Inventory Flatline

"What will stop these people who, month after agonizing month, continue to buy?"

Why, all the perma-bearish posting on this site, of course.

The rate at which new contracts are being signed would seem to be declining from a year ago (and more contracts seem to be falling through the cracks), so if you average current inventory over the sales rate (new contracts signed), even with a fairly constant inventory, the "months" of inventory is increasing.

I'll make it simple. If you have 100 homes in inventory and sell 10 per month, you've got 10 months of inventory. (10 months of inventory being the 10 year avg in Manhattan.) If you have 100 homes and sell 8 per month, you've got 12.5 months of inventory.

Increasing inventory is usually correlated with a decline in prices. Any other questions?

As for the market "happily plodding along", the Case-Shiller Index for NY is down six straight months!?

For the record, I prefer "NOT mathematically-challenged" to "perma-bearish." (-:

Except, Sisy, that the inventory hasn't been increasing. Not mathematically challenged?

sisyphean, contracts are way up over 2009 so far according to urbandigs' chart. He's arguing that the market is cooling off a bit, but that it's "normal, seasonal, and expected given the unsustainable pace from the 4-5 months prior." The point spinnaker made is that inventory is not in fact increasing at the rate many here predicted. It's been essentially flat for several months now. Not sure where it's headed, but since the summer's here, I wouldn't expect all that many new listings until the fall. That'll be paired with a slowdown in activity for sure though.

Well it seems you have convinced yourself of something sisyphean. Nothing in there that shows me what will stop people from continuing to buy at current prices. And I hardly think we have anything approaching a moving trend with respect to absorption rate or months supply of inventory.

sisyphean - did you see the latest post up on urbandigs?

http://www.urbandigs.com/2010/06/upcoming_q2_report_corcorans_w.html

the top chart..shows you monthly pace of listings where the broker changed status from an ACTIVE state into CONTRACT SIGNED...interesting I think..especially when you look back to 2008 and the fall off and then reflation

The simple fact that this thread has been up for 2 hours without being gang tackled by the next-leg-down thought police is telling. Does silence equal agreement that spinnaker might be on to something?

sideline, maybe they're all big soccer fans? Don't worry - I'm sure it'll happen.

sidelinesitter, lol. You're right. hmmmm, where is the swarm? They'll be here. They could argue that the sky is green.

urban, how is that a normal, seasonal and expected drop off?? not that 2008 was a normalized year, but it was more normal than 09 or 10 and the only data you have. April to May increased in both 2008 and 2009. And now in 2010, it fell about 30% from April to May. At least be honest with the data

where am I not being honest? See this is why its so great to put the charts up. Im a broker, out in he field, and have an opinion.

2008, especially early/mid 2008, the market was still trading near peak...sales volume was elevated but down from euphoria levels that led 2007 to be the year with parabolic sales. It wasnt until AUG and then SEPT that the market action fell off a cliff.

As for early 2010, it was feb, march, and into april that really was like a 'mini frenzy' in terms of action..that is what I described it as...peak level kind of action to me..I said it was not sustainable, rather, it was a function of a very crazy world and a bunch of factors that I discussed plenty of times on the site. Why the sharp dropoff? Because, in my opinion, April represented the culmination of a 3-month mini frenzy of deals going to contract...Like an outlier. Not really normal, even during the active months. Usually we see 1100-1300 contracts signed during the best months of the year. Not 1600 or so. May, looked to be the start of the equalizing from that mini frenzy...And I think June will continue the downward trend..

I dont have data before because it was poisoned by new development updates that were lagging...I dont have time to explain why we did what we did, you would need months of digging into the source data to understand. Everything will be explained when we launch. You need to trust why we limit the data for that chart, rather than show you wrong data going back further. As for 2009, that was FAR from a normal year. We had a sever adjustment in late 2008 and early 2009, which delayed our seasonal market behavior. June-Aug of 2009 was more like Jan-March of most given years. 2010 to me is the most normal so far of the bunch...but again, we shut out prior data because it was poisoned.

Flmao. I could argue with a dining table... But sometimes, well, you are just arguing with a dining room table.

- except for sisy, you guys are clueless in Detroit.

Lovez it ud, charts and graphs... Some leather of the street tells ya the 'the worst is behind us?'. Flmao. You remind me of the re banker roadshow where 5 analsysts showed 20 pages of graphs and said 'there has never been a synchronized national re pullback since great depression!'. That would be in 2003. I wonder how many more yrs these five monkeys went around doing the same song and dance?

A couple points:

1. Looking at UD's charts, the 2010 YTD peak was in April (I know you had the 5% caveat in there, but it seems clear that the inflection point was in April, not Feb). It looks like June is testing this high. It seems a little early to declare a steady state has been reached with inventory.

2. Sisyphean's point is that it's not just the overall level of inventory that's important, it's the rate of inflow and outflow. If UD's comment above is correct, then the rate of outflow (sales) will decrease going forward, at least for the next few months. What remains to be seen is what the rate of inflow (net new listings) looks like.

"Some leather of the street tells ya the 'the worst is behind us?'."

Yeah, at no point did Noah say that. You can pick your a back up now.

thoth, I believe the implication is that it's the summer, so new listings slow down considerably.

BJW: Understood - my point is that it's the delta in the inflow vs outflow that determines the impact to NYC. Even if new listings slow down considerably, a deeper slow down in sales will still lead to inventory increases, and vice versa. It will be interesting to see what wins out over the next few months.

thoth, definitely. I suspect the delta will remain fairly steady, even as inflow and outflow both drop a fair amount, but it'll be interesting to watch at least, for sure.

We had inventory pushing 11k a year ago and what exactly did that portend?

We have a thread discussing the fact that inventory did not spike as many predicted coupled with a recent thread discussing a strengthening rental market. What's a perma-bear to do?

I'd gladly join the bear rank and file if I saw anything that could convince me buyers will ever stop buying at current prices. But we seem to be pushing through a deep recession, eurocrash, ending of government incentives, job losses, and on and on it goes. So what's it going to take? You really think more bad bank paper will do it bubba67? Better get on with it or we'll be starting recovery -woops forgot, the next great bear talking point, interest rates. Yeah, that's when it'll happen. See, I've been following.

