What's happening to Manhattan residential real estate prices this summer?

The non luxury sector prices are stabilizing after one leg down of about 20-30% as consumers that have a need to buy are baited by the price drops, the low interest rate environment and the stimulus.

The luxury sector is in a free fall with prices dropping up to 50% and still not having a significant level of support.

Right now it seems that the folks that really wanted to buy did, that sellers are calling for the bottom, and we are entering another phase of price dislocation.

Is it better to rent or to own?

Ask again in 9 months when we all can be hind-sight experts.

lr10021: In your opinion what's the definition of "luxury sector?" Above $2 million? $5 million? Just curious.

avenueb: that is a really good question that has been asked about a 1000 times.

I never defined luxury based on price. Because a 2800 sf co-op on the far upper east side on 1st avenue that sells for $3M, but mom and dad are working and their four children attend PS 158, is more a necessity. I have always defined luxury as excess beyond one's real needs:

A $900,000 dollar studio at The Laurel is luxury. A 1.8M one bedroom one bedroom at Trump Park with carring costs of $2,300 per month is luxury. In the same way that a $15M townhouse for a celebrity couple who aren't really going to live there is luxury.

In the Manhattan rental market, prices are also continuing to decline even though this is when demand is traditionally highest in the season.

Yozhik - good observation. Prices are declining in the rental market in a big way. The variation between what a property is asking and what someone can get it for is huge. Unfortunately for condo landlords this is a double edged sword, prices are going down due to lack of buyers but also due to cap rate contraction resulting from lower rents.

prices have not fallen 50%.

Sales activity has surprisingly remained brisk this summer - hence I have wondered if prices may have at least firmed.

do you like luxury?

jaguar.

you forgot to add that inventory has dropped about 15% and is continuing to fall.

". . . this is when demand is traditionally highest in the season" The amount of mis-information on this board is staggering.

and it's just one month before labor day. just about time for the next listing season. large numbers of apartments taken off the market without selling. just pull up some of the bigger buildings and look at the listing histories for the last year. and compare to the year before.

joepa, yozhik was referring to rentals. and was absolutely correct. rental demand is at its strongest late summer.

still action out there...deals are as always never easy to get done, but demand is there. pricing is everything and while activity has been good deals are happening at levels in the first comfort zone reached down from peak. its not as if the recent activity is producing huge price appreciation. rather, pricing got to a point + market rally naturally sparked buyer interest to a point where volume was healthy. Still, I find demand/action better than normal for this time of year BUT lower than the frenzy around MAY/JUNE.

just my two cents on what this one guy sees.

printer...a few months back in April, a bunch of started a thread about apartment that would trade imminently. Even the bears chimed in. Guess what...almost all of those apartments have since sold or are in contract. But at prices 20-30% below peak. So there are buyers supporting the market at that point.

The President - While I will agree with you that we can't stamp that prices are off 50% in the luxury sector due to a lack of date points, many people in the industry are aware of it already. Something that would have sold for 11M to a foreigner in 2007 may need to get done for about 6M with furniture thrown in today. Remember the uber luxury sector was flying back then, and with all cash deals a rare commodity these days, there is a level of hesitation to put those properties on the market.

UD - It's interesting that you think demand is up there because I have also seen some open house traffic and it wasn't half bad. Even this past Sunday which was raining people were out there.

But I can't say I can find 10 apartments that would definitely get done soon. Back in April, you had this sense that there was the pent up demand. But now, I see more of a price dislocation. Buyers having seen the closing prices of late, are out to bid far below. At least most of them.

I know of this guy looking to sell at a reasonable price (far below any comp) in his condo, and after missing the opportunity to price correctly back in April/May/June, the best he is seeing is lowball offers that represent a 45% peak to trough discount on the unit, which is another 20% off the recently closed and discounted deals.

interesting...wel, quality of product does matter.how are light/views/condition/location/monthlies?

I am actually surprised that inventory has fallen this much. I thought that as activity picked up, people who had avoided listing in the winter because they felt 'what's the point, no one is buying', would have flooded the market. Perhaps they have all just put it off until after Labor Day. If we don't see a stronger than typical pickup in listings after Labor Day, I am comfortable saying the market has bottomed.

I am actually surprised that inventory hasn't fallen more. Once again, a huge number of units put on the market over the past year have been taken off the market, temporarily or not we'll have to see, without being sold. Historically, they would reappear if the owner truly wishes to sell after Labor Day.

