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Catching A Falling Housing Market Cliché

February 10, 2008 | 12:43 pm | |

Every so often, I get overloaded on a specific cliche that seems to explode in popularity, even though it has been around for a long time. Don’t get me wrong, I find myself using them and try to keep it to a minimum but its hard to do. While housing market has its built-in cliches:

Location, location, location

And sales related cliches like:

Cash cow
Dangle the carrot
Laugh all the way to the bank
Get your foot in the door
Making money hand over fist
Pick the low hanging fruit
Sweat equity
Sweeten the pot
You scratch my back, I’ll scratch yours
Think outside the box
Survival of the fittest
Firing on all cylinders
Drink the kool-aid
Keep your nose to the grindstone

I think that a lot more cliches have crept into the daily housing vernacular as many markets have been experiencing declines and there are growing economic woes are related to housing.

With all the interest in the financial markets, I am seeing, or just more sensitive to, stock market phrases used to characterize the housing market. Its not that the phrases are used incorrectly, its just annoying that so many use them adnauseum.

I remember when gravitas became a cliche nearly overnight a few years back. Last year, a huge phrase in the news media and blogosphere was:

Dead cat bounce

defined as:

When a stock’s price goes up a little because people have bought it after seeing it go down drastically.

Now that my family has a cat at home, I find it a bit distasteful.

The phrase which gained steam last year to depict the housing market, which is particularly annoying is:

Catch a falling knife

defined as:

To buy a stock as it’s price is going down, in hopes that it will go back up, only to have it continue to fall.

I heard the phrase several times at the recent Inman Connect conference by panelists, and while an accurate depiction, I just found it annoying.

So when characterizing the condition of the housing market these days, lets cut to the chase, because the jury is still out and I am at the end of my rope because the end doesn’t justify the means. I don’t want cliches to be our achilles heel because the depiction of housing conditions requires us to get our arms around it or its death by a thousand cuts and thats no joke when we consider the tangled web we weave so just stick a fork in it and burn the midnight oil to come up with another phrase that knocks housing out of the park.

Remember, at the end of the day, there is no “I” in housing.


[Contrarian Report] 4Q 2007 Manhattan Market Overview

January 19, 2008 | 1:28 am | | Radio |

The 4Q 2007 Manhattan Market Overview that I author for Prudential Douglas Elliman was released earlier this month. I neglected to post this on Matrix earlier because [insert excuse here]. Other reports we prepare can be found here.

The data and a series of charts are also available.

About two years ago, I began posting the links of the coverage of each report to see how each media outlet reports the market using the exact same data. I find it to be an interesting process.

Here was some of report coverage based on the same data (you get the idea):

The Link List

The New York Times Wall Street Journal Bloomberg New York Daily News The New York Post CNN/Money Reuters The Real Deal Financial Times The New York Observer Inman News Pravda New York Magazine The Guardian (UK) Gothamist

Radio and TV clips

[January 3, 2008] WNBC-TV
[January 3, 2008] Bloomberg – On The Economy
[January 3, 2008] WCBS
[January 3, 2008] WPIX
[January 3, 2008] Fox 5 TV
[January 3, 2008] Bloomberg TV
[January 3, 2008] WABC TV
[January 3, 2008] WNBC HD TV
[January 3, 2008] NY -1
[January 3, 2008] Fox Business Network
WCBS Radio
NPR Radio

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[Inman RE Connect] Brokers v Economists, Republicans v Democrats

January 13, 2008 | 12:33 pm | |

Another Inman News Real Estate Connect conference is behind us and as a result, I feel more informed, was able to meet new industry people, be exposed to new concepts, was able to see many colleagues, get another Inman bag full of pens and post-it note thingies. In other words, it was time well spent.

Brad Inman provided a great overview of his interpretation of where the market was going to the audience at the close of the conference, which was rational, clear and in many ways, the distillation of all the information and filtered spin that was presented over the previous three days. I need to listen to Brad more often – I wish his summary was available (Hey Joel, how about his summary for Inman TV?)

