this will be a boring post but here we go

3 years supply. That bodes well for prices...

Buyers are just going to have to come around to being willing to pay today's asking prices, so the excess inventory dries up. It's as simple as that.

Yes, and we all need to do our part....

Why Alan? I want to buy, but i don't HAVE TO! I'd rather rent and use my money wisely toward an investment with a greater return than housing if housing prices don't drop to more reasonable averages. If both markets keep tanking, it's easier to pull out $200K from the stock market than getting your $200K back overnight if it's sitting on a property. Meanwhile, if i'm renting and prices keep falling, once i reach the end of the lease, either i negociate a reduction on my lease, or i just move out to a cheaper place. Easy!

@sledgehammer: i think alanhart was being sarcastic...

Oooh! Sorry, i missed that..

I read somewhere that the 11,000 inventory does not reflect "shadow" inventory of new developments where all the new units are not "listed", in which case the number may be several thousand higher. Anybody know if that is true?

yes it's true. but honesty forces me to admit that the inventory includes many new development units that may never get built, or may be taken over by the bank (those Jasper condos come to mind, as well as Tempo). the bank process, however, will mean that those units will enter the market in some form, creating a supply overhang that will be very difficult to work through.

bottom line is that there are too many apartments out there given this demand.

In terms of market impact I would think the most significant "inventory" is new developments which MUST sooner or later be placed either as rental (indirectly afffecting sale prices) or sales units. Occupying sellers are often different because they not HAVE to sell. So, it would be interesting to know how much of the inventory is new development (esp. if you could add in shadow inventory, and substract out any buildings that are never going to be built).

100M sprint world record = 9.69 seconds
Current world record holder = Usain Bolt
Length of marathon in miles = 26.21875
Length of marathon in kilometers = 42.195
Estimated time for Usain Bolt to run a marathon = 1 hour 12 mins and 58 seconds

I prefer aboutready's technique for estimating time needed to absorb inventory. Use average sales per year.
Admittedly this number is changing so will have to be assessed at the end of each year but using a snapshot is not very useful.

ar - it may be a semantic difference, but I would phrase it as "prices are too high to generate sufficient demand to fill the apartments", rather than "there are too many apartments". I believe that the latent demand to live in Manhattan (rent or buy) and for non-residents to own in Manhattan is very large and is effectively limited only by price. On the margin, an afforable Manhattan beggars outer boroughs, Hoboken/Jersey City, Westchester/CT/NNJ suburbs, etc. and Manhattan occupancy almost always stays high - a tight Manhattan rental market is <1% vacancy (e.g., 2000, 2007) but a weak one is what 2-3%, which is tighter than a tight market almost anywhere else in the country? Vacancy creeps up, landlords cut price (rental is much more liquid), people move in. The purchase market is obviously much more complicated, less liquid and more screwed up right now, but at a price it sorts itself out, even in today's world. I guess my point is that I don't think there is any such thing as too many apartments in Manhattan; there are only prices that are too high for the market to fill the apartments.

oops, something got cut. last bit should read " a tight Manhattan rental market is <1% and a soft market is what 2-3%(?), which is tighter than a tight market almost anywhere else in the country. I guess my point is that I don't think there is any such thing as too many apartments in Manhattan; there are only prices that are too high for the market to fill the apartments"

weird posting problems. whole lines dropping out. sorry

sideline, i actually think there are too many apartments. very interesting article in The Economist the other day about the social and economic costs and benefits of owning a home. only time will tell, but we may have entered a very different era in terms of home ownership desire. at least NYC may be left with some decent rental apartments for the near term.

with reasonable mortgage underwriting standards, manhattan demand is also effectively limited by income/job distribution. which is why chefs, teachers, etc. were able to buy in the mid-1990s.

are you using less than or greater than characters? These are used to define html tags and anything after that does not show up.

BTW, I agree with you. Good point.

Darn it aboutready! We were doing so well recently agreeing with each other.

divvie, how do we diverge? it's just that i think that there will be negative household creation rates for Manhattan over the next couple of years. that's a very controversial position to take, but i believe it's defensible.

thanks divvie. Re-reposted post follows: the last bit should read "a tight Manhattan rental market is less than 1% vacancy and a soft one is what 2-3%(?), which is still tighter than a tight market almost anywhere else in the country. I guess my point is that I don't think there is any such thing as too many apartments in Manhattan; there are only prices that are too high for the market to fill the apartments"

Now that that's out of the way, ar, thanks for Economist reference. I will have a look. Maybe you're right that the outlet is a shift to rentals, presumably at lower prices given supply/demand.

thanks for noting the Economist article, aboutready.

You know, when you think about how much the American tax and financing system is skewed in favor of homeownership, all on the presumption that values inch up with fairly low volatility, therefore large debt is usually safe, you then think about how other parts of the system latched onto it to take their piece - property taxes, entire job industries based on housing.