One of the reasons inventory is flat, is because so many of the purchasers of new developments are underwater and when they realize it, they take their apts off the market. As example, take a very, very successful building with essentially no inventory - 200 WEA. The buyers of 15C bought their 1431 sq ft apt in 4/08 for $2,342,000. They put their apt on the market for $2,750,000 and if you assume 10% transaction costs, they would break even about $2.6. But the sponsor sold 24C which had 135 extra sq ft AND and an extra 36X24 terrace for $2,265,000. And, the exact same apt as 15C on the 9th floor sold at a small loss at $1,639,000. Is it any wonder they took their apt off the market. I could list dozens of apts with the same story on Riverside Blvd. If you took the shadow inventory of Extell Buildings alone, you would probably have a 10% jump in inventory. http://streeteasy.com/nyc/sale/507164-condo-200-west-end-avenue-lincoln-square-new-york

So one inventory chart does not tell the story. And some of the headwinds you list, spin, have just started. When the euro reaches parity -- which it will-- it will take time for the europeans to bail. They probably won't start selling till current leases run out and they realize they can't make the same returns. Add to that a range bound stock market, weak hedge fund returns, continued unemployment, higher taxes. What really inspires your optimism -- a plodding market?

New Home Sales Drop 33% in May, the largest since the government started compiling the data in 1963, surpassing the 23.8 percent decline in January 1994:
http://www.nytimes.com/2010/06/24/business/economy/24home.html?hp=&pagewanted=print

apt23 - The points you make I have watched being made in various forms for 18 months now. It's not that the points are not valid, they are, they just don't seem to be having any effect on buyers. And I don't see how you can read optimism anywhere in my posts.

bjw.. UD's is still accompanying "buyers" into this market... one must assume he is of the "worst is behind us" or at a min "you shouldn't move for 5, 7, 10 or x yrs" and you'll be "okay" camp... another way of saying "the worst is behind us", no?

likez bubba67... nice nice.... but you mean like this $30MM swing in 2 yrs kinda "movement" in the NYC RE mkt? Is that what you are waiting to see, spinny? FLMAO.... with a side of canadian bacon...

http://online.wsj.com/article/SB10001424052748704895204575321030323837408.html?mod=rss_newyork_real_estate

And wasn't i the one who said the tax credit is like a sugar high for lemmings and they'd be better off waiting to the expiry, cause in a buyer's mkt, the capital loss is eaten by the $15K/month carry idiot and not the prospective "owner?"

"And I don't see how you can read optimism anywhere in my posts."

That's kind of the mantra here - if you question something, some of the rah-rah permabears will jump down your throat for being bullish. It's nuts. I'm not particularly optimistic either, but I've always questioned some of the more extreme predictions here, especially when they're made repeatedly, with constant (but subtly done, of course) TOA revisions.

"UD's is still accompanying "buyers" into this market... one must assume he is of the "worst is behind us" or at a min "you shouldn't move for 5, 7, 10 or x yrs" and you'll be "okay" camp... another way of saying "the worst is behind us", no?"

w67th, assume? No. There's an old saying...

Like actions speak louder than words? Like he still accompanies 'buyers?'

hot diggity, this conversation got going nicely..back from programmers and reviewing now. Off first glance, YES, inflow vs outflow is important. We have dozens of charts, I only showed one. The platform is not ready yet, so I cant just put all the charts up. I have to leave something for the launch. But one chart is a ratio between pending and active inventory, similar to an absorption rate. The higher it goes, the weaker the market. The lower it goes, the stronger the market...relatively speaking between the movement of listings from an active state to a contract signed state. Here is that chart sneak peak:

http://www.urbandigs.com/sneak-peak6.jpg

We are also going to make a variation of this that takes into account movement of inventory from active to off market, so that plays a role too. You must understand, our entire system is governed with the concept that there are only 4 states a listing can be in: ACTIVE, CONTACT SIGNED, OFF MKT, CLOSED...nothing else matters and one listing can NOT be in two states at one time. Given the ongoing variations of flaws discovered in the source data in month 7 or so, we had to implement a flow algorithm with this governance. Then all the rules kick in for individual metrics to measure the right thing. Its all coming. I just need to do all the front end now to start beta, then launch. Hate to say it, but another 3 weeks or so it seems.

of course I accompany buyers...and I tell buyers what I see going on in the market, with the data I have to back it up - assuming confidence was high enough at the time to display it to them. This project is just under a year now in the works, crazy to think about how far we came in that time.

full disclosure, of my 18 or so clients, 9 pulled trigger in last 8 months. Of the remaining, 3 new ones, I would say only 3-4 are highly motivated right now. The rest are taking it slow.

FYI - for the ratio chart I supplied, consider 500 on the y-axis equilibrium..the goal of this was to measure supply vs demand, with zero being equalibrium. The whole point is to see how the flow of listing states are doing based on the changes by the brokers in the private sharing system

More things to know...All new dev data whose history record never had a beginning ACTIVE state, was removed. The reason for this was one major flaw with source data. New devs, simply put, did not keep accurate records of their inventory.

A) they did not publish full inventory, even though any unit was for sale most of the time
B) they batch uploaded a status change for units that went to contract WELL AFTER the actual date of contract signing - Im talking between 12-24 months later. So if you counted these things, you would have a spike in pending sales some 1-2 years too late (say in 2008, instead of 2006 and 2007), and you would have NO bump up in inventory stats because there was no beginning active state.

You can imagine the havoc this has on the task of accurately measuring the market. We removed this poison, a tough call to make. But the right call to keep better data. Over time, the system will be more accurate and we expect to see an inflation rate of sorts for inventory trends...the further back in time you go for inventory, the more under inflated we believe it is. Therefore, we only show back to 2008. Prior to that is simply a gradual decline in quality; something we refuse to publish on the site. Everything revolves around the data and all our efforts were based around the highest quality, most frequently updated, and complete data.

Ud. Just chill. My son makes bad decisions sometimes. He bites his sister, throws a fit, wants to always be first in the van. Does't make him or anyone a 'bad person'. Just chooses to see data the way he/she wants at that time. An americans love love love to forgive, especially if they end up getting obese and then losing it on tv.

im very chill...you guys need to know important things/rules that make up the data. nothing more. everyone can interpret how they see fit.

Great chart Noah. On close inspection it seems I bought right at the nipple. A year later and peace, love and happiness reign in the spinny house.

Bubba if I can extrapolate from that great example you cite you must be about ready to zero in on that 500psf tiki bar in the sky and kiss the timeshare goodbye. My congratulations to you and the missis! Nicely done.