Housing market direction discussion throughout the conference was essentially presented by two camps which seemed to parallel the ongoing presidential primaries:

  • Sales agents, brokers and NAR current and former employees [ie Republicans] — This group is nearly always providing a silver lining because they are paid for their ability to sell a vision or idea. Thats their job. Thats being said, I was surprised at the quantity of pollyanna-isms still peppering the reasoning why housing will recover in 2008. In the last two main session panels on the last day, it was very interesting to hear a lot of discussion about second home units and how they posed no greater risk than primary home units because they weren’t flips (reality check: when someone loses their job, which mortgage payment do they stop first: their family home or the ski lodge condo?)

  • Economists and academics [ie Democrats] — There is an old saying that economists are paid to worry. Prescribers of the red light theory (people are more likely to remember the negatives such as all the red traffic lights they hit, rather than the green) love this stuff. The keynote panel discussion was terrific, (Barry Ritholz and Noah Rosenblatt were great at laying it all out) but everyone needed to receive counseling for depression when it was over.

Thats why this period of housing turbulence feels a lot like the presidential primaries. Its all about how the information is presented, whether or not its in the right context and whose interests are being served.

[Inman Connect] Where Real Estate Meets Wall Street

December 24, 2007 | 3:59 pm | |

Connect NYC ’08

Inman News is presenting its Inman Real Estate Connect conference Wednesday, January 9 – Friday, January 11 at the Marritt Marquis in Manhattan. Through this twice yearly event (San Francisco and NYC), Brad Inman created the “go to” forum for the dissemination and sharing of real estate information and insight. As I have said many times, what distinguishes this conference from most others is that the attendees are decision makers.

Brad is moderating a panel in the general session on Friday, January 11, 9:00 a.m. – 9:45 a.m. that I’ll be participating in called:

NYC: Where Real Estate Meets Wall Street

The New York City real estate market has a special relationship with Wall Street where big bonuses can mean big luxury apartments. But Wall Street is also moving forward with many new investment products that may change the course of property valuation and hedging forever. How is Wall Street doing with these products and will the New York market benefit?


[Getting Graphic] Not Able To Appreciate Their Defaults

December 4, 2007 | 10:44 am | |

Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Source: Federal Reserve Bank of Boston

An Inman News story (subscription) covered the release of a new study of the relationship of default rates and housing appreciation:

House price appreciation plays “a dominant role” in generating foreclosures, according to a study released today by the Federal Reserve Bank of Boston, “Subprime Outcomes: Risky Mortgages, Homeownership Experiences, and Foreclosures.

The idea that lower rates of appreciation in a market would lead to higher default rates as borrowers are unable to refinance their way out of trouble.

The study, of the Massachusetts housing market from 1989 to 2007, found homes originally purchased with a subprime purchase mortgage ended up in foreclosure about 18 percent of the time, or more than six times as often as those purchased with prime purchase mortgages

About 30 percent of foreclosures in the state during 2006 and 2007 were traced to homeowners who used a subprime mortgage to purchase their house.

A higher percentage — almost 44 percent of foreclosures — were on homes whose last mortgage was originated by a subprime lender. About six out of 10 of those borrowers had originally purchased their home with a prime mortgage, and then refinanced into a subprime mortgage.

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[Inman News] Matrix One Of 25 Most Influential Real Estate Bloggers: 2007

October 4, 2007 | 9:42 am | | Public |

Joel Burslem, Social Media Manager for Inman News, and who seems to be working 24/7 and can be 2 or more places at one time, told me yesterday that I was named to this list.

Its very flattering and fun to be on the same list with these bloggers, who are regular reads for me. I have met most on the list in person and their message is an extension of their personalities.

Congratulations to all my colleagues out there. For such a big world, the blogosphere is surprisingly close.

25 Most Influential Real Estate Bloggers: 2007

[Crunch Report] 3Q 2007 Manhattan Market Overview

October 2, 2007 | 11:23 pm | | Radio |

The 3Q 2007 Manhattan Market Overview [pretty version will be posted later this week] that I author for Prudential Douglas Elliman was released today. The report is prepared in the same manner as in quarters past but in association with Radar Logic, where i am the director of research.

The numbers were released and my summary of their interpretation were provided to the media for the coverage today. The actual data and charts will be available later this week as well.

More than a year ago, I began posting the links of the coverage of each report to see how each media outlet reports the market using the exact same data. I find it to be an interesting process.

This list of articles is presented basically when I found them. I also include some duplicate news feeds because I like to see what regions are interested in the story – I place those near the bottom because of the repetition. I’ll keep adding links through the end of the week.