And I'm not comfortable saying the market has bottomed until the overhang in condo supply is dealt with, along with the issues of unemployment and credit delinquencies. and falling rental prices.

The Miller Samuel / Elliman numbers show that contract prices for Q3 are already lower than Q2....

so, officially, right now we're still declining.

i noticed most of 650 6th was taken off the market this week and know they didn't sell those turkeys.

nyc10022:

Where can I find Miller Samuel / Elliman contract numbers for Q3?

Thanks!

i just learned of a api pull error with my widget on urbandigs and an error on my db backend with hosting company..streeteasy and my programmer are resolving now. it has been updating so im not sure yet how data has been effected but this was the reason why 1month charts havent been working.

once fixed, and data backdated and reuploaded, ill post about the issue and correction. i may have to pull a BLS on you guys, doing a backward revision...i feel so dirty

UD, dirty is knowing it and letting it stand...

Topper, this is what he was referring to. No published report out there that I know of, and as Mr. Miller himself says, contract data are typically suspect. I'm inclined to put a little more stock in an Elliman report than one of the no-name appraisal firms, but I'd still take this all with a grain of salt until we've got more solid stuff.

http://therealdeal.com/newyork/articles/prudential-douglas-elliman-internal-document-shows-decline-in-contract-signings
http://matrix.millersamuel.com/?p=3043

Ironically, bjw said the exact same thing about the 20% down data the first time.... which just put him 6 months behind the truth!

You can complain about data all you want, but its fairly simple... contracts are being signed for LOWER PRICES in q3 than Q2. Ignore it at your own peril.

This data is a whole lot more valuable than anything else on this thread, including claims of "stabilizing" with zero data bahind it.

Is this still peak season for renters finding new apartments? I checked out a couple buildings in financial district and a few are doing 3 months free right now. Doesn't the rental market typically slow down in the fall to winter? and wouldn't this result in even more such deals as 3 or more months free? Also what is the purpose of offering months free as opposed to just lowering the rent?

I think "months free" gives them more room to increase at renewal without seeming like they're jacking up the rent hugely ... it just seems like they're not re-offering the "signing bonus".

Steve, this is generally the big season for rentals, yes.

But as I said before we got here, this season would be a problem because its also the season where most leases END. And we have more going out than in.

So, yes, things will stay slow (even slower) after this failed "peak" season, but there will also be less leases ending. Of course, if there is still major backlog from failed peak, it could be similarly painful....

... but the deals might not get better, they might just be as good.

Right now there is a LOT of inventory to get rid of, not 100% sure it will all be there later.

that makes sense, but why the months free as opposed to lowering rent? Does it just make them feel better about themselves, them being the building owners

nyc10022, two things: you yourself have stated repeatedly that real estate is a slow-moving market, so being a bit behind the curve is no big deal at all. If that's the case, then you should have no problem with waiting for the quarterly reports, no? Secondly, and I've said this before, so I'll just c&p:

"That doesn't make it any less valid. Sometimes you'll get lucky and get it right (you know that stopped clock argument...) but continually drawing such firm conclusions from suspect data will almost certainly drop your batting average below .500. And this not being baseball, that's the Mendoza Line here. Not good."

steve, they'd rather make concessions and then when renewal time roles around there are no more concessions and your rent is what it is. they believe they are in a stronger position then because the tenant won't want to move, and some lls will then try to jack up the rent quite a bit above the base rent, frequently despite market reality. they really hate to decrease base rents.

"nyc10022, two things: you yourself have stated repeatedly that real estate is a slow-moving market, so being a bit behind the curve is no big deal at all"

Way to misinterpret.

Yes, if you are waiting to buy! (bouncebacks are rare)
If you already bought, it just means the decision was even worse!

"That doesn't make it any less valid. Sometimes you'll get lucky and get it right (you know that stopped clock argument...) but continually drawing such firm conclusions from suspect data will almost certainly drop your batting average below .500. And this not being baseball, that's the Mendoza Line here. Not good."

yes, its all just, uh, luck that I've been right and you've been wrong.
uh, yeeeeeeeeah.......

But know thats your problem... you put as much faith in guys like steveF as the folks who have been right all along.

Luck, yeah, got it.

