With the news this week of plunging home sales across the country, doom and gloom has enveloped almost everyone I know. Stock prices dropped impressively, and the New York Times led the paper yesterday to report on mounting anxiety related to the impact of the latest housing statistics.
To be sure, I recently took a dim view (which I retain) about the chances of a housing recovery in the Big Apple, but Josh Barbanel, whom I know and much respect, injected welcome perspective in an article he wrote yesterday in the Wall Street Journal. The headline said it all:
His piece detailed the borough’s latest activity:
In Manhattan, a review of city records compiled by The Wall Street Journal shows that median prices so far this quarter are up more than 14% above the previous quarter and 16% above the year-earlier quarter, when Manhattan prices hit bottom, during the downturn.
What I’m hearing and seeing in Manhattan, however, is a battle between buyers and sellers. Sellers don’t want to put their properties on the market in the hope that prices will go higher; as a result, inventory is exceptionally low. At the same time, buyers don’t want to make offers in the hope that the bottom has yet to be reached.
The National Association of Realtors said that July sales of previously owned homes–resales–were down 27.2 percent from June and 25.2 percent from one year earlier. More troubling was the jump in inventory from 8.9 months of supply in June to 12.5 months in July, more the twice what is considered a normal amount that balances supply with demand.
Then came the news about sales of new single-family homes, of which Manhattan has a relatively tiny number. Yesterday, the Census Bureau reported a 12.4 percent drop from June and and 32.4 percent from July of 2009.
As every analyst has pointed out, the homebuyer tax credit disproportionately inflated sales and prices while disproportionately deflating them in most of the U.S. as the April deadline passed. (Sales of existing single-family homes, townhouses and apartments are counted when transactions are closed and new-home sales, when contracts are signed, an inconsistency that truly muddies the waters.)
Before recovering (momentarily?) yesterday after a bad start, Wall Street understandably reacted with shock since a growing economy is said to rely on housing’s recovery.
The consensus is that housing sales cannot rise without jobs growth: Consumers without jobs or without confidence in their future income aren’t about to commit to an obligation as daunting as the purchase of a home. They don’t care that mortgage interest rates have swooned.
So the news is not good for the nation, but it is much less bad for New York City, however dependent we are on the robustness of the financial services sector.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022