if it doesn't get parabolic too early."
Oh, the many debates we used to have on this topic! If I told you back then that gold would be above $1,500/oz two years later you would probably think hyperinflation was setting in due to the fed's debt monetization experiment. Well, here we are and guess what - still no inflation! Well at least not of the wage kind!

You see, the inflation the fed really fears is the kind where wages start to spiral out of control due to an overheating economy resulting in higher prices everywhere being passed down to consumers. We don't really see that today do we; in fact, the labor market is still quite pressured if you look at U6 unemployment figures. What you do see today are the unintended consequences of policy actions taken by the fed/govt: that is, higher food costs, higher energy prices, higher health care costs, higher commodities across the board, higher taxes, etc..all the stuff that hurts profit margins and squeezes consumers wallets.

Seems like a stagflation situation to me, caused by a bust in housing & credit of gargantuan proportions and followed by dangerous macroeconomic policies.

As for surging commodity prices, the best thing for high oil/gas prices is in fact higher oil and gas prices. At some point you will see massive demand destruction as consumers no longer are able to absorb market rates. The question remains 'when' that happens and the speculators take it too far.

I'll repeat what I said two years ago: What gold is telling us right now is that central banks across the world are taking part in a very dangerous experiment to stem deflationary forces. Keynesian policy in full effect. Faith in fiat currency in general is fading. The main goal of all of this is to re-capitalize the banking system and all those toxic assets that we seemed to forget all about lately. Wall street is riding the wave via a huge dollar carry trade that is helping to reflate all asset classes in an attempt to chase yield. In other words, risk assets have soared and that is what Mr. Bernanke wanted! What scares me is the future unwind of this trade whenever that may come; especially in HY bonds.

While its understandable to look at gold as a dollar hedge, and the dollar certainly has been performing terribly lately, I still think gold can rise even if the dollar strengthens - just like it did in late 2008 and early 2009. This time IS different and it just feels like gold is about to go nuts.

If equity markets do see a sustained sell-off and all the deleveraging that goes with it, we will likely see the new cash flock into two areas:

1) US Treasuries
2) US Dollars


That's the normal investor reaction when uncertainty sets in. Now, some very successful traders that I have been in touch with lately seem to think that this time around US Treasuries may not be the safe haven place to store money when 'the party ends'. In fact, all that talk of 'end game' and surging interest rates, is what these guys think will actually amplify the sell-off; again, whenever that may be. Imagine rates surging at the same time equities crash..paints a very ugly picture doesn't it?

It's a very interesting train of thought given all the pieces to the puzzle that is the credit crisis and the great reflation that occurred after. In this scenario, gold will be the benefactor of money looking for a safe new home. And that is when you see gold go parabolic.

My problem with this scenario is that if it does play out this way you will see the fed embark on QEIII and possibly QEIV in the form of huge treasury purchase plans. They will be the buyer of last resort in an effort to keep borrowing rates low. The one thing against me on this belief is that the fed can only control the 'short end' of the curve; that is, they can't control what the markets do with longer term rates. So, Im torn on whether US Treasuries will crash sending yields surging anytime soon. If I had to pick a side, I would say money flows into US Treasuries if a market selloff occurs; just like they would in past situations.

As for inflation of the wage variety, not for many years! When that happens, I bet you gold will have peaked (probably over $2,000/oz) and already started its downfall.


How's Manhattan Doing Right Now You Ask??

Posted by urbandigs

Fri Apr 22nd, 2011 08:23 PM

A: The market is quite active! A check in on the Manhattan real time ticker will show us that the 30-day pace of new deals signed into contract is now over the 1,100 mark. Keep in mind that this measure tallies up daily contracts signed and then counts a moving window for thirty days. In other words, as of right now between March 23rd and April 22nd there has been 1,120+ new deals signed into contract. This is up from the mid 600s in January, the mid 800s in February and just over 1,000 in March. At months end, a final cleansing algorithm will kick in before the April bar is published; ensuring further data accuracy. You can't get a more real time look at demand than this ticker so it's worth it to track which way the trend is going.

The Manhattan Market Ticker

*updates 7x a day as brokers update exclusive listings that get shared to all brokers via the rolex process.
ticker-april.jpgI boxed out the section you should focus on: the 30-day pace of new CONTRACTS SIGNED! You can see that its at 1,121 right now, up another 10% or so from last month's pace.

