babbling in the Real Estate Industrial Complex / NY Magazine edition

does EVERYONE want to live in the Village?
I probably take boozy (and woozy) press coverage about the Manhattan real estate market more seriously than most people (I hope so, for their sake), but this bit of drivel from a recent NY Magazine piece (New York City Real Estate – Six Neighborhoods Where Prices May Have Bottomed Out ) caught my eye. (That’s being kind: it caught in my throat, as in I gagged over it.)

The mutual stroking that goes on between the media and real estate agents featured a nothing-wrong-with-it-per-se quote from an oft-quoted agent to the effect that real estate prices in Greenwich Village have "rebounded", followed by this statement: "Why? It’s the one neighborhood that is on virtually every buyer’s wish list, and rebounds tend to start where desire is fiercest." WTF??

Let me be clear: that is not a quote from the agent previously quoted, so this is not about that agent. But it is exactly the kind of statement that we see all the time in this market, at least in part because there is no one official set of numbers, from which one might (for example) be able to see if there is any evidence that the demand in Greenwich Village is unusually high of late. Agents don’t have numbers; reporters don’t ask about numbers; everyone sounds like an expert. This doesn’t hurt anyone, but still … does it help?

I just want to beat up on the hyperbole of the reporter (or maybe I should be blaming the editor), not the agent here. Raise your hand if you think that the Village is "the one neighborhood that is on virtually every buyer’s wish list", as in: the only neighborhood in Manhattan that everyone (OK, "virtually" everyone) dreams of living in. Sheesh, I don’t even know where to start deconstructing that one.

Flatiron price rebound is driven by inventory (or not)
Look at the Flatiron segment, where one agent says "Inventory’s becoming a problem", which NY Mag supports by noting that "StreetEasy numbers back that up: From October to December 2009, the number of listings shrank by 14.2 percent compared with fall 2008." You’d think that the higher prices found in Flatiron are related to the shrinking inventory, and that this is something that accounts for Flatiron having stronger pricing than elsewhere in Manhattan. After all, that is the point of the article, right?

If true, you’d expect that the inventory reduction in Flatiron "compared with Fall 2008" was meaningful, in the sense of being exceptional. I know journalists are not bloggers, for whom there are different editorial standards. But let me just say that this is sloppy "journalism". (See below for line-out explanation.)

excuse me while I change rants
When I first saw the NY Mag article, I made an assumption that the StreetEasy inventory numbers and trends were similar to those reported by The Miller, and others, as you will see below. The two indented paragraphs below were what I originally wrote two weeks ago, which will be followed by what I have subsequently learned. As you will see, some of my original rant is mis-directed, but — fear not — I have another rant prepared for the occasion.

Assuming that StreetEasy’s inventory numbers parallel those reported by The Miller, the overall Manhattan market showed a decline from 4Q08 to 4Q09 of … wait for it … 24.6%. Hmmm … that means (assuming the two firm’s numbers generally track) that Flatiron’s 14.2% reduction in inventory lagged behind the overall market. Hmmmm. See my post from January 6, more Manhattan lofts sold, but very, very slowly, for numbers from The Miller and links to his report.

The "tightening inventory" theme is also used to explain price increases in Manhattan Valley, though the "tightening" is "just a bit" according to Street Easy. I am guessing that "just a bit" is less tightening than the 24.6% across-the-board tightening in Manhattan overall.

sloppy blogging vs. sloppy "journalism"
One aspect of my snark  was that the StreetEasy numbers, if fully compared by the NY Mag author, would show that Flatiron inventory declined, yes, but by less than the general market, because that is what The Miller reported about the general market. Turns out that would have been sloppy blogging, as I discovered when I went to the StreetEasy site to see the 4Q09 report.

The NY Mag reporter must have been given neighborhood data by StreetEasy that does not appear in the 4Q09 report, but I was shocked to see this statement about changes in Manhattan inventory, quarter-over-quarter and year-over-year (on p 1 of 15 of the 4Q09 report):

There were a total of 13,922 listings that were available at some point in this quarter, a 7.0% decline compered to last quarter but an 11.3% increase compare[d] to the prior year quarter.

In other words, according to the StreetEasy data set overall inventory increased in Manhattan year-over-year, so the Flatiron reduction of 14.2% is significant. Whether that explains the Flatiron prices "may have bottomed out" (compared to other Manhattan neighborhoods) is a different question, but here my rant was mis-directed. The editor still should have insisted that the over all market inventory increase be provided as important context for the Flatiron inventory decline, but that really is quibbling.

[UPDATE : note the comment below direct from the horse’s mouth (Sofia Song, StreetEasy’s director of research, clarifying that I was comparing their apples to their oranges; with that explanation in hand, I will comment further on that apple being a funny number to use … later. MANY THANKS to Ms. Song for appearing, and clarifying.]

my next rant takes us into the weeds
My new problem is based on the oh-so-tired-lament why can’t we all just get along?, or why can’t the reporting firms’ numbers be reconciled? The rant is that I don’t believe the StreetEasy inventory trend year-over-year.

While it is fair of NY Mag to use StreetEasy numbers (it is a reputable, though new, firm), the fact that this trend is contradicted by The Miller (as I note above) and by the Corcoran report (see p6 of 15 of 4Q09, showing maximum monthly inventory in the current quarter of 9,356 listings, compared to December 2008 with 11,231 listings). Further, I don’t trust the StreetEasy 2009 increase over 2008 inventory figure (11.3%) because the 2008 number as reported in 2008 does not match. (Are you sorry to have read this far? I sympathize, but can’t let go … yet.)

Long-time Manhattan Loft Guy readers that one reason I like The Miller’s reports is that he has long championed transparency, and he provides consistently sourced and defined numbers, year after year. StreetEasy is a new kid on the block (a welcome thing), and the fact that their reported 2008 high-water inventory number in the 4Q08 report (on p2 0f 15 in the report) was 10,152 as of 12.1.08 bothers me.

If that 4Q08 high was exceeded in 4Q09 by 11.3% (as claimed in the recent report), the recent quarter’s inventory would have crested at 11,299 instead of at 13,922. In fact, the reported 4Q09 inventory peak of 13,922 is a 37.1% increase over the reported 4Q8 peak. Unless. Unless they changed definitions, or changed methodologies, or did something else different that StreetEasy is silent about.

To repeat: I just don’t trust that number. What’s up with StreetEasy’s inventory counts?? [update: now we know; see the comment below]

net, net, nyet
I can’t argue that NY Mag was wrong to use them, but I can bitch. And bitch again.

End of all rants, for today. Resume reading NY Mag, if you must. Scoff at agent anecdotes. Resume reading "market reports", but be skeptical.

© Sandy Mattingly 2010