"that makes sense, but why the months free as opposed to lowering rent? Does it just make them feel better about themselves, them being the building owners"

ha

steve, its pretty simple, old practice by the broker set.

1) they don't have to "admit" they are lowering rent. A lower rent number can bite them in the butt when they try to rent the next place or have an older renter try and renew
2) because when its a new renter's time to renew, the "starting point" is the higher rent... the assumption is you would get no months free on the rental

"Yes, if you are waiting to buy! (bouncebacks are rare)"

Uh, isn't that why you would look at the data? So basically you agree? Good.

"yes, its all just, uh, luck that I've been right and you've been wrong.
uh, yeeeeeeeeah......."

You're good at being smug, but this has nothing to do with being right and wrong - I never prices hadn't dropped x%; I said wait til we get solid data before you jump up and down and paste the stat as established fact in 2348723 threads, as you tend to do. Put things in their proper context and it makes for better discussion. As for steveF, I put next to no faith in him, unfortunately.

I agree with the other poster's reasoning about free rent but would like to add that landlords (especially on newer buildings)would rather give free months than lower the tenant's rent because they report their rent roles to their lenders. The higher the rent role the more the building is worth. In certain instances (newly built and not fully occupied) it is better for the landlord to give free rent than to lower rents because lower rents may lower the value of the building and trigger a special servicing situation for the owner (where the lender can start trapping the landlord's excess cashflow and start overseeing the operation of the building in order to protect their investment). In the past, lender's generally didn't mind if there was a small concession they wanted the space leased so that they could project the income stream for a fully leased run rate expecting that tenants would stay put.

Does the drop in inventory bring it back to anywhere near normal levels? This is a serious question not a jibe. I see a chart from Urbandigs that we are back to February levels. Isn't it somewhat normal to decline seasonally, and if so, is this an unsual seasonal decline?

"So there are buyers supporting the market at that point."

This statement is by definition backward looking. There WERE buyers supporting the market at those levels. And yes new listing will come out after Labor Day. Lets see what September to December brings before we declare the bottom in.

I think the fourth quarter will, indeed, be very important.

Seems to me that developers have been very slow to bring to market their shadow inventory. But that shadow inventory keeps growing. And eventually the banks are going to want to clean up their balance sheets. "Pretend and extend" can only go on so long.

rhino - well we were at 5000 or so in late NOV 2007 just to put it into perspective. also, see my last note on the error we are experiencing. It might be affecting data in past 3 weeks. Its being worked on now.

http://www.urbandigs.com/2009/03/manhattan_inventory_trends_nov.html

Noah, that's exactly the perspective I am putting the reduction in inventory in to! So we went from 11,000 to 9,000....5,000 is tight. I wonder if anyone has done any work on what the turnover point in inventory level is associated with price increases. I would think 9,000 is still a declining price environment because February was a declining price environment.

hmm, good question. im working on a system to help clear those questions up...many months away though

I think it is funny that everyone argued that there was no such thing as "pent up demand". Now the argument is, “well that was it, there is no more pent up demand”. Hilarious. Shortest memories I have ever seen.

What happend to fleeing Manhattan and reverting back to the 70's?

well I think the argument was slightly different. The argument was, 'manhattan prices have a floor because of all the sideline buyers that will rush in and buy if there is a 5% or 10% discount'...so my argument was with that specific sideline buyer theory that was used as a sales pitch to support a floor on manhattan prices.

Who ever argued there wasn't any pent up demand? Many people have been priced out for years. The argument, as i recall it, was that pent-up demand was not sufficient to offset inventory and other downward price pressures.

I don't think anyone ever argued there wasn't pent up demand. Also pent up demand comes and goes at different price levels. And as Noah said, most bulls thought and said (but have since forgotten) that pent up demand would hold us much closer to peak. Even further, its not pent up demand when prices fall 30% and certain people find that attractive... that could be new demand. For example, there are many people who could not afford $1.2mm for a 2 bed, but may now be able to afford one at $850k. Again, that is different than pent up demand. Yet further, pent up demand isn't the greatest bull case because selling just happens, but pent up demand becomes un-pent and then what? Is there enough regular old demand behind the pents.

Juiceman, right on. Whenever I brought up pent up demand earlier in the year i was laughed at. I think the strong August activity will just carryover to Sept/Oct as the buyer/seller volume normalizes.

The "buyer" pendulum swings back.