Spin, though I am jaded because of the Miami market which took well over 3 years for the big part of the unwind to take place-- and it is still falling-- I am also amazed that the NY market seems stickier than it should be given the global financial circumstances. I do believe a lot of that can be attributed to the long, strong euro and as that unwinds, it will have an effect on NYC RE, just not an immediate effect.

If Miami can be any kind of template, the real fall in NYC won't happen until there is a critical mass of RE $ loss. That happened fairly early in Miami mostly because most of the buyers were new to the market. In NY, people have been in their financially conservative coops for years so have plenty of cushion. As more of the new, cushionless condo buyers need to sell (at a loss) and as foreigners leave the market, then we will probably see more give in sales and prices. If those losses start to hit the media, it will give pause to the "destination buyers" who always dreamed of a NYC pied a terre. Nothing like a significant cash loss to chill out those retirees. I think the only thing that can save NYC from more downturn is a revival in the job market which doesn't look likely.

All new dev data whose history record never had a beginning ACTIVE state, was removed.

UD: so this chart (nice chart) does not accurately reflect shadow inventory?

none of our charts reflect them...so yes, it does NOT accurately reflect so called shadow inventory..which is not as shadowy as it was (think back to 2005-2007 when marketing began during the boom and inventory did not reflect unreleased units).

at least now, in 2010, many of these units sold and got recorded (measured) by our systems. What didnt sell, is likely now on market and measured. When a closed listing gets relisted, we capture it. So its a problem that declines over time, assuming no new development boom takes place...which I dont see happening for many years.

Hopefully by then, source data is better

Spin & Apt: Nicely stated. I've been amazed as well that NYC has held up so well, but I can't help but wonder if it's just a matter of time. It reminds me of those funds that bet against US RE in 2006. Their timing was wrong, but the idea was correct.

UD: I can't wait for your new platform to be up and running. Thanks for the sneak peak.

I think we can all agree that we are one year down the road from absolute paralysis.

Miami, Las Vegas and Phoenix were the beginning of a problem which has gone global. They were the canaries in the coal mine.

Endless speculation of inventory levels is amusing. But the sea of worldwide debt is not getting better. Government spending is coming to an end and now we get to see what happens at the state level.

We have become so used to absurd economic news that the fact that nystate intended or still intends to borrow from it's pension fund to make this years pension payment is no longer of interest.

And on and on.

...and buyers keep beating a path back to the banks.

BP will save the NYS pension fund.

I cant wait either Thoth...im burnt out

EVNYC: "Except, Sisy, that the inventory hasn't been increasing. Not mathematically challenged?"

Yes, and no.

Clearly, the gvt programs worked and "gross" Manhattan inventory dropped significantly from last year's high of 11K. The gvt programs, especially the tax credit, worked disproportionately for the low-end of the market. Which leads me to two points.

1. Absorption rates improved dramatically for the low-end of the Manhattan market over the last year, but the high-end remains a basket case. (See 2009 and 2010 Absorption rate charts on the Miller Samuel site.) If you look at the most current chart for May 2010, you will see that the $10M market on the UES has over 5 YEARS of inventory. The UWS is much more robust though, it ONLY has 27 months of inventory!
See:
http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1275506041MCnJe&Record=4

2. If you look at the UD data for pending sales, what you see is that the gvt programs worked - starting in summer 2009 sales surpassed 2008 monthlies for low end properties which comprise the bulk of the absolute number of sales. Given that sales for May 2010 are the lowest of the series from 2008 through 2010 indicates that now that the gvt tax credit has been withdrawn (along w/ other factors such as continued high unemployment, decline in bonuses, et cetera) pending sales are dropping - fast. Based on a variety of data, I expect the drop from 2009 monthlies to grow worse through the end of summer 2010 and beyond.

It wouldn't surprise me in the least if some sellers will see the writing on the wall and eventually pull their properties from the market to rent them out. So, inventory numbers could well decline further, but I'd be willing to bet that "months of inventory," especially for low-end property will once again start to climb given fewer sales.

SPIN: "Well it seems you have convinced yourself of something sisyphean. Nothing in there that shows me what will stop people from continuing to buy at current prices."

As for "current prices:"
Again, according to the CS HOME Price Index, prices have been down every month through March 2010 for the NY Metro area for the past six straight months. Given the tax credit bounce in sales, It's possible the downward streak could be broken when the April data is released next week, but I expect it will continue the downward trend later this summer. So people aren't buying at current prices, they have been buying at lower prices.

As for "Nothing in there that shows me what will stop people from continuing to buy at current prices."
The RE that has been moving, as pointed out previously, has been low-end property, eligible for conforming mortgages, which has been buoyed by the tax credit incentive that is now history. Furthermore, various banks and agencies continue to tighten a whole slew of provisions that allow home purchasers to get a conforming mortgage, such as the FHFA requiring higher credit scores. So incentives are disappearing and disincentives to getting a home mortgage are increasing!

At the national level - I don't have NY Metro data unfortunately - this has led to a HUGE decline in the number of mortgage applications in the last month. The Mortgage Banker Association mortgage purchase application Index sank to a 13 Year low. Do you dismiss this as "nothing?"

"Nothing" seems to more accurately describe what middle-income people are going to buy RE-wise without a conforming mortgage...

"Given that sales for May 2010 are the lowest of the series from 2008 through 2010 indicates that now that the gvt tax credit has been withdrawn (along w/ other factors such as continued high unemployment, decline in bonuses, et cetera) pending sales are dropping - fast. Based on a variety of data, I expect the drop from 2009 monthlies to grow worse through the end of summer 2010 and beyond."

Hold on there, sisyphean. I don't think there's much question that the end of the tax credit has some impact on the market. However, you're drawing a whole lot of conclusions from one data point. And those other factors you list were certainly true while the credit was in effect as well. So I'm not sure where you're getting a "variety of data." I happen to think the market will cool off too, but that's because the level of activity was impressively high for the first part of the year, and we're just entering the summer months, where things traditionally slow down dramatically. I wouldn't read too much into one month just yet.

BJW" "you're drawing a whole lot of conclusions from one data point."

New Home Sales for May 2010 lowest ever recorded.

Most recent Mortgage Application Purchasing Index lowest in 13 years.

National data, admittedly, but it doesn't sound good to me.

As for Manhattan, note Special K's observation that you USUALLY have an increase from April to May, NOT a 30% decline.

Frank Zappa once commented on the alleged demise of Jazz by noting that "Jazz isn't dead, it just smells funny." Based upon recent data, I think you can make a similar statement about NY RE.

"National data, admittedly, but it doesn't sound good to me."

