Summer of Our Discontent?

Its a good topic to discuss UWS. I totally admit the action out there today and for past 4-6 weeks AFTER the frenzy of May/June from the overshoot in feb/march, is surprising for this time of year. Its not that prices are rising big time, although we did price out Armageddon, activity is definitely stronger than normal for this time of year.

I still many unrealistic sellers that think their place only deserves a 10% haircut when they are in a price point that is trading down around 20-25%. Mainly the classic 6-7 market. Of course those units are not trading. But if you price correctly, you may get a stronger bid because of traffic and sense of urgency alone.

It feels like a muddled market now that we had the first wave down and reached that comfort zone. Until macro or equities do something drastic, I see us staying put generally. Of course, individual distress or those that absolutely must sell will have to succumb to pressures because of their timeline to move property

The most important metric that I follow is new listings vs contracts signed. There has only been one day this year where the signings were greater. The reduction in inventory is purely a function of listings being pulled. The great unanswered question is why???? Due to sellers not wanting to sell at current prices? Sellers situations improved and don't need to sell? Wanting to wait it out? Sellers pulling listings to relist in the fall when Manhattan is more populated? Personally, I think there is nothing to be learned over the last few months. The first 4 weeks after labor day should be very telling to answer some of the previous questions.

As I pointed out to AR, my place is always on the market. Brokers around here know if that is someone out there looking for a place like ours, I have a walk away number.

patient says The first 4 weeks after labor day should be very telling to answer some of the previous questions.

That statement was said exactly just substitute memeorial for labor. We are in strong demand due to buyer increasing "SENSE OF URGENCY" to purchase.. I like that Noah. Can I use that on a go forward?

Why would there be a sense of urgency after Labor Day. I'd think there'd be a sense of urgency to complete a deal by June, July at latest, and put in offers 3 months in advance of that ... so you can get your kids into their school for September.

September shouldn't at all be a good month for people looking.

arlo that would be the case but we had a 2008-2009 depression :) fear out there that stopped buyers in their tracks. Depression? what a media joke. Now buyers are "sensing the urgency" to "possibly get a deal" "before it's too late"...but don't quote me on that.

I thought I read that the Borkerage Firms were not listing addresses again in order to affect transparency in inventory. Is that still true?

arlo - Your theory doesn't hold water. Daily contracts being signed has been steady up to present day.

Dmag, that tactic seems to be more and more common. Corcoran started doing it, and then Prudential seems to have followed suit more recently. Seems idiotic - I only go to open houses that I see advertised on Streeteasy, and the sign in sheets usually have a high percentage of people seeing the place on Streeteasy.

SteveF. That's might point. Some folks think that prices are reasonable now and are willing to pull the trigger. But, it is not making a dent in inventory. That's the spooky part. I worry that inventory will once again grow in late September and this current price point buyers will all have been filled.

patient09 - could be another shadow inventory lurking.

Noah - do you have any figures on numbers of listings pulled or expired?

Buy now or be priced out forever!

Sorry Steve, your dream seems to have hit a wall.

Seems to me that inventory is a number that can be easily manipulated while contracts signed is a harder number for brokers to beat into submission. Signed contracts and mortgages opened and closed are public info. Properties for sale are presented to the public at the whim of the seller/agent, are pulled, re-listed, listed without address, etc... I'm sure brokers manipulate listing data as much as the government manipulates the CPI.

what about all the shadow, pulled listings and manipulated listings on the way up to 11,200. Wasn't the same stuff going on then too. It's the same stuff now the only difference is that now contracts are being signed.

SteveF, before it's too late for what? A sense of urgency for what? As discussed on Headwinds vs Tailwinds, there are no catalysts for prices increasing, so at best prices are flat. The risks to the downside are still significantly greater.

This chart looks a little different than what those brilliant bears predicted doesn't it? What happened to sleeping in Central Park?

http://www.urbandigs.com/charts.html

This is a very interesting discussion with a bird's eye view of the Manhattan market ( I assume Manhattan because of the inventory numbers.)
How do you guys know the inventory total and the contract signed number? Is this a feature on Streeteasy? Sorry for the newbie question, I would love to be able to check the figures.

street...I strongly disagree, inventory is getting eaten up and positive GDP is expected for the quarter we are in. Even the lagging employment #s are improving. Sentiment is clearly changing as the summer dog days have been unusually robust. I expect this to build on itself into the fall of 09 and into spring season 2010.

great thread UWS...

