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.


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