Matrix Blog


[List-o-links] 3-8-07 From The Tank: SUCK As A Real Estate Market Description

March 8, 2007 | 7:34 am | |

Here’s a collection of studies gathered from the Tank, with the exception of the first two. I was intrigued by the use of the word suck in public commentary. Uncommonly refreshing. This is the same person who characterized homebuilders as being in a death spiral last fall.


[List-o-links] 2-20-07 From The Tank: Being On Vacation Means You Don’t Have To Say You’re Sorry

February 20, 2007 | 11:39 am | |

This week I am on vacation from taking vacations and have a little more free time to read from The Tank.

  • [Think Small [NYT]](
  • [Truth in affordable housing [Boston Globe]](
  • [Davos Is for Wimps, Ninnies, Pointless Skeptics [Michael Lewis – Bloomberg]](
  • [Great Moments in Public Relations [Money Blog]](
  • [The Psychology of Pricing [NYT]](
  • [Washington Post-ABC News Consumer Comfort Index Survey [WaPo]](
  • [Straying over the property line isn’t always deadly, but it can be dangerous [Lloyd – SF Chron]](
  • [Far-flung suburbs want good life too [LA Times]](,1,6820367.story)
  • [Housing starts: The bottom falls out [Salon]](

[List-o-links] 2-1-07 From The Tank: GDP is PDG Sans Inflation

February 1, 2007 | 12:01 am | |

Since this week is all about stats, impressions and spin, here are a few shot from the turret of The Tank.

  • [100 Bottles of Beer on the Wall [PIMCO]](
  • [A Rudolph House Gets Brutal Treatment [The Architect’s Newspaper]](
  • [Why Penis Will Make This a Most-Read Story [Michael Lewis – Bloomberg]](
  • [Long Island Housing Costs Skyrocket []](
  • [Stricter Standards Sought for Lenders, Brokers [WaPo]](
  • [Remember normal? [LA Times]](,1,3958659.story)
  • [How Jobless Rates Forecast the Super Bowl [Norris Blog-NYT]](
  • [NAR’s David Lereah: His Own Words on Housing [Big Picture]](
  • [As the rich get richer, the livin’ gets easier [Lloyd-SF Chron]](
  • [HouseMath 2.0](


[List-o-links] 1-11-06 From The Tank: Surge and Escalation

January 11, 2007 | 9:19 am | |

Since this week is all about surges and escalation, here are a few treads from The Tank.

  • [Redfin vs.’s Allan Dalton [Trulia]](
  • [10 Good men [The St. Paul Real Estate Blog]](
  • [Economists eye housing, Wall Street [CT Post]](
  • [Housing Data Yield a False Sense of Complacency [Bloomberg]](
  • [Apple iPhone [Apple]](
  • [Failed Condos Spur Rise in Vacant Apartments [WSJ]](
  • [Resetting the DOM to sell “stale fish” [SF Chron]](
  • [UCLA Anderson Forecast Holds the Line: No Recession in National Forecast [UCLA]](
  • [Want to improve your economic forecasting? Watch the Weather Channel [Northern Trust – pdf]](
  • [US housing market may slow world economy [BW]](

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[Media Chain-Links Without The Snow] 4Q 2006 Manhattan Market Overview

January 3, 2007 | 8:51 am | | Public |

The 4Q 2006 Manhattan Market Overview that my appraisal firm, [Miller Samuel](, authors for [Prudential Douglas Elliman](, was released for publication today. In order to include the entire quarter for the study, I spent the good part of the New Years weekend while away on vacation in a Starbucks crunching and analyzing while drinking too many vanilla skim lattes. Thats why the pretty version of the report [will be available in a few days]( rather at the point of release to the media.

The raw 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 soon online. I tend focus only on the data collection, verification and analysis until the media publishes the findings.

Each quarter I place links to articles about our market report for a few days after publication for perspective (plus I am obessed with making lists) to make it easy to compare how each media outlet (big and small media, blogs) presents the exact same set of data.

This article list is presented in no particular order, 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.

