Why is ‘boring’ housing market’s Q3 catchword?

(Courtesy of Prudential Douglas Elliman via Curbed)

Executives of the largest brokerages and those who craft reports on Manhattan’s housing market kept using “stable” to describe the second quarter.

For the third quarter, a word I’m seeing — as you doubtless are as well — is “boring.”

The term arises from some, though not all of the statistics. I’ve also noticed an attempt at “normal.”

I’m not so sure.  Variable?  Confusing? Troubling?

The reports are based on different data, but they come within a few dollars or percentage points of the each other. According to Elliman’s numbers from Jonathan Miller, for example, the average price from a year earlier is down 1.5 percent; the median also is down, by 0.3 percent.

Those results are surprising given the oft-recorded surge in the multi-million-dollar luxury market, though the median would be less affected by the minority of high-end sales.

On the more positive side, sales boomed 16.7 percent from a year earlier and listings stayed on the market only 119 days, a 4.8 percent decrease.

Yet the rate at which buyers sopped up homes for sale was 18.5 percent lower this year than last.  And inventory is down, too, by 4.8 percent.

On the one hand and on the other, no?

On the third hand, Streeteasy found that median prices for condos fell 5.9 percent from the prior year and for co-ops, 2.2 percent.  There were 6.9 percent more price cuts this year than last.

But closing activity rose 9.9 percent and the number of signed contracts was essentially stable.

“Boring” doesn’t do it for me.

Although it is perhaps reassuring to hear in a world of economic chaos and wild Wall Street gyrations that our housing market is boring, I just don’t find that assessment credible.  Equally suspect in my view is the contention some have proposed that we’re getting used to volatility.  Are you not hanging on news of where the Dow goes each day?

For one thing, third quarter reports are old. In fact, they depend on very old data — months old data — in our unusually dynamic market.

Moreover, quarterly reports don’t capture trends within the quarter. You can be sure that the July market was entirely different from the September market, and I believe that September provides ample reason for concern.

A friend of mine, Noah Rosenblatt, whose UrbanDigs.com site provides the best real-time data, has the information that troubles me about September.  The number of contracts signed was lower than each of the previous two Septembers and weaker than any month this year, according to him.

Noah also sees in relatively low inventory signs that better-quality listings are in order, implying that those buyers who really want to purchase are unable to find what they seek.  In my naturally limited experience, that has been the case.

Still, he notes that demand usually picks up in October, and that would be nice, if improbable, given his Q3 data.

One explanation for whatever strength the third quarter demonstrated may well be owing to the passion of foreign buyers for a hard U.S. asset that they can buy with currencies against which our dollar pales.

So, I’m not sanguine about a housing market that is viewed — for the public’s consumption — as boring or normal.

I continue to worry that consumer confidence, the global economy and everything related to financial services in Manhattan must have a negative impact on sales volume and prices.

Nor can it be irrelevant that the stock market has been playing chicken with a bear market of late; the S&P 500-stock index is 19-20 percent lower this week than it was no longer ago than April.

Whether we have arrived at what Curbed describes as the “new normal,” whether we’re just boring compared with our past and the rest of the country or whether our housing market is headed for — even already in — trouble is very much open to question, I think.

Ironically, I do not believe that anyone willing to hold onto a new home for another five years or so would be mistaken in purchasing property: Prices continue to be very low, mortgage rates are at an unprecedented level and the net costs of ownership compared with renting indefinitely couldn’t be more attractive.  It seems we have weathered times as bad as they can get since Lehman Brothers dissolved three years ago.

And it is comforting to know that we never suffered as much as the rest of the country’s housing markets, though I’m not about to jitterbug on their graves.

Where some in the industry are expressing something like cautious optimism, I’m cautiously pessimistic, only hoping for the best.

I’d rather be pleasantly surprised than disagreeably shocked.

Tomorrow:  If it’s Friday, it’s Weekly Roundup

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201

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