…Inventory was already sharply down in the spring, with the 2nd quarter 31.3% lower than the year before, making it “the lowest second quarter in the 12 years I’ve been tracking inventory in Manhattan,” says Jonathan Miller, president of appraisal firm Miller Samuel and co-author of Douglas Elliman real estate market reports….
…“Inventory traditionally rises in the spring in anticipation of the spring market and then falls a bit,” says Miller, “but this year inventory moved sideways through May and then for the last two months has fallen. So for the month of July, compared to July 2012, co-ops and condos are down 29 percent. We never saw the uptick in supply that we should have seen by now.”…
…Prices also rose this summer, but at a more modest pace in Manhattan than in Brooklyn and nationally, says Miller….
…“It’s more of the same for buyers and sellers,” Miller says. “I don’t see a relief from low inventory in the near future.”
Miller also doesn’t suspect that rising interest rates will bring relief from rising prices because there’s such a lack of supply….
…“In Manhattan, the luxury market–the top 10 percent of all prices during a period–over the last few years has been hovering around $3 million as an entry point–almost all of of the new development is above that threshhold,” says Miller….
…In a bizarre twist of fate, tight credit is making houses prices rise,” says Miller….
…“For many, it’s just money on paper, because you still have to qualify for a mortgage and that’s harder and harder to do,” says Miller.
That said, though, Miller admits that among buyers, sellers and renters “sellers clearly have had the most advantage in the market — except that they have to buy or rent something else.”…
…Miller doesn’t expect huge changes in pricing or inventory to come from the interest rate increases….
…On the bright side for buyers, Miller expects that tight credit will keep prices from skyrocketing in the near future….
…“In rentals, you have logjam of people who would have transitioned to sales and either don’t qualify because credit standards are tight or can’t find anything because inventory is so low and are staying as renters,” says Miller….
…In addition to low inventory, “rents are rising as the economy’s improving. When employment rises, it puts more pressure on the rental market,” Miller adds….
…“There are always seasonal ups and downs,” adds Miller, “but prices will remain high as long as credit is tight” and renters can’t become buyers instead. And Miller adds that he doesn’t see credit easing for several years. “Banks are afraid of their own shadows,” he says….