I've looked at inventory by month to show where current levels compare to the same period in each of the prior three years. I've included 2006 inventory trends since that was the highest level of inventory seen in the eight years that I have been tracking it monthly.
Since 2001, inventory has risen nearly every year after New Year’s in anticipation of the spring market. The average monthly level of inventory since 2001 is 6,936 units.
· 2006 was the previous high-water mark but for very different reasons — back then, mortgage rates were thought to spike the next year to 7% - 8% and sellers were placing their properties on the market to "cash-out." Many were wildly overpriced and really weren't "in" the market. This greatly frustrated buyers, who thought they had more negotiating strength given the high level of inventory.
· 2007 was a glaring exception to a first-quarter rise, given the record level of sales activity that eroded inventory levels while the rest of the country saw a rapid increase.
· 2008 marked the beginning of a year-long slowdown in the number of sales (which I got plenty of grief about last year at this time, yet proved to be right). The lower level of sales (down 23% in 2008) forced inventory to trend higher over the year.
· 2009 shows the same general uptick but at a much higher level. The sharp drop in sales activity after the market tipping point last September has been the main factor for the higher level of inventory. However I am surprised inventory levels aren’t even higher given the more than 50% decline in the number of sales.
And now a word on "casual sellers" — those who list properties only to test the market and see if they can get a high price — seem to be waiting for signs that that things will get better before they list. While the majority of current listings haven’t been re-priced to the new market, I could only imagine how high levels would be right now if the casual sellers came to the market like they did in 2006.
· Manhattan Co-op/Condo/TH Inventory By Month [Miller Samuel]
· Previous Three Cents Worth [Curbed]