Data Not As Rosy As Presented

Good explanation of my past arguments from The Wall Street Journal:

HEARD ON THE STREET: Signs Of Rot In Big Apple Property

By Liam Denning A DOW JONES COLUMN When it comes to illiquid assets during a slump, marking to market can be a problem. A few haircuts here and there, and everyone ends up looking thin on top. That problem will soon start cropping up in the Manhattan residential property market. Even as the housing crisis shows up in half-built ghost towns across America, New York City's priciest borough has seemed largely immune. The median price of a Manhattan co-op or condo was $900,000 in the fourth quarter of 2008, according to Prudential Douglas Elliman. That's down 12% from the peak, but still up year on year. Like a broker's blurb about "spacious luxury," however, such price signals warrant caution. Some sales are agreed to 12 months or more before they are actually completed - and the price is factored into sales data. To a lesser degree, a similar issue affects the widely followed Standard & Poor's/Case-Shiller index, which uses rolling averages. In Manhattan's case, it pays to look at transaction volume: It's down 50% year on year in the fourth quarter, according to Jonathan Miller, president of real-estate appraiser Miller Samuel. Thinner volumes add to the sense that Gotham's strength is more apparent than real. Soon, the time lag on sales ought to catch up with the deepening gloom in New York's key financial services sector. "The first quarter will be very ugly," Mr. Miller says. (Liam Denning joined The Wall Street Journal from the Financial Times, where he wrote for the Lex column. Previously, he was an investment banker at Goldman Sachs. He can be reached at 212-416-3618 or by e-mail at liam.denning@wsj.com)