Another bearish chart from Jonathan Miller

inventory is rising because of increased demand. that is not bearish, it's bullish and what typically happens at market bottoms.

tell me you aren't serious cfranch

of course. he's decided to buy. it'll turn hardened re bears into bulls.

or, in other words, cognitive dissonance is resolved by rationalization...

Um, this is kind of a compelling statement from the JM Curbed post:

>> While inventory growth in 2010 is the ***highest we've tracked since 2001*** (when this data was first collected in this format), it's pretty consistent with the prior two years, which were marked by declining or flat pricing.

I thought that chart a couple of weeks ago where people were trying to decipher a January effect from a broken up line chart made no sense.

However, this is pretty conclusive, no?

skinny, the percentage level is very high. however so many apartments were delisted that I believe the absolute inventory level is still lower. I found his comments about the delisted to be relisted units to be more important.

"inventory is rising because of increased demand."

Woah. Someone needs a course in logic.

"inventory is rising because of increased demand. that is not bearish, it's bullish and what typically happens at market bottoms."

Spunky, is that you? We've missed you, but why'd you steal cfranch's account?

no i ain't spunky. some of you people need to study some basic RE economics. there has been a clear restoration of confidence, not wild bullishness. still enough fear out there to keep only units that are priced correctly moving. will some sellers put units on at overheated prices? sure but they will sit there. the fact remains well priced units are moving and those that want/have to sell will price accordingly if they want a deal. on the macro level we have a stock and bond market which have been telegraphing recovery for the past year yet everyone ignores it. a recent NY times article showed how NY survived this recession far better than expected. as i walk around the city i see once empty stretches of commercial spaces-8th street in the village, 5th ave in chelsea-all filled with tenants. go to open houses some weekend and you will find them packed with people looking to buy. get real perma-bears we've hit bottom. do we have a v-shaped recovery? i think not but a normal healthy market seems reasonable.

I'm calling you spunky not based on your outlook, but rather on your ability to turn logic upside down in strange ways to "make" your point: "inventory is rising because of increased demand". Really? What would happen if demand fell? Inventory would fall? If absolutely no one in the world wanted to buy inventory would magically go to zero? May I remind you that about a year prior to the RE crash virtually everywhere, we saw a buildup in inventory with stable prices. I'm not saying prices are going to crash, just that your argument about the effects of rising inventory are, to be kind, colorful.

And FTR, this "perma-bear" has piled craploads into the stock market since the panic. I know it all seems like technical trading to you, but I'll put my money where I see a v-shaped recovery. What's the point in committing your capital to an asset whose outlook is flat with a negative carry of 2-3% annually?

In other words, do you believe in a healthy recovery of the stock market, unemployment, economy, etc., but without a recovery in NYC RE prices? I do, so why commit your capital to what appears to be the laggard asset who's likely gonna bleed you through negative carry? That does not make one a perma-bear, just a reasoning investor.

i wish i could be as convinced about the general recovery. other than the increase in the stock market and less jobs being lost (at some point, we kind of run out of jobs to get rid of?), what points to a return? government spending needs to decline sharply or taxes need to be raised. either one of these actions will create yet more pain.

Inventory rose last spring as well.

I kind of see what cfranch and the other sides are saying...

cfranch - inventory is rising because demand is rising and therefore two things are happening:

a) more sellers are considering listing to take advantage of the stronger action out there
b) fewer sellers are removing listings in the hopes they get their price as the market starts to get a bit nutty out there, although from an adjusted lower level

other sides - how could rising demand, a.k.a more contracts being signed, equal rising inventory?

The answer is that there are more variables that play into the equation. When I launch my new site you will see some very interesting things. One chart that simply amazes me is the PACE of sellers removing listings from the market in mid 2008 right around when Lehman failed. Inventory shot up NOT because there was a flood of new listings trying to sell and get out, but because sales pace plunged to insanely low levels. As this occurred, sellers REMOVED listings from market at a HUGE pace, as if to say, "the market is not good, Ill take my apt off and try later".

The data doesnt lie and it shows this. Now that the market has been strengthening with time since early last year, this pace of sellers removing listings has fallen, as if to say, "the market is better, I'll keep my apt out there longer to see if I can get my price"...

So, while sales pace is STRONG right now, I have 1,013 contracts signed in last 30 days, the pace of new listings (2,314 in last 30 days - up from prior) is greater and pace of removals declined (807 in last 30 days - down from prior); both are very seasonal things...so the combination of all this is leading to higher inventory...

Thats my take

I think it'll be a muddled recovery, GDP growth closer to 2% rather than 3%. We're still innovating, we're still immigrating, we're still producing. The drags you indicate are real, but I look at it and think that rather than the economy growing by 30% over the decade of the recovery, it'll grow by 20%.

More important than all that, IMO, is whether I'm getting paid well for taking the risk. During the worst stages of the panic, you could find companies who were trading for cash on the books, no debt, with an earnings yield of 10% and a decade of earnings at that level. Now, could things turn bad? Sure. On the other hand, here's a company paying 10% even if there's no growth, and BTW for every dollar you buy, there's a dollar in the company's coffer. If there's inflation or growth, then the yield rises. Risk-free? Hardly. But being well-compensated for the risk...