Oohhh. Me so 'pent up' for you, Big American GI.

"Who ever argued there wasn't any pent up demand?"

"I don't think anyone ever argued there wasn't pent up demand."

9 months ago in response to this post from stevef, oopsie!

Stevef “Incomes are the baby sister to supply/demand. We have modest inventory and pent up demand.”

Nyc10022

> pent up demand.

We don't have pent-up demand, we have the opposite. People who wanted to buy because they thought would appreciate. Now that numbers are coming in, they are running scared. That isn't pent up demand, that is classic bubble.

stevejhx

"and pent up demand"

From whom? Everyone who's losing their jobs, and just saw half their wealth erased on the stock market?
Right!

I think many of us who are bears also represent pent up demand.

I expect I'd be a buyer at a further 20% or so decline in prices.

Other people will be buyers at just a 10% further decline. Other people will be buyers at a 30% further decline.

It's very much like a broker's order book which has "depth" for both bids and offers. That order book will include both prices and size of orders.

Thanks JuiceMan.

Topper, I believe almost all people aren't buyers at certain price points at all. I believe people will buy at anytime and at the current price as long as their financial circumstances allow this. When they begin to desire ownership is when they will purchase. People have heard how difficult it is to time the market and they don't want the anxiety associated with it as most bears experience daily on these boards. So they "hope" for the best but it is not an impediment to purchasing.

True Topper, but those are not fixed numbers - they change based on momentum. That's what a lot of the bears don't understand (and the bulls didn't either). Someone might say they are a buyer 10% down from here, but if prices actually get there, they'll back their level up. And if prices stabilize and go up, they'll move their price target up as well. And the same works for sellers.

That right Printer...and if we don't uptick soon its why we probably see another downleg of decent size. Its probably more impactful to the downside here, because the reason to chase has always been 'that it never falls that much', an idea that was never based on fact and now has clearly debunked even for those who denied the 1990s happened.

so lets just agree that the sideline buyer theory used as a sales pitch to support an argument that Manhattan has a floor on prices is bullshit and that pent up demand is variable and can change given changing market conditions - big difference. I believe the original poster of this inadvertently combined the two as one.

I've always seen this forum as one for people who want to buy (yes there's a rental section, but the vast majority of activity and discussion is centered around purchasing), so activity here in and of itself has represented pent-up demand in some form. I don't know how you can really deny that. The people I question are those who would vehemently say otherwise and who ALWAYS prefer renting - pretty indicative of an underlying agenda that runs contrary to the ambitions of most people here. Just my .02.

Lmao. Of course I will buy when my value metrics hit. Lmao. Why do you think I'm on this board? To get a few cheap laughs? I will buy somewhere between $300 Psf and $1000psf, but me thinkz after a 10 yr bubble that popped a year ago, we just hit my top range at 1965 B'way and are indeed at 2004 prices headed fast to 2001 prices, I'm getting older and richer so it'll be somewhere in the next 3 year period with the caveat where are rents (and direction of rents) for true 3 bdrm in NYC when my personal wealth metrics hit. Lmao.

IMHO, if people collectively froze from Sept08-March09 due to some highly unusual "financial terror" out there, then that quickly becomes pent up demand. Which will have to unwind itself. There is no choice it has to balance out unless everyone decides to move to nebraska.

bjw2103, you're absolutely right about that, most of us are potential buyers. What percentage of us would jump in after a mere 15-25% reduction and how can that be construed as representative (or not) of the kind of buying frenzy needed to clear up 11K of inventory (back in may) plus the unknown thousands in shadow inventory, so that market equilibrium (whatever that means) could return? That's the big question.

w67thstreet, I think you dropped your a. Seriously though, notice I made absolutely no mention of price. People will buy at a price they see fit, and of course that varies according to everyone's financial situation, appetite for risk, and a host of personal reasons. FWIW, I'm not always convinced some people here actually want to buy, ever, but that's just a hunch.

Trompiloco, there's no way we get back down to the inventory levels of fall 2007 (which is what I've seen as peak, though my best bud here has loudly protested otherwise) anytime soon. I don't know what market equilibrium means either, but I don't see much harm in being very patient if you're in the market right now.

AR,

"Once again, a huge number of units put on the market over the past year have been taken off the market, temporarily or not we'll have to see, without being sold."

How the hell do you know this? Is there a way for you to track the number of units put on sale and taken off? You're making an observation based on your bias views.