How do I know this? Subscribers get access to our monthly CONTRACTS SIGNED bar charts that show performance on a monthly basis. This allows us to see the current trend and compare a specific month to the same period 1 year prior! Since real estate is seasonal, its always best to look at year-over-year trends to filter out seasonal noise.

Here is a chart showing the pace of Manhattan Contracts Signed by Month:

csgn-manht.jpg

Looking at the real time ticker at the beginning of the article, I can see that the current 30-day pace is just over 1,100. We still need to sustain this production for the next 7 days to stay over that mark, but as it looks now we are on pace to come close to last April's CSGN totals of 1,150 (see arrow on chart above).

Keep an eye on the daily ticker as Manhattan is currently seeing peak levels of activity right now, as we should for this time of year.

My advice to sellers that have been ACTIVE and waiting for a bid to come for 90 days or more, lower your price NOW because once we get past May the pace of demand will surely start to go in the other direction! Just look at the red bars in the above chart to see how the market played out last year. Right now, we are following 2010 fairly closely in regards to pace of demand trends. These tools are here to tell you when to take advantage of periods of demand and right now the market is hot with bids coming in.

So if you are not seeing any action, don't blame your broker, blame your price!
In the end, the market dictates your home's worth!


Manhattan's High-End Takes 31 Months To Recover From Lehman

Posted by urbandigs

Wed Apr 20th, 2011 12:26 PM

A: This is interesting. Two and a half years ago Lehman Brothers filed for Chapter 11 Bankruptcy, sending bids for Manhattan real estate plunging. Fast forward to today and we see that it took Manhattan's high end pending sales market 31 months to recover to levels last seen on Lehman's failure day. The only difference this time is which way the trend is going!

MANHATTAN: $5M+ Market Pending Sales

high-end-manhattan.jpg


Neighborhood Check: Gramercy/Murray Hill & FiDi/BPC

Posted by urbandigs

Wed Apr 20th, 2011 09:50 AM

A: Lets get back to analyzing inventory trends for Manhattan neighborhoods. Today, I wanted to check in on Pending Sales trends (a measure of pace of demand) for Gramercy, Murray Hill and then downtown Manhattan.

Lets just get right to the data. Again, pending sales is measuring the pool of listings that have changed from an ACTIVE state to a CONTRACT SIGNED state and are awaiting closing. As the pace of new contracts signed rise or fall, pending sales charts will reflect the performance. Our platform was designed to allow you to fine tune the Manhattan market by: 1) neighborhood, 2) bathrooms, and 3) price range...so that your local submarket of interest can be measured and tracked in real-time as changes are occurring.

PENDING SALES: Murray Hill/Kips Bay vs Gramercy/Flatiron

gramercy-murrayhill.jpg

PENDING SALES: Fidi/Civic Center vs Batter Park City

fidi-bpc.jpg


Introducing Flat Fee Consulting for Manhattan Buyers

Posted by urbandigs

Tue Apr 19th, 2011 08:07 AM

A: I am going live this week with what I think is an innovative new service for Manhattan buyers out there who do not want to take on a full buyers broker. A flat fee consult basically consists of all the 'meaty' parts of a buyer broker's job without the buyer broker. As the buyer, you will submit the offer directly with the listing agent while hiring me as a third party consultant for the initial property valuation, comps analysis, bidding strategy, negotiating strategy, etc.. The centerpiece of this new service is a new tool I just developed called The Digs Report. Let me formally introduce it this new concept today.

Go right to Flat Fee Consulting page for more details. The service was also featured in The Real Deal, "UrbanDigs founder launches flat fee consulting service":

Noah Rosenblatt, founder of Manhattan market trends analytics site UrbanDigs.com, launched a new flat fee buyer consulting service today. He said the service aims to help home seekers find properties' true market value, and will then guide them through the buying and negotiating process, starting with the opening bid. Rosenblatt said the service is aimed at buyers who don't trust brokers and want an independent adviser.
The service was designed for buyers that are currently working 'on their own' yet would like an adviser on their team who does not have a vested interest in the transaction at closing. My fee for this service is $1,500 for 1 property consult, and an extra $500 if you need my services for a 2nd property consult.