UD What is the # of monthly contracts now compared to same months 2006,2007? I would also be interested in the % of sales happening now relative to current inventory versus peak years. Does that make sense? I have a foot out the door maybe I can dig this up on your site...

I also think it would be cool to see some comparisons drawn based on data to the RE implosion that began in 1988/89. What happened to contracts signed, total % down from peak and a chart of the full duration of price ups and downs before turning positive until imploding again.

I think I remember the market taking a deep breath around 2003(?) things just sort of slowed, it seemed to last 2 months, then just took off and never looked back. Purely anecdotal, I just remember it happening while I had a couple of listings at 124 Thompson street, a strange lull..than back to the races.

dont have that much data to go back to 1988..we only have 6 years of status updates, so we backdated to that period. As for your first question, hmmm, not sure but Ill see if we can add that kind of feature to the to-do list..as for 2003, I was a trader then but owned for a year and I can tell you this market had a plunge in late 2001 after 9/11, took a year to recoup, and then had slow appreciation for year or two before getting a bit nuts up until 2007

UD, thanks for the coherent explanation of the statement.

9/11 Plunge I remember for sure, rentals actually surged downtown because of the federal credit given out.
I was just musing on a period, I believe it was summer of 03, just a strange little blip I remember. Thanks. Pace of contracts for peak v. now would be interesting, give some additional perspective to today's market.

inonada; are you saying my statement was incoherent? lol.

UD- as if to say, "the market is better, I'll keep my apt out there longer to see if I can get my price"..."

I love how you think you can read minds...what about it saying "i can't afford to pay for this apartment and I cant pull it off the market like I did before"

i.e. people are listing now that took off last year BECAUSE THEY CANT WAIT AND HAVE TOO NOW.

similar to the spike in foreclosures in florida...they didnt list those because the market was good, they listed them because they HAD to.

either way, is anyone here saying that the indisputable HIGHEST ON RECORD INCREASE in inventory since december is going to contribute to prices going up? As inventory rises prices go down. Everyone knows basic supply and demand. So why would you buy as inventory is increasing DRAMATICALLY. You know it is going to put downward pressure on prices, and in a year what you buy wont be worth what you paid.

Also UrbanDigs, why do you point to the contracts signed as strong but the number of new listings and decreased removed going up DRAMATICALLY as seasonal!!!

Why not say that the number of contracts signed is SEASONAL! (which according to your sites 6 month chart doesnt seem even a noteworthy increase). Why not just say oh, contracts are being signed, that is what historically happens this time of year AND LOOK AT IF IT IS BEING DONE AT A RATE HIGHER THAN IN THE PAST. taking out 2009, contracts signed are not even close to noteworthy now, BUT WHAT IS note worthy is the increase in INVENTORY:

Which is going up HIGHER THAN EVER BEFORE. So to call something that is increasing more than normal "seasonality" and call something (contracts signed) that is the same or less than normal STRONG is off.

Please tell me what you think the effect of increasing inventory will be on prices in the next period?

Ive addressed all these points in prior discussions...do I think a rise in inventory from 7100 to 8550 will cause a drop in prices? not necessarily...but what are we comparing to? 3 months ago? 6 months ago? a year ago? Again, discussed the 'relative' nature of that topic many times here, and not going to start it all over again.

I never read anybody's mind, just gave one example of why I saw a surge in listings removed right when Lehman failed and this market saw sales plunge. I never claimed or stated that I know the exact answers..you said that.

I see alot of posturing by sellers/ developers thinking that the recent stabilization in economic numbers will translate into better selling prices, but they dont realize that at this point there is a total disconnect. manhattan RE is in free fall because the jobs ands cold hard cash just arent there to support it.

secondly, STOP using the SE widget now on urbandigs..you know Im building a new platform with a new data source and I quote that new system. It will cost me money to remove the SE widget on UD and Id rather put my hard earned money into completing the new platform. Its 4-5 weeks away.

Lastly, there was a much STEEPER rise in inventory from mid 2008 to early 2009: going from 7100 to about 10,900...the current increase is from around 7,000 to 8,500...so not sure what this RECORD INCREASE talk is all about.

manhattan re is not in freefall right now. if it is, I question what segment of the market you are referring to. there are bids. period. a year ago it was in freefall and there were no bids, sellers had to hit low ball bids to move property. not so right now. im not saying we are at peak levels, we are not, but properties priced right get bids. i dont get why this is so hard for people to understand. I guess its easy for an outsider who is not actively doing deals in manhattan real estate and submitting bids weekly to say the market is in free fall.

free falllinnnn...just like the tom petty song

"I never claimed or stated that I know the exact answers." but ....

"this pace of sellers removing listings has fallen, as if to say, "the market is better, I'll keep my apt out there longer to see if I can get my price"..."

of course you are guessing at why it happened.....what I am saying is there could be other reasons that are bearish instead of bullish like you are saying

Keith B saying "UD What is the # of monthly contracts now compared to same months 2006,2007? I would also be interested in the % of sales happening now relative to current inventory versus peak years. Does that make sense? I have a foot out the door maybe I can dig this up on your site..."

to me this is what I am talking about. why dont you though up data that matters, like the number of contracts signed the last two months compared to the number of contracts signed in the same months in 04, 05, 06, 07 as a percent of inventory

This is what JM did with inventory and the result INVENTORY INCREASING HIGHER!! Than any other period on record.