[Home Prices Fall Just a Bit; Brokers See ‘Soft Landing’ [NYT]](
[Manhattan real estate cools off [CNN/Money]](
[Real estate still strong [NY Daily News]](
[Apartments up at least 5% in Manhattan [Newsday]](,0,4471241.story?coll=ny-business-print)
[Manhattan Apartment Prices Rise 3.2%, Sidestep U.S. Declines [Bloomberg]](
[Reports Contradict Predictions of Apartment Market Slump [NY Sun]](
[Manhattan apartment downturn short-lived: report [Reuters]](
[Brokerages Turn in Homework for the Semester [Curbed]](
[Brokerages: Market is stable [The Real Deal]](
[A Look Back in 2007! Manhattan Is Still an Islan [NYO-The Lab]](
[Reports show real estate slowdown [AM New York]](,0,5101712.story)
[Average Manhattan apt: $1.2M [Metro]](
[Home is where B’klyn bucks are, reports show [NY Daily News]](
[Market for Manhattan Apts. Strong [Chicago Tribune]](,0,6411490.story?coll=chi-business-hed)
[Market for Manhattan apartments remained strong in 2006 [Boston Herald]](
[Real Estate Bubble Slowly Deflating, Not Bursting [Gothamist]](
[Market for Manhattan Apts. Strong [Tuscaloosa News]](
[Manhattan apartments go for an average $1.14-million (U.S.) [Globe and Mail, Canada]](
[Market for Manhattan apartments remained strong in 2006 despite national dip, analysts say [San Diego Union Tribune]](
[Market for Manhattan Apts. Strong [Sun-Sentinel]](,0,2093084.story?coll=sfla-business-headlines)
[Manhattan apartment downturn short-lived: report [WaPo]](
[Manhattan apartment downturn short-lived: report [MSN Money]](
[Manhattan apartment downturn short-lived: report [KPLC-TV/Lake Charles, LA]](
[Manhattan apartment downturn short-lived: report [Reuters Canada]](
[Market for Manhattan apartments remained strong in 2006 despite national dip, analysts say [IHT]](
[Mean Manhattan apt. price up to $1.1M [ABC]](
[Healthy Year for Manhattan Real Estate Market [RISMedia]](
[NYC Apartment Market Prices Up with Inventory Growth Dropping Sharply [Earthtimes]](,39849.shtml)
[NYC Apartment Market Prices Up with Inventory Growth Dropping Sharply [Yahoo Business]](
[Reuters Canada Business Summary [Globe and Mail]](
[Manhattan real estate prices still rising in Q4 [Inman – Subsc]](
[Manhattan real estate market remains strong [Courier News (NJ)]](

Radio and TV clips

[January 8, 2007] [The Real Deal](
[January 7, 2007] [WABC-TV](
[January 3, 2007] [Bloomberg TV](
[January 3, 2007] [WABC-TV](
[January 3, 2007] [WABC-TV](
[January 3, 2007] [WABC-TV](
[January 3, 2007] [WNBC-TV](
[January 3, 2007] [Bloomberg TV](
[January 3, 2007] [Bloomberg TV](
[January 3, 2007] [Bloomberg TV](

[January 3, 2007] [Bloomberg Radio](
[January 3, 2007] [Bloomberg Radio](
[January 3, 2007] [Bloomberg Radio](

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[List-o-links] At The Golden Gate: I Left My Heart In New York

December 4, 2006 | 11:35 am | |

For the next two days, my posts will be a bit sporadic. I am in San Francisco for business. Its one of my favorite places. The weather is perfect but I am desperately trying to stay on New York time. Its hard to get up at 3:30 am PST, no matter how you try to convince yourself.

Here’s a few links that may be of interest.

  • [Bonfire of the Vanities: Novelist and Economist Smackdown Over Proposed NYC Development. [Businessweek]](
  • [Conforming Loan Limits Unchanged As OFHEO Wakes Up From Hibernation [Sac Bee]](
  • [Bank Problems As Easy Credit Forces The Into Beige From Black [NYT/Norris]](
  • [Case Shiller Index Shows Housing Goes Soft [S&P (pdf)]](
  • [‘Cognitive Dissonance’: A Term Some Past Buyers May Want To Understand [WSJ]](
  • [Rhymes with “Treat”: Reits Are The New Contrarians [SFGate]](

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[Matrix Zeppelin] Stuffing omelettes, fire sale, skewed, inconsistencies are consistent, in the black, rolling junker, your britches

November 27, 2006 | 12:02 am |

Inventory levels stirred the most discussion in the shortened holiday week and a lot more answers than the original post was attempting to provide. And lets not forget Stuffing Omelettes, represented to be insanely good and now served on the Matrix Zeppelin:

  • In a stabilizing/stagnant market, you don’t want to flood the market with units, and so you may choose a specific unit type to offer and figure that the remainders will either be sold alongside them, or held back for rentals. Much of the pricing strategy depends on when the developer sees their first returns. With a 90% LTC, it may take until the penthouse floors are sold for the developer to actually see their ‘profit’…In general, you save the PH for last so that you can leverage the successful sell-out of the lower floors to command a high premium for the PH. If you’ve already made your returns, then you might be wiling to fire sale the remainders.

