Breaking Down Manhattan's Recent Strong Activity

Posted by urbandigs

Fri Apr 13th, 2012 09:47 AM

A: Sorry for the light content lately, but I've been swamped the past few weeks and probably will be for the next 1-2 months. I just wanted to do a simple breakdown of Manhattan's recent surge in deal volume and put that into perspective relative to how our market performed this time last year. To get right to the point, Manhattan continues to see a surge in new deal volume amidst tight supply. Over the past 30-days, brokers have placed over 1,200 new listings into contract via our real-time feed from the Rebny Listing Service (RLS). The weekly pace continues to be around the 300 level, which is a 'very strong' signal of new deal volume across the Manhattan marketplace.

First, let me give you a quick check of the Daily Manhattan Market Ticker available to UD subscribers (snapshot taken 11pm last night):

ticker_apr12.jpg

# of deals signed Thursday --> 54
# of deals signed Wednesday --> 53
# of deals signed last 7-days --> 304
# of deals signed last 30-days --> 1,239

This is signal #1 of a very active marketplace. I urge subscribers (especially brokers) to check in on this market ticker tool every few days or so to maintain a pulse on real-time conditions in the marketplace. The ticker is directly connected to real-time shared status updates for all REBNY member firms managing their exclusive listings. Its the market in the palm of your hand as you can track daily deal volume from every REBNY agent in every office that does business in Manhattan real estate. Since no one broker is the market, this tool will accurately show you relative market strength and weakness as it happens. Ultimately these #s will affect the market trends that are available in our chart sections.

Now lets take a broader view of what the real-time ticker above has been telling us about current conditions lately. Below is a breakdown of Manhattan Supply vs Pending Sales from Jan 2011 to present -- allowing you to see how 2011's active season compares to the current marketplace (I numbered some items on the chart for brief discussion below):

2012_strongmarketbreakdown.jpg

Lets break this simple supply--demand chart down:

1. Supply Rose Throughout 2011's Active Season -- Back in 2011, Manhattan supply hit a high of 8,080 actively marketed listings on May 14th after rising for the first 4 months of that year. So far this year, Manhattan supply is basically flat for the year and currently is struggling to break the 7K level -- we show inventory currently trending at 6,871. Buyers in today's marketplace are simply not seeing as many new products hit the market as we did this time last year. The result is buyers are competing with each other for the highest quality/best priced listings that do come to market. It doesn't take much for buyers to realize when a good deal presents itself.

2. Pending Sales Peaked Last Year @ 2,728
-- The peak of demand last year was back in early June. At that time, Manhattan supply was in the 7,800s. We already reached that level by early April this year with supply in the 6,800s! That is signal #2 of the strong level of new deal volume that is taking place in the current marketplace.

3. Pending Sales Reaches That Level Today -- Give the markets daily deal volume that the real-time market ticker above is showing us, it's fair to say we will push noticeably higher than the peak of pending sales in 2011. Time will tell how much higher as we usually tend to see pending sales peak out around the June/July time frame.

4. Supply Mostly Flat So Far in 2012 -- Supply is influenced by a # of things: pace of new products coming to market, pace of active supply going into contract, and the pace of active supply coming off the market. Right now I can tell you that there is less supply coming to market + a very strong pace of active supply going into contract + a very low pace of supply being taken off the market. Add it all up, and overall inventory has strong market forces pushing against it preventing it from rising to much higher levels.

5. Gap Between Manhattan Supply & Manhattan Pending Sales Widens -- With supply flat and demand rising, the gap between the two is widening and is another signal of a strong marketplace. My only concern continues to be, 'how long can we keep up this pace of new deal volume if less supply continues to come to market?'. At some point it can become self-defeating, similar to how high oil prices results in demand destruction and ultimately lower oil prices. At some point, all the good products will be signed into contract and as we approach the summer we will see much less new supply come to market. The combination of these two forces may confine the current surge in activity to a shorter period than what we usually see for our active season.

Subscribers can further detail out local trends in neighborhoods and price points in the Sub-Market Trends tab of our charts section.

Finally, I'm asked all the time by users to help interpret supply/demand charts either for the market as a whole or for a local sub-market -- for those I encourage you to read the discussion, "How to Interpret The Trend: The Anatomy of a Chart", posted back in January.

Cheers!


CAPTCHA Image