I'd agree, but consider that $8k, even on low-end properties in Manhattan is pretty insignificant compared to what it means virtually anywhere else in this country. If your conclusion is that "it smells funny," well, I can agree with that, but it's really not saying much. And as you might know, Zappa, much as I love the guy, was wrong.

Sisy: I recall you used to be focused on dollar volume of sales, and it was illuminating. I think you'd get a much more powerful view of inventory and sales if you went back to looking at dollar volume and inventory in addition to unit volume and units of inventory.

As for UD, I much appreciate your data - Thank you! - but I draw dramatically different conclusions from them.

On your own website, in your most recent web posting you once again make your claims that future quarters, in this case Q32010, will show "improvement." Part of your case is that Qtr-Qtr Average Sale prices will increase and show Year-over-Year gains. I expect that your predictions about Average Sales price in future quarters are accurate, but unless you are a masochist, I'm hard pressed to understand how this will be an "improvement."

Look at the data on Manhattan Market Strata Quaterly by NUMBER of Sales from Miller Samuel:
http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1168397931yhNzR&Record=10

What you will see if you do is that for 2008Q1 through 2009Q1 the HIGHEST percentage of <$1Million sales were UNDER 57% of the total, while for 2009Q2 through 2010Q1 the LEAST percentage of same was ABOVE 57%. The gvt programs benefitted the low-end disproportionatley.

Now, compare that to UD's "Manhattan Qtr-to-Qtr Average Sales Price chart.
http://www.urbandigs.com/

Curiously enough, when <$1Million sales are a larger percentange of the total number of sales starting in Q22009, the average sales price goes down in UD's chart!

In all likelihood, the drop in pending sales noted by UD in May 2010 is coming from the low-end of the market (<$1Million) that benefitted from the tax break and greater availability of conforming mortgages. Now that the tax credit is gone and mortgage requirements are getting more restrictive, I fully expect a continued decline in the number of low-end sales.

With fewer low-end sales the average sales price will increase in future Quarters, which UD considers an "improvement." Ceteris paribus, the reality is that the total dollar volume of Manhattan sales will in all likelihood decline while the average sale prices go up.

So in all likelihood, we'll have fewer total sales, less total dollar volume, and in all likelihood declining prices - but average sales price will go up!

SkinnyNsweet:

Glad you asked that! Miller Samuel finally made Q1 data available. The following is for Manhattan Coops and Condos.

YrQtr Dollar Volume
1989Q1 $490,592,878
1989Q2 $632,614,567
1989Q3 $310,443,840
1989Q4 $403,487,480
1990Q1 $479,724,700
1990Q2 $415,223,109
1990Q3 $357,985,056
1990Q4 $287,435,577
1991Q1 $324,380,988
1991Q2 $446,672,065
1991Q3 $486,076,976
1991Q4 $453,814,432
1992Q1 $373,450,023
1992Q2 $481,653,751
1992Q3 $395,562,755
1992Q4 $394,683,640
1993Q1 $348,731,838
1993Q2 $359,170,048
1993Q3 $456,131,436
1993Q4 $403,536,168
1994Q1 $466,894,056
1994Q2 $561,149,610
1994Q3 $601,885,620
1994Q4 $437,876,010
1995Q1 $551,379,056
1995Q2 $485,757,474
1995Q3 $476,652,688
1995Q4 $517,765,362
1996Q1 $611,420,864
1996Q2 $500,332,062
1996Q3 $717,488,905
1996Q4 $644,069,322
1997Q1 $621,942,905
1997Q2 $796,458,852
1997Q3 $882,628,824
1997Q4 $851,635,316
1998Q1 $850,010,268
1998Q2 $1,135,952,682
1998Q3 $1,022,534,925
1998Q4 $867,517,176
1999Q1 $895,185,018
1999Q2 $1,371,111,048
1999Q3 $1,447,921,059
1999Q4 $1,219,485,216
2000Q1 $1,620,679,210
2000Q2 $1,815,730,470
2000Q3 $1,554,186,550
2000Q4 $1,537,186,358
2001Q1 $1,812,412,233
2001Q2 $1,497,658,792
2001Q3 $1,479,170,980
2001Q4 $1,593,518,262
2002Q1 $1,673,375,800
2002Q2 $2,289,739,718
2002Q3 $1,937,254,774
2002Q4 $1,660,031,214
2003Q1 $1,465,667,853
2003Q2 $1,794,041,312
2003Q3 $2,156,755,242
2003Q4 $2,055,104,210
2004Q1 $1,851,415,472
2004Q2 $2,168,465,706
2004Q3 $2,536,279,214
2004Q4 $2,133,462,377
2005Q1 $2,462,760,612
2005Q2 $2,873,528,568
2005Q3 $2,296,176,561
2005Q4 $1,868,973,896
2006Q1 $2,608,360,640
2006Q2 $2,680,897,262
2006Q3 $2,723,124,524
2006Q4 $2,989,834,440
2007Q1 $4,482,818,334
2007Q2 $5,251,931,724
2007Q3 $4,791,831,514
2007Q4 $3,625,690,862
2008Q1 $3,931,865,462
2008Q2 $5,144,435,049
2008Q3 $3,928,883,402
2008Q4 $3,389,002,764
2009Q1 $2,181,887,165
2009Q2 $2,011,393,440
2009Q3 $2,951,320,260
2009Q4 $3,205,396,261
2010Q1 $3,350,581,912

Lest my logic wrt UD is unclear I'll rephrase it slightly.

The gvt tax credit and easier credit terms for conforming mortgages benefitted the low-end of the market from 2009Q2 through part of 2010Q2. Much of the high-end market has been cash and so the number of those sales, going forward, should remain consistent with seasonal patterns. As the number of low-end sales decline due to the expiration of the conditions that supported them, I expect the (seasonal) declines in the total number of sales to come almost entirely from the low-end. I fully expect the percentage of <$1Million sales to decline, which will in turn, increase the average price of properties sold. It’s simple math.

I’d be willing to bet UD that his prediction about average prices increasing for 2010Q3 will come true, but UD would have to bet that total dollar volume will increase as well. I’m betting that total dollar volume goes down 2010Q3. (Ceteris Paribus.)

take em to school sisy.... yeah, top end compression and low end bounce....uhhhh.. you coulda woulda had a 4bdrm for your 1bdrm 2010 prices.....

good stuff...will have to run out of the city for the day and will try to offer some opinions tomorrow

sisy, I think your analysis is spot on except for one factor you may be overlooking, which is the easing of credit in the -- I don't have a good name for it -- low-end jumbo space. A year ago, if I had a client who wanted to buy at $1.3 mm apartment, they'd stick $600K down because they couldn't/wouldn't break the conforming loan limit of $729,750K.

