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Three Cents Worth: Manhattan Absorbs The Turkey

[This week, real estate appraiser, Curbed graph guru, and podcaster extraordinaire Jonathan Miller absorbs the tryptophan of housing inventory.]

This week I thought I'd match up the Manhattan housing marking to the U.S. market and throw in a little New York City by way of absorption. Of course real estate is local (blah blah blah) but I thought I'd see what happens - we keep saying Manhattan is different than the rest of the country.

I took a look at absorption—the number of months to sell out available inventory (excluding shadow inventory) at the current pace of sales. I like tracking absorption because it shows inventory and sales in their proper context – the health of the market at the present moment. If you simply publish the number of sales or the amount of active inventory, you get half the story. For example you might see inventory (supply) rising rapidly but if sales (demand) were rising rapidly too, the absorption rate might remain flat.

I just got a hold of the last 10 years' worth of absorption of U.S. existing home sales (blue line) by month?I selected the last month of each quarter?and paired it with Manhattan's quarterly absorption rate (red line). I added the absorption rate of NYC (green line) but I've only got the last 5 quarters of inventory data.

In the first half of the decade, the Manhattan absorption rate (9 months) was double the U.S. absorption rate (4.5). The Manhattan market's volatility is a product of a few thousand transactions versus millions (well, using weird NAR seasonalized and annualized adjustments). The Manhattan chart goes "cold turkey" (sorry) around the Lehman tipping point in late '08–early '09, but then settles down in 2010.

At the end of the line, the Q3 2010 U.S. absorption rate shows more weakness than Manhattan, but one quarter does not a trend make. The U.S. market seems to be more of a turkey (sorry) in our post-tax-credit housing world than Manhattan: the U.S. absorption rate is about 2.5 times higher (slower) than it was in the first half of the decade.

Manhattan's absorption rate is at about the same level as the midpoint of entire decade, so relative to where it has been, Manhattan is absorbing units more readily than the U.S. housing market. In other words, the current Manhattan housing market is, for lack of a better description, not a turkey.
· Monthly Absorption Rate for Residential Properties [US, NYC, Manhattan] [Miller Samuel]
· Three Cents Worth archive [Curbed]