Analysts shed light on first quarter numbers confusion

By James Kelly | April 14, 2008 03:58PM

Home sales in Manhattan may have taken a large dive in the first quarter of 2008 from the year before, but a big discrepancy between reports from the city’s most influential sources make judging the market’s actual activity difficult.

According to appraisal firm Miller Samuel, home sales fell by 34 percent year-over-year to 2,282 in the first quarter. Analysis by Brown Harris Stevens and Halstead Property, however, showed just a slight decrease of 1 percent, to 2,857 closings in the first quarter.

Halstead Property executive vice president and chief economist Gregory Heym, who prepared the brokerage’s data, wrote in a company memo that sales were verified through the city’s public data resource, Automated City Register Information System, and by consulting buildings’ managing agents.

Miller Samuel also based its statistics off ACRIS records and managing agents, said president and CEO Jonathan Miller. The appraisal firm also consults Manhattan brokerages, especially Prudential Douglas Elliman, for whom the report is prepared.

While a review of closings in ACRIS conducted by the New York Times showed a decline of only 1 percent in the first quarter from the year before, a few key factors explained to The Real Deal by appraisal experts demonstrate how the actual drop in sales may have been larger.

Discrepancies between different researchers’ quarterly market reports are common, but this gap is much larger than the standard margin of error, said Jeffrey Jackson, chairman of appraisal firm Mitchell, Maxwell & Jackson.

“Somebody’s got the wrong data,” he said.

Discrepancies between reports are often caused by the gap between a home’s closing and the date it is filed with city records. Depending on which date is used, some sales can be placed in either of two quarters and skew the data.

That delay is often largest between the fourth and first quarter, Jackson said, because the recording of closings slows down around the holidays. That can create a spillover effect that inflates the number of first-quarter sales.

“If someone has access to information that is closed but may not be recorded and it misses the cut-off of the period, you are going to have inconsistencies,” Miller said.

Jackson adds that because the fourth quarter of 2007 had a larger number of new residential developments than in the past, the impact of delayed recordings of sales could be magnified by bulk closings.

However, Jackson maintains that such a large discrepancy between reports could not be accounted for by the lag of sale recordings alone. He said his own data agrees more closely with Miller Samuel’s lower figure of 2,282 first quarter sales.

Another way that the number of sales can be inflated is if closings collected via ACRIS or other databases are not parsed for “non-legitimate” sales, said Sam Heskel, executive vice president of appraisal firm HMS Associates. These include deed transfers between family members or two associated owner corporations, as well as a transfer to a bank as a result of foreclosure.

Heym disclaims in his company-wide memo that “no firm can report with 100 percent certainty on the number of sales.” He writes that the numbers are not presented “as hard fact, but as an indication of the scope of the report.” Heym declined to comment to The Real Deal


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