New Brokerage Models Flourish (NAR Needs Redfin’s PR Firm)

September 5, 2006 | 12:01 am | | Radio |

Damon Darlin’s [The Last Stand of the 6-Percenters? [NYT]]( was a really great overview of new brokerage services that are being offered. The article was very informative. However, after reading it, the article made me wonder who on earth would ever use a traditional broker again? Its not what I think the intention of the piece was.

New technology and new business models were pitted against longstanding tradition and a proven track record. There was a great phrase in the article referring to the difficulty of innovation in the real estate brokerage industry:

It’s a thousand tiny shackles on innovation.

A valid point. Innovation can ruffle feathers.

Well, rather than the idea that full service brokers are obsolete, I think the takeaway should be that there is room for both the old and the new. Like [Dottie Herman, CEO of Prudential Douglas Elliman]( (the firm for whom I author their [market reports]( for) said at Inman San Francisco: [Technology won’t replace agents, agents with technology will replace agents [RCG]]( Exactly.

The irony in all this is the fact that the housing boom coincided with new venture capital monies which provided the opportunity for so many real estate start-ups to in fact, start-up. In fact, I see this as more of a dotcom real estate boom, with so many legitimate business models, rather than most of the silliness we saw in the previous dotcom boom, where thoughts of actually turning a profit would be figured out later.

Some of these new real estate technology sites will fail as the housing markets cool or their idea doesn’t catch on, while others will survive and thrive. Change can be good but its kind of hard when the system in place has been around for a long time.

I find that one of the weaker arguments to the new real estate models has been the idea of cost savings. Despite the near monopoly of listings through traditional MLS systems, there is the assumption that its an even playing field. In other words, users of these discount brokers assume that the property gets exposed equally whether its a [Foxtons listing (remember Your Homes Direct?)](, a [Redfin listing]( or a full service listing, when in fact, I would speculate that it does not.

More eyeballs on a property, especially broker eyeballs, yield a higher chance for a higher price or simply a sale. In other words, a seller may be saving costs, but they could be working off a lower base (sales price) number because of the lower exposure. The cost savings seems to be more of a potential future benefit than at present and its not really comparing apples with apples (in theory it is, but not in practice). The MLS system is proprietary.

And what is it with [NAR and public relations]( How can the NAR stir such ill will on a consistent basis? I continue to be amazed by their complacency and their disconnect with the public as an organization. Its tough to accept their word as gospel anymore. Even their current radio and TV ads about code of ethics seems to be too little too late. Its simply not fair to most realtors who are nice normal people and not the stereotype the profession has gained a rep for in recent years.

As a result, if you want to create a new real estate brokerage business model, now seems to be as good a time as ever.

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[Podcast] Downsizing: Moving Down The Property Ladder

August 23, 2006 | 6:57 am | Public |

Everyone looking at clues for weakness in the housing market and possible new trends. Bob Moon explored this in the recent piece called [Downsize my space [APM]]( where he interviewed a series of experts (including me) and consumers on the idea of trading down to smaller houses or rentals. Essentially cashing out of the housing boom.

The main story idea came from David Seiders of the National Association of Homebuilders, who is essentially their spokesman and suggests that the trend in expansion of the average home size since the 1970’s is easing. Decreasing affordability will cause them to be built smaller to keep the prices down.

I can seen his point. As housing costs rise, it would appear to be a reasonable assumption that the average size would contract. He doesn’t appear to be providing real evidence of this as a long term change, however. I think a problem with this logic is the idea that home sizes increased since the 1970’s even as home affordability was much less in the 1980’s and 1990’s with mortgage rates 2 to 3 times as high and strict requirements on 20% down payments a standard.

I provided the observation that people are trading down, not to cash out, but to buy a second home, which has been a factor of improved affordability. Keep the payments the same, but have more places to live. I would suggest that the second home market would be hurt well before people would purchase smaller primary homes.

[Listen to story [Real]](


Happy Birthday To Matrix

August 1, 2006 | 12:01 am | | Radio |

Well, its August 1, 2006 and its been a year to the day (technically not until 9:37pm, but who says there is that sort of precision in blogging) since I made my first post [“Appraising the appraisers” on National Public Radio]( on Matrix.

A few months prior to the first post, I had given serious thought to starting a weekly podcast to be able to express my views on real estate, a topic I am very passionate about, in an objective sort of way. While I was very excited about the new podcast medium (still am), I wasn’t sure if it would allow me the outlet I was looking for. I saw that many podcasts were delivered at that time through blogs and then it clicked…a blog! Why not 2 blogs?

