Unless you live under a rock, you are undoubtedly cognizant of all the bad news of late. The first quarter 2009 Manhattan real estate sales statistics recently came out, and predictably the news was that sales are down. No surprise there.What is surprising is that signed contracts are on the rise. Hmmm, "So what?" you may ask. "How does this affect me, and why should I care?"
If you were to "buy" or "sell" a property today, you would sign a contract of sale. This is really what the "sale" is. All the terms of the transaction are spelled out in the contract and the Buyer and the Seller both sign the document to acknowledge their agreement to the terms and conditions.
Can you move in to a property you just "bought" today by signing a contract? Heck no. You've got to "close" the deal. A closing is where the Buyer & Seller as well as a bunch of lawyers and other folks sit at the "closing table" and a myriad of documents are signed, fees paid, mortgages issued and monies exchanged. Oh, and at the end of it all, the Seller has his money and the Buyer has the keys.
The closing typically happens two to four months after the contract is signed. This creates a significant lag between when a property is "sold" and when the property "closes". The media reports on closed sales, not contracts signed, so for all intents and purposes, the media's perspective of the housing market is months behind. This lag is exacerbated by the fact that the reports come out quarterly, so if a deal "closes" in the beginning of the quarter, it won't be included in the quarterly statistics until almost three months later!
The news that contract signings are up validates my, and my colleague's "real-life" experiences that there is significantly more activity in the market than last year, and even the early part of 2009.
No one can say for certain that we have hit bottom, but the indication is that we are either there or very close since activity is on the rise. The sad thing is that Buyers who are waiting for the "official" bottom to hit, will only find out about it long after it has actually occurred. By then it may be too late.
You may want to re-read this fascinating article if you're a Buyer.
Reach me at: michael.sussilleaux@gmail.com
Posts