My bet is contracts signed the first 2 months of this year are below any of those years as percent of inventory! Hence the market looks okay compared to the dead cat that was last year, but realistically it is no way strong with capital letters as you say.

And the increase in inventory isnt going to help that one bit over the next year...my prediction is prices are headed for another leg down after a brief stall. its basic.

and I agree other reasons could be in play. I'll add a monthly tally bar chart of sorts to the to-do list so you can compare how months in JAN-FEB compare to other years. As for % of sales relative to current inventory, not sure what that really tells us.

And for that metric, do you mean % of contracts signed relative to inventory or % of closings relative to inventory?

"not sure what this RECORD INCREASE talk is all about."

i thought you read the original post that quoted JM as saying this is a record increase in inventory in the last two months

and in terms of the data on your site, even if its not accurate, it is consistent, so you can use it to see an increase or decrease from the past

also, i think the "insider" as you call yourself is smelling your own fumes to much, which is the problem with insiders, and how they lose perspective.

talking to outsiders is perhaps the easiest way to avoid this. If all you talk to is insider "brokers" who have a vested interest in telling you things are good, then of course you see things the way you are saying.

thats why data helps, so please let me know about keithB (a broker's) suggestion. he seems to be after similar real evidence vs. anecdotal broker hype

Despite the newbie that I am, I second that Manhattan is not in freefall as post-Lehman. Again, just anecdotal here, but (1) we have several friends who are having/just had babies in the past 6 mos and are upgrading to larger spaces and had an IMPOSSIBLE time finding something - not only no "deals", but bidding wars and all cash offers; and (2) as I had posted last week, my parents are LLs and their rents are not down, 6-9 months ago YES, now no. To clarify, I am not saying the market is "rebounding" or going back to peak or close to peak or anything of the sort. I am only saying...freefall = no.

I'll duck now :)

thanks.... cpntracts signed as percent of inventory

i think it would be good

oops, should have said "contracts"

some recent closings:

155 W 70 - 15E sold at full ask at 1.699m
850 Park Ave - 8B sold over ask at 4.3m
10 WEA - 25A sold over ask at 1.557m after a price increase in NOV
333 E 69 - 10CD sold at full ask at 3.495m
210 W 78 - 8A sold for full ask at 1.65m
146 W 57 - 74C, price reduced when it didnt sell in June 09, sold for OVER original ask at 3.7m (great example of the progressive improvement in this market over time from early 09 lows)
15 W 81- 8G sold for over ask at 2.5m
15 W 81 - 3J sold for just over full ask at 1.6m
90 Riverside Drive - 12B sold for over ask at 6.125m

Just some examples of the type of market is out there...More coming. 35 Bethune 2/3a will be over ask. 205w89-4F will be over ask..15w72-22N will be over ask...

This is why I laugh when outsiders claim to say the market is in freefall, probably because they want it to be. Im no perma bear or perma bull..For years I told you what is happening out there..I was bearish prior to the fall, less bearish in late 2008 after the fall took place, and reported on the improvement in the last few months. It is what it is and the market is bigger than all of us. Its easy to report on what I see, because Im out there daily.

jstreet - yes, consistent but wrong. Which is why I spent 8 months and 40K making sure my new system is right, or as right as I can possibly get it. never be 100% perfect.

I talk to brokers I trust and sales managers I know only as a secondary confirmation of what I see out there to see if its just me or a more market wide trend. I trust only myself, and what my buyer clients and I go through on daily basis as we talk with brokers in all price points about setting up appts, bidding, negotiating, etc..when I do this daily, you notice when things change. I send out appt requests daily, and when I start to see 50% of the responses from brokers say 'we have multiple offers, or we have offes over ask, or we have cash offer that is about to sign' and then I epxerience this with clients directly, I can sense the change in the markets. I dont get why after all these years you still question this from me. Come on man, Im working my a$$ off to give you the best unbiased reports as possible, without jumping to conclusions or talking too quickly. Im careful how I report on UD and Im all for more transparency and putting my money on that for you guys!

contracts signed as percent of inventory allows you to see if sales (as measured by contracts signed) is high or low compared to past years. the reason to add as percent of inventory is 800 sales a month when inventory is 2000 is very big sign of high sales, but 800 sales a month if inventory is 12,000 isnt that much comparatively.

this would be a good metric for pace of sales, as measured by contracts signed

ok Ill put on list

free fall. sur esome prints are going off, but it will not be sustained. the lowere end of the market is getting rocked.

People here never seem to tire of arguing reality.

well I question sustainability of it too...but for now, its reality

UD you are mad appreciated, and one of the best sources of data, which i think your site will be even better.

That is WHY I and I assume others want to point out areas where we disagree, to keep you that honest. No one is perfect, and smart people know to listen to others feedback as information, that's it. If you disagree, thats one thing. But having outsiders tell you things is just information that could help you balance what you are seeing.

