Equity Markets Jittery Again -- Manhattan Deal Vol Stays High

A: A tale of two markets as equity markets get jittery over the same old concerns while Manhattan continues to enjoy peak levels of new deal volume -- weekly pace of newly signed contracts is hovering between 320-350, as the past two days alone (mon+tue production) saw 130+ new deals across Manhattan get signed! Today we booked another 40+. Its common for the pace of new deal volume to lag equity markets by at least a few months - just think back to 2007-2008, as Manhattan held on until Lehman failed in Sep 2008. But today's Manhattan real estate sector is a very active one and the data suggests a notable shift in leverage to the seller over the last 4-6+ weeks or so. I'm especially curious to see how current conditions may affect future lending rates if bank pipelines get too backed up, or how appraisals come in for deals where bidding wars resulted in offers well over ask. Expect today's market conditions to ultimately be reflected in the Q3-2012 market report released October 1st. For now, lets look at what equity markets are worried about again and how we can tell if/when it starts to impact Manhattan RE.

Major equity indexes traded down over 1% today before rallying back as worries over Greek and the EU once again 'mean something' - concerns over Spain are also worth pointing out. Stock markets are psychotic like that as things matter until they don't...until they matter again - its the markets way of self-cleansing itself of bad debts and mis-valuations and it almost always first shows up in bond markets (corporates, government, asset-backed securities, etc.)!

An example of this would be how the Greece 1YR Govt Bond Yield is at 1,143%!! - a sure sign of the turbulence that likely lies ahead for Greece. At all times, equity markets are trying to discount the potential future impact on corporate earnings and in essence is barometer of investor confidence and their taste for risk assets over the near-medium term.

But what I want to point out is just how far we have come since 2009, and how we are at the height of that up move right now -- this leaves contrarians worried over future risk/reward after climbing a big wall of worry and the optimists who want to continue to ride the euphoric wave.

The EU problems are yet to full out crash our markets -- and now it seems like there will be another round of tests of the markets durability to these known sovereign debt concerns. For this to get Manhattan messy, equity markets need to see some kind of substantial selloff strong enough to impact buy side confidence and bids. One technical indicator of rising sell side momentum is watching to see if the S&P500 crosses its 200-day moving average. Looks like we need another 7%-8% selloff to reach that 200-day moving avg and if we close below it, the markets may be in for a deeper down move than many might otherwise suspect.

Below is a chart showing the S&P500 since May 2009, along with the 200-day moving average in red. The last time these concerns surfaced was August of last year and markets dipped below their 200-day moving average and nose-dived 12%-13% over a matter of weeks (shown on chart below) - since then, its been a gradual reflation back to over 1,400. Take a look:



Manhattan real estate deals take weeks to go from verbal agreement on terms to fully executed contract of sale; when it gets counted as 'pending' on UrbanDigs.com. Here is the latest snapshot of the Daily Market Ticker:



The ticker lets us track:

-- 2 doses of daily updates; both today's deal production and yesterday's #s
-- a weekly pace of deal volume
-- a monthly pace of deal volume

Looking at the monthly pace allows us to see the broader trend and as you can see, Manhattan produced over 1,300+ new deals over the last 30 days! Daily deal volume continues to be very strong during the week, reaching the 40s, 50s, and 60s and sustaining these levels for weeks now. If the market were to feel an impact to a stock market selloff, this ticker will be the first to show it as future deal volume dies down dragging with it the weekly and monthly #s.

So far that has not happened. In the meantime, lets keep our eyes on equity markets to see if EU worries start to 'matter' again as we finish off a very active start to 2012!.

April in the Books - Pending Pipeline Strong For Future Reports

A: With April in the books, lets take a look at how Manhattan produced in the month and how it compares to past April performances and where we came from since March. With the market continuing to see a very strong pace of new deal volume, the pending pipeline of closings will likely power solid Q2 and Q3 reports -- Due to the lag in ACRIS filings, I would put my money on Q3 being the 2012 report that truly captures what Manhattan is experiencing right now in the field. Lets discuss and quantify these statements with charts.

First, lets take a look at how many contracts Manhattan managed to produce in the month of April, 2012 -- and how that compares to past April's going back to 2008:



Now, lets break down how the month of April performed compared to past April's, and see how much supply we had at month's end -- we should always look at pending sales in relation to active supply trends because the two are related.