The Link List

Manhattan Home Prices Rise 2.3% on Luxury Condo Sales [Bloomberg]
Home Prices Buck Trend, for Now [New York Times]
Manhattan continues to buck U.S. housing trend [Reuters]
Manhattan housing boom continues [CNN/Money]
Manhattan apartment market prices hit record high [New York Daily News]
Manhattan Apartment Prices Soar, Bucking the Trend [CNBC]
Manhattan Housing Market Still Sturdy, For Now []
Manhattan housing market still healthy [The Real Deal]
No City For the Young [The Real Estate/New York Observer]
Manhattan real estate bubble hasn’t burst [Newsday]
Your Morning Credit Crunch: Manhattan Stays Bullish [Curbed]
Manhattan real estate sales, prices still climbing [Inman News]
Pre-Credit Crunch Apartment Prices Increase Real Estate [New York Sun]
NYC Real Estate Prices Strong – For Now [Gothamist]
No Surprises In Manhattan Real Estate Poll [NY Press]
Manhattan housing prices in record high [Construction Digital, UK]

Radio and TV clips

[October 2, 2007] CNBC

[October 2, 2007] Bloomberg Television

[October 2, 2007] NY1 News

[October 2, 2007] Bloomberg Radio

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Business As Usual+: Miller Samuel Is To Be Acquired By Radar Logic

September 27, 2007 | 9:00 am | |

Its an exciting day for all of us at Miller Samuel.

Our firm, which has been tirelessly providing unbiased appraisal reports and market studies since 1986, is being acquired by Radar Logic, the data and analytics company enabling derivatives trading in the RPXâ„¢ market based on daily prices for residential real estate.

We are “business as usual”

Whats new?

  • We will be able to leverage our valuation and market reporting expertise with the groundbreaking data analytics pioneered by Radar Logic.

Stay tuned!

Press release [pdf].
Press Release [Market Wire].


Wonderfully complimentary blog posts:

A Champion reigns [Property Grunt]
Radar Logic to Acquire New York Real Estate Appraisal Firm Miller Samuel [Sellsius]
Radar Love for Miller Samuel [Altos research]

News stories:

Miller Samuel, Appraiser, to Be Sold to Radar Logic [Bloomberg]
Radar Logic to buy Miller Samuel [The Real Deal]
Miller Samuel acquired by Radar Logic [Crains]
Radar Logic acquires Miller Samuel [Inman News]

A New York Story: Pop Goes The Country

September 18, 2007 | 10:11 am | | Public |

The bi-annual real estate issue of New York Magazine had been talking about a crash since 2003. However this year, they apply a more reasonable discussion to the burning question: Why is New York different and how long will it last? (since their new owners took over a few years ago, editorial content has returned the magazine to “must-read status”).

Aside: Of course I love the fact that the average sales price for Manhattan 2Q 2007 presented in the Prudential Douglas Elliman Manhattan Market Overview that my firm authors of $1,333,316 is on the cover (something about loving numbers).

While I am not in total agreement with all the content, it is a refreshing approach because the article tries to present both sides in a best and worst case scenario format. The take away is weighted toward the pessimistic view.

There is discussion of

Hyman Minsky’s ingenious model of asset bubbles, economic stability breeds riskier and riskier investors: First come the “hedge borrowers,” who play with their own money; they are followed by “speculative borrowers,” who have enough cash flow to keep the lender at bay but not enough to cover the principal investment, and finally “Ponzi borrowers,” who are, as the name suggests, borrowing to refinance other debts they can’t meet, in the wild hope that the market will keep climbing.

Of course, New York had very little speculation during the New York housing boom so this applies more to borrowing habits of market participants.

The article references economists I admire and have quoted in the past: Joseph Gyourko, Christopher Mayer, Todd Sinai, Edward Glaeser, Robert Shiller and Nouriel Roubini (whenever I am feeling too optimistic) plus several others. Brad Inman coins the phrase: “Irish Effect.” They also included my friend Noah Rosenblatt, who runs and is someone I recently discussed the housing market for hours after midnight on the tarmac of Atlantic City’s airport on a grounded jetBlue flight from the recent San Francisco Inman conference (how cool is that?).

Worst Case: In this scenario, a full-fledged credit crunch rips through the system. The August employment figures, showing no growth for the first time in four years, are the beginning of a serious downward trend. The economy heads for a hard landing, and an all-out recession ensues.