The disagreement isnt whether things are going into contract, it is IF THE NUMBER OF THINGS GOING INTO CONTRACT is significant to call it capital letters strong. that's where the spin comes in.

especially in the face of rising inventory faster than ever before! Just show data that says january and february were even normal seasonally for activity as compared to inventory size. I doubt it.

Why not say, compared to the death of last winter, there is an increase, but we are below normal, healthy market (or what ever the data shows). If not you are doing exactly what you said the media would do if Q1 numbers show an increase on last year.

By saying things are STRONG without saying compared to the lowest point last year INSTEAD of STRONG compared to a normal year (which I havent seen data to support that) you are doing it

thx and right, that is why I always try to make sure I say it in a relative manner; progressive improvement from early 2009. As I said in my 2nd to last discussion on UD:

"I've discussed the progressive improvement in bids this market experienced since trades in early 2009"

Thats how I always say it so people know what I mean. But still, many mis-interpret and think I said something else. Not much I can do about that

Thanks, i think it'll be good

oh the new site is insane..I see it already. its all I look at. Unfortunately my chief technology guy has a full time gig at Akamai, and is the only one I trust to build a system as complex and interconnected as the vision I have. I had to wait years for him to be available. Which was fine because it took years to secure a direct data feed to rebny broker sharing system, with proper usage agreements. I see it progressing but Im frustrated with how long it takes to finish. Already if you saw it you would be quite intrigued by what this data is showing

Cool, can you see what the number of contracts signed in jan, feb of 2004-08 is? Or what inventory was in those period?

An interesting thing to know (which we won't really know until the end of the spring) is the extent to which listings are being front-loaded this year. A lot of people seem to share Noah's perspective -- the market seems relatively strong right now, but who knows how long it will last. That makes me wonder if brokers have been listing properties in the early months of the year that they ordinarily would have held back until April. Anyone have a sense of this?

yeah, it seems great. i'm happy you're doing it, and that you're doing it right

miette--relative to what...

what is the market strong relative to..

09, 08, 07, 06, 05

I meant "strong" relative to recent months.

right now I have pending sales only, so looking at one month is kind of taking away from what that trend is telling us because we put rules into what defines pending sales as to exclude flaws in the source data of broker status updates. you can imagine what we went through for all these metrics, I discussed before.

But Ill try to answer your question for pending sales using MARCH as target month:

MARCH 2006 - aprox 2,400
MARCH 2007 - aprox 3,800 (on the way up big time at this time to 5,800 or so in AUG 2007)
MARCH 2008 - aprox 5,500 (we see a gap up in early 2008 that we need to investigate and do further studies on - remember, we are not launched yet)
MARCH 2009 - aprox 3,200
CURRENT - aprox 4,516

I see two big waves up/ one small wave, and one big wave down in last 3 years:

BIG WAVE UP ---> JAN 2007 - JULY 2007
BIG WAVE UP ---> JAN 2008 - JULY 2008 (as if the sharing system got a mass update for new listings or something - something we noticed twice in the last 10 months and we have to deal with)

BIG WAVE DOWN ---> JULY 2008 - MARCH 2009
SMALL WAVE UP ---> APRIL 2009 - OCT 2009

slight move down since and now we stalled around 4,500 level for past few months.

really, what months?

last february..

last december?

tell me more about what kind of DATASETS you guys want to see??? Anyone? Im all ears.

jstreet -- who cares? My point was about perception, and whether some renewed optimism, at least for the short-term, might have caused or be causing brokers to post listings early in the year in hopes of moving properties before a potential next leg down.

yeah, i think as percent of total inventory is important with this metric

and miette, the fact that noah says pending sales have stalled over the past few months, shows sales are NOT strong right now relative to past months. if anything they are weaker, hence the stall

who cares? seriously. who cares how pace of sales is REALLY measured. I guess your point IS all about PERCEPTION, rather than reality

I guess if someone came up with a similar list of places that only went into contract after **significant** price cuts, you'd find that an equally compelling indicator of a weak market?

The point is that isn't very interesting as a data point.

The pending sales data is interesting, but it is only at a unit volume level. Do you have total dollar volume represented by these transactions? If I remember correctly, that gap was enormous when someone analyzed it a few months back. It was very interesting.

well the adjustment process messed up all the seasonality..I discussed this in early and mid 2009 as it happened...the normally seasonality was cancelled in 2009 as the adjustment took place...in essence, pushing it back 4-5 months. the fact that the pace sustained itself from say May-June-July-Aug-Sept-Oct was a surprise to me. It cooled in late Nov and Dec, and that to me is seasonal too on the downside. So I dont look too much into that. For the most part, Im kind of impressed on how this market sustained sales pace since around May-June 2009. I would have expected a prolonged drop but that didnt really happen. Because of how the metric is designed, I would expect that to rise a bit in coming weeks and months as Decemebers cooldown is phased out.

oh total volume will be a crazy chart to look at..a huge plunge, HUGE! but because it was so huge and dramatic, Im sure you will see a noticeable rebound from last 4-6 months of action. Especially as higher price points started to go to contract and close

jstreet, you're missing the point. I was asking how brokers (and potential sellers) might be responding to the perception that the market is seeing some decent activity -- see various recent posts about busy open houses, bidding wars, and the like. How decent the activity actually is only time will tell.