Now it feels like loans are available up to $1.5mm without too many heinous restrictions and at okay prices.

So I wonder if as the lower end of <$1mm sales declines (which it def. feels like is happening) if we'll see a little more activity in the $1mm-$2mm space. I think this might well push into 4Q 2010, since it feels like everyone has left for the beach already, but that would get us your forecast of increasing average prices while also giving us increasing dollar volume although at flat apples-to-apples pricing.

ali r.
DG Neary Realty

Front Porch - TY for your comments, they are much appreciated.

I agree completely with your observation. I file it under the "social learning" category. The market changed dramatically a few years ago and with time, realtors and their clients are learning to cope with the changed environment.

While the macro trend remains "de-leveraging," unlike some of the "perma-bears" I don't expect the market to go straight down. The social learning that you mention is just one of the MANY things that gives this "perma-bear" pause (really bad pun intended) with respect to prognostications upon market direction.

The crash in the Euro could potentially strengthen the RE market significantly. In terms of countervailing trends, mortgage rates just hit a record LOW as a result of Euro issues.

Did you ever think we'd see record low new home sales and record low mortgage rates in the same month!???

So, my bet proposal with UD on future dollar sales volume is somewhat risky, as "ceteris paribus" may not hold up...

For the record, I'm hoping everyone here knows what "ceteris paribus" means.

I recently was accused by a friend as treating her like she was ignorant for not knowing what the term meant. Of course, said friend has a BA in Econ, an MBA, and works as a Senior VP at a major Financial company! Not sure what they teach these kids in school nowadays.

In case I'm wrong...
http://en.wikipedia.org/wiki/Ceteris_paribus

sisy, I for one appreciate the Latin throw-ins. There's a bastardized English version (AOTBE) but it doesn't have the same ring to it.

Cet pari I can get, it's the name of the brokerage firm "Pari Passu" that confuses me. I always have to look that one up.

Re: New home sales, I think that number just isn't relevant anymore (insert bear pile-on here). In January 2001, new home sales were 17.5 percent of the market. In 2009, they were under 7 percent.

I think they're just going to continue to dwindle over the next couple of years regardless of what happens to the broader market.

ali

New home sales aren't relevant? Because they've declined so much or is there another reason?

So, all those people who used to be employed by builders back when new home sales were relevant, what are they up to? Working in auto plants in Michigan?

here's hoping front porch gets swept away to Michican.

sisy: ceteris paribus, most enlightened posts of the day. sisyphus would be proud and very supportive (ok, ouch)

apt23: Thank you. Your kind remarks are much appreciated. Your own posts are much appreciated as well.

As a minor footnote on my user name, I'd point out that beside the fact there is another user on streeteasy who uses the name sisyphus, the mythical Sisyphus was a very unpleasant fellow - so I'd like to distance myself from Sisyphus himself! My user name refers to my quest to buy a house - which led me to research housing prices - which led me to conclude that it's best if I wait a while. Sifting through all the data has truly been a sisyphean task...

Was anything really resolved here? Whenever I see Case Shiller being used to back up a position on Manhattan RE I know someone's reaching a little beyond their center of balance. I hear you saying buyers will stop buying but what's going to stop buyers buying? Elimination of an 8k tax credit? You really think so sisyphean? Lots of numbers, bold predictions, condescension, a little latin, and gushing love for your fellow posters gives an appearance of having solved the riddle. Well good for you, I guess. You haven't convinced me. Average day yesterday - 38 contracts.

you are so proud of your use of ceteris paribus, in a sentence that is unintelligible--
and your knowledge of greek mythology is so impressive

pedantic

now what were you saying about real estate?

sisyphean- "In all likelihood, the drop in pending sales noted by UD in May 2010 is coming from the low-end of the market (<$1Million) that benefitted from the tax break and greater availability of conforming mortgages. Now that the tax credit is gone and mortgage requirements are getting more restrictive, I fully expect a continued decline in the number of low-end sales.

With fewer low-end sales the average sales price will increase in future Quarters, which UD considers an "improvement." Ceteris paribus, the reality is that the total dollar volume of Manhattan sales will in all likelihood decline while the average sale prices go up.

So in all likelihood, we'll have fewer total sales, less total dollar volume, and in all likelihood declining prices - but average sales price will go up! "

Im sure there is a lot of truth to this statement..but I am yet to really dig into the ALL the charts I built. As you can imagine, my focus has been on quality of the data and ironing out flaws and making sure we measure everything properly. Now I have to build the UI, so I dont have much time to really analyze and interpret every chart we built. Rather Im doing random spot checks going back years to make sure data that composes those charts, really is what should be there. If it shouldn't, then we need to iron out that bug. But we are past that now I think and its as good as it can be, NOT 100% perfect - nothing can be 100% perfect with brokers maintaining all the data.

Anyway, another sneak peak for your. Here is a 2yr comparison of the sub $1m market PENDING SALES vs the $1-2M market pending sales (you can also get 2-5m market and 5m+ market as a subscriber when I launch):

http://www.urbandigs.com/pricepoint-sneakpeak.jpg

My thinking is that LOW END sales always takes up the bulk of our sales. So I really need to dig into all price point trends before I respond to your argument. Not much time today though. As for total dollar volume, we have that too for sales, and I think it will be very solid for the next few months at least as the pipeline of deals closes.

also, I really dont trust any data out there but what we are about to launch to the public..after what we discovered, and the flaws, and the scrubbing required, I just think most reports are going to be very over inflated and double count many listings...in addition, given the embedded flaws with source data, I would think many listings will be counted in different categories at same time; i.e., like in contract and active at same time, etc..

SPIN: "Was anything really resolved here? Whenever I see Case Shiller being used to back up a position on Manhattan RE I know someone's reaching a little beyond their center of balance. I hear you saying buyers will stop buying but what's going to stop buyers buying? Elimination of an 8k tax credit? You really think so sisyphean? Lots of numbers, bold predictions, condescension, a little latin, and gushing love for your fellow posters gives an appearance of having solved the riddle. Well good for you, I guess. You haven't convinced me. Average day yesterday - 38 contracts."

I'm not particularly looking to get in a flame war with you but if you're going to criticize the teacher you should do your homework first. Please re-read the assignment. I actually mentioned quite a few other issues beside the disappearance of the $8K tax credit...