Quick Tip: If supply rises big time and the market produces 1,164 new deals (as it did in April), it's not as strong a market signal than if supply fell big time and still managed to produce the same amount of new deals signed! In the case of rising supply conditions, more inventory somewhat mutes the effect of rising deal volume. Whereas in tight inventory conditions, it will get more & more difficult for the market to sustain monthly deal volume this high; higher than 1,100+ new deals signed a month which is a very strong pace.

APRIL New Deal Vol Since 2008 - Active Supply at the Time

April 2008 --> 1,182 new deals signed - 7,072 active units for sale at time
April 2009 --> 642 new deals signed - 9,455 active units for sale
April 2010 --> 1,150 new deals signed - 7,791 active units for sale
April 2011 --> 1,006 new deals signed - 7,886 active units for sale
April 2012 --> 1,164 new deals signed - 6,905 active units for sale

It really helps to put our market trends in perspective when you look at both supply and demand trends in relation to each other, over time.

Now, lets take a look at monthly new supply for Manhattan since 2008:



This monthly new supply bar chart since 2008 should clearly show you how since late 2010 (red bar), Manhattan has seen less supply to come to market on a monthly basis for every month except February of 2012! In other words, current tight inventory conditions are a function of new supply trends for the past 18 months! This did not happen overnight.

This is probably why buyers out there continue to bid, and bid aggressively, for quality product that comes to market at a reasonable price. Add in that equity markets recently reached a 4-year high and you don't have that fear & uncertainty that typically motivates a whole new class of sellers to list property for sale to either a) liquidate to raise $$, b) sell what is perceived as a near term depreciating asset, or c) sell out of general market fear.

I'm not saying its party time again and prices are higher than peak in 2007, they are not, Im simply reporting on real-time production data and how we got here over the past few years. Price discovery on deals signed in April will likely become available between mid-June and September. Generally speaking, certainty and confidence are very important buy side characteristics that take years to shape, and that's exactly what happened to Manhattan property buyers over the last 3+ years. So don't be surprised to see a pop in median/avg sales price trends in the Q3-2012 report that will be released on October 1st.

It is what it is, and I'll still be surprised if we can keep up this pace of producing over 1,000+ new deals signed as we head into June given tight inventory conditions and fewer new listings coming to market on a monthly basis. But, until anything changes the Manhattan market continues to experience a very active start to 2012 that will power strong Q2 and more likely, Q3 reports. Cheers!

3-MTH Pending Sales Check for Manhattan N'hoods

A: Lets check in on the 3-MTH pending sales trends for all Manhattan neighborhoods tracked by the UD system.

Notable Neighborhood Moves since the last check in mid-March:

-- Battery Park City market wakes up, surging 154% over the last 3 months
-- Tribeca cools down slightly seeing demand go from +68.9% to +57.6%
-- LES/Un.Sq/EVillage surges from +17.8% to +65.9%
-- Chelsea/Midtown South jumps from +36.6% to +91.5%
-- UWS jumps from +27% to +61.9%

Here are all the Manhattan neighborhood trends we track; I added supply trends after each neighborhood's 3-month pending sales #:

3-MONTH PENDING SALES TRENDS -- SUPPLY TREND

Battery Park City: +154.5% -- supply down 18.1% over this time
Chelsea/Midtown South: +91.5% -- supply down 6.6% over this time
LES/East Village/Union Square: +65.9% -- supply up 2.2% over this time
Upper West Side: +61.9% -- supply up 0.3% over this time
Gramercy/Flatiron: +59.1% -- supply down 1.9% over this time
Tribeca: +57.6% -- supply up 2.3% over this time
Upper East Side: +57.2% -- supply up 5.8% over this time
Inwood/Wash. Heights: +57.1% -- supply up 19.6% over this time
Midtown West/Clinton: +47% -- supply up 7.8% over this time
Harlem/Morningside Heights: +41.1% -- supply down 12.4% over this time
Murray Hill/Kips Bay: +39.6% -- supply up 5.3% over this time
East Harlem: +38.5% -- supply down 5% over this time
Soho/Noho/West Village: +34.8% -- supply up 11.5% over this time
Midtown East: +21.2% -- supply up 9.5% over this time
Harlem/Hamilton Heights: +12.9% -- supply up 5.5% over this time
Fidi/Civic Center: +12.5% -- supply down 5.2% over this time

The supply/demand trends continue to be quite clear --> new deal volume is pushing pending sales %changes to high levels while supply trends remain tight.