The service will work like this:

1. Initial Property Valuation

The first step in the process is for me to verify that enough data exists to even run a comparable sales analysis with confidence. Generally, this means having enough sales data in the building that you wish to place an offer in.

Just like any buyer broker would require, I will need access to the target property to inspect: views/exposure, layout, condition, building amenities, etc..

2. Comparable Sales Analysis

What is the place you are about to bid on worth in today's market?? The meat of the buyer brokers job!

As your outside consultant, I will perform a Comparable Sales analysis using in-building sales as well as current inventory trends for your local Manhattan submarket. A two-page PDF report will be produced with my findings as well as Fair Market Value range estimates for where I believe the target property may trade in today's market. Below is a screenshot of this report; please click on the image below to visit the buyers consulting page where you can enlarge these images.

digsreportpdf.jpg*Actual Digs Report for a client analyzing 77 Seventh Avenue, Apt 18D

As with any comps analysis, the following adjustments will be made:

a) Time Adjustment
b) Floor Adjustment
c) Renovation Adjustment
d) Size Adjustment
e) Special Features Adjustment (think terraces or fireplaces)

3. Devise a Bidding Strategy

The next step in the process is to discuss the analysis with you and devise an initial bidding strategy before submitting the offer. This includes getting to know how the analysis jives with your affordability and perception of the target property's value, as well as keeping in mind where you would like to go to get the deal done.

Since I am not representing you as a 'Buyers Broker', I will never have any contact with the selling agent. Rather, I will be the 'guy behind the curtain' advising you every step of the way as the negotiation begins.

4. Submit The Offer

Submitting your offer the right way helps your chances of getting the deal done immediately! At this stage we probably know where your initial offer will come in, which leaves writing up the offer letter the last job to do. I will help you to create your initial offer letter and ensure that you are being presented in the best light to the seller.

In the end, a motivated and well presented buyer will have more pull should the negotiation end with a gap. After all, you never really know how low the seller may go until the risk of losing the deal presents itself. Properly presenting your strengths and showing the seller that you are 'ready to go' with all ducks in a row is a vital piece to the puzzle.

5. Negotiating Strategy

In a perfect world, all negotiations will be straightforward and simple. Let me just say, its not a perfect world! Negotiating is an integral part of a real estate agent's job! There is a reason why we are called "brokers" and there always is a brokering element to the negotiating process.

Nobody expects buyers to be experts in negotiating, especially in a market as fast paced as Manhattan is. There is protocol here in starting the process out and there are varying strategies that could be implemented during a negotiation depending on how the process plays out. With years of Manhattan sales experience and 50+ closed deals, I will be able to pass on the experience gained from representing both successful and failed negotiations in the past. Even top brokers don't secure every deal and the key is knowing how to handle every twist and turn that may pop up during the negotiation process.

In this stage, I will act as your adviser behind the scenes as the seller counter's your initial and updated offers.

5. Sign The Contract / Walk Away

After the negotiation is complete and all terms are agreed to, you will face two choices:

a) continue and move forward with attorney phase
b) walk away

At this stage, my job comes to an end as your consultant. Of course, I will make myself available to the buyer as needed during the course of the attorney process should any hiccups arise and guidance is needed. Since there was no representing 'Buyers Broker' for the transaction, when contracts are executed the seller broker will be responsible for your board package preparation to get to the ultimate closing.

Simple. Clean. One-time service. Perfect for buyers that want to work on their own, yet feel they can use some assistance when the right property presents itself!

Any questions, please feel free to email me!




HIGH END: What The Brokers/Managers Are Seeing...

Posted by urbandigs

Thu Apr 14th, 2011 09:21 AM

A: Manhattan's high-end market is performing quite well right now, as evidenced by UrbanDigs' Pending Sales $5M+ charts. That is the chart that tracks the # of properties with an asking price over $5M+ that move from an ACTIVE to a CONTRACT SIGNED state and are awaiting closing. The metric goes through the proprietary UrbanDigs cleansing process to ensure accurate counting. I want to show you how this 'price point' is performing relative to the broader Manhattan market, and share some thoughts that were given to me from brokers and managers I know well and trust.

managers-agents-manhattan-real-estate.jpgFirst, the chart! Then we will get to what these agents/managers are seeing out there in the field.