  • If the number of condo units being built is spiking up in recent years, leading to new condos being a larger percentage of overall housing stock, then even if the percentage of new condos being warehoused is a constant, wouldn’t those held-back inventory units be increasing as a percentage of overall units available? Meaning data is more skewed now than a few years ago?

  • I have a similar problem in Charleston. My inventory numbers on condo/townhomes are off because the marketing agents will not list all of the active condos when they are available. For example there is a 315 unit condo conversion and the realtor only has 5 units as active in the MLS right now. This really skews the inventory numbers in the market and it is impossilbe for me to track all these scenarios.

  • Clearly the tic upward in new developments under construction would skew the unreleased inventory numbers upward a little as well. Does it matter? Is it inventory if it isn’t built yet? When I sell in new construction it may take several months to a year to close the deal. It seems that the equally significant numbers are related to sales volume. The sold and closed deals from new developments today, reflect a significant delay in buyer activity from as much as a year ago. Likewise, I’ve a number of new development deals in contract for next year that represents buyer activity from the second half of 2006. It means that there is hidden buyer activity too. Since it’s ultimately a supply and demand question, to be relevant, doesn’t the inventory question need to be considered in relationship to absorption? How is it possible to really understand it at all with so much elasticity in the timing of that relationship? Suffice it to say Johnathan, that the post raised more questions for me than it answered; but I’d agree with you that, “…this technique has been done for as long as I can remember, inventory numbers should still show reliable trends. In other words, the count would be considered a constant in the equation.” At least I can take comfort in the fact that the inconsistencies are consistent.

  • Once a developer is in the black, whatever the mix, prices will climb – even if simply to tell customers to submit offers, that invariable tend to be high offers (or higher than the previous asking price) – you can achieve this in any market as long as your initial marketing mix creates a feeling of something being exclusive – once you have that and have sold a unit or two – even at low numbers – you simply make your money back on the remaining property.

  • I always get a chuckle when I see signs like that – or the ones that say “Make $3000/mo P/T – $8000/mo F/T”. You’d think if they were so successful, they could afford to have professionally-made signs. The best one, however, is the sign on the rolling junker that says “We buy houses”. Yeah, right… you can’t afford four tires that match, but you can buy a house for cash…

  • Speaking of stuffing. The next morning use the stuffing to make Stuffing Omelettes. It is insanely good.

  • We see signs, just like the one shown above, all over the Ocala area… and yes, we are also seeing the “We Buy Ugly Houses” ads as well. Just hold on to your britches, the next year should bring us more comedy in Real Estate!

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[List-o-links] From The Tank: Freaking Out, Knockout, Liars, Orange Juice and Nicaragua

November 27, 2006 | 12:02 am | |

Silver linings ran amok this week – so I put ’em in the treads to get the tank off the beach.

  • [Real estate spin gets exported to Central America: Former strongman and new president Daniel Ortega apparently is good for Nicaraguan real estate [Coldwell Banker]](
  • [Rates versus Prices [BW]](
  • [No knockout blow yet in fight over Fed outlook [MW]](
  • [A Season of Lofty Expectations [NYT Dealbook]](
  • [Liar’s Loans (No Doc Mortgages) [WaPo]](
  • [2/3’s of Economists Say the Worst of Bust Is Over in WSJ survey [REJ]](
  • [Freaking out about WSJ’s survey, a broker’s perspective [Realty Times]](
  • [Conventional loan limits won’t change if prices decline [Calculated Risk]](
  • [4 Things to Serve When a Central Bank Chief Drops By for Breakfast [NYT Norris Blog]](
  • [Black Friday Becomes Cyber Monday [NRF]](


[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]](


[List-o-links] From The Tank: Tools, Lessons And Messages

October 27, 2006 | 12:05 am | |

Periodically I purge some links I collect that are worthy of a post or were interesting or fun, but I didn’t have enough time to expound upon and too much time had passed by. Since I didn’t want them to let them be forgotten, I pulled them out of the tank – definitely worth checking out.