On a daily deal volume level, we are seeing around 40-50 new deals signed a day over the course of the business week - a very strong pace. The high end is also showing an uptrend but not nearly as active as the lower price points.

In terms of price points, over the last 3 months Manhattan Pending Sales trends are as follows:

PENDING SALES ALL MANHATTAN = +53.8%
PENDING SALES <$1M = +51.9%
PENDING SALES $5M+ = +27.6%

Manhattan tends to see monthly deal volume over the 1,200+ level only one month out of the calendar year - the reason being is that it gets harder and harder to sustain such high levels of new deal volume that this kind of action ultimately becomes self-defeating and will at some point, cool off.

Right now monthly deal volume is at 1,217, with another 57 deals going into contract yesterday alone. Sellers should take advantage of this kind of activity while it lasts and buyer's just have to deal with buy-side competition and a sense of urgency for quality, well-priced product a bit longer. Expect this pace of deal volume to slow as we get closer to the summer at the expense of even tighter supply as unsold listings tend to be removed from the market in the slower summer months.

Cheers!

Manhattan Supply vs Sales Volume -- Past 3 Years

A: We rarely take a look at how the market has performed over the past 2+ years, so lets take a quick look at how Manhattan has performed since the height of the credit crisis in 2009. It should put into perspective how far this market has come and give you a good sense of where we are and where we came from. We should also point out the general downtrend in supply over this time -- to me, it feels like this market has gotten awfully tight over the last few years, and the charts confirm it. But that hasn't stopped buyers from signing new deals at all - lets discuss.



Supply down 27% since early 2009 (green line)
Sales volume up 91.7% since early 2009 (red line)

Not many people expected this kind of comeback! The UD Manhattan sales volume chart is set to a 90 day lag to allow enough time for sales to be filed by the city register - so it cuts off near the end of the chart above. You can read up on ACRIS sale filing delays here, "Q1-2012 Sales That Never Made the Q1 Report".

The UrbanDigs real-time market ticker and chart systems tell me where that trend of sales volume above is likely to head over the next 3-6 months.

-- The market ticker shows me daily market production by REBNY members
-- Pending Sales show me the pace of current deal volume

Please click on this free link below that will show you:

Manhattan Supply vs Demand (pending sales) Trends

I've discussed how active Manhattan markets are right now as our daily ticker continues to put weekly deal vol over the 300 level which is fueling a rise in our measure of pending sales -- pending has surged 64% over the last six months alone!

This is all happening with tighter supply conditions from both one and two years ago; which makes me want to up the potency of this recent move up in new deal volume.

Its fairly safe to expect a sustainable and noticable tick up in both sales volume and median pricing trends over the next few quarters. Expect strong Q2 & Q3 quarterly firm reports w/ the focus on the Q3 report due to the lagging nature of ACRIS sale filings.

It is what it is until the data changes, and with supply so tight and deal volume so high, I have to wonder how sustainable the current trend is. Shift the leverage to the seller for the next 30-45 days and let's see if Manhattan can keep this deal volume up as we head into the summer.

Breaking Down Manhattan's Recent Strong Activity

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):



# 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):



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!

Q1 Sales That Never Made the Q1-2012 Reports

A: The Q1-2012 market reports are out and are populated by closed sales that took place in January, February, and March. The reports were released April 2nd. Due to ACRIS filing delays, readers of these reports must understand that they paint an incomplete picture as there are many Q1 sales that filed in after the report was released + Q1-2012 contains many Q4-2011 closings that filed in late. So when it comes to analyzing price action, the Q1 report is more of a snapshot of a marketplace 4-6 months ago. If you wanted to analyze Q1 with all sales that actually closed in Jan-Feb-March, then you would have to wait 60-90 more days or so for all sales to file in. Here are some sales that closed in Q1, but filed in late and never made it into that report! These sales will be included in the Q2-2012 report that will come out July 2nd.

"Don't hate me because the city filed me late" - says one high end Q1 sale that missed the Q1 market report by 2 days.

