At the end of the second quarter, real estate guru Jonathan Miller predicted that falling inventory would continue to be an issue for the Manhattan market. The third quarter reports were released at midnight, and guess what? He was right. The Elliman report, authored by Miller, shows that inventory fell 24.3 percent from last year, to its lowest level in seven and a half years. Miller explains that there are three main reasons for the tight inventory: 1) New developments are scarce, and many won't be entering the market for another couple years. 2) Sellers are waiting while they "try to process the chaos that surrounds them."
By "chaos," Miller means the fiscal cliff, possible expiration of the Bush tax cuts, an election year with no clear plan for the housing market, economic concerns in Europe, and the third round of quantitative easing that the government just launched to lower interest rates and stimulate demand (here's a QE3 primer).
And the third reason why inventory is low is because many properties have such low or negative equity that sellers can't sell. "In other words, sellers, when they sell a home, become buyers or renters," says Miller. "Rents are rising and mortgage lending standards are tighter than 5-6 years ago so many sellers won't qualify for a new mortgage."
As for prices, they once again remained stable. Elliman put the median sales price at $890,000, up from last quater's $829,000, but down 2.3 percent from last year. The StreetEasy report has the median at $850,000, while Brown Harris Stevens has it at $865,525. The year-over-year dip continues to reflect the rise in sales of 1 bedrooms, which pull down the average prices.
As the Wall Street Journal reported last week, sales in the third quarter are up. StreetEasy and BHS report that closings increased about 12 percent from last year, and, once again, studios and 1-bedrooms made up more than 50 percent of all sales. Miller notes that the number of signed contracts are up year-over-year, meaning that this summer was more active than last.
· Market Reports [Elliman]
· Market Reports [Brown Harris Stevens]
· Market Reports [StreetEasy]
· Market Reports archive [Curbed]