This chart looks a little different than those brilliant bulls predicted doesn't it? What happened to buy now or be priced out forever?

http://www.urbandigs.com/charts3.html

until this chart crosses, no reason on earth to hurry to buy.

SteveF, so you think manhattan prices have reached a bottom and will rise from here with lower inventory levels going forward? This assumes people moving into the city (net) and making more?

patient - 1st, the trend is clearly that they are converging. 2nd, if a place was on the market, and taken off permanently (again, only time will tell), then it is arguably better than if it was sold, because that's one buyer who is still out there.

No question, it will be interesting to see how strongly inventory increases over the 4 weeks after labor day. If we see a lot of re-listings, then we'll know it is very much a buyer's mkt and prices will have to move lower to clear. If not, then people are feeling more comfortable about their situation, and those that needed to sell are mostly out of the market, so we'll know that we've hit bottom.

patient09, I agree there's no reason anyone should rush to buy anything right now, but look at the chart you posted with a 6-month timerange. There's a notable trend there.

with stocks rallying so much, GDP not only must be positive, but it should be significantly positive - especially with cash for clunkers.

I can see it already that when data comes people will act very surprised and go nuts on the bears. With inventory restocking, stimulus, and cash for clunkers programs we will very likely have 3-4 quarters of somewhat good data. But we are stealing growth from futre quarters and stimulus is not sustainable. So its longer term that worries me.

A year ago the levels were at 6500 -- so are we only timing the market from post lehman collapse?

2 years ago inventory was at 5000 or so.

UD: I'm thinking that now is not a bad time for a trade. Trade in my renovated place for another year-long reno project. Might be someone out there (foolishly or not) who'd pay a premium for having the work done (and of course the year-long stress on my end). Simultaneously, I'd find a seller who'd bitten off more than they could chew, money-wise.

Over the last 4 weeks, 1,350 listings were removed from market and 830 new ones were added for a net reduction of about 520...this is NOT my system, but OLR. not sure their methodology for this.

"But we are stealing growth from future quarters and stimulus is not sustainable."

Since when has this been a problem? Who gives a crap about the future when we can have the drunken orgies now?

UD - where was inventory at its '06 peak? I remember it bumping up quite a bit in '06 before the final bubble blow out in '07 took it down to that 5k level.

printer: "No question, it will be interesting to see how strongly inventory increases over the 4 weeks after labor day. If we see a lot of re-listings, then we'll know it is very much a buyer's mkt and prices will have to move lower to clear. If not, then people are feeling more comfortable about their situation, and those that needed to sell are mostly out of the market, so we'll know that we've hit bottom."

You tend to type better than I. I agree with your statement above.

ha! all I have for inventory is from NOV 2007

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

We were at low 4000s in late 2007 and early 2008

i don't know. on some level, psychology brought us into this and psychology may likely bring us out. i wonder how many outsiders read this blog like the bible, holding their breath for those barely perceptible changes in sentiment among posters.

Tread lightly on statistics of "contract signed" listings over the last 6 months.
I've followed many apartments that went from "contract signed" to a frequent "no longer available" and seeing "closed" as often as a sunny day in London.

If the inventory was reduced because it changed hands, signed contracts would show this fact.
August is just a slow sales-time for RE/open houses/house shopping. Labor day brings everyone home and starts the game up again. It's a good time to introduce new properties to the market. The $64,000 question is will there be buyers. For sure your going to see a surge in inventory and a readjustment in pricing structure. Everyones just waiting to see what kind of fall it's going to be. I predict a huge increase in open house attendence followed by glowing reviews of how amazing Manhattan RE is followed by few signed contracts. The stock market is not the economy. September could be a cold dark month for the equities market. That will scare a sizable number buyers just begining to nibble.

sad to say but the employment numbers are not improving as of today's reports

Prices have fallen roughly it seems 20% on average for 1 beds/studios since Jan 09......this happened relatively quickly.......we could see an additional 20% drop if things dont start moving....but not sure...

SteveF, I would very much like to hear your view on where prices go from here.

glamma...great post. You are right on. I look for more building/mortgage/neighborhood thread titles. We've been seeing alot more of these postings this week. This tells me buyer activity is increasing. Simple stuff. The humans move in herds :)

Mhillqt, luv that 20% out of your a$s number. Hey! let's keep those numbers flying, it's 50%, no 60, no 75%. Maybe prices are down with new development condos but not at all with pre existing condos. My studios comp prices were flat since lehman but new listings have been pricing higher since June.