While in development of this system in 2009/2010, we discovered that the acris filing lag works something like this:

50% or so of closings will be filed within 2 weeks
70% or so of closings will be filed within 4 weeks
80% or so of closings will be filed within 6 weeks
85% or so of closings will be filed within 8 weeks
95% or so of closings will be filed within 12 weeks

The UD chart system automatically sets all sales related charts to a 90-day lag to wait for 95% or so of closings to be filed and measured. UrbanDigs offers the following Manhattan sales related charts:

Manhattan Sales Volume (by price points)
Manhattan Median Sales Trend (by neighborhood - will be expanded soon)
Manhattan Absorption Rate (in months)
Manhattan Sales Dollar Volume (in millions)

There are a few ways to handle the lag:

1. Wait 60-90 days for all sales to roll in before painting a picture of a time period (UD does it this way)
2. Publish market reports on time and then issue a revised report 90 days later with complete sales figures
3. Publish market reports w/out any revising - which is fine, but will be about 2-3 months at a lag in terms of price action...as long as the methodology is consistent, the ongoing trend will eventually reveal itself

The key is to be consistent with reporting. The annoying part is to think about how the Median/Avg Price #s can change when a quarterly report waits for all Q1 sales to file in? A Q1 report today that shows YoY price declines may in fact show YoY price gains if they only waited 60-90 days for all Q1 sales to roll in.

Take a look at the luxury sales that occurred in Q1 but never made it into the recently released report because the filing came after April 1st.

$5M+ Q1 Sales That Never Made the Q1-2012 Market Reports

$19,287,375 -- 34 Greene Street - 5PHN closed March 1st
$13,240, 250 -- 535 West End Avenue - PH1 closed March 23rd
$10,600,000 -- 1 Central Park West - Unit 30A closed March 14th
$8,073,000 -- 350 West Broadway - Unit 5 closed February 10th
$6,345,850 -- 60 Riverside Blvd - Unit 3602 closed March 20th
$5,800,000 -- 10 Gracie Square - Unit 1/2C closed March 19th
$5,800,000 -- 580 Park Avenue - Unit 9D closed March 20th
$5,651,287 -- 240 West Broadway - Unit 5 closed February 28th

In only 4 business days since the close of Q1, there are already eight $5M+ sales that closed in Q1 yet due to the delay in ACRIS filings will be counted in the Q2 report. This is especially interesting as The Real Deal recently reported "Luxury market losing its shine? Only 17 sales over $10M close in first quarter compared to 25 in third quarter of 2011"...Now we know that only 4 business days later, 3 more $10M+ sales came in for Q1 that were missed in that article.


The Q1 report contains many Q4-2011 sales and the upcoming Q2-2012 report will contain many Q1-2012 closings. That's the lag - so when analyzing price action keep this in mind!

I also count:

-- 21 Q1 sales between $2M-$5M that closed over the last four days and didn't make it to the report
-- 41 Q1 sales between $1M-$2M that closed over the last four days and didn't make it into the report

It may not sound like much but this is only the first 4 days since the close of Q1 that we are talking about here. Over the next 8-10 weeks, many more Q1 sales will continue to file in and add to these totals.

This is why there is a discrepancy between what real time measures of inventory are telling us about current conditions, like supply and pending sales trends, and what quarterly market reports are telling us from actual closings. Not much we can do about ACRIS filing delays, but we can be educated on these kinds of things so that when we read and interpret the market reports we understand what the #s are reflecting on.

March in the Books - Monthly New Deal Vol Highest on UD Record

A: Manhattan continues to shine in regards to new deal volume, which is the best way to get a feel for the current 'pace of demand' in the marketplace right now. Today's activity will ultimately fuel future quarterly reports and from what I am seeing I think its safe to expect solid Q2 and especially Q3 reports in the near future. The UrbanDigs monthly tracking systems show that March-2012 booked 1,213 new deals signed, the highest monthly total for any month of March since we started keeping track in 2008. Given continued tight supply conditions, the market probably "feels" even more active if your an active buyer, seller or broker.

With sales reports lagging 4-6+ months, the only way to see what's happening in the field right now is to look at real-time inventory trends. That is, is a large amount of new supply coming to market? How is current deal volume? Is the pace of new supply outpacing new demand or vice versa? Since the contract price is only known to the parties of the transaction we will not know price discovery until a) the closing occurs and b) the city publicly files the transaction - a lag that can be 4-6+ months. By then, the market may be producing very different kinds of supply/demand numbers in the field. So lets get right to this real-time information and see what's really going on out there.