  • [Zillowed gets “FTC’ed by the NCRC [Curbed SF]](
  • [Treasury Secretary Paulson Doesn’t Understand Wealth Effect [Big Picture]](
  • [But Paulson Sells $8M Condo [Bloomberg]](
  • [Economists say not at bottom [MW]](
  • [Tool to make real estate purchase decision [Ken White]](
  • [Philosophy of Boredom [U of C]](
  • [BofA did it right, WaMu did not [BW]](
  • [Hiring a Resident Broker to Sell Your Apartment [True Gotham]](
  • [Sponsor Sales in Your Neighborhood? [Urban Digs]](
  • [“economic rent” explained (it is not what you think) [Manhattan Loft Guy]](

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[Matrix Zeppelin Series] starry-eyed, rents have gone up, notice of default, stat worthless, being greedy, See you next Tuesday, DEADCAT BOUNCE, one $200 meal, sanctions

October 16, 2006 | 12:01 am | |

This week a lot of time was spent discussing rising rents, the bounceback, forclosures and discussion of new brokerage models, that ignited some great contributions. I was pounced on for being a little cavalier about a thorough research paper. (But there is no pouncing allowed in a deadcat bounce.) Read it on the Matrix Zeppelin:

  • I think that I make a reasonably good case that brokers offering new rate structures are being illegally discriminated against in many ways, and as the Wall Street Journal editorial page complained in 2005, sanctions against brokers have not been forthcoming.

  • Commissions based on the % system of compensation will always be criticized as unfair for the same reason a waiter serving one $200 meal gets a $40 tip while one serving five $20 meals gets only $20.

  • Also the bounceback you talk about, could also be a DEADCAT BOUNCE.

  • You say, “See you in six months” when a buyer says they don’t want to buy now. I say, “See you next Tuesday.”

  • What all of you have neglected to realize is that this process virtually assures that the borrower ends up with the best offer. If you are worried about losing the referal business that you have worked so hard to cultivate, maybe you need to make sure that you have the best offer available on the table for your customers (instead of being greedy). You should also be sure that it is your customer’s best interests that you are concerned with (fiduciary responsibility??), and not your own. If you don’t do these thing, I am going to be there to take your business and your referal business will forever and after be mine.

  • If half say prices are going up is that a good thing? I don’t think you can say. If they already think houses are overpriced, the belief they will rise further would not lead me to believe they are happy about the prospect of overpaying some more. And how many of those who answered the poll Yes going up, were in the market to buy? If most of these YES votes were homeowners who just bought I think they would rationalize they made a good investment, thereby rendering the stat worthless in my opinion. Also, the other half sees prices as going down or neutral (you don’t state in your post for comparison). I don’t see that as positive news since if you believe housing prices will drop you will WAIT until they do before you buy, wouldn’t you? I guess, in the final analysis, it’s just a half a glass of water.

  • The important metric is how many homes out of the total inventory are currently in foreclosure. Why? Because homes in any stage of the process are under pressure to be sold quickly. In a market with 7+months of inventory, that means even Notice of Default homes (not yet foreclosed) will have to be discounted to sell before the Notice of Foreclosure goes out. By the way, when I said the homes have, “entered the foreclosure process” in my previous post, I meant that they have received a notice of default or are at auction/REO.

  • Lets say rents have gone up 30% this year. Explain to us how landlords would be able to continue to raise rents 30% per year for the next 3 years, if people’s income did not increase at that rate as well? I think Skep-tic’s point is, that people could use many different types of loan products to buy apts in Manhattan, i.e. interest only neg. amortizing, to name a few, and thus leverage their income to pay more and more to buy an apt. But you can’t do this when you rent an apt.

  • This sounds an awful lot like surveys of individual investors in late 2000, who still had starry-eyed expectations of 10% annual gains in their equity portfolios, in spite of all evidence to the contrary. A population with no basic understanding of economics and a vested interest in the status quo is going to take longer than would seem rational to come around to reality.

[Matrix Zeppelin Series] utter desperation, Madden Curse, collapse city, anonomous wolves, sales are way off, listen to the CEO’s, parallel universe, blink first, entry barrier, fierce competition, stretch to buy, WAY south

October 6, 2006 | 2:36 pm | |

A lot of grumbing about the economy and real estate brokers this week (that isn’t hot air) as well as some carry over on the herd mentality discussion last week. Here’s a few notable comments from the Matrix Zeppelin:

  • Concerning the issue about the media and the herd mentality – There is no question in my mind that the media helps create a mindset that pushes the trend to the extreme. I am a regular reader of Last year, they ran a regular series of articles called “Mogul in the Making” that show cased how some average person (like a fireman or a housewife) was making big bucks in real estate. The articles mostly made you feel like you were missing out if you were not investing in real estate. During that time, never once did I see an article about someone’s home not selling. Now, they run an article about once a week called “Help – my home won’t sell” and showcase someone who had high hopes of a quick sell and it’s just not happening. The articles are written to show utter desperation on the part of the seller. In the “hot” market, I know of homes that sat on the market for months, and I now know of homes that have sold in a matter of days (I am in Atlanta). Once a trend starts, the media shows no balance at all, which in turn helps drive the “herd” to the extreme.