Also, JM removed new development from his stats for his analysis. Are you doing the same?

Do you have any idea about the aging of pending sales?

I'd imagine that stalled closings at new development is driving up pending sales numbers? For example, all the stalled contracts at OMP -- are they just sitting there as pending sales?

exactly, skinny. that is more revealing data that shows the market more clearly.

I have no problem with the other data, like the list of deals near ask, just explain how this price compared to 05 levels. and if you say deals are happening, say how many compared to past years. its that simple.

if not you are simply trying to create a sense of urgency rather then reporting on what is happening. it like real news vs. fake news.

"Also, JM removed new development from his stats for his analysis. Are you doing the same?"

Its treated differently. We have data if the sale is first new dev sale so the # of months we allow for a new dev to be counted as a pending sale differs from the rule for existing resale to filter out noise.

Again, we are not done! cant stress that enough, but all these little points are part of our work, I promise.

Jesuh! F'king mohammid! Mothfker stupid borker tricks! F'king teabagging nimrods can't understand logic if it pumped in IV drip mothrfkers! Plural f'king azzwipes!

So in this footrace we got ud, miette, cfrench, keithb (all the hopes of every lemmings) and some 400 at ask and maybe some bid war beeeeytchs.

Sorry but I'll take
1) greatest re bubble popping
2) all bubbles retrench way past it's beginnings (2001)
3)9.5% unemployment
4) 16mm underemployed
5) 10 yrs of misallocation of human capital to re
6) an unhealthy allocation of lending institutions as % of GDP (used to be GNP when I went I taught Econ)
7) expiring govt purchases of 99% of mortgages
8) expiring tax credit and none that'll replace it or extension at end of April
9) an unhealthy transfer of wealth from savers to consumers thru low interest rates
10)and my pink unicorn

on my runner winning. Not only is he the beat ultra runner but can do sub 5min mile. Flmao.

miette-- i get your point, I am not sure. My point is the perception that the market is seeing some activity is due to reports from brokers, and open house traffic and NOT REALITY. which is measured by contracts signed compared to past seasons. So far I have only seen signs that activity is weaker compared to past years (inventory rising faster in the past 2 months than before) (stalled pending sales data) ect.

That is the reality.

Yep. Ud 1300 more than 2009 and that's all youz gotz? Flmao.

I'll guarantee you 1299 are lemmings. Flmao

KeithB, my comment about coherence was directed at cfranch's comment, not yours. Sorry for the confusion.

also, perhaps the threat of rising interest rates and current tax credit is causing what would be very low sales numbers to be somewhat low to normal. and when the rates actually rise and tax credits expire (not to mention all the other unfavorable macro conditions) sales will decrease even more and lead to the next inevitable leg down.

UD, are you comfortable sharing what you think sales and/or prices will do in 2010? and if you already did, sorry for asking again

"5) 10 yrs of misallocation of human capital to re"

w67, with respect, I have to disagree with this. You are missing the important distinction between warm bodies and human capital, which I think you know are not equivalent.

Whether bear or bull on RE, I'd think it would be useful to understand how the Manhattan market is changing.

My own impression is that there has been a shift in locus of sales over the last four months.

FROM lower end properties where sales were driven by the $8K tax credit (and relatively low-interest rate conforming loans) that was initially scheduled to end Nov 30 2009.

TO higher end properties (selling for cash) now that the people who are stiill lucky enough to be employed* are getting their bonuses in January and February 2010.

There would seem to be some confirmation of this in Jonathan Miller data on Manhattan absorption rates. See:
Jan 2010
http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1267723313qagUz&Record=0
Feb 2010
http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1267723350QjPFW&Record=1

Note that from Jan to Feb, the number of properties under $500K increases while the number of properties for $3 Million or higher decrease.

UD: One metric that might help get at this would be to look at the number of closings where the purchase included a mortgage. I suspect the number of cash purchases has increased in the last few months as the market has shifted to higher end properties. I've seen such data reported for other markets, but not NY, and I don't know of anyone who provides Real-Time data on this. It would be a wonderful metric to include on your site and you could scoop JM! While not an expert, I would think you could get this info from ACRIS.

*Follow-up on unemployment from previous posting.

It's clear that Mortgage Delinquencies (and consequently RE prices) and Unemployment are correlated. See the following graph:
http://www.calculatedriskblog.com/2010/03/states-seriously-delinquent-mortgages.html

That said, if you've ever looked at charts that disaggregate unemployment by demographic group, you'd know that for every white male college graduate over 44 years old that's currently out of work (4.1%), there are many more black males with no High School degree under the age of 25 (48.5%) on the unemployment lines.
See:
http://www.nytimes.com/interactive/2009/11/06/business/economy/unemployment-lines.html

Since it's the former, rather than the latter group, that's mostly in the market for Manhatta RE, I think you need to be careful about talking about 9.x% unemployment when discussing Manhattan RE. Yes, fewer Investment Bankers have jobs today than a few years ago, but the majority of them are still left, and many of those are getting nice bonuses - so I'm not overly surprised that with a bonanza of properties on the market, that there appears to be a good deal of cherry picking going on in the high end market now that we've entered bonus season.

