December volume + absorption / loving the actual data

If you are at all interested in the macro-economics impacting the Manhattan real estate market, you probably already have seen the terrific blog, UrbanDigs. Noah’s got a post yesterday that includes some tables about actual Manhattan transaction volume and "absorption" from Vanderbilt Appraisals. (h/t Curbed)

 

This is the first place I have seen an authoritative number for actual transactions closed in Manhattan in December, so it is both (a) a useful data point and (b) a hard data point. Actually, that is backwards: it is useful because it is hard, and because it is interesting. I consider it to be hard since the source (Vanderbilt Appraisals) should have access to as broad a range of sources as anyone. While I don’t have much of a comparative basis for the number (Noah reports that Vanderbilt has 1,127 sales for 4Q 2008, a number that requires some context), the report that 688 Manhattan coops or condos closed in December is not — by itself — an indication of an illiquid market. As Noah notes, that is a 39% decline YOY, but overall volume in 2007 was up 30% from 2006. 

 

So, while the 4Q number of 688 is dramatically lower than 1/12 of 2008 sales overall as reported by Miller Samuel (10,299) — not to mention the record market of 2007 (13,430) — if 2009 were to average 688 sales per month, the total of 8,256 transactions would be almost in line with volume in 2006 (8,493) and 2005 (7,780), neither of which was perceived as a ‘slow’ market at the time.

 

One of the Vanderbilt tables in Noah’s post assesses how long it may take to sell the entire current inventory of Manhattan coop and condo listings. They compute the "absorption rate" by dividing the number of current listings by the average number of sales per month in the past six months (the use of the average may understate a trend, but it evens out mere statistical ‘bumps’).

 

The fun stuff is that they compute the absorption rate for coops and condos separately, and then by 6 price ranges. For both coops and condos the relationship between price and decreasing absorption (i.e., longer time to absorb current inventory) is nearly linear. (The Vanderbilt table is much prettier, but here’s a taste, with absorption expressed in number of months:)

 

In other words, the higher the price, the longer the inventory has been taking to burn off.

 

coops? not so many… but a nugget, nonetheless

The raw numbers in the Vanderbilt table for the 6 month monthly average sales show how much of The Market is condo sales rather than coop sales:

  

Once you get to six figures, in other words, about 3 condos (total: 363) are sold for every coop (total: 126). Whenever I get to addressing the full 4Q reports, I will test that bit of Vanderbilt data against Miller Samuel, for sure, for sure.

 

Nothing specific to the Manhattan loft market here, but good stuff. To repeat: the Vanderbilt data are terrific because they seem to be solid reporting and because they are interesting about trends. Personally, I find the December volume report to be in the Not As Bad As I Had Feared category. No surprise if absorption rate is slowing, or that it is price-sensitive. Somewhat surprised at the condo vs. coop differential on closed sales, which presumably is yet another indication of the degree to which new developments have dominated recent transaction stats.