  • The funny thing about Herd Mentality (and something that Wall Street veterans know) is that going in other direction can be much more profitable. I look at Money Magazine cover stories and I think of the Sports Illustrated Curse. If you’re younger than 25, you may also know this as the Madden Curse. Anyway, I am envious of homebuyers in the market right now. Not only are mortgage rates the lowest that they’ve been in 6-8 months, but sellers are fearful of not being able to sell. Low rates and low prices — an excellent buying situation.

  • I would hate to be in a fox hole with Ms. Corcoran. Her suggestions have panic written all over them. If I were interested in her clients home I would know beyond a shadow that they were in “collapse city” mode. Maybe some creativity and good old fashion overtime would help. Problem is these sellers have signed up for a closing as quick as possible evidently. Buyers lick your chops. It’s time to unleash the capital now that everyone is locking down.

  • [re Curved: Three Cents Worth] Holy Crap did you get thrown to the anonomous wolves! I love that when one person voices their opinion openly, it is criticized by those unwilling to stand by their opinion with their name. At least I like the graph… Good job.

  • I don’t see why anyone would be envious of buyers when affordability is at an all time low. The fact that sales are way off in an environment of low interest rates and solid employment reveals just how far prices are from sustainable.

  • I think the key point that needs to be highlighted is that the July numbers were revised significantly lower than previous. If you go with the original July numbers Aug would be lower. My guess is they will futher revise the Aug numbers lower once all the new construction cancellation factors in. One just needs to listen to the CEO’s of Lenar, Toll, etc on what the market is doing.

  • I’ve thought since this spring the short term rates would be falling simply as a corrective response to Greenspan paranoia. The inflation he was constantly fighting simply didn’t exist, at least to the extent he wished us to believe. The economy has been absorbing all the ‘extra’ money supply. What I’m really eager to see is how the Fed responds to $45 oil, becuase it appears it’s in our near future. Will they call the positive economic response inflationary? If so, we’re in trouble again. Sometimes I think the Feds live in a parallel universe.

  • So whats it going to be. Are owners going to blink first or buyers. Will it be a soft landing,or will prices continue to decline gradually over a long period of time? I have a question for every owner trying to sell their apt in manhattan. Can they afford to buy their apt today for the price they are asking. Do they have the cash available for the down payment, do they have have the income necessary to service the mortgage debt. I bet the answer to this question by most sellers would be no. So what makes them believe that someone else out there can?

  • It is unfortunately true that the entry barrier for real estate brokers is very low, especially in New York. I have always found it odd that one of the toughest real estate markets in the world has such low qualification requirements for its professionals. Good news is, Department of State has decided to raise the bar. If there is no change in plans, as of January 2007, the number of hours required for licensing as well as continuing ed will increase. Although it is not quite sufficient to bring the industry standards to the necessary level, it is a start.

  • Thanks for posting this. I am seeing articles on line that indicate that new agents had it easy and will be the first to leave when things get tough. This business has never been easy. New agents had fierce competition because there are so many of us. Some of the experienced agents are the ones the coasted through the boom years and they may have trouble. They were so busy they did not take the time to learn new skills. They will wake up and realize that if they can’t use a computer they may be in for a rough ride.

  • I’m surprised the number of people in NYC spending 30% of their income is so low. I certainly spent more than that when I lived on Avenue A. On a side note, I will suggest to the NYT that Boulder and College Station, where nearly 50% of renters spend 50% of their income are both home to large public universities, so the incomes may be skewed. As one who now manages a portfolio of workforce housing communities across the midwest and south, we’re noticing a nice uptick in occupancy and a gentle increase in rents. We don’t operate in markets like DC, where the ‘conversion’ fad removed a large portion of the managed rental stock (as opposed to investors who will rent individually), so rents are rising because of demand, not a lack of supply. That said, I don’t agree with Mr. Frey that people necessarily stretch to rent as much as they stretch to buy. I think they rent where they feel safe, find attractive amenities, and can make their rent payments without unreasonably stretching.

  • If inflation continues to be a concern (as it is now, accorsing to fed statements), the Fed cannot cut rates. If it does, long rates will rocket up, making refis impossible. If inflation plummets and allows the Fed to cut rates, that means the economy is heading WAY south next year. I see no good outcome here.

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