MANHATTAN PENDING SALES vs PENDING SALES $5M+

manhattan5m+.jpg

The data doesn't lie and if you track the data itself rather than what you 'think' is going on out there, you will always get a much more accurate interpretation on current market trends. Even though some brokers think they 'are' the market, the reality is the market does what the market wants when the market wants to do it! It's possible the market is strong, even though a broker's personal business is slow; and vice versa. So, look to the data to quantify any trends!

I did close a deal that was counted in this measure a month ago, but as of now I have no $5M+ outstanding deals. So even though I'm not seeing activity in this segment of the Manhattan marketplace right now, by reading the chart I know this price point is on fire right now. Here are some opinions on the $5M+ market from across the Manhattan real estate industry:

RAPHAEL DENIRO (The DeNiro Group @ Douglas Elliman)

"I'm seeing well priced, turn key properties, move very quickly. Particularly full service buildings in "A" locations. Mostly "all cash" deals. The only thing that matters in Manhattan high end real estate is, how the DJIA is doing on a given week, despite whatever is happening in Japan, Southern Europe, or the rest of the U.S."
My comment: Given the fed engineered reflation in all asset classes, equities, commodities and HY/IG bond markets alike, there is a ton of wealth that was created as investors search for yield. It does not surprise me to see winners in these tradable markets put money to work into Manhattan's luxury market.

NIKKI FIELD (The Field Team @ Sotheby's International)
"I returned last week from a sales trip to Beijing, Shanghai and Hong Kong. The Chinese appetite for Manhattan Residential Real Estate is exploding. International buyers consider the NY market a stronger investment opportunity than other global capitals. A recent International market survey determined that residential values in Manhattan are -18% below London, -54% below Moscow and a whopping -94% below Hong Kong. No wonder the Chinese are taking advantage of the current market correction here. Their target is predominantly the over $5m market. They are purchasing for personal use as well as income investments. My 12 day trip has delivered a dozen deals in play to date.

With 1 European investor, I currently have in contract 3 brand-named condo deals: $7.5m, $13.3m and $15m. All selected during a 2 day shopping marathon.

Regarding my own exclusive listings inventory, I have closed or have in contract in Q1, 9 exclusive properties. A number of these listings had been languishing on the market for close to a year. In some cases, price corrections were surgically administered, but none were signed below fair value. "
My comment: I heard multiple stories from colleagues I trust confirming what Nikki says above about Chinese appetite in Manhattan high end property. An all around great quote from Nikki that goes into some detail on the recent deals her team executed. Can't get better than that.

FREDERICK PETERS ( (Frederick Peters @ Warburg Realty)
"I can't yet give you specific apartments. But overall, we are seeing that properties with trophy qualities, including, size, view, condition, and/or location, seem to be commanding prices 10% to 15% higher than they were at the beginning of the year. Many of the top pre-war buildings are seeing sales price as high or higher than at the peak of the market, with price records being set in building after building. One thing after another selling in overbids. One simply cannot believe it."
My comment: Fred is a manager and leader at Warburg and has access to all the firms' recent production. It would be silly to ignore what he is saying about the high end market right now given the data on recent high end executed contracts that he has. With that said, its important to note that he is commenting on 'trophy properties', that have that extra something that high end buyers pay up for in Manhattan.

DEANNA KORY ( (Deanna Kory Team @ Corcoran)
"The high end market on CENTRAL PARK WEST is super strong. $7M+ is selling @ record prices and really quickly. I am having a bidding war on a near $10M apartment. With 4 bids over ask in 5 days!"
My comment: Again, hearing actual examples is what people always ask for, so here you have it. Looks like she is seeing the action in the $7M+ market, so make that note as my charts are showing the $5M+ market. How you define 'high end' in this market can make a difference and some would consider $10M+ the 'high end' in Manhattan. Its fine, I just want to point out that the chart above is for $5M+ properties.