First, lets check in on Total New Supply by Month for the entire Manhattan marketplace (in other words, how much stuff is coming on the market each month):



Because of seasonality, its best to look at a month's production relative to the same month in past years. If I were to count how much new product came on to the Manhattan market in the months of March since 2008, it would look like this:

March 2008 --> 2,094 new units came to market
March 2009 --> 2,070 new units came to market
March 2010 --> 2,040 new units came to market
March 2011 --> 1,932 new units came to market
March 2012 --> 1,759 new units came to market

The trend of declining supply should be clear. But what's even more clear is when you look at each month's bars over the past few years - do you see declining monthly trend of new supply since 2010? On a monthly basis, there is simply "less stuff" coming to market! Last month was the first month since almost a year and a half that we saw a rise in 'month-to-month' new supply to hit the market. That rise only lasted 1 month, as March 2012 produced 9% less supply than March 2011. The result is Manhattan total supply down around 11% from a year ago and 10.2% from 2 years ago.

Lets now move the focus on to Monthly New Deal Volume for Manhattan since 2008:



New Deal Volume for Manhattan in the month of March is:

-- up 15.7% from last March-2011
-- up 39% from February-2012

All with tighter supply. Today's buyers know fairly quickly when a good deal on a property presents itself. Its a special bonus for sellers because the market should tell you rather quickly whether or not you are priced realistically. Its up to you and your broker to recognize when your not priced right and how to adapt before market action slows down. This level of new demand ultimately will be self-defeating, and no trend lasts forever so sellers are advised to take advantage. Buyers are paying for views, private outdoor space, and renovations right now -- so if you have none of these and are not seeing any action, check your price!

Back to measuring the pace of demand, if I were to count how many new deals were signed in the Manhattan marketplace in the months of March since 2008, it would look like this:

March 2008 --> 1,141 new deals signed
March 2009 --> 650 new deals signed (post-Lehman woes)
March 2010 --> 1,060 new deals signed (post-Lehman recovery)
March 2011 --> 1,048 new deals signed
March 2012 --> 1,213 new deals signed

Its fair to say most of these deals signed will ultimately close over the next 2-4 months and likely be counted in the Q3-2012 report. Which is another way of saying that the Q3-2012 market report released October 1st, 2012 is really reflecting market conditions happening right now!

For observations on price action, we have to go by 'brokers feel' based on what is being seen in the current marketplace and possibly looking at last asking price of listings that go to contract. The issue with the latter is that there is often a noticeable difference between the last asking price and the ultimate contract price where the bid came in. Analysis of what price points are going to contract is helpful when discussing which segments of the market are currently seeing the most demand. For now, this is the best way I can sum it up:

Manhattan 3-MTH Pending Sales % Change for UrbanDigs Price Points

Manhattan Overall (baseline) --> up 33.1%
Manhattan <$1M --> up 32.1%
Manhattan $1M-$2M --> up 40.6%
Manhattan $2M-$5M --> up 32.1%
Manhattan $5M+ --> up 13%

The $5M+ market, while active, seems to be the least active out of the all the price points the UrbanDigs system tracks. Subscribers can check on hyper-local trends in the UD Submarket chart tab. We will work to expand all chart functionality in the near future to give you more flexibility in your chart searches - we just always must keep in mind that when it comes to real-time stats, having a large enough sample size to push forth a meaningful trend is always a concern. If you get too granular on a real-time pending sales or supply chart, your sample size will be way too low and ultimately become meaningless.

Rock on Manhattan, rock on!

Market Still Active - Weekly Deal Vol High

A: Weekly deal volume for Manhattan is in the low 300s for the second consecutive week, putting us on pace to easily break the 1,000+ new deals signed level for March. In the field I am seeing lots of 'contracts out' so I dont see any reason why the current pace of deal vol will dry up anytime soon. Lets quickly check in on the daily Manhattan market ticker and take a look at 1YR supply/demand trends for the city that never sleeps.

