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Three Cents Worth: A Market With Teeth

[Do not be afraid. The pointy tangle of red and blue below shows the relationship between the percent change in sales (blue) and listing inventory (red). As you might expect, the two figures usually swing together, but there's more, much more. Jonathan Miller explains. Remember, for a graph for the screen-impaired, click on the image below.]

Like most markets, the Manhattan housing market is seasonal, meaning the change in direction of listings and sales volume is basically predictable. So what does that tell us about rising inventories?

Well, the data does not show that there is a rapid pace of for-sale properties are flooding the market as has been reported. Instead, it shows that the change in listing inventory peaked in the second quarter of this year at a lower rate than in both 2004 and 2002. (The smallest swing is seen in the stagnant market of 2003 prior to the Iraq War.) In fact, the actual level of inventory today is about the same as it was three years ago.

The change in listing inventory (red) typically gains momentum in the first half of the year, peaking in the second quarter as sellers opt to place their properties on the market for the usually better "spring market."

Besides being yet another opportunity to use the infamous "Curbed Arrows", this week's chart also shows the change in number of sales. (Remember, we are looking at the percent change from the prior quarter, not the absolute numbers.) The change in sales usually drops to its lowest point at the end of the year, and this year is no exception. It's going to be interesting to see if a prolonged transit strike affects the change in the number of sales in the first quarter. I suspect it won't.
· Percent Change in Listing Inventory and Sales [Miller Samuel]