I dubbed one blog [Soapbox](, which would cover appraisal specific topics (hey, I’m an appraiser). The name Soapbox was a title of a section I was planning to build on my web site []( to address the issues facing appraisers of the day. Simply standing on a soapbox seemed necessary to make appraisers heard. On July 18, 2005 (more than a year ago) I made my first post on my other blog Soapbox called [The beginning of the end, or how this mess got started]( I dove right in and worked out the technology kinks and created some efficiencies to make it practical to run 2 blogs.

The other blog I dubbed [Matrix]( which would cover the real estate economy. The name Matrix concerned itself with a definition at A situation or surrounding substance within which something else originates, develops, or is contained. It seemed that real estate was that surrounding substance, plus the movie was pretty cool, even on the 10th viewing (just the first movie). Last month, Matrix was finalist in the [2006 Inman Innovator Award Finalist]( for a real estate blog, which was very gratifying, especially given the company of the other finalists.

I have learned a lot from the process and simply enjoy writing and getting feedback from readers as well as lurkers I run into as I do my job. Its like doing your homework on the issues of the day, so I am usually prepared to discuss the topics when at a speaking engagement. I love exporing topics and finding that angle that has not been explored before. I can’t stand blogs that simply copy news from media outlets and other blogs and provide no insight.

There are always plenty of topics to cover since the real estate market dynamic is always changing.

My family has accommodated me timewise – at first they didn’t get what was so exciting about it – my 7 year old son (I have 4 sons) would ask me “Dad, are you going to blog today?” I changed my schedule so I go to bed at a reasonable hour to be able to get up at 4:30am to write my posts. Since August 2005, I have only missed a few days and have written 772 posts on Matrix (excluding Soapbox). Somedays 5 posts, somedays 1.

Its been completely fun. More to come. Thanks for reading and sharing. Just remember one thing, if you call me for market feedback or insight, I am going to ask you if you read Matrix today. I am relentless about that. Just ask anyone who knows me. 😉


[Media Chain-links] 2Q 2006 Manhattan Market Overview

July 6, 2006 | 6:07 am | | Public |

The 2Q 2006 Manhattan Market Overview that my appraisal firm, [Miller Samuel](, prepares for [Prudential Douglas Elliman](, was released today. Each quarter I place links throughout the day of publication to make it easy to compare how each media outlet (big and small media, blogs) presents the exact same set of data.

Even more interesting to me is how the other real estate brokerage companies who write alternative reports, frame their comments in the articles. While I have not had access to their specific results, I understand that some of the statistics such as average sales price, differed from the results in our report. Some of the reporters that cover the real estate market in New York have expressed frustration at trying to discern what actually happened this quarter.

To view the actual [data]( and [charts]( (going live by noon Friday 7-7-07). The [actual report pdf will be available next week](

This list is in no particular order and were generally presented when I found them. I included some of the duplicate news feeds because I found it interesting who picked up the story. I will keep adding to the list through the remainder of the week.

[Little Shift in Prices of Manhattan Apartments [NYT]](
[Manhattan Has Most Apartments for Sale Since 1994, Report Says [Bloomberg]](
[Mixed messages on Manhattan home prices [CNN/Money]](
[Manhattan apt. price hits record [NY Daily News]](
[Disparities in Manhattan apartment prices show a market that is neither booming nor busting [NY Newsday]](,0,5664699.story?coll=ny-business-print)
[Condo Expectations May Be Rethought As Prices Plunge [NY Sun]](
[Manhattan apartment prices leap despite sales drop [Reuters]](
[Manhattan real estate inventory grows [Inman]](
[NYC Housing Prices Keep Climbing []](
[Manhattan condos again outsell co-ops [The Real Deal]](
[Sales drop, prices rise in Manhattan market [The Real Deal]](
[2nd Quarter 2006: “The Boom is Done” [The Real Estate]](
[Manhattan housing prices up [USAToday (Miller Samuel)]](
[Brokerages Submit Reports, Hope to Avoid Summer School [Curbed]](
[Manhattan Apartment Price Hits Record Highs [All Headline News]](
[Investing: Rising rates depress N.Y. apartment sales [IHT]](

_Duplicate News Feeds_
[Sales mellow in Manhattan [Houston Chronicle]](
[Manhattan apartment prices leap despite sales drop [Yahoo News]](
[Manhattan has most apartments for sale since 1994 [The Journal News (Westchester, NY)]](
[Manhattan apartment prices leap despite sales drop [Washington Post]](
[Sales of Manhattan apartments falling [Sun-Sentinel]](,0,5055822.story?coll=sfla-business-headlines)
[Apartments On The Market In Manhattan Hit 12-Year High [Tampa Tribune]](
[Manhattan apartment prices leap despite sales drop [MSN Money]](
[Manhattan apartment prices leap despite sales drop [7KPLC (Lake Charles, Louisiana)]](
[Manhattan apartment prices leap despite sales drop [Wave3 (Louisville, Kentucky)]](

Here are a handful of radio and tv spots as well – more to come.

