Q1 reports are out and many are pointing to the possibility of a declining market, driven by decreasing activity and prices following suit. We found these headlines suspect, particularly based on what we’re seeing on the ground: inventory seems tight, prices appear quite stable and buyers feel anxious. So we did some digging and learned that the take-aways are not so pessimistic. Noah Rosenblatt at Urban Digs points it out quite well:
When analyzing Manhattan ACRIS sales pace for any quarter (ACRIS holds the public record of sales) you MUST understand that you are seeing an incomplete report with a ton of Q1 sales not yet publicly released! Especially March, whose sales will continue roll in over the course of the next 4-8 weeks as ACRIS files them.
Indeed, when you look at the chart above, pending sales (i.e. signed contracts) are on a clear and robust up-trend. Basically, if the sales of a quarter are front-loaded, with a majority taking place in its beginning, the overall sales numbers will be most accurate. If, however, a quarter is back-loaded, with a majority of sales occurring at the tail end (March, in this example), the overall numbers are likely to be inaccurate and lower than reality. This is what happened this past quarter. As Noah points out, “pending sales is the most real time measure we have to track the pace of demand for Manhattan inventory”.
Because of this significant lag, and because median sales prices are particularly volatile based on the types of apartments that are closing, take this quarter’s headlines with a healthy grain of salt. Lastly, with respect to falling condo transactions, it’s about time! We see this as a positive trend, as decreased numbers reflect the dwindling condo inventory that remains and absorbed new development condos.