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Wrapping Up Holiday Inventory

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[This week, Curbed graph guru and podcaster extraordinaire Jonathan Miller tries to confuse us with seven lines of pure, hard data.]


Click graph to expand!

After joining the mile-high club this week (for blogging of course), I thought I'd update and expand on something I analyzed a while ago, comparing listing inventory with patterns seen in prior years. This time I pushed it back to 2003, when the credit boom began to show maximum impact on housing. I am not including shadow inventory here?I don't have granularity for that, but at 6,500 units in shadow, its essentially multiplies existing inventory by a factor of nearly 2. We've had a shadow problem over the past two years.

I know I'll get grief for violating the Curbed common sense rule of more than 3 lines on a chart, but I need to do so here. The blue line is the 10-year monthly moving average for listing inventory, presented as a rational middle ground. The green line, 2003 (when credit began to ease considerably), straddles this moving average.

Above the line
Of course, the 2004-2005 (black, gray) years reflected peak appreciation rates and saw limited consistency with any seasonal patterns we are accustomed to. The year 2007 (light gray) was our market peak. Easy credit crushed other market forces and there was even talk that real estate would lose its seasonality. Good grief.

Below the line
The 2006 (dark red) inventory run up and market slow down in 2008 (bright red) showed inventory patterns more consistent with historical norms, but at elevated levels. One thing is clear, inventory has been falling, and falling rapidly in 2009 (dotted line). But that's a somewhat misleading characterization of the state of the market today.

Inventory tends to decline in the last several months of any given year, while rising substantially at the beginning of the year. What's different this year from prior years is the amount of inventory decline seen since last spring (dotted line). Down 28% from March 2009. This is due to a combination of sellers withholding inventory or removing it from the market until conditions improve, as well as the surge in sales activity this summer.

Since the sharp drop in inventory this year was exaggerated by sellers trying to time the market, as well as projections of 40% Wall Street bonus increases, I'd expect inventory to jump sharply in the first half of 2010.
· 2003-2009 Manhattan Co-op/Condo/TH Listing Inventory By Month [Miller Samuel]