Posted by Leonard Steinberg on July 24th, 2012
Today a report to be released by Zillow indicates that home prices in the second quarter rose from the year-ago period for the first time since 2007, according to a closely watched index, the latest indication the housing market is starting to recover. In the quarter ending in June, home values were up 0.2% from the same period in 2011.
Like most other reports, this report is too a reflection of closed sales, hence a bit of a time delay on what is really happening in the markets right now. In Manhattan we are seeing a very unusually busy July, traditionally a slower Summer month. We are seeing multiple bids everywhere. Properties that once sat idle are in contract. The inventory shortage is worsened by the fact that fewer people will list a new property in the Summer. And the fear of the new construction inventory coming to market being priced around $ 2,000/sf and up is (wisely) scaring buyers into committing to a property now before an inevitable further escalation occurs…..while they can still commit to the low interest rates.
In my opinion Zillow’s data is not a great reflection for the Manhattan market because the time it takes for a property to get signed to closing is unusually long here: the best reflection of what is going on in the market in real time is a report on signed contracts: while not 100% accurate, it is much more reflective of current market conditions. That is why LUXURYLETTER is so widely read, the only monthly report on signed contracts AND closed sales.
We have been hearing of vastly improved activity in pricing in many other markets around the country for some time now. In my building alone, an apartment sold for $ 1 million less a year ago…..and indicator of price escalation over 15%. This is unusual, although the very high end of the market appears to still be experiencing LUXOFLATION, the inflation that applies to the super-luxury market and can be witnessed in art, car, and other luxury goods pricing, field by a growing international wealthy community.
I feel certain that once this new wave of inventory hots the market, priced higher than where many apartments are trading to-day, the averages will rise in Manhattan again, and a new ‘normal’ will set in.