AR,
And yes, i'm calling you out here. Show me proof of HUGE number of units put on the market over the past year and taken off the market?

"Why do you think I'm on this board? To get a few cheap laughs?"

Why would anyone think that w67th?

"of the kind of buying frenzy needed to clear up 11K of inventory (back in may)"

Is it clearing 11k or 3k-4k of units? 7-8k of inventory is pretty normal historically speaking

"plus the unknown thousands in shadow inventory"

This is way overused on this board. There is definitely shadow inventory out there, but how is the new condo situation resolved? How many people given the choice to buy right now would risk new development? How many people could get a loan? I understand that it is real estate and it is lumped into this discussion, but how comparable are these new devs to existing co-ops and condos? It is a distressed slice of the market and will take years to work itself out.

I guess if you classify all the folks willing to buy at 90% off as "pent up demand", yes, we have pent-up demand.

;-)

Interestingly enough, with 20-30% declines in prices, we're still seeing low volume. Doesn't sound very pent up to me.

We also have a host of pent-up supply. Zillow says 2/3 of Americans would sell their homes if prices rise.

"well I think the argument was slightly different. The argument was, 'manhattan prices have a floor because of all the sideline buyers that will rush in and buy if there is a 5% or 10% discount'...so my argument was with that specific sideline buyer theory that was used as a sales pitch to support a floor on manhattan prices."

Exactly.

All that "pent-up demand" was shown to be a load of crap, and prices exploded through that suggested floor (and haven't stopped).

> fall 2007 (which is what I've seen as peak, though my best bud here has loudly protested otherwise)

Loud and correct, that is.

Amusingly, bjw continued to try redefine the word "peak" to mean, well, NOT the top.

But the *actual* peak was, yes, in 2008.

"Zillow says 2/3 of Americans would sell their homes if prices rise."

What does this even mean, really? Given the generality of the statement, I'm surprised it's not 3/3. Funny stuff.

"Loud and correct, that is.
Amusingly, bjw continued to try redefine the word "peak" to mean, well, NOT the top.
But the *actual* peak was, yes, in 2008."

Patently untrue, as usual. I think you'll notice that there are differences in when prices are highest and when volumes are highest as well; there's more nuance here than you're accounting for, that's all.

Ericho, two corrections, you would only need to clear 3-4K off 11K if no more units were listed at all while you were busy doing this, but that's never the case. So you need quite a frenzy to go down from 11K to 7-8K, the same way that it was only because we went through a panic driven freeze that inventory jumped up so quickly.

As to how much inventory there is right now... weeeeell, I don't know if you can get an exact bulk number of all the units listed and then delisted unsold during the last year, but of course you can notice, through the limited but eloquent scope your saved listings provide, whether that situation has been frequent or not.

people list/unlist all the time in all markets. you can't assume everyone who ever listed is 'shadow inventory' any more than you can say anyone who has inquired about a property is a 'shadow buyer'.

the same thing that motivated people to start buying in the 2nd quarter also motivated some of the sellers to take their properties off of the market (if they were even serious sellers to begin with). I wouldn't assume they will all be back in.

i could just as easily say that the current number isn't really accurate because so many properties are on at such ridiculous asks, and the owners aren't interested in realistic bids, that they are hardly 'for sale'.

but i don't. you just have to take the numbers as they are. as long as the methodology is consistent, they provide an accurate look at the state of the market.

> Patently untrue, as usual.

You lying, as usual. Its 100% true.

"I think you'll notice that there are differences in when prices are highest and when volumes are highest as well; there's more nuance here than you're accounting for, that's all."

"Nuance".... the last argument of someone who has lost one.

No nuance. A bubble is a rise in prices, not volume.... by definition. Market peak is also a measure of prices.

No nuance here, just bjw failing to admit he's wrong (as usual).

"What does this even mean, really? Given the generality of the statement, I'm surprised it's not 3/3. Funny stuff."

Yes, hillarious. bjw loves talking about pent up demand when it suits his purposes, but when it doesn't, suddenly it doesn't mean anything. Talk about slant.

I love it!

nuance. still rotfl on that one...

nyc - I love how you respond to your own responses - pretty much says everything there is to know about you.

"All that "pent-up demand" was shown to be a load of crap, and prices exploded through that suggested floor (and haven't stopped)."