"Lots of numbers" Guilty as charged. The question you posed about inventory is an inherently numerical question requiring quantitative analysis. If you can't stand the heat, you should not have walked into the kitchen.

Your initial question seems inherently bullish, and I suspect the real problem is that you perceive me as a "perma-bear." If you re-read what I've said, you'll find that I'm mostly about "data-driven" arguments, rather than bull-bear dichotomies, in which the world is very messy. As noted, the low-end market in Manhattan has seen tremendous improvement in the past year in absorption rates, but the high-end market has gone in exactly the opposite direction. So "gross" inventory numbers don't really tell the story - if anything they mask it.

Trying to work toward at least some common ground, do you at least acknowledge that the evidence presented pretty clearly indicates that you can't treat inventory numbers as a "black box?"

"You haven't convinced me. Average day yesterday - 38 contracts." Ummm yeah. Your citation comes from UD web page. The same page shows the 30-day average for "contracts" at 984. The current UD page also shows a "Pending Sales" chart for
2008 June 1400 (approximately)
2009 June 1475 (approximately)
From the table rather than the chart
2010 June 0984 (as of June 25th)

By my calculations thats a 33% drop Y-o-Y. Your point being???

That said, the situation is ever changing, and its certainly possible that record low mortgage rates as a result of the Euro crash, could make a difference a bit down the road.

Wbottom,

My apologies for hitting you over the head on your use of statistics last month. Fundamentally, I think your judgment is quite sound - and I enjoy reading your posts, but I get aggravated when people throw around numbers without citing a reference - which you have been prone to do.

At the risk of digging myself deeper into a hole, the way some folks use statistics reminds me of an old George Carlin skit.

-(As sportscaster "Biff Burns"): "Here is a partial score: Pittsburgh, 37."

As for RE, see my response to SPIN above. In a nutshell: Through April 2010 we've experienced a year of steadily improving absorption rates in the low-end of the Manhattan market, and continuing stagnation in the high-end.* The end of the $8K tax credit, along with other changes such as credit accessability and long-term unemployment, seems to mark as least a temporary lapse in the low-end. As of May 2010, the absolute number of Pending sales (~contracts signed) are declining from last year, and the trend is expected to get worse through the Summer. A decline in closed sales are certain to follow.

[Shout out to UD: Any data on the changing relationship between pending sales and closed sales??? My impression is that the percentage of pending sales to closed sales is declining, but I've seen NO data on this.]

Manhattan inventory has been treading water since Feb. 2009, but with declining sales in the low end, absorption rates (~months of inventory) at the low end should get worse.

Nationally, as well as locally, a lot of data on the housing market has fallen off a cliff in the last month. How far is the drop? Will NY County and/or NY Metro go over the cliff as well? Got me hanging!

*Case Shiller Home Index for NY Metro has been going down slowly since Fall 2009. It would be great to have "cross-sectional" data that would allow us to break out the declines by market segment (Manhattan vs Metro, Conforming vs. Non-conforming market, et cetera) but that data isn't available. Alas.

"I actually mentioned quite a few other issues beside the disappearance of the $8K tax credit..."

Yep, and then it was mentioned that a) $8k is rather insignificant in terms of Manhattan real estate prices, so it's easy to overestimate the effect here, especially when you see the national numbers, and b) nearly all those other issues have been present for some time, including the high activity months we've had in 2010 so far. If they haven't had the dramatic impact you seem to be expecting so far, why will they do so going forward? That question really needs to be answered here.

"Any data on the changing relationship between pending sales and closed sales??? My impression is that the percentage of pending sales to closed sales is declining, but I've seen NO data on this.]"

Yes, you can compare pending vs acris 90-day MA for recorded sales...cant put any more charts up now, sorry. I have to work on final tasks so we can launch in 3 weeks or so. Hopefully. I hate putting this off but we had to as data cleanup took wayyy longer than estimated and budgeted for.

I can sense you will subscribe for the tools, $15/mth was as low as we could take it, so I am curious to see how your opinions change or get reinforced when you really start digging!

BJW: "$8k is rather insignificant in terms of Manhattan real estate prices"

The data is clear. There has been a differential impact on the Manhattan market. The low-end, where $8K can make a difference, has seen dramatically improved sales since the tax credit caught on in Spring 2009. To be fair, the $8K is probably most relevant to the sub $500K market, but I only have data on the <$1Million market. There may certainly be more to the story (see Front Porch's comments) but I don't have the data.

sisyphean, that's pretty wishy-washy to me. You can't attribute the improved sales solely to the tax credit. You're assuming total causality, which is a dangerous thing to do. Did it have some impact? Sure, but I don't think you'll convince anyone that other economic factors are suddenly meaningless or at least less significant that an $8k credit. That's kind of ridiculous. As you say, $8k is more relevant as you get to the real low-end of Manhattan real estate, but I'd say even at sub-500k (which is where you're getting to a rather small portion of property on the island), it's still not THAT significant. And you don't have all the data, as you stated. I wouldn't get ahead of myself.

BJW: "nearly all those other issues have been present for some time"

Fannie Mae Tightens Credit Score Requirements for Refinances & Purchases
May 24th, 2010
Effective June 19, 2010, Fannie Mae will impose higher credit score requirements and lower loan-to-value requirements on many mortgage products. Most impacted will be refinance mortgage applications.
http://www.calculators4mortgages.com/blog/fannie-mae-tightens-credit-score-requirements-for-refinances-purchases/

There seems to have been a steady tightening at the low end of the market that has been going on for a while, but I expect the effects to be cumulative.

To repeat a line from earlier, the incentives are going down, and the disincentives (such as access to credit) are going up.

The tax credit and the assumption (- which for the moment has proven false) that mortgage rates would be going up pulled demand forward. The remaining pool of potential buyers has declined because many have bought and are now homeowners, and the remaining subset is reduced because more of these are no longer creditworthy because of tightened requirements.

I think Front Porch may be right though that credit availability may be expanding for creditworthy customers wanting more than what a conforming loan may buy them. Now that mortgage rates have gone down to record lows, you might see a little more activity in that range. I wouldn't bet on the sub-conforming range in Manhattan in the near term.

There certainly may be other factors as well...

bjw2103: "assuming total causality, which is a dangerous thing to do."

Agreed, but how aboout cutting me a little slack. I've mentioned quite a few other issues, and I do see the tax credit as a significant catalyst when combined with other items such as mortgage rate assumptions and expectations that the economy was getting less bad.