Interesting article. Confirms that people are in fact pulling units off the market in droves.

http://therealdeal.com/newyork/articles/fewer-listings-lower-prices

jasonkyle, interesting article. what i thought was amusing was the miller quote that many people didn't put their properties on the market this year, deciding to wait. wait for what?

If they can just hold out another 7 years or so they might be ok.

i don't understand renting at a loss instead of just lowering the price. it seems like a really bad play at this point.

"This chart looks a little different than those brilliant bulls predicted doesn't it? What happened to buy now or be priced out forever?

http://www.urbandigs.com/charts3.html

until this chart crosses, no reason on earth to hurry to buy."

Ruh row.

Its funny, Steve has been wrong for a year and half now predicting the price and volume increases... and, even now he's still wrong.

Volume has barely moved, and we're STILL adding more listings. Not surprised that folks who can't sell are moving back to shadow inventory.

But, WOW, does that chart point out that Steve doesn't know what he's talking about.

"We are in strong demand due to buyer increasing "SENSE OF URGENCY" to purchase.. I like that Noah. Can I use that on a go forward?"

Go forward?

ROTFL.

SteveF has been saying it since BEFORE WE DROPPED 20%!

Sense of urgency, I love it. So urgent, they're not even buying at 20-30% off!

"jasonkyle, interesting article. what i thought was amusing was the miller quote that many people didn't put their properties on the market this year, deciding to wait. wait for what?"

Still waiting for those price increases... and waiting... and waiting.

from Miller..

"number of sales is far lower than last year at this time."

where was that surge again, Steve? We've been dead for months, and the "hot period" is still far lower.

Interesting.

sorry, here it is "Sales are still off 50 percent from this time last year"

ouch.

sorry, Steve...

I love the part about the guy passing on 10 large to rent for 32k instead. Hmmm How's that for the rent/buy math folks.

A RE broker told me on Sunday that the dip in the market was over, bottom is past and, that's why property prices are on the rise today! Almost word for word. I'll bet you're all wondering what kind of snappy answer I had for the broker.

Dead quiet, I had nothing to say...I was stupified!

Broker 1, falco 0

au contraire, falco, your silence spoke volumes. falco 1, broker 0.

you should have referred the broker to the "biggest price cut of the day" feature on the real deal. it's often brutal and well... daily.

I must be looking at a different market, because from my usual pool of anecdotal evidence, this Summer is NOT particularly strong vis-a-vis other Summers.

30yrs, i agree. i think there is some activity in the lower end, for any number of reasons, but overall this has been pretty slow. most of the action seemed to have happened by early june.

I feel very comfortable waiting to see how things unfold in the fall. The empty retail / office space should do everyone in i'd say. but I guess well just have to wait and see. September is right around the corner and I see the same places that were empty 3 months ago, still advertising

Wait a second "... NOT particularly strong vis-a-vis other Summers."

So now the bloodbath that was predicted for this summer has turned into a apple to orange comparison with other summers? PUH LEEEESE.

"Most of the action happened by early June."

What exactly does this mean aboutready? What were the avg daily contracts in early June vs today? Our 30 day avg is 800 plus contracts. In June it was, what 1000. Yeah, definitely dropped off a cliff there my dear.

hi sweets!! i said it seemed to be at a high in June. and if you spend any time looking at properties over a million, yes things didn't do so well. i'd also posit that successful deals at the lower level peaked in june. btw, lots of deals aren't going through right now, just thought i'd share that info?

by love, see you on the flip side!!!

Good observation Marco_M, there are also a lot of apartments that haven't been rented in areas were traditionally it was easy to rent...Live in the heart of WV and there are tons of places still available(based on online listings and friends in the neighborhood). Last year when I was looking there were slim pickings by about this time. Also the people who are renting at a loss, their losses are going to exuberate. I would like to find an indictor that compares the rental market Year to Date?

I think the listings will increase in the next three months due to this and hard to find financing. There are definitely buyers out there, but the sellers selling points are definitely whacked in a lot of areas, we will come close to equilibrium bwtn ownership and renting before the market takes an up swing. Though haven’t figured out yet how close to equilibrium the price will come.

