Matrix Blog

Historical, Landmark, Milestone

Days On Market: Time Is Always Running Out

April 2, 2007 | 6:58 am |

I got a call from an agent last week who asked me if the days on market (dom) figures in my market studies were based on the original list date or last list date (the last time the price was changed). It was something she wanted to have a better feel in advance before advising her clients on one of her listings. I directed her to my methodology page and had a pleasant discussion about the differences between the original and last listing dates in calculating days on market.

Ten years ago, this discussion would not have been part of the real estate conversation.

In the late 1990’s, I started tracking listing inventory and the time it took to market a property in Manhattan on a macro level. I had been kicking around the idea since the early 1990’s but couldn’t figure out how to capture the information in a more granular way.

This sounds fairly straightforward but this ability generally doesn’t exist in any listing database systems I have seen or read about.

The problem with listing related information, unlike sales information, is that it is very difficult to capture this information in its aggregate form. Why?

Looking at sales data for answers

If a property closed for $1,000,000 today, I will capture the sales data and keep it in my database in perpetuity. A few years from now, I could look back at my database and see all the sales that closed for about this price on or near this date.

But what about listings?

When I review active listings in a particular market, I look at the days on market before I consider finer property nuances like condition, layout, room count and so on. It provides clues to the upper limit to value, helping define the possible value range of a property whose value we are estimating. The same goes with sales that closed. I want to understand how the property was accepted.

If that same property was listed for $1,000,000 today, the price might be reduced, raised, get taken off the market, re-listed with another agent, etc. Listing systems generally don’t have the ability to capture the snapshot of the market at a previous point in time, other than today. In other words, I can’t query the state of listing activity as of a prior date.

One property could have a half dozen prices associated with it and various dates. The list price tomorrow, if unchanged, would remain the same, however, a simple query on tomorrow’s date wouldn’t show the listing because the listing date is simply the milestone where the current price started. The search would need to encompass what properties were listed on that day by looking at the listings with the same date and then looking back at each record to see if when the last price change was made.

This information gives you a sense of how well the property was absorbed by the market. If it was initially overpriced with many price deductions, it could even suggest that the sales price was somewhat below market levels rather than if the property was listed close to market and sold more quickly, it can often be infer a price more consistent with market. A decade ago, these patterns might have suggested just the opposite but you have to have the information first before you can grapple with this indicator.

I find it humorous when a property is languishing on the market, presumably because it is overpriced, that the owner will resort to raising the listing price when the real estate news reported begins to describe an uptick. This is common and explains why there will always be over priced listings in any type of market.

Listing history of the immediate market ie, price reductions or increases, and their associated date, was something competent appraisers and agents should always consider when valuing a property.

Here are the formulas I use. Days on market is usually split into two different categories:

  • DOM From Original List Date – Measured from the date the listing was first placed on the market. The calculation is: Original List Date – Contract Date. This is often the easiest to measure but is less useful. For example, with that $1,000,000 property I mentioned earlier – what if the property was listed at $2,000,000 yet worth $1,000,000. Is it a competing listing to other $1M properties? Is it actually in the market? No it isn’t.

  • DOM From Last List Date – Measured from the last time the list price was changed, if ever. The calculation is: Last List Date Change – Contract Date. This is the more useful of the two methods because it shows the market’s ability to absorb a property once it actually enters the market. Essentially, its the list price of the property just before it goes to contract. In other words, its the list price that brought the property into the correct market segment and attracted buyers.

Trulia Trends Report/National Heat Maps Launched Today: What Are Consumers Looking For?

January 9, 2007 | 6:37 pm | | Public |

January 2007 Trulia Trends Report

After joining the real estate party a little over a year ago, [Trulia has made great strides establishing their role as a leader in the listing search business](, working with [Realtors]( rather than against them. Trulia has working agreements with 90 of the top 100 real estate brokerage firms with more on the way. (disclosure: I am a member of [Trulia’s advisory board](

They crossed the million listing milestone last year. While impressive on that point, I think its more important to note that these are clean listings, not simply raw feeds rife with errors, duplicates, stale product or junk.

I had spoken with Trulia shortly after their initial launch with the idea of developing a market report, since I found their approach to the listing process so refreshing. The finished version now being released reflects market conditions and includes consumer search behavior.