Whether it's sustainable is another question. I'm prone to suspect that the end of gvt programs in the next few months will exert a downward pressure on prices but it also depends on how the US/World economy evolves and I don't think anyone on this board can predict that with certainty.

agreed sidelinesitter :)

sisy.. .yes much better analysis. but what happens to the$3MM+ units that's been languishing for months? bottoms form from, well bottoms. It's the used car/$15K car mkt that makes the $150K car mkt viable. In addition, the $2MM units being bought are the best of the best priced at 2005.... so what happens to the rest of the languishing units? Do they clear at higher prices... No F'n WAY.

FLMAO.... plz someone tell me they actually believe 2 months with rising inventory is somehow indicative of even a bottom , much less rising prices...WHO TAUGHT YOU GUYS ECON? FLMAO

one other thing... Samuel Miller talks out both sides of his mouth. He doesn't know what hat he wears at any one time? Does he wear the mkt statistician hat? The vulture buyer hat? The I've got friends all over NYC brokerage hat? THAT dude is confused as hell as how he wants NYC RE to go? FLMAO... as are all the other borkers on SE? It's the stripes that they wear... they make money on transactions... it's how they feed their kids... you think more "action" is not desired by this group? U think their opinion is unbiased? Note how NONE of them is willing to put into words where NYC RE will be in 3 yrs? NONE.. up or down vote, simple. ME, down... no question no hesitation. Is it right time for SOME ppl to buy... it's america, knock yourself out.. just don't stuff the mortgage back into the FDIC m'kay.

To a car salesman, IT'Z ALWAYS A GOOD TIME TO BUY A CAR!!!!!

Yeah. the Germans said FU to greece. Greeks are rioting in the streets. Euro is about the fail. UK is next on hit list. Chinese premiere said STOP the RE speculation.

US has not marked to mkt any of its bad debt. 99% of mortgages are bought by Geitner.... yes I CAN predict the US/World economy. It looks like CRAP. Sorry, i don't understand.... this mkt activity in NYC RE.. it's the ppl coming in from the hills and picking up seashells cause for SOME reason the sea is receding....

"FLMAO.... plz someone tell me they actually believe 2 months with rising inventory is somehow indicative of even a bottom , much less rising prices...WHO TAUGHT YOU GUYS ECON? FLMAO"

Who on this thread said they were calling a bottom or that prices were rising? A few people were reporting increased activity -- and almost all were offering the caveat that they didn't know how long it would last or what long-term implications it would have. I appreciate it when people on this site offer actual observations about what's going on in the market, as long as their affiliations and incentives are disclosed.

Did the illustrious economists who taught you econ teach you to set up strawmen and ad hominem attacks to support your arguments?

Don't take Greeks rioting in streets that seriously. Dunno what's going to happen to the U.K. - they have mostly adjustable-rate mtge, most people are not going to be able to adjust to even 5% interest rate on their mtges.

Miette.... let's cut the BULLS-IT. Up or down nyc re in 3 yrs?

My view? Flat (after some ups and downs) to slightly down. Maybe more than slightly down in real terms (but not nominal terms) if stagflation kicks in. Though that's not likely to happen for another 2+ years.

my husband met with some british clients this week. they started out by saying how great it was to hear how well the US is doing, good to see someone crawling out of the abyss and all that. but then they said they were rather surprised at all the empty storefronts. back home, it seems, empty storefronts usually indicate some level of economic distress.

they also said how impressed they were with our optimism. of course we're optimistic. there's always more debt. municipal debt is exploding. and it looks like people are and will be buying. unreal.

nyc10023... me thinkz... a lot of londoners who bought in nyc if their mortgages back home get slammed will be looking for capital. If their currency indeed craps out, which i believe it will, their NYC RE will be too tempting to re-patriot in pounds back home.... $.02

That's a long term prediction with US raising IR post a "solid" economic recovery (however Bernie defines it).... but this 0% interest can't last much longer....

Miette.. now we are getting somewhere. Stagflation... nice term... but really can't see inflation of any kind. The last go around, i used to have a CPI clause in my commercial leases.. that went bye bye in 2003... AMERICANS will not stand for runaway inflation of any kind (IMHO). Seeing Volcker licking Obama's ears gives me great hope that 0% will go away soon and inflation will be tamed brutally and viciously with 6-9% interest rates. I think Bernie is on board.... he won't say it in public... but he knows what he has unleashed and is hair trigger away from sopping up the liquidity.

On NYC RE or any Re for that matter... it doesn't make logical sense to me that the vehicle by which the populous created tremendous money/credit (thru our fractional banking reserve system and the tremendous number of transactions (thereby increasing money velocity) ) will somehow sidestep a complete and utter collapse back to pre-bubble (say 2001-2003) pricing in real terms.

Were out of the woods?
WTF?
When did we get out of the woods?
This ride has many dips and turns to go. Consider the conditions of the crisis that led us here and ask yourself if the the changes made correct the conditions going foward that brought us to this point.