Except for the recent units that have disappeared because of "pent up demand" and the fact that you have no idea if "and haven't stopped" is true, your statement is correct.

What are people talking about? Make this simple. Who says the bottom was put in, who says we are going lower in the fall?

"Interestingly enough, with 20-30% declines in prices, we're still seeing low volume. Doesn't sound very pent up to me."

Not what we are hearing from digs and others. Maybe not peak frenzy, but stable, decent activity seem to be the message.

"As to how much inventory there is right now... weeeeell, I don't know if you can get an exact bulk number of all the units listed and then delisted unsold during the last year, but of course you can notice, through the limited but eloquent scope your saved listings provide, whether that situation has been frequent or not."

She is imply that there are thousands of units being put and pulled over the past few months. She's completely discounting the buying binge we had in Spring and the strength we are witnessing this summer.

The only thing that matter is, the number of units sold.

"Who says the bottom was put in, who says we are going lower in the fall?"

I'm already on record for a whole lot of nothing for the next 6-12 months. Flat.

How about you Rhino?

""Nuance".... the last argument of someone who has lost one.
No nuance. A bubble is a rise in prices, not volume.... by definition. Market peak is also a measure of prices."

Not really, you're just so prone to hyperbole. To look at market peak (and any snapshot really), you do have to look at volume as well. If prices are sky-high but volume has trickled to next to nothing, you need both pieces to get a proper gauge on things. Price alone isn't nearly as helpful. Maybe I shouldn't call it a nuance - you're just missing the big picture then.

"Yes, hillarious. bjw loves talking about pent up demand when it suits his purposes, but when it doesn't, suddenly it doesn't mean anything. Talk about slant."

I didn't really talk about pent-up demand so much, but it's silly to even be talking on this kind of board if you believe demand doesn't really exist, no? That's all my point really was. You've said yourself you plan on buying, no? It's strange that you argue such a basic point, but you're as contentious as they get, so maybe I shouldn't be surprised? But otherwise, what are my "purposes"? Or are you going to call me a "bull" again? Because that one kind of blew up in your face.

trompiloco, all you have to do is pull up a few of the larger buildings and have a look-see at the listing histories, particularly ones in midtown and the uppers. obviously all the sellers decided that now that prices are poised to go through the ceiling they'd prefer to hold onto their "assets" and wait for greater appreciation. right.

urbandigs:"so lets just agree that the sideline buyer theory used as a sales pitch to support an argument that Manhattan has a floor on prices is bullshit"

I for one am not willing to agree to that (and I'm certain on the bear side). I agree with what a number of people mentioned supra: they are on this board because they do want to buy, but not at the peak levels nor even current levels, but at some level lower. To me, that's a sideline buyer.

However, I must add that RE is about the only thing that no one want to buy when it's "on sale". If Bloomingdale's puts a "50% off" on a rack of Jimmy Choos, women will slit each other's throats to get at them. But mark down RE by 50% and all of a sudden no one buys it. Just like the higher RE went on the way up, the more desperate people were to make stupidly high purchases.

But I also agree that it is not true that "everyone is a buyer at the right price". There are plenty who will never buy no matter what for various reasons (rent control/rent stabilized apartment, just don't want to, etc.). I'll pull out an example I use all the time: in the first half of 1992 I sold half a dozen studios at 200 West 20th Street between $27,000 and $41,000. During the same time period i don't know how many studios sold in Tudor city between $8,000 and $15,000 *and we're not talking about unsold shares with rs/rc tenants; these were vacant and ready for occupancy). But people were in "no buy" mode. In fact, it was harder to sell those 6 studios in 1992 for $35,000 than it was to sell them for TEN TIMES THAT AMOUNT in 2007.

""Who says the bottom was put in, who says we are going lower in the fall?"

I'm already on record for a whole lot of nothing for the next 6-12 months. Flat."

From where I sit, even during most of the big boom years, the fall was a dead period. It would be rather interesting if this fall was any different.

If nothing can sell during fall, it will be like last fall...an opportunity for bulls to deny that prices are falling. The true market is what you can get... And if someone has to sell this fall, I can't see how it won't be priced down from the recent activity.

PS: It can be shown that stocks are also the thing people won't buy on sale. We all know after 1988-1998 stocks were the way to go with every dollar....and now in 2009 real estate is ummm still the best long term investment around because people frame the last ten years again.