We decided wanted to break out the market by major cities rather than as a national statistic since both Trulia and myself have serious issues with the accuracy in this type of approach, despite the fact that Trulia covers all 50 states. The list of major markets will expand and so will the metrics covered, as their service is able to build more historical content with the passing of time.

Thus the Trulia Trends Report became a reality today at 9am. Its a first step with more content and analysis to come as a collaberation between Trulia and Miller Samuel.

Download the Trulia Trends Report [PDF] here.

Download the Trulia Trends Report press release [PDF] here.

Here’s Trulia’s post about the new report.

My personal favorite section of the report is the…ahem…Matrix table on the third page. Especially the favorite neighborhoods and cities columns. Manhattan, Chicago, Philadelphia, San Francisco and Boston had favorite cities in different sections of the country and were most heavily concentrated on the east and west coasts. The searches originating from the remaining cities stayed within the same state or adjacent state.

Trulia National Heat Maps

This is a dynamic resource that breaks the US up by state, county, neighborhood and zip code. Consumers can see what markets got the most traffic. This is a live resource that is continually updated.

Here’s Trulia’s post about expanded Heat Maps.

Another important announcement today (to me that is): [Apple developed an iPhone product to be released in June]( Thank goodness, I am about to throw my Treo out the window (and I am on a high floor).

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The Onus of The Wall Street Bonus

December 15, 2006 | 9:56 am | |

Over the past few weeks, discussion of the impact of the Wall Street bonus has increased as rapidly as the housing prices did in 2004. Its a big economic event in the New York region and provides a significant impact on the local economy.

Bonuses been get a lot of coverage with more to come:

[Huge Profit at Goldman Brings Big Bonuses [NYT]](
[Brokerages report record profits [AP]](
[Unbelieva-bull spending spree [NYDN]](
[Downtown realtors ready for bonus time [Metro]](
[Jaw-Dropping Bonuses on Wall Street [US News]](

However, I don’t think that bonuses are the only reason why 2007 looks more promising today than it did 6 months ago. While bonus income seems to have more impact on pricing than the number of sales, the consensus is that a wider market strata will be affected this time.

Last year, the bonus income had more of an impact on the upper 2% of the market, for properties priced above $5 million dollars. This year however, as the saying goes, its different. But no real reason has been given as to why things are different this year other than bonuses, it just feels different. For example, its my impression that there have been more bidding wars in the last month and a half than in the early part of the year.

Here are some thoughts on why the outlook for 2007 could be better than last year in New York real estate:

  • Bonus income is higher than last year and its no surprise. Each quarter, news coverage of the pace of bonus money tracking has remained on target. The news gradually built expectations over the year.
  • Bonus income has seen 4 successive years of gains (assuming this year is), which provides a cumulative effect. Bonus payouts don’t necessarily go into the housing market in the first year of payout. Activity today may originate from payouts made a few years ago.
  • Mortgage rates have been generally in decline or flat for the past 6 months. Mortgage applications are rising including refi activity which adds to the churn. The Fed is largely expected to cut the federal funds rate in mid-2007 because of a cooling economy. However, the NYC economy is expected to be fairly solid so the market benefits from weaker conditions in other parts of the country through tapping into lower mortgage rates.
  • International buyers have been coming to the market in increasing numbers, (but less than I would have thought by this point). Favorable exchange rates due to the weakening dollar makes NYC properties increasingly affordable to foreign buyers.
  • Lending (underwriting) standards continue to erode making it easier to get deals done.
  • Some developers are starting to get the message that its all about accurate pricing and that marketing alone doesn’t move units. We are hearing that some stalled projects are being re-priced and then see units started to move. Placing ego aside is a huge step int he right direction.
  • Overpriced listings from non-serious sellers started to expire and not be renewed last spring, reducing the clutter and frustration for buyers. Inventory levels in the region have remained level for more than 6 months, after seeing substantial gains for the prior 18 months. There is some evidence of inventory bottoming out nationally after several months of gains but the jury is still out.
  • Rental rates spiked this year as a result of people moving into rentals for safety and lower cost. They became disillusioned after seeing bidding wars and 20 to 25% rent hikes in the luxury sector.
  • The local economy is on solid footing and the [city is projecting a surplus](
  • The recent national election brought significant change to the Congress, implying some sort of changes in the future.

To expound on the last thought, [the real estate market is often defined by negative milestones](, ironic for such an upbeat industry. One of those milestones could be the recent national election.