NO

all we did was buy some time before the next swing down...which I can see from where I'm standing.

AR: I don't know where or how the retail is holding up in London - in the SW areas of London, there are quite a few empty storefronts and stores on-the-verge-of-closing (yummy mummy hobby stores). Been like that for a few years. The stores that seem busy are the coffee bars and cheap takeaways. Even the newsagents aren't doing that well. Maybe rents are lower, so they are able to hold out longer? Part of our extended family lives in an area with little turnover on the lower end (400k-600k pounds) and higher end (1m+). But quite a few of the newer people have bought with large mtges, so it will be interesting to see what happens when rates reset.

I think whether policymakers will aggressively raise interest rates will depend quite a lot on where we are in the recovery cycle -- they'll have to weigh the effect of fostering high interest rates to rein in inflation against dealing another blow to weak financial institutions and, of course, the housing market . . . and it will be a delicate calculus both policy-wise and politically.

Isn't 2003 pricing in real (i.e., inflation-adjusted) terms about where we are? Or a bit higher. I think I'd locate the start of the bubble in about that year -- after the post 9/11 housing dip and recovery.

falco says:

Were out of the woods?
WTF?
When did we get out of the woods?

and his/her sentiments are predominant not on just on these boards but on CNBC and practically every financial media outlet. this cautious negativity keeps me bullish. sentiment is just one indicator i use to determine whether to buy or sell assets. it typically is not a primary tool but this past decade it has been flawless. if you bought at maximum bearishness and sold/shorted at maximum bullishness, you did quite well. i find formulating one's bias solely on backwards looking numbers to be foolish. they are helpful but one needs more tools in their arsenal to make informed decisions. so all the numbers cited-inventory, price per sq ft. etc are simply pictures in time and need to be integrated with sentiment indicators to get a truer picture of the future.

i like to look at forwards looking numbers. tax collections. at all levels. where they will be coming from, where they'll be falling short.

Don't go by me...I'm a pion.
Listen to Elizabeth Warren she is not a pion.
http://www.charlierose.com/
Charlie Rose interview last night. She is saying what I an saying (cause I'm parroting her).
So now it's me and Elizabeth's opinion.
Check it out and get schooled a bit.
No need to thank me.

I think that looking at new contract signings is SOOO much more important now as an indicator of market strength than looking at inventory levels. One of the reasons for this is that I think the inventory numbers have been so "cooked" over the past few years that NO ONE has ANY sort of REAL handle on where they were at any point in time. So even if someone comes up with a much better way to count TOMORROW, the old numbers will still be bad. Remember Mr. Miller's comment on this site (I think the last post he made here) was that shadow inventory was greater than (what do you call non-shadow inventory? I don't want the to use the term "REAL").

Also, I think we all know that a LOT of this new inventory are properties which were on the market at some time and couldn't sell, so they got pulled, and now hearing how "everything is fine" sellers are putting units back on the market. Now, not all of those shouldn't be counted. But some significant percentage of those units are sellers who were insane about the prices they thought they were going to get and are putting those units back on the market again at insane ("fishing") prices. I personally don't believe that if you are trying to use a metric of inventory growth to judge market strength, that you can do it without filtering out these "fishers" as noise. And no one has done that (or I think can currently do it).

Let's take an extreme example just to illustrate my point: let's say you had inventory of 8,000, out of which 4,000 were people who absolutely HAD to sell and were willing to take the "real current market price", 2,000 were people who wanted to sell if they got a "reasonable price", and 1,500 were people who bought for prices which were 30% over current market had mortgages which were 10% over current market (which means including transaction costs means they are really 20% under water) and "couldn't" sell at today's market, and 500 which were people who didn't need to sell, but if they could find some sucker to pay 30% over "market", they would certainly sell to them.

Inventory grows to 10,000, out of which 4,000 were people who absolutely HAD to sell and were willing to take the 'real current market price", 2,000 were people who wanted to sell if they got a "reasonable price", and 2,500 were people who bought for prices which were 30% over current market had mortgages which were 10% over current market (which means including transaction costs means they are really 20% under water) and "couldn't" sell at today's market, and 1,500 which were people who didn't need to sell, but if they could find some sucker to pay 30% over "market", they would certainly sell to them.

And during this same time you had sales (real numbers, seasonally adjusted, etc.) showing a real, steady increase, but still below this "apparent" 25% increase in inventory.

I'm not sure that even though you have "inventory" growing it would truly indicate market weakness.

NB: I'm not claiming that these are the current numbers, just trying to show how looking at bad data....... GIGO.

Also, I have to disagree with the concept of retail vacancy vastly improving. We've been seeing LOTS of stores coming in, lasting less than 6 months, and then going out again. I think we have not begun to see the impact of the Commercial RE crises yet.

Lastly, I still believe that we've put band aids on the true economic problems in this country, and we've done way too much to cover up 500 pound gorillas by hiding them in closets. We also CLEARLY have people who are giving us the numbers who are clueless (or flat out lying) about what's really going on when we see at the beginning of the year "the world is ending and we HAVE TO lend "Wall St" (yes , know it's not just Wall St) $780 Billion, but at the end of that same year, we hear about RECORD high "Wall St" profits (yes again, the issue is MUCH bigger than that, but I'm trying not to have that whole discussion here, just pointing out one symptom).

