Three Cents Worth: Listing Inventory Gets In The Red Zone

Source: curbed.com
Wednesday, February 22, 2006
by Joshua















[Graphist Jonathan Miller plots the change in listing inventory (red line) against the change in median sales price (blue line) in Manhattan over the last five years. The highlighted zones represent periods of rising inventory. To view this chart in a larger size, click here]

Manhattan real estate is all about change, so I thought it would be cool to plot the change in median sales price and listing inventory over the past 5 years (that's as far back as I can go for historical inventory).

Since I am still suffering from post-Superbowl traumatic stress syndrome and wanted to ease my pain because Olympic curling was not cutting it, I decided to zero in on significant periods of rising inventory. These "rising inventory zones" are highlighted in red (okay, pink) and marked by the now-infamous "Curbed Arrows."

After the jump, a few observations that jumped out.

Listing Inventory: The change in listing inventory is far more volatile than change in median sales price than one would think, given the tight levels of inventory we have seen over the past 5 years. The red zones show periods of 31%, 62% and 52% increases in inventory levels. I also found it interesting that a sharp rise in inventory did not occur at the same time each year, making the argument that inventory changes were not predictable based on just seasonality alone.

Median Sales Price: The change in median sales price has showed a steady upward rate of annual appreciation for the past 4 years, exceeding 20% in 4 of the past 5 quarters (with the exception at 18%). While in the red zone, the rate of annual price appreciation either eases or levels off but appreciation still occurred.

Going forward, I would guess that inventory will continue to rise over the next few months as listings enter the spring market and then eases as the number of sales increases.

Median Sales Price v. Listing Inventory [Miller Samuel]