Best Case: In this instance, the current liquidity problem is contained by the end of the year. Employment figures pick up in September. Global growth continues.

A correction to the article is needed: The widely quoted Case Shiller Index doesn’t include co-op and condo sales as indicated in the article, which is 96.9% of the Manhattan sales market, nor does it include new development and foreclosures.

This just in: Lehman’s net declines, but less than analysts expectations.

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Can We Reach A Freakin’ Quorum About Housing?

August 20, 2007 | 12:01 am | |

Besides having a lot of admiration for the never ending contrarian ideas of Stephen J. Dubner, a la Freakonomics, it provides a great excuse to use “Freakin'” in public and not get scolded or lose my temper.

He gathered 5 real estate veterans to get their take on the questions: Is it finally time to believe in the housing bubble? And how much should the average American care?

He solicited comments from:

Robert Shiller: author of Irrational Exuberance and one of my economics’ heroes, who seems to be more optomistic than his introductions before various interviews would seem to suggest:

It is not clear whether the boom has come to an end; there is still investor enthusiasm out there.

Lawrence Yun: the new chief economist for NAR, who has taken the torch from his predecessor by dissappointingly finding obscure positive elements to expound upon that conflict with each other.

All real estate is local, and there are many local variations…The national median price was 1.1% lower in the second quarter of 2007 than its comparable period the year before….If people want to call the 1% price decline a bubble collapse — well, everyone has an opinion

David Lereah: the former NAR chief economist who gave this job title a bad name. He missed the opportunity to make NAR a trusted resource during the housing boom and post-housing boom periods, re-inventing phrases like “housing expansion” and balloons. A number of my agent colleagues were embarrassed by the things that he said during his tenure.

Bubble is the wrong imagery for today’s housing markets. Bubbles inevitably “pop.” A more useful image for the housing markets is a balloon. Balloons expand and deflate.

Barbara Corcoran: the former head of one NYC’s largest brokerage firms that bears her name. She was a brilliant marketer who really needs to re-connect with the market today. I am thinking that what worked 10 years ago doesn’t work today because I doubt that people believe she is running around the country snapping up property like picking apples from trees. But then again, I don’t understand marketing.

I’m yahoo-ing, low-bidding, and snatching up deals wherever I can find them…I’m grabbing as many over-priced, over-stuffed, and over-rated homes as I can get my greedy little hands on.

Aviv Nevo: one of the authors of the controversial Madison FSBO article who raised a lot of eyebrows with the study for his sharp insight, but also its limited applicability to the national market (not his fault at all). BTW, have you been to Madison lately? and is Jocko’s Rocketship near the football stadium still there?

I don’t know if it is time to believe in a housing bubble, and, frankly, I am not sure the average American should care.

Amir Korangy: founder and publisher of The Real Deal, to whom I have a particular bias, being in their publication a number of times, but for good reason: its a go to resource that is growing fast and has seemingly bigger than a Manhattan White Pages (8 pages of Millers, last time I checked).

Real estate prices are a local phenomenon based on employment, industry, and other factors including climate, quality of education, cost of living, immigration, and crime. Therefore, if the concept of a national housing market is ultimately a false construct, there simply cannot be a national housing bubble.

So why am I rambling about all these commentators in one column by a really smart contrarian economist? Because it speaks volumes about the residential housing market and how we see (or don’t see) it. The commentary represents a world filled with mixed signals, spin (cherry picking), more spin, limited applicability, out in left field silliness and rational thought, which leaves us freakin’ hungry to read more.

Oh, and by the way, I don’t think there was a quorum on the state of housing here.

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Inman TV: Blogging Superstars Clip

August 14, 2007 | 11:11 pm | | Public |

Well, it was pretty flattering to be in the company of bloggers that I admire so much as panelists at Inman Real Estate Connect. Inman TV posted a clip of the panel discussion. Brad moderated the The Blogging Superstars panel. Superstars as a name is a bit over the top. There are so many great bloggers out there.

All the panelists spent some time together in the green room (it wasn’t green) before going on stage. Even though the audience was 1,000+, cameras, stage, etc. I thought the mood was pretty relaxed. Brad is very engaging as an interviewer. Teresa is a dynamo, Kevin pulls no punches, Ardell is truly innovative and Noah is rentless relentless.