I can't speak to the greater Manhattan market, just the niche I look at. If you didn't absolutely have to sell during post-Lehman, you took your place off the market in the world of 3br+ Manhattan co-ops/THs. Kinda chicken-egg as to what increased inventory means right now. Some sellers think it's an improved market and are rushing to get their previously de-listed places sold. As always, unless you have a trophy apt that is just the thing that someone is looking for, have to price to market.

30yrs you make a very solid point!

jstreets - its not that I am uncomfortable with making a prediction, its just that I really don't know where this market may be headed next. Its confusing to me. So I have been focusing on analyzing what it has recently done and what it IS doing now, rather than what it may or may not do later. In 2007 and into mid 2008, I was very confident of an adjustment down so I was very bearish on price action. Well that happened. Honestly, I did not expect a sustainable uptrend in both sales and improvement in bids to where we are today..and now I see the latter stages of a wave up, a mini euphoria from an adjusted lower level and to me that is toppy. So all I will say is I dont expect this market to sustain what seems to be happening now for much longer. Im just advising caution on my clients not to get emotional if they have a time pressure to buy and maintain discipline on their bidding strategies because there are competing buyers out there that will bid UP to get property they want

"stock and bond market which have been telegraphing recovery for the past year yet everyone ignores it"

I've been saying this since SPRING OF 2009.
Now, who's your daddy!

Russell 2000 index hit 52 week highs this week.
RLX (s&pe retail index) at 2 year high. It already took out highs of 2008 (prior to the market collapse).

Think about this. Use that peanut brain of yours. If the US consumer is the lifeblood of the world's economy, then what is the retailers telling us?????

One more note.

Welcome to the party Cfranch.

:)

"Russell 2000 index hit 52 week highs this week"

You do remember where that index was a year ago, right? The absolute bottom was 51 weeks ago. And so your point is???

Small business are 'OUTPERFORMING'.

If you understand markets & the economy, it's all you need to know.

"my husband met with some british clients this week. they started out by saying how great it was to hear how well the US is doing, good to see someone crawling out of the abyss and all that. but then they said they were rather surprised at all the empty storefronts. back home, it seems, empty storefronts usually indicate some level of economic distress."

Complete BULLSHIT!

Your husband's british client need to stop hanging in a cave.
The FTSE hit new 52 week highs today. Businesses ARE rock'n.

the entire market rise through 2009 came from big banks with trillions of liquidity looking for a decent return. mutual funds saw a huge outflow in 2009 meaning the little guy was typically selling at exactly the wrong time. once the little guy embraces this rally and goes all in, it will be time to sell. i sell when falco goes all in.

ericho: yes i was bearish late 08 and early 09. i am neither a permabull or permabear. both are losing positions.

Cfrenchie's version of the world.
Everyone loves chocolate so I I hate it
everyone wants first class, so I'll take coach
everyone wants into ivy, so I'll go state
everyone wants a beautiful wife so I'll take the ugly one
everyone wants to make money so I'll be a monk.

Oh ericho. On your $800 psf on penthouse there is a $815psf unit on wea and 70th street. Pretty nice unit actually. That just an ask. So tell me how your call to buy into ph went?

Cfrench you are in good company. Hold his hand tightly.

cfranch, you don't get it. you're assuming Joe retail will go back in. maybe, but despite the best efforts of your industry I don't seeit happening in the near to medium term. and a lot of people will not be funding 401ks this year. don't get me started on that.

More inventory being added because demand has improved isn't what makes market bottoms frenchy....its what is called 'overhead resistance'. The bounce in demand is being sold into. What makes bottoms is when there are no remaining sellers because they've all already been scared well enough to sell. This inventory being brought out to meet demand at these 25-30% off peak prices is good evidence for a lack of upside, nothing more. The next question is, will it be absorbed at current prices.

the answer to that is no. why? becuase there simply are not enough capable buyers.

67-spell my name right! actually you got my version correct-a contrarian at extremes.

AR: my industry? i day trade for a living but was in private practice before that. recognizing that the only way to fix health care is to pay docs less, vastly increase our workload, overregulate what we do and to ration care, i chose to get out.

Rhino-you are correct. we saw the bottom last year and we are now in the second stage where price and volume stabilize.

Franch, as a stock guy I would think you'd appreciate 'overhead supply'. I'm with Marco. I don't believe there are enough capable buyers. And to capable I would add willing. Franchie I will give you another stock analogy. This is a sideways consolidation before another downleg. While the 25-30% discounts have generated some interest...strength is being sold...and thus, for all the talk of demand there hasn't been any uptick in price whatsoever.

your basing analogy is missing one key component: volume. prices have risen,albeit slightly but we are talking about an illiquid asset here. and we are basing on increased volume. stocks that base at recent highs on increased volume are typically poised to breakout and move higher. stocks that have fallen and are basing at the lows with decreased volume are typically going lower. the RE market currently resembles the former.