A lot of the discussion of falling inventory above is misleading. The unlisted "shadow" inventory may be growing faster than the listed inventory is depleted, as new condos that started construction before the bubble peaked continue to be completed but only list a tiny fraction of their units. That supply is still out there and needs to be taken into account, even if sellers don't want to admit it is out there yet.

And since a noted expert stated that shadow inventory exceeds the sum of both resales and sponsor unit on the market, what would that lead you to believe?

There's a Boogeyman lurking in the shadows, indeed.

listings removed is significant too..

It's safe to say that every property in the city would be for sale for the right price. So we have THAT, too.

"listings removed is significant too.."

Which leads to the main point: if you don't count ALL listings somehow, your number is irrelevant.

You can only count what you can see. There is no indication that listings removed will play any more of a roll than it already has over the past year. And I see the shadow condo inventory someday bringing condo prices down from the stratosphere but it's a stretch to say this will have much of an impact beyond the condo buyer community. What happened to all those auctions we were supposed to see anyway?

Deny, spin, twist, look the other way, redirect and finally just ignore the data and it will go away. All traits of the above bears. The crash is always "COMING!" yet it never does. You bears above are not a fun group let me tell ya. Did you ever notice that people have a tendency to walk away from you at parties? It's not a coincidence. Get in the game and focus on the positive not the negative.

Here you go: The global recession is over(Europe has already declared), confidence is returning, people are buying and inventory is dropping. What else are you people waiting/looking for? The gods of real estate to say it's okay to buy. What!!!! :)

Hey we all have our underlying motivations for seeing the glass half full or half empty. Its just normal human behavior and makes for interesting discussion. Not sure I would be here if we agreed on everything.

spinnaker...excellent point.

what do you make of thsi?

http://www.forbes.com/2009/08/19/recession-job-losses-nber-gdp-growth-opinions-columnists-nouriel-roubini.html

only got thru the 1st part but "wow"..dr.doom is on board the growth train. I can't believe it.

try reading the whole article before coming to a conclusion.

ok dad.

How about some predictions from AR, Columbia, Rhino, all the bears on where inventory will rise to in the fall? That way we avoid after the fact rationalizing that even though what you predicted would happen didn't happen, you never predicted it anyway.

I suggest we use UD's numbers as our yardstick.

here:

"The inventory adjustments will largely be over by the middle of 2010 as will the impact of the stimulus. But since the recovery in private demand will be weak, the economy is poised to slip back to anemic growth (well below potential) in 2010, posing the risk of a double-dip recession. Exhausting most policy measures now means that there will be little room for additional fiscal and monetary stimuli in the future. Policy measures entailing long-term fiscal costs can only provide temporary stimulus to growth. Any sustained economic recovery will ultimately have to come from the revival in private demand—i.e., through consumption and investment—both of which will be constrained by structural factors."

cc, check this out:

http://panzner.typepad.com/.a/6a00d83451591e69e20120a560707f970c-pi

quite the historical anomaly, our current green shoots situation, no?

truly entering uncharted territory.

Sounds like a worthy thread to start printer -Scientific Wild Ass Guesses For Q3/Q4. Lets see how many bears and bulls are willing to put some figures to their predictions for 3rd and 4th quarter activity.

anything to take your mind off of reality....

What's reality got to do with anything? This is realty.

spin, i've been wrong for years. always showing up to the party early.

"Are you smoking this shit so's to escape from reality? Me, I don't need this shit. I am reality. There's the way it ought to be, and there's the way it is. Elias was full of shit. Elias was a crusader. Now, I got no fight... with any man who does what he's told. But when he don't, the machine breaks down. And when the machine breaks down, we break down. And I ain't gonna allow that... in any of you. Not one."

"The crash is always "COMING!" yet it never does."

Steve, are you really this much of an idiot?

Dude, we already HAVE the crash. We were right. WE TOLD YOU SO.

You were dumb enough to not know it was coming, we get that. But now you're so dumb you don't get that its already here?!?! OH MY LORD!

"Deny, spin, twist, look the other way, redirect and finally just ignore the data and it will go away. All traits of the above bears. "

I LOVE IT! A putz who doesn't know the market tanked (after 6 months of date showing so), has said "stapmede" for 18 months that never came, is talking about OTHERS denying and spinning!

Oh my lord, Steve, you just described yourself to a T!

> only got thru the 1st part

Why doesn't it surprise me that SteveF can't finish the article?
I don't know if the guy has ever read anything that wasn't in bold (or on a cereal box)....

