Next week we release the Manhattan 1Q 2012 market report. I'm sifting through the data now but I thought I'd take a shot at seeing ahead into the second quarter sales based on listing activity in the first quarter. I realize this is fraught with statistical pitfalls and I am using too many graphic elements in this one but hey, this is Curbed and I'm USING arrows.
I looked at the % change in inventory from December 31 through March 31 in each of the last ten years (2012 was through last Friday). Although inventory is expected to rise during this period, it didn't in 2002 (post-9/11 as consumers pulled their listings from the market en masse), 2004 (fastest period of price growth), and 2007 (sales spike worked off inventory faster than it could enter market). However, in the balance of the decade it did rise with each new year as consumers brought out their properties in anticipation of an active spring market.
On the demand side I looked at the percent change in sales between the 4th quarter of the preceding year and the second quarter. I wanted to see how much sales activity changed in the first half of the year. Sales activity during this period would also be expected to rise since the first half of the year is generally the most active (i.e., bonuses and the spring selling season). However, it didn't rise in 2004 (prices were rising so rapidly that sales slowed with decreased affordability, hence the beginning of the end?the elimination of underwriting standards to keep the banks' mortgage pipeline full?and 2009 (post-Lehman stall).
A few takeaways:
· Sales are a LOT more volatile than inventory levels
· Inventory growth has been trending lower over the past five years
· The pace of sales has been trending higher over the past two years
Perhaps these are the primary reasons why prices have remained stable post-Lehman in a soft but slowly improving economy with irrationally tight mortgage underwriting policies. We clearly have been seeing some crazy times every 2-3 years (2002, 2004, 2007, 2009) in the housing market for many different reasons. It's been 3 years since the last one?making me wonder whether we are due for another or it's clear sailing from here.
· Matrix [matrix.millersamuel.com]
· Three Cents Worth archive [Curbed]