Regarding shadow inventory, here is some data taken from Streeteasy's 2nd qtr report

Inventory Available New Absorbed
Week starting on Listings ListingsListings
3/30/2009 11,245 412 165
4/6/2009 11,411 408 214
4/13/2009 11,314 299 177
4/20/2009 11,506 424 233
4/27/2009 11,546 428 229
5/4/2009 11,655 435 192
5/11/2009 11,630 319 214
5/18/2009 11,713 395 285
5/25/2009 11,515 248 219
6/1/2009 11,502 373 226
6/8/2009 11,589 485 306
6/15/2009 11,305 293 202
6/22/2009 11,203 348 257

Quarter total 4867 2919

Starting inventory 11,245
+ new listings 4,867
- absorbed listings 2,919
= Ending inventory 13,193

Actual ending inventory 11,203 ish

Difference between actual ending inventory and indicated ending inventory = 1,990

I am not sure how nearly 2,000 listings disappear in the quarter (bad data, miscodes, etc), but according to streeteasy, the absorbed figure includes delistings. My hypothesis is that they are not counting all delistings correctly - how do you lose nearly 2,000 in one quarter??!!

Anyhow, if even a portion of these 1,990 missing listings for one quarter are indicative of the units lurking in the shadows, then the shadow inventory could be HUGE.

...thoughts on the approach? I realize I may be stretching the data, but most data on Manhattan RE seems to come with some kind of flaw or another. Or am I missing something that explains the data differences?

let me try to repaginate the figures:
Available New Absorbed
3/30/2009 11,245 412 165
4/6/2009 11,411 408 214
4/13/2009 11,314 299 177
4/20/2009 11,506 424 233
4/27/2009 11,546 428 229
5/4/2009 11,655 435 192
5/11/2009 11,630 319 214
5/18/2009 11,713 395 285
5/25/2009 11,515 248 219
6/1/2009 11,502 373 226
6/8/2009 11,589 485 306
6/15/2009 11,305 293 202
6/22/2009 11,203 348 257

ugh - forget it - check the link instead

http://docs.streeteasy.com/market_reports/2009Q2_Report.pdf

Doubt I'll see more declines until very late Fall.

Or at all...

Stabilization, and back up, slowly but surely. About 3 years from now, we are back at the peak 2007 levels. Modest appreciation.

puffycuff, it is painfully obvious you are ericho75. Please stop with the multiple personalities.

I don't know why this is controversial, but here:
Reason you won't see more declines before the fall is because people are optimistic during the summer. People anticipate the start of the school year in the fall. They also go and view apartments when views are nicer and sunny and etc. And then sellers get stubborn for a couple months after. Then they get to be more down about things around late Fall when Thanksgiving comes around. Sorry if this doesn't meet your POV, its just my opinion.

puffycuffy, even if the market stays here now, 30% decline, getting to the peak means almost 50% increase to get back, and over 3 years, talking 15-20% up per year constantly for the 3 years.

And tell me Devincooper, what would the catayst be for this next leg down?
Inventory? Nope, we're getting a nice drop in inventory in historically 'slow' summer months...
Economy? Have you been hiding in a cave the last 2 months...green shoot everywhere!
Bank Implosion? Record bonus and pay raises this year from some of these banks...
Unemployment? Lagging indicator...

I see a higher chance of buyers hitting the ask in the than sellers hitting the bids in the Fall.

"What's happening to Manhattan residential real estate prices this summer? "

If there's anything the bulls and bears can agree on is this, prices have stabilized over the past 3-4 months.

We'll see what the Fall brings...

Devin, that's for correcting that fuzzy math....Its actually 13% a year on a compounded basis....which only after the real estate freak show of the last ten years would anyone call modest.

For the record, I think we will have two more years of declines of 10-15% annually to bottom at roughly half peak value. It will then take about 10 years of 7% increases to get back to peak value.

"what would the catayst be for this next leg down?"

Momentum is one. I don't remember a specific identifiable catalyst for each leg on the way up. Inventoy is another. Every though 9000 is lower than 11000, its very high. Another is if the recent buyers were in fact 'pent up' and now their gone. Are there buyers behind them? That's really the only question. Bottom line is that every sale eliminates a willing buyer at the given market price level. How people willing buyers didn't find what they wanted in May, June and July? I doubt there are many left and expect price discovery for the market on the downside.