First, the real-time Manhattan Market Ticker (snapshot from midnight last night) which captures daily deal volume, daily new listings to hit the market and daily off-market listing updates direct from the RLS:



As usual, I boxed out the CONTRACTS SIGNED row so you can more easily see the latest deal volume #s:

# of deals signed Friday --> 49
# of deals signed Thursday --> 53
# of deals signed last 7-days --> 315
# of deals signed last 30-days --> 1,139

Use the below graph to interpret market conditions over the past 30-days:



The market has seen this kind of action for the past 2-3 weeks, indicating a very strong market all while inventory levels are 11% lower than this time last year. Always look at supply in relation to demand to gauge the strength of a local housing marketplace:

If demand surges and supply surges --> the rise in supply mutes the strength of the rise in demand

If demand surges and supply stays flat --> slightly stronger signal as demand continues to rise without a rise in supply

If demand surges and supply falls (current scenario) --> strong market signal as demand continues to surge even with fewer properties on the market

Let me show you the last 1YR of Manhattan Supply (red line) & Demand (green line) so you can see how the current situation is:



UrbanDigs Note: Tight supply and surging deal volume is the story of Manhattan right now. There is simply a lack of well priced, desirable product on the market right now. Real buyers who are actively looking in their targeted sub-markets are quite aware of current market conditions as low ball bids don't get desired responses and 'multiple offers in' and 'contracts out/showing for backup' updates from seller broker are common - especially downtown. As real buyers lose out on 1-2 highly desired property, you can bet that they will get more aggressive when that 3rd one hits the market - creating a cycle that tends to feed on itself. Real buyers feel a sense of urgency as they go through these kinds of situations and miss out on desired property. The question is how long this high level of activity will sustain itself given the tight supply out there. In March 2011, the market booked 1,048 new deals signed - In March 2010, the market registered 1,060 new deals signed. Current 30-day pace is 1,139. This quantifiable data should speak for itself. Some notes for buyers and sellers.

Sellers: We need product! Just beware of pricing high and missing out on the current action. Just because deal volume is high, does NOT mean the market is seeing a huge rise in price action. I would advise to price realistically and let the market work for you. If you choose to test out a higher price, fine, just re-visit that strategy in 2-3 weeks if no acceptable bids are received. Your best action will come in those first 2-4 weeks.

Buyers: I know its frustrating not having as many options as there were 1 and 2 years ago, and then losing out on a desired property. Try to keep emotions in check if you do get involved in a multiple offer situation. A good comps analysis should allow you to come up with a 3% fair market opinion for most active properties - just be prepared to go towards that higher end of the range given current conditions. If you do get a deal in place at a price that works for you, stay on top of your attorney to conduct diligence in a timely manner (4-5 business days once all docs are received) without sacrificing quality of the review. The seller is entitled to entertain offers until a contract is fully executed! My best advice for those in this part of the process is to make sure your buyer attorney communicates often with the seller attorney and sets expectations on when the contract is expected to be signed. These kinds of updates can/do save deals! The worst thing your attorney can do once deal terms are agreed to is a) disappear for 3-5 days or b) maintain radio silence during the diligence process.

3-MTH Pending Sales Check for Manhattan N'hoods

A: Its been about 5 weeks since the last N'hood update, so lets check back in. My observations in the field are what many of my colleagues are telling me they are seeing as well --> lots of pricey product without desirable features leaving quality, well priced inventory very tight. The result is multiple offer situations for the best product out there that are priced realistically, mainly in the downtown markets. I'm hearing about bidding wars for $14M+ properties in Tribeca and I'm seeing accepted offers getting outbid before the buyer has a chance to sign. The data seems to be confirming this.

My note to sellers who have not seen strong interest/bids over the last 2+ months is to seriously reconsider your pricing strategy while the active season is in high gear! If your listing has not gotten interest or acceptable offers so far this year, its not the market, its your price and your expectations on your property's value! In the end the market always dictates value, not the seller or the the seller broker. Now lets get to the trends.

Notable Neighborhood Moves since the last check in mid-February:

-- Tribeca remains very active jumping from +43.2% to +68.9%
-- SoHo/NoHo/WVill surges from +24.7% to +68.5%
-- Midtown West jumps from +7.3% to +48.8%
-- Gramercy/Flatiron submarket is back in the black going from -16.7% to +4.2%
-- Harlem/Hamilton Heights is the only negative performing market over the last 3 months

Here are all the Manhattan neighborhood trends we track; I added supply trends after each neighborhood's 3-month pending sales #:

3-MONTH PENDING SALES TRENDS -- SUPPLY TREND

Tribeca: +68.9% -- supply down 4.3% over this time
Soho/Noho/West Village: +68.5% -- supply down 26.4% over this time
East Harlem: +52.4% -- supply down 21% over this time
Midtown West/Clinton: +48.8% -- supply down 6% over this time
Battery Park City: +40% -- supply down 18.9% over this time
Chelsea/Midtown South: +36.6% -- supply down 10.8% over this time
Midtown East: +33.1% -- supply down 8.5% over this time
Upper East Side: +29.6% -- supply down 1.4% over this time
Upper West Side: +27% -- supply down 8.3% over this time
LES/East Village/Union Square: +17.8% -- supply down 7.3% over this time
Murray Hill/Kips Bay: +15.1% -- supply down 8% over this time
Fidi/Civic Center: +12.5% -- supply down 20.5% over this time
Inwood/Wash. Heights: +10.8% -- supply down 3.1% over this time
Harlem/Morningside Heights: +8.5% -- supply down 18.5% over this time
Gramercy/Flatiron: +4.2% -- supply down 9.5% over this time
Harlem/Hamilton Heights: -12.8% -- supply down 5.2% over this time

The supply/demand trend should be quite clear, with supply down in every submarket we track over the last 3 months. Subscribers can further break down neighborhood trends in the SUBMARKET Chart section where you can further select a price range, # of bathrooms (we use bathrooms because we found Bedroom count to be inflated in the RLS data), and property type (co-op, condo, townhouse)

Lets end with a quick note from Donna Olshan's Weekly Luxury Market updates ($4M+ properties):

There were 17 sales last week, the 7th straight week that the total price of contracts signed at $4 million and above has exceeded $100 million. Since the beginning of the year, the luxury sector has recorded 143 contracts signed, totaling over $1.1 billion. Other trends: condos outselling co-ops 2.5 to 1 and Downtown remains the most popular luxury area with 20% more contracts signed than the Upper East Side.

The UrbanDigs real-time Manhattan data platform confirms what Donna is reporting on. We are in the process of revamping the entire Chart user interface so that UD subscribers can have much more flexibility with their chart searches. We expect to launch this upgrade with the new Comps Tool in 6-8 weeks or so. Our comps tool will focus on sales trends, building trends, days on market trends, listing discount trends, as well as a Comparable sale relevancy tool that will push forward the best comps for any target unit in mind. No small feat, but we are almost there. For those that gave us valuable feedback on chart UI upgrades and other tools you want to see, hang in there! Its all coming!!

Don't Mess Up In Here...!

Originally Published October 23, 2006 -- was requested to put this back up, so try to put yourself back into time & place -- The principles still apply in today's marketplace -- A: If you are a new seller who has been on the market 4 weeks or less, then this post is for you. Fact is, if you take a step back and in hindsight look at the traffic patterns of any given exclusive, a pattern becomes clear. That pattern is sometimes the difference of tens of thousands of dollars in the end; IT WAS FOR ME!

Unless the apartment is aggressively priced, most of the activity will happen in the first 2-3 weeks and in the final 3-4 weeks (due to price cuts).

THE FIRST 2-3 WEEKS (The 'Should Have' Period)

I like to call the first two weeks of every exclusive the 'should have' period. The first 2 weeks is the period of time where you get a bunch of appointments scheduled from 'B' buyers who are trying to learn the inventory of their price point and their agents who just want to do a deal already. Maybe you'll get a few 'A' buyers too. Most likely, you'll get a low ball bid. Many times this very early bid is the nightmare for sellers 5 months later. So, I refer to it from the seller's point of view as the, "I should have accepted that bid and saved 5 months of agony".

It makes me think of that scene in Casino where Joe Pesci stares down DiNero as he goes to pick up his wife, Sharon Stone, at Pesci's restaurant. You know that scene, where Pesci snears, "Hey! Don't Mess Up In Here...!"...


(not the scene but has that same look)

In Hindsight, every financial decision is 20/20; including whether or not YOU, THE SELLER should accept that offer.

It is during the first two-three weeks of listing your property that you will get the most interest and if lucky, an offer. The offer will not be high but will be very close, the same, or most likely HIGHER than what you eventually accept down the road after multiple price cuts!

I SAY TO YOU, THE SELLER, DON'T MESS UP IN HERE! And if you do mess up and ignore the offer because there is so much activity and you won't sell below a certain price in the first 4 weeks, to NOT blame it on your broker for failing to move your property at the highest & best price possible down the road.