"The gods of real estate to say it's okay to buy. What!!!! :)"

Yes, same gods who said to buy in 2007!. SteveF and Perfitz and all the other geniuses!

"Not so long ago our inventory -appropriately scrubbed per UD methods of removing duplicates, listings with no address, etc., was pushing 11,500. Now, through the heat of the summer, we have watched it plummet to just over 9,200. That's one hell of a drop, and one that nobody predicted. None of the pontificators here saw this in their collective crystal balls. It is safe to say the summer activity predictions were UNANIMOUSLY WRONG!"

How did we miss that the premise of this entire thread is FUNDAMENTALLY WRONG.

UD numbers went down a bit, absolutely. But the stats show it was NOT because of volume, it was because of pulled listings. New listings outpaces sales.

Anyone saying it was volume increases that narrowed inventory is WRONG.

Just as you have to add listings when they come into the market (and speak of the new flood of inventory) so too do you have to subtract them when they leave and speak to the declining inventory. I think the OP was about summer activity being higher than most expectations and certainly it's hard to ignore 800 -1000 signings per month in this market, in this season.

these inventory numbers are starting to feel a lot like unemployment numbers. the number without the real story is less and less meaningful. disappointed sellers feel like discouraged unemployed workers.

"I think the OP was about summer activity being higher than most expectations"

Whose expectations? I expected it to stay low, though not as low as the completely dead period... and thats what we have. Historically, still very low.

"Just as you have to add listings when they come into the market (and speak of the new flood of inventory) so too do you have to subtract them when they leave and speak to the declining inventory. I think the OP was about summer activity being higher than most expectations and certainly it's hard to ignore 800 -1000 signings per month in this market, in this season."

It's also hard to ignore the amount of signings or in contracts that end up not closed.

Would love to see a statistic if possible by year of the percentage of "in contract" to "sold."

I also just wanted to point out that, after the 1987 crash, the economy was going like gangbusters by 1992, but NYC real estate prices didn't hit bottom until 1995. So even if it is true that the economic turnaround is upon us, it's still possible that real estate is not going to bounce back just yet. My understanding is that housing (even more than unemployment) is a lagging indicator.

"and thats what we have. Historically, still very low."

That's not what's being reported - May-June activity was at peak-levels, believe it or not, and seems to have slowed a bit in summer months, but still ahead of normal seasonal levels, which is saying something. It's been fairly sustained since ~April.

http://www.urbandigs.com/2009/07/pent_up_deman_more_cautious_bu.html

The seller in the real deal article seems to think prices are going up. $10M cash is 26 times the yearly rent he accepted. That is a pretty good offer. So, he must think rent and prices are going to go up. Taking the $10M and investing it at 4% in govt bonds would get him $1000 more a month with no monthly maint or tax costs.
I guess when you watch the equity markets rally 40%, you might want to wait and see if real estate will be a year behind. Plenty of reason to take you place off the market. And if it makes inventory go down and creates the impression things are selling, all the better.

May June activity has to be taken with a grain of salt.
People who wanted to buy Dec. thru April couldn't get a bank to sign off on a mortgage.
(Wells Fargo was just about the only one writing any paper)

In my very unexpert opinion, May/June activity is the sum of May/June plus 50% of Dec/Jan/Feb/Mar/Apr stalled activity.
Sept/Oct/Nov will be a better indicator.

truthskr, that's a bit of an unscientific explanation, but I agree May-June activity is unsustainable. urbandigs has noted his surprise at the continued activity through July-August; it'll be interesting to see how long it goes.

Given the "facts" of global warming" these days, isn't everyone a scientist? :)
Yes very unscientific, and my most humble layman opinion.
I think the upcoming (completed) quarter will provide a better barometer.

For all the gung ho bulls that feel this is 1995 all over again, isn't it safer to buy in at 1996 and 1997 to make sure it's 1995 and not 1992? ;)

I think the gung ho bulls all think it's 2004. That's why we have bubbles - because some people get it into their head that bubbles are normal.

And can someone confirm that the actual May/June activity is "solds" and not just "in contract."

"In contract" figures are by no means "scientific." "Sold" is verifiable by acris.

Urbandigs
Any chance on figures between '08 "in contract" to "sold" ratios with '09?

truthskr, it's all contracts, which is why Noah is saying it'll show up in the Q3-Q4 reports. I'm definitely not bullish, but these are signs that the market may be stabilizing (lest I be shot here for saying something remotely positive for the housing market).