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Three Cents Worth: Inventory, a 3-Year-Old Sandwich

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[This week, our graph guru Jonathan Miller has a few things to say about the path of inventory in 2008.]

[Click to expand.]

Back in March, I tried showing inventory levels by month, presenting inventory by year since 2001. However the results weren't very clear. So I updated the presentation — trimmed the crust, so to speak — hoping to provide a little more clarity.

One of the ways to characterize the level of inventory today is that it is higher now than last year, but below levels of two years ago. The current year is sandwiched between the prior two on the graph. One of the more striking elements of inventory levels over this three-year period is the fact that levels are notably higher than the seven-year monthly average.

The trend in listing quality is relatively poor and moving towards overpriced properties. There is a lot of product entering the marketplace that doesn't reflect the current market (overpriced). We are also seeing a rise in "cash-out" sellers who are placing apartments on the market to "see what happens." That's probably a strategic mistake on their part since properties that are not priced reasonably close to market levels simply are not selling.

Since there is no apparent indication that we will see a spike in demand over the next year (stranger things have happened), inventory levels are going to remain elevated for a while.
· Manhattan Inventory Pace (January-May) [Miller Samuel]