The answer lies in the absorption rate.
Absorption refers to the number of properties sold relative to the number available. First, average the number of properties sold per month for the last twelve months (some reports only average for six, but twelve will account for seasonality).
Then divide the number of properties available by that average number. This, in theory, gives you the number of months it will take to sell the current inventory. That’s the absorption rate.
Less than six months of inventory is considered a seller’s market. Six to nine months is a balanced market, and more than nine months is a buyer’s market.
Although absorption has slowed a bit since a year ago, inventory is still relatively low.
Miller Samuel, the appraisal firm, reports that for the month of February, Manhattan inventory levels for properties priced below $2,000,000 are in the balanced range. Levels in the $2,000,000--$3,000,000 range are just barely into buyer's market territory.
However, remember that the number of "available" properties includes those with a brick wall view, a five flight climb, or a price that’s 20% over market. Tough sales all, especially that last. So the inventory of properly priced, desirable apartments is significantly smaller.
Looking for a prewar two bedroom with a doorman anywhere in the Village for under $3,000,000 with a maintenance under $3,000? There’s exactly one. If your budget will stretch to $3,750,000, and/or you don’t mind paying much higher monthlies, you have a choice of four.
Property on the west side is also in short supply, at least for co-ops. You’ll have a better shot at finding a condo than a co-op in six of the eight price brackets, but even the supply of condos is balanced in five of those brackets.
On the east side, it’s still a buyer’s market, at least for co-ops. Miller Samuel reports that there’s at least a slight surplus of co-ops at every level, ranging from 10.5 months in the $2,000,000 bracket to 35months in the $10,000,000 and up bracket. But condo inventories there remain for the most part at a balanced level.
The experts say that prices will remain flat for the next year or so. However, in those areas where there’s a really short supply of inventory, I think prices simply have to rise.
Here’s the link: http://matrix.millersamuel.com/?p=13186