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Three Cents Worth: Manhattan Inventory on a Slippery Slope

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[This week, real estate appraiser, Curbed graph guru, blogger, and podcaster Jonathan Miller takes his time machine through five years of inventory trends.]

It's no secret that the lack of supply has turned the housing market inside out right now. We are seeing multiple bids on a larger portion of the sales and no immediate relief in sight. I took a look at inventory trends over the past five years to explore how we got here. I separated out the market by re-sale and new development to explore the differences.

The line chart shows the percent change in inventory from the same quarter a year prior with commentary. I don't think many people realized how sharp the drop in supply was after the market corrected with Lehman bankruptcy in late 2008. Inventory collapsed as sellers could not see a quick rebound in the future and got out as quickly as they could in order to wait for the market to improve. You could argue that some of the decline in inventory is now just the same?many are waiting for prices to rise high enough to have enough equity to trade up or to break even.

I also presented a column chart that shows a decline in both inventory types, but they show very different patterns. The decline in new development inventory is quite steady. New development listings enter and exit the market randomly depending on the availability of the project unlike the re-sale market, which ebbs and flows with the seasons. You can also appreciate (no pun intended) how small the new development share of total inventory is and how that will not be the salvation of the low inventory situation in the future, especially because the new product entering the market is luxury (top 10 percent of the market) oriented.

· Matrix [matrix.millersamuel.com]
· Three Cents Worth archive [Curbed]