Although technology was being pushed and blogging was seen as a marketing vehicle to all real estate agents, I didn’t really agree (but I was the only non-agent on the panel). I think all agents should consider blogging for marketing their brand, but for the majority, it just won’t work. Given the time constraints, variation in writing ability and the ability to connect with the audience, its hit or miss. In addition, everyone on the stage approached blogging differently, so there is no simple template.

However, passion for our topic was what all of us clearly had in common approach. I’d almost say that there needs to be an underlying desire to put your thoughts out to the public, to the point where your friends and family ask the question: “So tell me again why you are doing this?” I think your blog’s association with your business almost needs to be an afterthought.

Here’s a photo, and yet another, and another, and another.

Guy Kawasaki, formerly of Apple Computer once defined the Internet as:

“[30] million people interacting with people they don’t know; about topics they don’t understand; for reasons they can’t explain.”

Thats how blogging started for me.

Housing PR Shampoo: Forecast, Revise, Repeat

August 10, 2007 | 8:59 am | |

One of the minefields of business is to predict the future. Few are particularly good at it, but its expected, wanted and needed by those who follow a particular industry.

The National Association Of Realtors, who before the recent housing boom, was the go to source for housing market forecasts before the blogosphere taught everyone to question everything. Thats a good thing.

Technically things haven’t changed much. A trade group is forecasting market conditions, whose influence impact their members (otherwise they wouldn’t bother)The NAR is still issuing forecasts, changing their forecasts and they are still being reported to the public as newsworthy stories. It seems like a straight press release rather than a news story, doesn’t it?

One of the things that has always bothered me about NAR forecasts is there doesn’t seem to be anything behind them, statistically speaking. A logic is presented, that when presented in the backyard bbq, makes everyone nod in approavl. Bad weather, poor consumer psyche, etc. Its simply sound bite driven. I have written about this before, but I guess it still bothers me.

Its one thing to project lower sales activity because of unseasonably cold temperatures keeping buyers indoors or vice versa, but that should be extrapolated through statistics and shared. Showing temperature against demand. Something. It gets cold every winter, it gets warm every summer. If the stats are seasonally adjusted (I haven’t ever been able to find their methodology for this, can anyone provide some insight about this to me?), it would be simple enough to show a pattern.

Sorry for the whining, but I find this whole thing exhausting.

Here’s a possible 2-year NAR forecast pattern by month:

  1. Market is doing well: Release glowing forecast, revised with more glow
  2. Market is doing well: Release glowing forecast, revised with more glow
  3. Market is doing well: Release glowing forecast, revised with more glow
  4. Market is booming: Release glowing forecast, revised with more glow
  5. Market is booming: Release glowing forecast, revised with more glow
  6. Market is booming: Release glowing forecast, revised with more glow
  7. Market is doing well: Release glowing forecast, revised with same glow
  8. Market is doing well: Release glowing forecast, revised with same glow
  9. Market is cooling: Release glowing forecast, revised with same glow
  10. Market is cooling: Release glowing forecast, revised with less glow
  11. Market is falling: Release glowing forecast, revised with less glow
  12. Market is falling: Release glowing forecast, revised with less glow
  13. Market is falling: Release glowing forecast, revised with less glow
  14. Market is falling: Release glowing forecast, revised with less glow
  15. Market is falling: Revise forecast lower, revised with positive signs
  16. Market is falling: Revise forecast lower, revised with positive signs
  17. Market is falling: Release slightly negative forecast, revised with positive signs
  18. Market remains down: Release slightly negative forecast, revised with positive signs
  19. Market remains down: Release neutral forecast, revised with positive signs
  20. Market shows slight improvement: Release positive forecast, revised with more glow
  21. Market shows slight improvement: Release positive forecast, revised with more glow
  22. Market shows slight improvement: Release positive forecast, revised with more glow
  23. Market shows slight improvement: Release positive forecast, revised with more glow
  24. Market is doing well: Release glowing forecast, revised with more glow

Perhaps I am exagerating a bit, but I have spoken to many Realtors over the years who wish NAR would lay off a bit. In other words, speak to accuracy. I understand the need for public relations as an organization, but to have a “chief economist” or “senior economist” release warm and fuzzy straight public relations stuff is probably a disservice to their membership.

UPDATE: Check this simlar whining rant on Motley Fool.

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