MY STORY: When I had my condo on the market at Astor Terrace, I showed you the work I did and how I was going to market it, I got the most activity during the first 3 weeks. Every open house was packed and I was thinking JACKPOT! I even got a bid. I was asking $1,075,000 (much higher than I knew it would sell for but it was my home, and my home is worth what I say...yea right!) and got a bid of $950K. I shrugged it away without a response and played hardball. Yea, real smart.

Four months later I found myself $6,000 into weekly NY Times advertising and other marketing expenses, tired, worried, and 2 price cuts down to $975,000. Traffic dried up and I was getting very nervous. HOW COULD I HAVE DISREGARDED THAT OFFER! Nights became sleepless and bills seemed threatening to my financial well being.

I winded up accepting a $935,000 one time take it or leave it bid, up from $925,000 orginially. It was all cash and 'looking to close within a month' that made the offer a no-brainer for me. But the mistake was made and the lesson was learned.

THE LESSON: Think about any bid that you receive in the first two to three weeks! Think about even if it is well below your asking price. If you decide NOT to accept a low offer in the first 3 weeks, than be prepared to possibly have your apartment on the market for the next few months! I'll explain why right now.

4th TO 16th WEEK OF YOUR LISTING

During weeks 4 to 16th of your listing, assuming your property was on the market for 4 months or more, your traffic is pretty much the same; SLOW. The broker is showing the apartment 1-2 times a week, and you are having 2-4 people per open house. Not a good sign. The listing seems to have staled up, and feelings of nervousness fill both the agent and the seller as thoughts of 'problems with marketing' begin to arise. I usually hear questions like, "Why are'nt you showing the apartment more often?", or "The ad in the NY Times wasn't big enough", and the best one, "I want this place SOLD, so get to work and SELL IT!". Yea, ok.

You know what I think at this point? I hate to be the bearer of bad news but if you had 30 buyers through your property with no bid submitted, than your asking price is too high and needs to come down to reality; i.e. YOU HAVE TO WAKE UP!

I've said this over and over here on UrbanDigs:

YOUR HOME IS WORTH ONLY WHAT SOMEONE IS BOTH WILLING & ABLE TO PAY FOR IT

It doesn't matter that you are so close to the subway station, or that you have brand new stainless steel appliances, or even that you have a terrace (cause I had a sick one!). It only matters what a buyer will bid for it and whether or not you HAVE TO sell it right now. The problem is that as a seller, you get emotional and ONLY look at the positive attributes of your property when you price it and review offers! The solution should be to be as unbiased a seller as possible! Notice if your apartment is on a low floor, or has no views, or gets no sunlight, or is on a very busy/noisy street, or has a floor-through layout, or has low ceilings, or whatever! This is what buyers will be thinking about when they bid. A biased seller will be unable to make rational decisions when it comes to accepting an offer.

Moving on.

FINAL 3-4 WEEKS

Traffic begins to heat up as you already hit your turning point and have succomb to price reductions. It happened for me after 12 weeks on the open market and 11 open houses. A very long time for any nervous seller!

I didnt get a contract signed until the 18th week and 16th open house and for lower than what I was offered 16 weeks ago!

Your price comes down and activity picks up. Wow. I can't believe it. It's amazing how this works. Why didn't I think of this earlier? Why didn't I respect what my broker originally told me 15 weeks ago about where to price my unit? Why was I so blind?

BECAUSE YOU ARE HUMAN. BECAUSE ITS YOUR HOME. BECAUSE ITS HARD TO SELL ANYTHING THAT HAS EMOTIONAL TIES, MEMORIES, GOOD TIMES & BAD.

But you must not be clouded in your financial decisions. You must be able to recognize when to move on an offer. You must be able to realize that a highly qualified buyer may NOT be so easy to find!

This post was based entirely on the notion of hindsight and what I have noticed AFTER looking back at my clients and my own exclusive listings, to see if there were any patterns. There were. If anything should be gained from this post it's that you must have the vision and the will to accept a reasonable offer if:

1. It comes very early and from a qualified buyer
2. Is reasonable in the sense that you were going to price your apartment at 750K but decided last minute to raise that to 800K. Now you get a 700K offer in first 2 weeks.
3. You are under time pressure to sell

Don't Be Stupid. Don't Be Greedy. Don't Mess Up In Here!