Now these latches are accelerants on the downside and barriers for a recovery - property taxes aren't going to bend with falling prices, at least not until there is a big lag on assessed values; no jobs means no driver to values; greater volatility in the job market with globalization destabilizes regional housing prices long-term; new models for financing will take this all into account and cap leverage allowed.

sidelinesitter, i'll post the economist article in a moment. also, i do tend to focus on the larger apartments. i think there are some very negative demographic trends for smaller units as well, but my knowledge therein is more sketchy.

here's an absolutely fascinating factoid. over the last akmost 40 years the number of households in the US with 2 parents and children has remained the same. NOT the percentage. the number. now, obviously, parents in manhattan have changed course over the last 10 years, with greater numbers preferring to stay than leave. i'm not certain that will or even can continue at this level.

for the youngsters, my info is anecdotal. but how many new grads do you think law firms, banks, ad agencies, etc. will be hiring in the next couple of years? BigLaw has a backlog of about two years at this point (wtf were law firms thinking hiring 125 summer associates back in October/November?) i know i not only lean pessimistic, i'm nearly scraping the ground, but I've got to think there will be far more people leaving when their leases expire than there will be newbies coming in.

here's the article at The Economist about the costs and benefits of home ownership.

http://www.economist.com/finance/displayStory.cfm?story_id=13491933

Excerpt on shadow inventory from Crain's article:

As a result, inventory in Manhattan hit its highest level in the decade since Mr. Miller began tracking that statistic, soaring to 10,445 units, up 34% from the year-ago period. What’s more, he notes that those figures do not include the units that developers do not actively market to sellers, known as their shadow inventory. Mr. Miller estimates that there are 5,000 to 7,000 units that fall into that murky category.

Link to full article: http://www.millersamuel.com/press/view.php?V=1238684266FtFbE

"11 Contracts Signed"

In the past 30 days, 544 contracts were signed, per UD. Let's use the 30 day figure because tracking daily contract signings is not as accurate since it can be dostorted by a variety of factors, such as the weather, holidays, etc.

"3 years supply. That bodes well for prices..."

It's actually closer to 2 years when you use the 30 day figure on UD.

I should just walk away, but alpine, you do realize the last thirty days have been at a time of year that runs historically quite high? if you averaged it out since September, we're probably running at less than 400 a month, perhaps significantly less.

> It's actually closer to 2 years when you use the 30 day figure on UD.

We're saved then! There will be no decline!

If we're debating 2 vs. 3 years, that don't bode very well...

i have two points left to make tonight. as Crainsnewyork has pointed out the number of jobs lost in NYC thus far has been much lower than expected. the government bailouts paid for at least an extension of employment for many, many people. so...we have reached this decrease with an artificially supported employment base that will likely see major reductions shortly (too many reasons to go into now).

the second is that so many experts excoriate Hoover for decreasing spending and increasing taxes. since Reagan does anyone have any figures on how much of the spending and taxing has been shifted to the states? we could be well and truly f'd if you think about it. $4T in spending thus far and limited success, in some areas none.

"as Crainsnewyork has pointed out the number of jobs lost in NYC thus far has been much lower than expected."

OH MY GOD! Someone other than me or steveF posted POSITIVE news on SE!!!! I can't remember the last time this happened! Is tis a sign of the apoacalypse??

alpine, you have some reading comprehension problems, not that it matters, really, but what aboutready meant to say is that jobs losses in NYC have been kept artificially lower by the bailouts, so that the day of reckoning is probably coming later than in other places. But that's okay: it will only take 2+ years to clean up the inventory, provided that no new apartments enter the market and that shadow inventory doesn't either. Good night and sweet dreams.

The Economist article posted above:

page 4, paragraph 3, last line "Homeowners are more likely to know who their representatives are; more likely to support local causes or parent teacher associations and (this being america) more likely to go to church."

i don't mean to derail the thread but I found the last part quite interesting. what exactly do you think the writer was trying to say in reference to America/church?

as a conjecture? i think the author was pointing out that people who move less frequently, which would be homeowners generally, tend to put down more roots and form a tighter-knit community. also, homeownership rates are highest in some fairly surprising places (West Virginia, for example, is on the high-ownership list). People in cities, obviously, are less likely to own as a percentage.

What he doesn't note is that often the "redder" states have higher rates of home ownership.

People in the U.S. are seen as being much more likely to belong to a church, attend services, give money there, etc., than people in Europe. The Economist charts that occasionally, and I've seen other surveys saying the same thing. They see it as one of the things that makes the U.S. the U.S.

i took it as a snarky way of saying basically "i wouldn't mention church if this wasn't america we were talking about. those righteous goof balls place such high importance on a ridiculous thing like that."

*i don't have a problem with him saying that - i happen to agree.

heheh, you would have sounded much smarter sniper if you had said "I agree aboutready and NWT, that's what I was thinking also" because both gave good, rational, plausible suggestions.

but aren't we all really saying the same thing? i was trying to cut around the "smart" or diplomatic way of saying it and understand if we were all reading it the same way.

kind of. i'm an agnostic, but I'm often envious of the comfort some people obtain from their religious beliefs and connections. but that's kind of like my saying the country life has some appeal. i'll always be an agnostic, and I'll always live in a city.

just remember, religion, like everything else in the US, is practiced very differently in different locations.

posted 4/22/09

82 New Listings
22 Price Cuts
24 Contracts Signed
11,061 Total Inventory

3.41x Pressure Index

460 days needed to absorb current supply

a better day in view of price cuts and signing deals

"OH MY GOD! Someone other than me or steveF posted POSITIVE news on SE!!!! I can't remember the last time this happened! Is tis a sign of the apoacalypse??"

Yes, SteveF, a good person to align yourself with...

Two folks who don't have a clue about the market, but have no problem proving that each day.

and the news wasn't even positive.

I know..... that just makes it even funnier.

But not at all surprising.

posted 4/28/09

44 New Listings
73 Price Cuts
29 Contracts Signed
11,106 Total Inventory NEW RECORD HIGH

1.51 Pressure Index wondering when we will see that at 1
382 days needed to absorb current supply

it is getting better all the time ;-)

PS watch the daily price cuts sellers are getting nervous (Summer coming)

Actually, HT1 i just posted yesterday that I thought the cuts were declining, but i think you're right. I think sellers may have been feeling a bit saucy at the increase in activity, and held onto their pricing levels a bit too long. I'd bet most of the ones who sold did so at a discount and those who were stubborn may be very unhappy next month.