YUVAL GREENBLATT( (Manager @ Douglas Elliman)
"It's funny you ask because only yesterday an agent in my office expressed concern that there wasn't much inventory in the very high end. Generally speaking, the 5mm+ market has been substantially active with few quality listings available. An example of activity within the past week is a CPW listing of ours that went quite a bit over the ask. "
My comment: We have to re-engineer our Chart UI (user interface) in order to see supply trends in the $5M+ market. We are working on it. For now, I can't quantify supply trends in this price point but from what I hear from colleagues there is just not that many quality products with the desirable features that buyers pay up for in the $5M+ marketplace. This could explain why buyers are chasing the good stuff that does happen to come to market.

There you have it! Actual data and anecdotes on how Manhattan's high end is doing now. Here is your chance to speak out on your personal experiences, as that helps all of us understand the market best!

WHAT ARE YOU SEEING???


The Manhattan Market Ticker

Posted by urbandigs

Tue Apr 12th, 2011 07:32 PM

A: As we approach the middle of the month, here is a quick check into the real time Manhattan market ticker.

ticker-manhaatn1.jpgMethodology Behind The Manhattan Ticker:

The Rows

ACTIVE --> Counts All NEW Listings & Back On Market Listings

CONTRACTS SIGNED --> Counts Listings That Change From ACTIVE to a CSGN / BOARD APPROVED Listing State

OFF MARKET --> Counts Listings That Move From ACTIVE to an OFF-MARKET Listing State (Temp off market / Perm off market)

The Columns

TODAY --> Captures today's daily changes - updates 7x/day

YEST -->
Shows yesterday's changes

7-DAY --> Shows a 7-day running total of changes

30-DAY --> Shows a 30-day running total of changes

As it stands now, we had:

132 new deals signed the past 2 days
328 new deals signed in past 7 days
1,061 new deals signed in the past 30 days

While my business has slowed down in the past 4-5 weeks as clients signed and closed, the market is still moving at brisk pace. Always remember that no one broker represents the market. That ticker is the end result of 9,000+ REBNY brokers updating their exclusive property listing statuses every day. When the market slows, the real time ticker will be the first tool that picks up on it.


Manhattan Pending Sales Up; Sales Pace Still Down

Posted by urbandigs

Tue Apr 12th, 2011 10:44 AM

A: Taking a look at Manhattan's real time measure of demand (pending sales) we can see that anecdotes of an 'active' marketplace are confirmed. Remember that this is simply measuring the pace of contracts being signed, NOT price action. We will not know where bids today are coming in at until 2-4 weeks after the closing; when they become public record in ACRIS. Which means, ACRIS sales are lagging big time. To adapt, we have to delay how we measure the pace of ACRIS sales here on UrbanDigs.com. Think about it, how can I tell you in real time how sales pace for April is doing when the majority of these sales will finally get filed in May? As it is now, the April sales pace is only an incomplete picture.

MANHATTAN: Pending Sales (green) vs. ACRIS 90-day Moving Average Sales Pace (red)

manhattan-2011-active.jpg

I added big yellow blocks to point out 2010's Active Season and the current 2011 Active Season. You will notice how the red line lags in the pickup by about 2-3 months, as listings that go to contract await closing. That is no different right now. In order to see how current sales pace is, we need to wait another month or so for future filings to come in.

As it stands right now, I can make the following assumptions:

a) If current Pending Sales (green line) is any indication, we should see a pickup in ACRIS sales pace in about 1-2 months. This would make Q1 easy to beat assuming the follow through continues to be consistent with pending sales trends.

b) Year-over-year, we still have work to do if we are to avoid another seasonal decline in sales pace from this period in 2010. I have a feeling Q2 y-o-y sales pace will still be down from 2010 levels when the report is released in July.

c) There is a disconnect between current sales pace that media is reporting on, and current pending sales pace that quantifies current demand for Manhattan property.


As of now, we are still sustaining the 1,000+ contracts signed pace in the last 30-days. With the recent move UP in new ACTIVE's coming to market, it will be a bit easier to stay at this pace of demand while our active season finishes off. The reason is because we need new inventory to come to market if there is to be a sustained pace of 1,000 new deals signed over a rolling 30-day period. Without this rise in pace of new inventory, buyers will be forced to bid for leftovers and fight for the 'lower' pace of quality product that comes to market.


