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Three Cents Worth: Complaining & Explaining Tight Inventory

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[This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller takes inventory.]

A continuing refrain in 2012 has been (no, not Linsanity) the shortage of Manhattan apartment inventory. Seems like everyone has been complaining about it. I thought I'd look at how 2012 was shaping up by parsing out the markets by bedroom size. I looked at the first 12 weeks of the year and compared it against the average of the three prior years. Although I'd rather average the last decade as a basis of comparison, my per unit historical only goes back to late 2008.

Here's the listing breakdown by apartment type from the last week of the prior year and the 12th week of the new year:

Studio YTD
2012: down 2.3%
2009-2011 Average: up 11.9%
The only category that has seen a YTD decline in inventory in 2012. The sharp drop in mortgage rates last fall brought out the highest market share of entry-level apartment sales in more than 2 years.

One-bedroom YTD
2012: UP 3%
2009-2011 Average: up 14.4%
The same mortgage rate impact seen on studios, only not as severe.

Two-bedroom YTD
2012: up 4.5%
2009-2011 Average: up 15.9%
The growth rate AND total number is well below recent trends.

Three-bedroom YTD
2012: up 10.4%
2009-2011 Average: up 15.5%
Same story as the 2-bedroom market.

Four-bedroom YTD
2012: down 8.7%
2009-2011 Average: up 9.7%
Clearly softer than the other categories. 4+ bedrooms are the only category to see the current year numbers above the average of the preceding 3 years. The current YTD % growth is pretty consistent with the average. Perhaps the high end dominance is being a tad over-hyped this year.

Conclusion?

I think the shortage of inventory is a combination of higher contract activity and fairly low consumer confidence. I think many people who organically might have listed their properties this year were hammered by an incredibly turbulent fall and winter series of bad or confusing economic news. The drop can't be solely attributable to an uptick in contract activity because of its late start (mid-February) plus the uptick wouldn't have been enough to overpower the seasonal growth of inventory at the beginning of each year. (I've got 12 years of overall historical that says so.)

Perhaps this means we'll see heavier listing growth in 2013 this time next year but hopefully with a smattering of both an easing of credit and continuing improvement in the regional economy (insert Lin repaired knee analogy). That would be Lintastic.
· Matrix [matrix.millersamuel.com]
· Three Cents Worth archive [Curbed]