is the 2010 strength in Manhattan loft sales odd, or even notable in a Lake Wobegon sense?

absolutely: maybe
I’ve been staring at the quarterly Manhattan loft market data in various metrics …. Blame it on The Miller (for giving me the numbers); blame it on Diane Ramirez (for calling the bottom); blame it on the Red Sox (not sleeping).

Here is something I see: if there are as many Manhattan lofts sold in the Fourth Quarter of 2010 as were sold in any other quarter this year, this year’s total will approach or exceed the best year for loft sales in the last seven (2008). Here is something else that i see: if you took the last four quarters as a “year” (4Q09 – 3Q10), the total loft sales in that not-a-real-year would come within 2.5% of the 2008 total. (And: that that 2008 total [for a ‘natural’ year] is the highest of any four-consecutive-quarter set going back to 1Q02 – 4Q02.)

One more thing: in this string of the last four quarters, each quarter is at or above the average for quarterly loft sales in the the last 5 years and very, very, very near the average for quarterly loft sales in the last 10 years. As far as data, that’s all I’ve got at the moment.

does “average” = “strength”?
In the current world (post 2007 liquidity crunch, post 2008 Lehman bankruptcy, post 2009 ‘nuclear winter’), reaching a long-term average four times in a row seems like it is approaching normal.

I am not saying this 4-quarter run is “normal” or that it represents the bottom, because “normal” is an awfully elusive concept (notice I wiggled with “seems like it is approaching …”) and The Bottom will be seen only in the rear-view mirror. But I am saying that this consistently average sales volume indicates a now-4-quarter-long market that has been deeper than the market that preceded it.

Deeper in the sense that there have been a consistent and consistently average number of buyers and sellers who have agreed on market prices for an average number of lofts. By my lights, a deep market (in which buyers and sellers meet, in quantity) is a more efficient market, a market in which buyers and sellers find it easier to negotiate to an agreement. The Days on Market data of late are consistently (if not yet conclusively) in support of this depth: the last two quarters have the two lowest DoM figures of any quarter going back (so far) through 2007 [updated:] the Second Quarter of 2005 (I have not yet gone back farther).

so what?
So what I am saying is that the latest loft sale data on volume (transactions) and velocity (DoM) suggest that the loft niche has been in a period of relative strength. I am not saying that this period will continue, but I will be watching to see if it does.

so, when?
In yesterday’s post about the loft niche vis-a-vis the overall Manhattan real estate market, October 2, Manhattan loft market outperforms in volume (big) + absorption, i talked about two intriguing loft metrics:

the reported loft numbers show that this niche outperformed the overall Manhattan real estate market year-over-year in two metrics: transactions (volume) and inventory change (absorption). …


I suspect that the first number is more due to the inherent volatility of Small Numbers (a niche is a niche), but that the second may be more significant.

Everything that I have said about Manhattan loft sales volume in this post is based on those Small Numbers (the five- and ten-year averages are in the range of 180 and 185 loft sales per quarter), so it is possible that I am looking at essentially random variation but detecting a “pattern”. Maybe, but you’ll have a better idea of that when (not if) I do what I suggested in that post that I might, when I said immediately after the quoted portion above:

Which leads me to An Idea … I should track both Loft Transactions and Loft Inventory as a percentage of the overall market!

If I track the loft niche vs. overall market on transaction volume I should find some longer term sense of the volume trends, if it is in the numbers to begin with. I have already begun to collect these numbers (every number cited here is taken from a Miller Samuel quarterly report), but I have not gotten enough numbers across enough metrics to make a splash when presenting it as a table. But I hope to get to that … this week (?). Yeah, I hope.

If this post meanders too much for too little payout, don’t blame The Miller for his numbers or Ramirez for jumping the call to the bottom; blame Manhattan Loft Guy and (look at the time this is posted, compared to the end of “last night’s” game) blame the Red Sox (for me not sleeping). Go Royals!

© Sandy Mattingly 2010


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