Happy New Year. With the 4th quarter now behind us, I wanted to present how inventory and cpi-adjusted sales price levels compare to the previous five years.
The four quarters in aggregate for 2006 indicate a year over year increase in average sales price from 2005 of 6%. The 3 years prior to 2005 saw an average of 20% annual growth. The market seems to have made a transition to single digit price growth without much carnage up until this point. There now appears to be a modestly positive economic outlook for the next year in Manhattan framed by potentially stable mortgage rates, record bonus income, low local unemployment, sharply rising rents and evidence that sellers are pricing closer to market levels and buyers seem to be returning. The big question mark remains with inventory.
The 22% quarter over quarter drop in listing inventory was an unusual, despite the continuing addition of new development to the housing stock. The drop was due to the recent trend of expiring over priced re-sale listings that were in effect, "piling on" to the oversupply of new development (which will continue to enter the market for the next 1-2 years). The idea of "cashing" out, that began in 2004 has largely fell by the wayside. There was also an unusually sharp increase in sales activity this quarter which ate into inventory levels. I would think that inventory levels have room to drop a little further over the next several quarters if sales activity continues to pick up but new development will keep inventory from dropping to levels seen during the boom.
I'll post about the other significant changes seen at the end of 2006 over the next few weeks.
· Average Sale Price Versus Listing Inventory [Miller-Samuel]