Checking in on Tribeca

Posted by urbandigs

Mon Apr 11th, 2011 11:27 AM

A: Got many clients and brokers asking me for real time data on how Tribeca is doing. I'll just keep it simple and show you a 6-month PENDING vs ACTIVE chart for Tribeca. I also threw a Median Sales Price 90-Day Moving Average bar chart in there too. Subscribers get full access to all real time Manhattan tools that go back to January 2008.

TRIBECA: PENDING SALES (green) vs. ACTIVE INVENTORY (red) Last 6-Months

tribeca-2011trends.jpg

TRIBECA: Median Monthly Sales Price 90Day Moving Average

tribeca-2011sales.jpg

No time for any discussion, sorry. Feel free to interpret and chat below about what you are seeing in your local submarket. As I like to say, Manhattan is not 1 market; rather, is a group of local submarkets and price points. One submarket may be performing quite different than another and this site's mission is to give you the real-time tools to see this as it happening! In about a month, we will launch a chart user interface upgrade that will allow you to measure any submarket versus the broader market to look for under/over performance to broader market trends.


Manhattan's "High End" Seeing Bids

Posted by urbandigs

Tue Apr 5th, 2011 10:25 AM

A: I want to show you one of the tools that subscribers can check here on UrbanDigs.com; breaking down Manhattan Pending Sales by price point. Where is the action? How is the high end performing relative to the lower end markets? Rather than listen to anecdotal reports, it's always better to look at the actual data to quantify current trends. I offered some advice to both buyers and sellers at the end.

First off, the entire market is seeing a nice seasonal uptick in demand during the first half of 2011. Completely normal, nothing surprising here. But lets check on the major price points so we can see how the high-end market is performing relative to the lower end markets.

MANHATTAN PENDING SALES <$1M vs $1-$2M:

lowerend.jpg

MANHATTAN PENDING SALES $2-$5M vs $5M+:

higherend.jpg

HOW TO THINK ABOUT PENDING SALES
: Pending sales is the pool of Manhattan exclusive listings that move from ACTIVE to CONTRACT SIGNED, and are awaiting closing. If there is no ACRIS recorded sale in 6 months, we remove the unit of inventory from our Pending Sales measure. The reason we do this is to make Pending Sales more sensitive to real time changes that may be happening out there today, and less diluted by transactions that have delayed closings (think new development deals that close 12-24 months later).

Now, at all times there are units of inventory coming IN the front end and units of inventory going OUT the back end! For example, on a typical day we may see:

FRONT END --> 30 new contracts signed today added to the measure
BACK END --> 22 units already counted as 'Pending' either closed, or are removed because they hit the 6-month mark!
-------------------------------
NET CHG = +8 units for Pending Sales

That is how the platform works. So when you see Manhattan's high end market move from 67 to 108 (see the red line in the 2nd chart above) from early February to present, we know there was a net gain of 41 new deals over $5m that went to contract pushing the measure higher!

Following the formula I just explained, its possible that...

FRONT END --> saw 93 new $5m deals go to contract
BACK END --> 52 units already counted as 'Pending' either closed, or were removed because they hit the 6-month mark!
--------------------------------
NET CHG = +41 units for Pending Sales $5M+ market

This is a hypothetical example because I wanted to explain how the Pending Sales works, on both the front end and the back end. Fresh data is always coming in, while closed and stale data is always going out. The result is a real time measure of demand. Over time, the net change will reflect itself in the trend. Right now, the trend is up and tells me that bids are coming in!

BUYERS: You may have to tweak your bidding strategy, bid a bit more aggressively for quality, well-priced property that meets all your needs. This is not the environment to mess around with low-ball bids for well-priced quality property that you love! I find in my business that all it takes is 1 or 2 'liked' properties to be lost to a competing purchaser before the buyer approaches the 'next liked property' more aggressively. Im not telling you to overbid what you deem as fair market value for the property given comps and current market conditions; rather, I'm telling you to tweak your bidding strategy a notch to the more aggressive side as long as the current pace of demand sustains itself!

SELLERS: You want to sell when the market sees bids coming in, and no surge in supply. That seems to be the case now. If you have been on the market for 2-3 months, had more than 25-30 buyers come in your doors yet not receive any bid, the time has come to rethink your pricing strategy! You maximize your profit potential by selling when the market is active, with bids coming in, not when its slow and buyers know they can bid less aggressively! History would tell me you got a few more months of this kind of action until the summer slowdown, where many sellers remove property from market until after Labor Day when the market usually ticks back up again.


