Inventory vs History?

Good questions. However, it is really clear that you do not know this market. I too work for a bank but my bonus actually will not be paid for another couple of weeks (the numbers were announced a fortnight ago). Basically, bonus season is from mid/late December through the ides of March. Somewhat correspondingly the low season of Manhattan real estate is from Thanksgiving through, say, Easter(ish). During that time it is not uncommon to see an uptick in inventory. Come spring though that dissipates. Hope that this helps!

Andy,

You're absolutely correct with regard to bonuses, and I need to correct Ducky. While bonuses typically are not PAID until Jan/Feb, most people know their numbers in Dec/Jan. It is when people learn their numbers (not when the $$ clears) that many listings enter contract, so you would normally expect a sizzling Jan/Feb. In the past few years, even Nov/Dec were busy for NYC real estate as bankers anticipated high payouts. I work in banking and many buyers (especially first timers) set themselves up to move as fast as the bonus clears.

This year has been noticeably different. January and early Feb were actually pretty busy - lots of buyers and busy OHs - it will be interesting to see how many of these went to contract. It's slowing down now, with many buyers deciding to sit on the sidelines. May be a good time for you to poke around. Good deals seem to be selling while many of those priced at 2007 levels are not moving.

Thank you ducky and ynh.
Anyone know where to find historical data for inventory or "months of inventory at current sales rate"?

http://www.millersamuel.com/charts this should get you going

I am afraid that ynh is incorrect. 1) the bonus season is from Dec through March (I have worked on the Street for a number of years and am currently with a large European based bank that announces in Feb and pays in March) and 2) the winter months tend to be the slower season for RE transactions - places can sit longer (this is evident in the Miller Samuel charts). Although Wall Street generates a considerable and disproportionate amount of money and therefore real estate transactions, the majority of the real estate transactions are not to those in finance...sometimes people can be a wee bit myopic.

In any event, the inventory levels in Manhattan are relatively low and prices are seemingly stable. Will there be a Miami or Vegas style crash here? Probably not, on a percentage basis, New York in general, and Manhattan in particular, were nowhere near as overbuilt as those burghs. On the other hand, will prices go up and never come down or at least go up by the mercurial upward rate that they have in the past five years? Probably not, my own guess is that prices will be flat for sometime due to a variety of reasons. However, I have a stock portfolio and savings account for my retirement, and I have a home with a killer view that is comfortable and mine for my shelter - I tend not to confuse the two.

Regarding inventory: Curbed's "March State O' the Market Report" yesterday focused on a city gov't document titled "NEW YORK CITY’S RESIDENTIAL BUILDING BOOM CONTINUES THROUGH 2007." It states:

"The year 2007 saw the highest number of building permits for privately-owned residential units in New York City since 1972, according to newly released data from the US Census Bureau records. With 31,918 units permitted in 2007, it was the second highest amount of permits issued since accurate records first began being kept in 1965. In two of the boroughs, the numbers were even more impressive, with Brooklyn and Queens seeing their highest ever totals.

The data shows that the pace of housing construction remains strong in New York City with thousands of new housing units being added every year. The year 2007 was the third year in a row with over 30,000 units permitted—the first time that this has happened since records began being kept—while the six years that Mayor Michael R. Bloomberg has been in office represent the highest six year total ever, with 159,370 units permitted."

The doc ststes that 30% of those 2007 units are in Manhattan, so in addition to current stock and developments already in the pipeline, we're looking at another 9600 units in what, the next 3-5 years? Not to mention the nearly same number of permits issued in 05 and 06. And all presumably w/ no tax abatement. I'm no urban planning expert, but that seems like a massive amount of new inventory at a time when many parts of the market are already down and others are soft at best. Do any of the more sophisticated number crunchers here have any thoughts on this?

http://www.nyc.gov/html/hpd/html/pr2008/pr-03-03-08.shtml

http://curbed.com/archives/2008/03/03/curbed_roundtable_march_state_o_the_market_report.php

Inventory and time on the market numbers are extremely flawed. At least for Manhattan. There are a tremendous number of new development units that are really on the market (some today, some a bit later) that won't show up until Corcoran lists them both as new listings and as in contract. Other companies and developments don't show any or few listings on streeteasy (i.e. Kalahari and Gramercy).

I would say bonus season starts mid JAN and lasts until early April or so in the sense that activity is higher during these months compared to other months during the calendar year. If I were to fine tune this subset of 4 months to pin down the actual bonus season months, I would disagree with Ducky and say that the real activity is between 2nd or 3rd week of JAN until 2nd or 3rd week of March! February is generally a very active month with packed open houses (unless price is way out of whack) and bidding wars being a common tale for properties priced correctly.

Inventory is rising due to the drop in buyer confidence resulting from the credit crisis, tightening of lending environment, and negative wealth effect of falling stock prices. Add in more interested sellers to either cash out or sell due to uncertainty given these times, and rising inventory makes even more sense.

IN past years, the months of JAN-APRIL brought such high sales volume that we had very tight inventory heading into the slower summer months. This year should be interesting to see how confidence will ultimately effect sales volume. So far, there is some effect but hard to quantify right now. In May we should be able to look back at the Q1 stats and see how that compares to previous years.

The months of NOV & DEC are generally slow, and many listings are even removed from the market during these months due to slow activity & holidays, and to give the listing some freshness heading into a more active bonus season only a few months later. Many brokers, buyers, and sellers take off during this time and if they dont, access usually is a bit harder due to holidays.

urbandigs, do you have any thoughts on the gov't doc I mention above? I figured someone here would put it into context. As I read it, it seems to be a tremendous development in favor of buyers over the coming years.

i'll have to look later tonight/tomorrow

Amazingly, based on the charts at Urbandigs.com, Manhattan inventory has been increasing rapidly and is now up 12% from the beginning of February, at 5,900 units.

12%. Pretty mindblowing.

I then thought "well what about seasonality?" and revisited Jonathan Miller's chart from Curbed a couple of days ago which demonstrates that this is not an annual winter phenomenon. In fact, in 4 of the 7 years tracked, inventory appears to have declined in February.

http://www.millersamuel.com/charts/gallery-view.php?ViewNode=1204831603HmXFR&Record=3

Urbandigs/others - would be curious to hear your takes.

simply put - there's a crap condo popping up on every block. nobody wants to buy this anymore, the last suckers seem to have all gone to the A building, based on the discussion thread about that one...

There are at least 3500 units of this kind coming into the market over the next quarter.

Wonder what impact the downturn will have on the permits actually being used... I have heard about projects being suspended.

Don't know if anyone's seen the NYT this morning. Granted, the NYT articles tend to be more anecdotal than fact-driven, but read the following:

"Some sellers have pulled their apartments off the market for now, in the hopes that they will have better luck in the traditionally more robust spring season, which typically begins in April. Others have pulled out altogether, thinking it would be better to wait for a year or more to get the price they want. Sellers who really need to sell now are finding that they have to work a lot harder to attract buyers."

This suggests that DESPITE massive increases in inventory, there is still a growing backlog of additional sellers willing to wait it out. This would just serve to keep inventory growing down the road.

So inventory hit 6,000. Up about 700 units or 13% from the beginning of February. That's in ONE month.

Easy to imagine we could see 7,000 very soon.

I exaggerated wildly. One and A HALF months.