With the president’s approval rating at record lows for his tenure and the situation in Iraq deteriorating, I thought that a change in control of the Congress could be one of those milestones. The looming election had turned the focus away from the housing market. While the change in power may or may not impact housing, it was a change and seemed to precipated a change in perception.

The latest wrinkle is the [sudden illness of Democatic Senator Tim Johnson](, who, if unable to continue in office, would be replaced by someone appointed by the Governor, a Republican by presumeably, a Republican. This would move the Senate to 50/50 representation by both parties just after the newly majority that the Democrats earned last month. However, I suspect that this is a non-event for housing. The momentum has already been initiated by the election.

Sure, the bonus money is an important, and perhaps primary component of the recent surge in activity in Manhattan, but it can’t claim all the credit.

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[List-o-links] From The Tank: Bears, Goldilocks And GDP

November 6, 2006 | 12:01 am | |

A lot of economic negativity this week – didn’t get time to expand on them – so I put treads on the tank and dragged ’em off the beach.

  • [Appraising Zillow [WaPo]](
  • [Alpha/Beta Anemia [PIMCO]](
  • [Good-Bye Goldilocks [Comstock]](
  • [Bear market in housing futures [CNN/Money]](
  • [Labor Costs Surge, Retail Sales Weak In Latest Dour Data [IBD]](
  • [The New Word in Home Sales: ‘Canceled’ [WSJ]](
  • [Productivity growth stalls in third quarter [WaPo]](
  • [The Sears Buildings – apparently, modular was in, then [Boston RE Blog]](
  • [CME Housing Milestone [Housing Derivatives]](


With A Flag, An I-Beam and a Christmas Tree, The Party Is Just Getting Started

February 27, 2006 | 12:06 am | | Milestones |

Ever since I was a kid, I remember seeing and reading about Christmas trees on top of buildings under construction but they were not quite finished. I also remember seeing an American flag and there was usually a ceremony of some kind that was covered in the newspapers.

There has been a tremendous amount of construction in recent years and I started thinking about [topping out]( ceremonies:

What is this all about? Why a tree?, and Why was I looking up instead of watching where I was walking?

According to [Modern Steel Construction / December 2000 [pdf]](

When or how it started, but the tradition of ‘Topping Out’ has become a cherished custom of Ironworkers whenever the skeleton of a bridge or building is completed. Topping Out is a signal that the uppermost steel member is going into place, that the structure has reached its height. As that final beam is hoisted, an evergreen tree or a flag or both are attached to it as it ascends.

This tradition of [ironworkers]( is most closely associated with the [International Association of Bridge, Structural, and Ornamental Ironworkers]( union in Washington, DC.

[“Topping out” is the term used by ironworkers to indicate that the final piece of steel is being hoisted into place on a building, bridge, or other large structure.](

The project is not completed, but it has reached its maximum height. To commemorate this first milestone the final piece of iron is usually hoisted into place with a small evergreen tree (called a Christmas tree in the trade) and an American flag attached. The piece is usually painted white and signed by the ironworkers and visiting dignitaries (figure 1). If the project is important enough (and the largesse of the contractor great enough) the ceremony may culminate in a celebration known as a “topping out party” in which the construction crews are treated to food and drink.

For those who are into Scandavian mythology here is the [History of the “Topping Out” Ceremony [Columbia University]]( via [The Ironworker]( magazine.

Topping Out Bear Stearns NYC

[Mohawk Indians]( are the most well-known ironworkers and are close associated with topping out buildings.

  • [Booming Out: Mohawk Ironworkers Build New York [Smithsonian]](
  • [Mohawk Ironworkers Who Built the World Trade Center Profiled on Lost & Found Sound’s Sonic Memorial Project [NPR]](
  • [Mohawk Ironworkers to be Honored at WTC Ceremony [Canku Ota]](

Here’s a sampling of local coverage for a typical event:

[Topping Out at 7 World Trade Center](
[Topping Out At The Ukrainian Museum’s Top Project](
[Topping Out the Blanton: That tree on the roof? Means the new museum is A-OK.](
[Vought-Alenia plant to be topped out](

but its not limited to the US…

[New unit at Northwick Park Hospital finished [UK]](
[New home to help juveniles re-integrate [HK]](

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Super Bowl Housing Correlations (Well, Not Really) and The Super Ball

February 6, 2006 | 12:06 am | |

As we enter the post-Superbowl housing market, here’s a few items of interest (well, at least to me). Actually, I never thought of the Superbowl as a milestone for the housing market, but some people apparently have.

