New York After Bloomberg — The American Magazine

New York After Bloomberg — The American Magazine

The Manhattan Inventory Report for 9/7/2013.

The Manhattan Inventory Report for 9/7/2013

 I'm sorry to have been absent from this blog the last few months. Unfortunately I had a major medical issue to deal with which made staying on top of this impossible. Fortunately, it seems that all of those issues are behind me and I can resume working and hopefully putting a different light on the NYC real estate market than your typical real estate agent. Going forward,I won't be updating the Inventory and Mortgage Reports on a daily basis unless there are major changes. The data just doesn't change enough and it seems like I am close to repeating myself each post. Weekly, probably Mondays seem to be the best choice ( I wanted to get this one out immediately though). So with that said, this post will recap the last two months.
 

 State of the Market

The Manhattan Inventory Report for 7/2/2013.  The first chart is a one year chart. Take a look at inventory. It's the red line and it shows the number of "real" available apartments and townhouses in Manhattan. You may see differing #'s in other data. The data shown here is scrubbed, listings that are over a year old are not included as for various reasons that is usually not an active listing. So we can see that one year ago active units numbered a just under 5400 (5356) and today they amount to 3932, up from a low of 3746 on 9/2/13. And you want to know why prices have risen? There just isn't enough inventory available on the island of Manhattan to satisfy the housing needs of New York. That is being addressed as there are many new projects under construction. They are however mostly due to be completed next year or later. 

The Manhattan Inventory Report for 9/7/2013.

You can also see that pending sales (contracts signed ) soared from January through late June. Since then they have tapered off. Both of these trends are completely in line with normal seasonal trends, however the levels that were reached are what is significant. The second chart is a long term picture, going back to January of 2008 (That is all of the data that we have). From this chart we can see that inventory is at levels lower than at any time that we have data for. You also can see that contracts signed reached a peak that exceeded anything on record. That's a recipe for rising prices and as you can see in the third chart, that is what has occurred. The chart is the www.streeteasy.com Condo Market Index and it tracks condo prices by looking at same apartment sales. A detailed explanation is available on www.streeteasy.com's website. But essentially it gives a very good indication of where the tide of prices is. Whether it has been rising or falling and by how much. The blue line shows that prices are just below the peak set before the real estate crisis. The index in July (there is a lag as it takes time for sales to be recorded) was at 2.15 verses 2.19 in January of 2008, August #'s should be available within a week and should show a continuing rise. Bear in mind that this is an average over the whole city. Neighborhoods can vary dramatically and certainly buildings too, and this doesn't take into account townhouses which have screamed above their previous peak.

 Outlook

Is there anything on the horizon that will even out the supply and demand picture? Well yes, first we are about to enter the fall selling season as many who took thir apartments off the market during the summer usually relist them. Also if you look at the pending sales, they dropped in late June. That also is when the rise in mortgage rates that began in May began to steepen and become a factor. As interest rates rose from approximately 3.5% to 4.75%, the cost of servicing mortgages rose by almost 15%. A $1 million dollar mortgage at $3.5% costs $4,490 monthly while that same $1 Million mortgage costs $5,216 monthly at 4.75%. That is significant. I have had a number of customers lower their price point or suspend their search as they no longer could afford to borrow the same amount of money. At some point, the effects of higher rates and rising prices would eventually choke off the ability of enough buyers to continue to afford new purchases. Does that mean prices will fall? Maybe... I'm not into making predictions, but it certainly will slow or stop the price rise should interest rates continue to climb. But that is for another post.