For the record, according to the NY Times (sorry SE!)
Current listings for Manhattan 10,219

Current listings for Manhattan under $500K 2,215
Current listings for Manhattan under $550K 2,581
(Assuming many of those will sell for under $500K)

So currently, the <$500K market comprises 22% to 25% of the Manhattan market. Given the signficant decline in months of inventory over the last year, a year ago the share was probably above 30%. I could go play with ACRIS data, which would be interesting, but I do have a day job.

I have ACTIVE at 7,723 right now...

again, there are very real reasons why I am not going to follow any other statistic outside this new platform. Sure there may be 10,219 listings, 1500 of which im sure are double counted, should not be counted, are subject to the flaws we discovered and not scrubbed out, are open listings, etc..

UD

BJW raised a valid question about the <$500K market share. I just thought it useful to give a ballpark figure as a reference.

I am certain your measures are much more accurate as I know how much garbage can be found elsewhere, but the nature of the question doesn't really demand a decimal level degree of accuracy.

If you want to get technical, my 22-25% figure from the NYT is probably biased upward as a lot of rentals (which almost all fall in the <$500K range) get dumped into the sales data.

Also, if anyone wants to get technical, I'd guess that the changes in the tax credit after Nov 2009 made it more applicable to the Manhattan market, which might help explain what was called the late Winter 2010 "frenzy."

the tax credit to me, is a one time event not worth digging into. The entire market, in all price points, especially the 2-5m market, saw a reflation. To try to dissect the reflation and figure out how 'effective' the tax credit program was to me is quite difficult. Given the performance of the market in general during the time the program was in place. Discussions are fine of course, but I wouldn't look to the data too much as we cant quantify what % is due to tax credit program and what % was due to the reflation activity that we know occurred. How do we differentiate?

"Agreed, but how aboout cutting me a little slack. I've mentioned quite a few other issues, and I do see the tax credit as a significant catalyst when combined with other items such as mortgage rate assumptions and expectations that the economy was getting less bad."

sisyphean, I'm not trying to give you a hard time. I'm just kind of a skeptical person by nature (or at least nurture!). urbandigs summed it up pretty nicely in his last post - I think you're giving it far too much weight. The tightening lending standards are a much more credible reason, but those have only been effective for a few days, so there's no telling what's going to happen. And it kind of contradicts what front_porch mentioned about lending at the slightly higher end. Don't forget that lending was much tighter in early-mid 2009 as well. Obviously the effects weren't dramatic enough to last all that long. Basically I'm saying I haven't seen a compelling answer to spinnaker's initial question.

My daugter just lost her front tooth. Awesome.

2252 open houses. Not even Friday nite yet. Hmmmmmmm

Seriously, WTF is so so so hard to understand. I don't need comps, data, convincing, cajoling, education, a light from above to know racism, stupidity, ignorance, hatred, drugs, ethnic cleansing is bad bad bad. Raise of hands, how many ppl think material wealth should be determined by a game of musical chairs? Seriously WTF is wrong with you lemmings?

"I don't need comps, data, convincing, cajoling, education, a light from above"

Well then you don't have much, do you? Instead of just cursing and calling people lemmings all day, answer the dang question.

Here's the answer

Unemployment is the deepest and longest since the Depression with no light at the end of the tunnel.
State governments are about to either make unemployment significantly worse or become insolvent and no one has a clue what that would mean.
Interest rates continue to hit all time lows which indicates a rising fear of deflation.
It has become abundantly clear that our economy as been unstable for at least ten years and has avoided collapse only through a series of bubbles and enormous and u sustainable government intervention.

And you want to study a bunch of questionable data about inventory levels?

columbiacounty, now that's much more plausible than what's been kicked around on this thread. Unemployment has been an issue for some time though, but the state/city government situation is not making things any easier for the time being. I buy pressure from there. I don't buy low interest rates (or fear of deflation) having any greater influence going forward. How do you see that? Rates have been quite low (and pretty clearly artificially depressed) for some time. I think we all get by now that there's been significant govt intervention - but it keeps on chugging along, some would say miraculously. When does this supposed bomb finally go off? And say what you will about inventory, but the trend is telling.

I have no idea why people think that, just because the tax credit doesn't technically apply to higher levels of the market, that it didn't affect sales in this category.

Lots of people aren't very bright and don't understand even their own taxes. For example, Joe the P was on TV explaining how his taxes were going up -- when in fact they were probably going down. He couldn't even get the direction right -- and he was on the damn TV with Katie Couric listening with her usual vapidity. I find it entirely plausible that a fair number of buyers entered contracts thinking they would get the tax credit -- but actually won't. Call it the Katie Couric segment of the market: the wealthy are especially prone to misunderstanding taxes and losing money to qualify for tax credits. It's their way of sticking it to the liberals.

Additionally, there was the phenomenon, cited on the streeteasy, of parents buying expensive places for their lower income children.

Any sources for a percentage of all cash buyers vs mortgaging buyers over the last year?

Id have to believe the all cash buyers had the 8K last on their mind, and the 70%/80% mortgaging crowd first on their mind.

SkinnyNsweet, are you suggesting that people were buying $2m apartments in large part due to an $8k credit without knowing that they actually did not qualify for it? Hilarious.

bjw2103: No.

Oh. Then what exactly are you trying to say?

I'd argue that the explanation for the tax credit affecting non low-end sales is more straightforward.

The tax credit spurred sales at a time when sales volume was very low because of fear in the herd. People are herd animals and once some folks started buying because of the tax credit, this motivated others to go out and take advantage of the tax credit as well. In turn, others followed (not necessarily in the same market segment) as they saw other people buying. Fear declined.

Others followed even though they didn't qualify for the credit? Or are you saying that general sentiment improved, so people were buying in all segments? That would completely contradict the premise that the vast majority of activity was in the low-end.

