Manhattan Market Update / Price Action (lagging) Continues to Rise

Posted by urbandigs

Tue Sep 25th, 2012 10:30 AM

A: September is the slowest month of the calendar year so let's check in on how Manhattan has been doing. I also want to check in on price action using the Streeteasy Repeat Condo Index. Just a reminder, the UrbanDigs real-time system tracks Manhattan inventory as listings move from ACTV to CSGN to CLOSED. The Streeteasy Index track Manhattan price action by analyzing same unit condo resales over time; thereby eliminating variables like differences in views, size, building amenities, etc.. Combined together, these are the main two tools you need if you want to know what its happening in this marketplace right now!

First, lets take a quick peek at the UrbanDigs Daily Manhattan Market Ticker which shows us daily, weekly and monthly production for the Manhattan marketplace:

ticker_sept25.jpg

...by looking at the ticker above, I can see that:

-- Manhattan has produced 778 new contracts signed over the last 30 days
-- Manhattan has produced 209 new contracts signed over the last 7 days
-- Manhattan has seen 1,506 new listings come to market over the last 30 days

You can see how these trends rank amongst past months performance by clicking here for Monthly Contract Activity and here for Monthly New Supply.

Here is a chart showing you Manhattan Monthly Contract Activity since 2008 -- it's in bar chart form so you compare production in the same month going back 4 years to factor out seasonality:

sep_2012_dealvol.jpg

This chart clearly shows a downtick in deal volume since May (when the market was in frenzy mode), but also shows how we continue to outperform September production levels from years past. The current pace of monthly demand right now is in the high 700s (as seen on the market ticker at the top of the post). This compares to past September contract activity in the following ways:

SEPTEMBER 2008 --> 567 new deals signed
SEPTEMBER 2009 --> 761 new deals signed
SEPTEMBER 2010 --> 583 new deals signed
SEPTEMBER 2011 --> 571 new deals signed
SEPTEMBER 2012 --> on pace for high 700s

Today's market strength and shift in leverage to the sell side has been in the works over the course of the last 3+ years -- it is not something that just happened 6 months ago! The data is what it is and the data doesn't lie. Shortage of supply coupled with progressively rising demand has left today's buyers of quality property without much leverage in negotiations. If your new to the market and you want to bid low and get a steal for a premium Manhattan property, I wish you good luck! Unless the building/unit is lacking in desirable features, 'it ain't happening!'. When a quality product does come to market and is priced right, dozens of other willing and able buyers are stepping up to the plate.

In terms of price action we have to wait for deals signed into to contract to not only close, but to also be filed with the city register. So we have to wait 60 or 90 days to allow time for these sales to file in before making any conclusions; otherwise we would be analyzing an incomplete picture with future sales data yet to file in.

Manhattan's rising price action began back in March or so but has taken time to see in the data. With the most recent # published this morning, take a look at the Streeteasy Condo Index which is beginning to reflect market strength seen back in May/June:

se_con_index_aug.jpg

When I discussed how this was shaping up to be the "Hottest Year Since '07" back in August, it was from analyzing the real time data from UrbanDigs combined with what I was seeing in the field with our buyer clients. The SE Condo Index is slowly confirming these price action trends and we still have 2-3+ months of 'pending sales' yet to be reflected in the index. In short, expect strong quarterly reports when Q3 is released in a week or so and expect the SE condo index to continue its march higher for a bit more (although the move may be nearing its end) until it catches up to today's market. I would say the SE index currently reflects where the market was back in May/June -- this is the lag that we must deal with when analyzing price action and why today's marketplace may not be performing at the same level suggested by this information.

One thing is for sure, sellers will have strong comparable sales deals to price off of as aggressive bids for property ultimately close and become public record. Time will tell if the market can continue to produce bids to maintain the uptrend that is now maturing.


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