  • [The Super Ball, Super Bowl and Financial Markets []](

But what few folks may know is the fact that the Super Ball ended up becoming the idea for the term “Super Bowl.” The first two contests between the NFL and the AFL were labeled the “World Championship Game.” After the second such contest, the owners were sitting around trying to come up with a snappier name when Lamar Hunt, the guiding light of the American Football League, and the owner of the AFL’s Kansas City Chiefs, remembered watching his daughter play with a high-bouncing Super Ball a few days earlier and ‘ball’ morphed into ‘bowl.’ Voila…Super Bowl!

  • [‘Bull’ Market? []](

The Super Bowl Indicator predicts a good year for the stock market if a team from the old NFC wins and a bad year when a team from the AFC wins. Then again the Super Bowl Indicator has lost some of its magic in recent years. Maybe we should switch to political indicators, which would suggest big gains in stocks during an election year.

But is the stock market truly showing signs of prosperity, or is it just BS?

I would like to suggest the latter and that it might not be a good time for you to obtain a home equity loan to invest in hot tech stocks. We are going through a housing bubble, and stock valuations as measured by stock price-to-earnings (PE) ratios are at bubble levels. The buy low, sell high philosophy would lead you to sell stocks now, not buy them.

  • [In the (Jobs) Super Bowl, Seattle Trounces Pittsburgh, 3 to 0.2 [Bloomberg]](

In the ever-escalating battle to turn the Super Bowl, the premier U.S. sporting event, into a defining metaphor of American life, Merrill Lynch & Co.’s chief economist for North America, David Rosenberg, has broken new ground.

He says the economic numbers favor the Seattle Seahawks over the Pittsburgh Steelers in the National Football League’s title game, which often turns into a tongue-in-cheek referendum on the competing cities. Las Vegas oddsmakers favor the Steelers over the Seahawks today by 4 points.

“If the Seahawks match up to the city’s relative economic and market performance, then the oddsmakers may have the wrong team,” Rosenberg wrote in a Feb. 2 report after reading a sports column titled: “Give Me a Good Reason to Root for the Seahawks.”

Take job growth, for instance. That goes to Seattle, with 3 percent in 2005 to Pittsburgh’s 0.2 percent, according to Rosenberg. There’s unemployment: Seattle edges Pittsburgh, 4.6 percent to 5 percent. And Seattle home prices jumped 13 percent last year compared with 4 percent in Pittsburgh, Rosenberg wrote.

Well, Pittsburgh won decisively, so the moral of the story is: there is no correlation between the Superbowl and the housing market, as much as we would like there to be.


In Good Times and Bad, Negative Milestones Often Define The Real Estate Market

January 11, 2006 | 9:48 am | | Favorites |

Theory of Negative Milestones


I was writing another post about the housing situation in New Orleans and I kept coming across the phrase “post-Katrina” as in [“post-Katrina policy landscape” [NYT]]( and it struck me how much negative economic or natural disasters help define a new period for the real estate market.

It gives people the ability to sweep away everything that occurred prior to the event and see things in the current market with a little more clarity. At that moment, history plays a lesser roll in defining how the current market is behaving.

It can also be a stressful period because, like most markets, buyers don’t like the unknown. When economic parameters change or are likely to change because of an event, it takes a while for participants to get used to the new rules. Its a delicate moment in time when buyer/seller psychology is at its weakest or most raw and the potential for misinformation is most high.

I find this whole concept this akin not to asking when it comes to real estate, “what were you doing when Neil Armstrong stepped on the moon?” but rather “where were you when the plane hit the north tower on 9/11?”

The irony is that the whole idea of real estate exudes optimism, hope, success, growth, shelter, safety and opportunity, but the events that define it are most often negative.

Here’s a list that helps define my interpretation of the real estate market after 20 years in the business. Some are more specific to New York City because that is where I work and there are certainly other milestones to consider. It also seems to me that the milestones are getting closer together, but that might just be only because they are fresher in my thinking.

Negative Milestones

  • October 19, 1987 stock market crash
  • 1990-1991 recession
  • August 1998 stock market correction
  • February – March 2000 NASDAQ correction
  • June 2001 entering the recession
  • 9/11
  • March 2003 – start of the Iraq War
  • June 2004 – Fed starts raising federal funds rate
  • August – September 2005 – Hurricane Katrina and Rita

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