Manhattan Q1-2011 Review

Posted by urbandigs

Fri Apr 1st, 2011 10:45 AM

A: The media is out with many articles on Manhattan's Q1 performance. What you need to know is that most of the reports are based on 'Actual Sales' which means there will be a lagging gap between what the sales say and what may be going on in the market today. I apologize if this is repetitive, but when the NY Post comes out with a "It's A Buyers Market" tagline in their print edition, I feel it worthy to jump in and show you actual data!

According to Bloomberg, "Manhattan Apartment Prices Decline 9.9% as Condo Sales Tumble":

Manhattan apartment prices dropped in the first quarter as condominium sales plummeted and new- development deals made up the smallest share of the market in almost seven years.

The median price of all properties that changed hands in the quarter fell 9.9 percent from a year earlier to $782,071, appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today.

The shift in apartment demand sent condo transactions down 24 percent in the first quarter from a year earlier to 964, according to Miller Samuel and Prudential. Sales of co-ops climbed 29 percent to 1,430. New developments, which are primarily comprised of condos, accounted for 14.5 percent of the sales market, the lowest since the third quarter of 2004.

Noah Rosenblatt, founder of UrbanDigs.com, a real estate analytics and consulting company in New York, said the decline in condo sales was because of a lack of properties on the market rather than falling demand.

"There's just not as much condo supply as there was a year ago," Rosenblatt said. "If condo supply is down, of course you're going to see fewer condo sales. The pace of sales is relative to the pace of supply."
Lets get right to the data! When analyzing Manhattan ACRIS sales pace for any quarter (in this case Q1-2011 which comprises Jan-Feb-March sales) you MUST understand that you are seeing an incomplete report with a ton of Q1 sales not yet publicly released! Especially March, whose sales will continue roll in over the course of the next 4-8 weeks as ACRIS files them. I discussed this ACRIS lag in depth a few weeks ago.

Due to this reality, we at UrbanDigs.com decided to show ACRIS sales volume charts with a 1-month lag; so we will only go up to end of February. Our ACRIS sales charts are based on the SALE DATE, not the filing date, and it should be so that we get an accurate picture of how Manhattan real estate is performing.

Here is a chart showing Manhattan PENDING SALES (green line) vs ACRIS SALES (red line):

acris_pending_Q1.jpg

Conclusions: You can see how ACRIS sales trends are still at low levels, similar to Q4 of 2010, and down 8.7% from exactly one year ago. In addition, you can see how Manhattan pending sales is on a clear uptrend as buyers submit bids and execute contracts for property. Pending sales is the most real time measure we have to track the pace of demand for Manhattan inventory.

Now, let me show you one more chart that adds up the total Manhattan Monthly Contracts Signed:

contracts-signed-manhattan-real-estate-urbandigs.jpg

Conclusions
: Its clear that so far in 2011 we are performing similar to 2010's active season. This chart also shows you how bad early 2009 was, at the height of fear when bids and executed contracts were hard to come by. This March we saw 1,048 contracts signed, compared to 1,060 signed in the same month last year.

Finally, I'm hesitant to talk about median price trends due to:

a) the lag in ACRIS sales filings, and
b) because median sales are highly exposed to what types of property are closing


If you have a few weeks of 3BR apts closing, followed by a few weeks of 1BR apts closing, you will see wild swings in median sales trends. Average sales trends are even more exposed to flaws and outliers. By reading today's reports, it may lead a buyer to think that Manhattan is currently a "buyers market" with lots of inventory and that prices fell 9.9% in the last 12 months. I must say, being in the field with my buyers and seeing the leading data using UrbanDigs.com tools, I don't think this is an accurate representation of today's market. Remember, when you find the property you want to bid on or sell, look to in-building comparable sales for the best indication of property value - once you start to creep out to the sub-market or broader market price action, you are degrading the valuation big time! In Manhattan, every building is its own local market!

For price action, I actually find Streeteasy's newly released Manhattan Price Index to be most accurate for the performance of this market; ironically that shows us up slightly since March of 2010 and not down year over year.