'Unemployment is the deepest and longest since the Depression with no light at the end of the tunnel.
State governments are about to either make unemployment significantly worse or become insolvent and no one has a clue what that would mean'
That's right on the money. Now add to that some of the toughest finacial reform this country has ever seen. What a gift to the big apple! One more reason to move your financial business elsewhere. Where is Obama today? I'll tell you, begging our neighbors to enact similar regulation to keep the playing field level. The United States government reacted far more aggressively to the financial crisis than most Europeans governments, including Germany’s, did, according to International Monetary Fund data. The Europeans, for their part, say the United States, as the country where the financial crisis started, had more to do.
The United States will run a larger deficit than Germany in 2010 and 2011 — thus doing more to stimulate the economy than the Germans, economists say. But the United States is also withdrawing its stimulus at a more rapid rate than the Germans, I.M.F. numbers show.
“We need to act in concert for a simple reason: This crisis proved, and events continue to affirm, that our national economies are inextricably linked,” Mr. Obama said on the White House lawn before leaving for Toronto.
I've heard that sound before....that sucking sound...where have I heard that sound? Oh yeah! I heard that sound right after NAFTA! That's the sound of jobs being sucked out the country! Wow, financial jobs being sucked away sound just like manufacturing jobs! Who knew?

>> $2m apartments
>> in large part due to

I never said either thing.

It would not be the first time that misperception of a tax benefit affected behavior. I don't get why that's such a difficult concept.

Skinny, I'm not saying it's impossible. I'm saying show me that it happened in any significant way. You'd truly have to be an uneducated buyer to both decide now is the time to buy a $1m+ apartment because of an $8k tax credit and then not even realize you don't qualify for it.

bjw: In the TA dept. --total anecdotal. When i was looking to buy it was smack dab in the middle of the first deduction go round. everywhere i went, i ran into parents buying for adult children -- often very obnoxious adult children. I suspect two things: first that parents were going to help junior with a small apt because the $8000 tax deduction would mean so much to his/her 50,000 income. second, that once they started to look around, they decided to upgrade to 2 bedrooms (i was looking in 2 bed market) so they could also have that pied a terre they always wanted. I don't know how they structured the deal but I am willing to bet their accountants came up with a way for junior to "co-buy" the apt so he could get the tax deduction. the rich often get richer just because they will chase (relatively) small dollar sums.

BJW: "Or are you saying that general sentiment improved, so people were buying in all segments?"

Are you familiar with Darwin's theory of Natural Selection? Let's apply the principals to the market.

Overall buying sentiment improved, but there are what biologists would call "limiting factors" in different market sectors.

While the tax credit certainly led to an overall improvement in market sentiment toward home purchasing, one of the major themes of this thread has been the availability of credit.

Check out the following URL:

http://mortgagedataweb.blogspot.com/

Click on the chart in the "Down Goes Conventional Purchase Mortgages!" section. Once there, select "Amounts (Jumbo)." This will provide you with a very striking visual of the number and amount of Jumbo purchase loans issued nationally from 2005 through the end of 2009. The numbers drop from 50K+ to ZERO!

So a MAJOR limiting factor for the high-end is the disappearance of credit. It's possible that this may be reversing of late, but I don't have the data.

So more people may want to buy homes that cost more than the conforming loan limit (i.e. Jumbo loans) but the credit at that level has mostly disappeared.

Sentiment is one thing, the ability to raise the money another.

While the $8K tax credit mostly applies to <$500K market, the conforming loan limit is probably most applicable to the <$1Million market. The conforming loan limit is a little over $700K in NYC, but my impression is that folks under $1 Million have learned to put down a slightly larger deposit to get the mortgage loan under $700K.

You've never been to an investment strategies for tax avoidance seminar in Palm Beach, have you?

"You'd truly have to be an uneducated buyer to..."
think hammer pants look good on you this time around
be shocked when Ricky Martin came out
go to a Rich Dad, Poor Dad seminar

And yet, people do.

You are the one that started us down this path making an unevidenced assertion that the tax credit only had an effect on sales in a small part of the Manhattan market. I don't quite get why I need evidence to speak to an initially unevidenced claim -- especially when apt23's got an anecdote.

Skinny, no. You're missing the larger point. The credit's impact is likely negligible in this market, and it's impossible to quantify anyway (read urbandigs' excellent post). It was posited on this very thread as the beginning of the end for all the activity through April.

>> The credit's impact is likely negligible in this market

Where is the evidence for this claim?

Look, the assertion was made that the impact was considerable (along with other factors to be fair). I find that dubious and very difficult to prove. You seem to be intimating that the assertion is correct. We'll have to agree to disagree. But re-read Noah's post just in case:

"the tax credit to me, is a one time event not worth digging into. The entire market, in all price points, especially the 2-5m market, saw a reflation. To try to dissect the reflation and figure out how 'effective' the tax credit program was to me is quite difficult. Given the performance of the market in general during the time the program was in place. Discussions are fine of course, but I wouldn't look to the data too much as we cant quantify what % is due to tax credit program and what % was due to the reflation activity that we know occurred. How do we differentiate?"

Not sure I agree with everything said here...

from http://www.maryjoandco.blogspot.com/
UPDATED - The Market Has Changed - It Is Now A Seller's Market In Manhattan!
There has been:
Shrinking inventory.
Apartments selling in a week or less.
Very low mortgage rates. This may continue for a year.Strength in the economy.
I can feel the market changing in my day to day activities. Prices will start going up soon. Once the media pick up on this and announce it sellers will become firmer with their pricing.
If you have been waiting to buy because you have been looking for a deal your time is about up. Once the current apartments for sale are sold new sellers will be pricing higher.
The good news for buyers is that low interest rates can have a much larger impact on your monthly costs than an increase in purchase price. Contact me if you want to discuss your specific situation and how to approach buying or selling an apartment.
*Update - The media is headlining a 33% drop in U.S home sales. NY Times article is here.
This is primarily a result of the expiration of the home buyer tax credit last month. But this is a nationwide statistic. Manhattan is an island unto itself when it comes to the real estate market. Prices are so much higher than the rest of the country that the tax credit had very little effect on local purchaser's decision making about when to buy. Buyers in the rest of the country rushed to get into contract. Here that happened not at all or very little. I was out with a buyer of a 2 bedroom apartment today for the final walkthrough before closing. I have been sending them listings so they can see what the market is doing. They feel lucky to be in contract because there is so little inventory available where they want to live."

ready, set...

The market was hot Feb-May because the sun came up everyday..prove me wrong!

Look, the market reflated from uber distressed levels because simply, it was ready to reflate from very distressed levels. The result was lower inventory via higher sales, less people removing from market, less time on market, and declining listing discount at a time when rates were also very low, when tax credit was in place, when markets advanced (before they started to fall via europe), etc..

Pinpointing the exact reason for this reflation or saying it was due to the tax credit only, is in my opinion, to miss the severity of what this market did as a result of the credit crisis, and what markets normally do after such a severe event in a fed/govt engineered reflation environment.