[[Bloomberg TV]](

[[WPIX WB11]](

[Morning Call [Bloomberg TV]](

[Bloomberg Morning Markets [Bloomberg TV]](

[Squawk Box [CNBC]](

[News at Ten [WB11]](

[News at 5 [Fox 5]](

[WSJ Report [WCBS Radio]](
[NPR poor fidelity – better clip coming [WNYC]](

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[Media Chain-links] 1Q 2006 Manhattan Market Overview

April 4, 2006 | 7:39 am | | Public |

The 1Q 2006 Manhattan Market Overview that my appraisal firm, [Miller Samuel](, prepares for [Prudential Douglas Elliman](, was released today. I always think its interesting (actually, its fun) to see how the various media outlets (Big and Small Media, Blogs) respond to the exact same set of data and how the real estate brokerage companies who write alternative reports, frame their comments.

This list is in no particular order and excluded all the redundant articles (ie news feeds). I will keep adding to it through the week after the initial post.

[Apartment Prices Up Again After a Slump in Manhattan [NYT]](
[Housing frenzy slows down[NYDN]](
[Wall Street bonuses lift Manhattan apartment prices [Reuters]](
[Reports: Luxury Housing Boom May Be Reaching Its Crest [NY Sun]](
[First Quarter Reports: Thousand Island [NYO The Real Estate]](
[Housing market still steady [NY Newsday]](,0,1077170.story?coll=ny-business-headlines)
[City Apts. Defy U.S. Bubble Trouble [New York Post]](
[Condo boom boosts Manhattan real estate market [Inman News]](
[Manhattan housing market shows weakness [CNN/Money]](
[Manhattan Apartment Sales Cool Off []](
[Manhattan Apartment Prices Climb at Slowest Pace in Three Years [Bloomberg]]( [IMMOBILIARE: SALE, SI SGONFIA OPPURE CROLLA [Wall Street Italia]](
[Manhattan housing market booms in first quarter [The Real Deal]](
[State o’ the Market Update: Through Thick and Thin, ‘Essentially Flat’ [Curbed]](
[Brokers say New York real estate market is cooling [Financial Times]](
[Wall Street Bonuses Fuel Manhattan Real Estate Surge [DJ]](no link)
[A game of telephone [Property Grunt]](
[Manhattan Market Up, Psychology Down in Q1 [Brownstoner]](
[Real Estate Rashomon [Walk-Through]](

Here are a handful of radio and tv clips as well.

[[Bloomberg TV]](


[[WPIX WB11]](


[[WCBS Radio]](

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They Sure Make Water Tanks Like They Used To

March 3, 2006 | 10:16 am | Radio |

I happened to glance outside my office window a few weeks ago and noticed a water tank being constructed. There are so many on the skyline, I didn’t notice the previous tank that was replaced. The exterior of my window was dirty from a season of snow and rain (and hard to open) so the quality of the photos are weak, but you get the picture.

Water tanks have always been a favorite of mine as evidenced by [our collection of them [Miller Samuel]]( They are one of my favorite items in the NYC skyline because of the contrast they provide. They are non-descript and primitive looking, and the design has largely gone unchanged since the mid-1800’s.

They contrast with the sleek new buildings that are being developed and are usually hidden behind the design (but still look like these). They are everywhere but one doesn’t get that impression from street level. You’ve got to be up high to appreciate the quantity of water tanks out there.

Here’s a series of interestng articles on their history:

  • [Holding Water For Generations [Block Magazine]](

  • [Charlie Zimmerman – WATER TANK BUILDER [NPR]](

  • [Talk Of The Town [New Yorker]](

Here’s the 24 hour sequence. I missed a few steps because I didn’t expect progress to go so quickly.


Derailing Conventional Wisdom: Creating Public Space and Inspiring Development From Abandoned Rail Line

December 19, 2005 | 12:01 am | | Radio |

Source: Friends of the Highline

In New York, urban renewal took the form of an elevated 22-block long section of train tracks to be turned into a future park called [The Highline]( and has spurred new residential and commercial development. Thats the result of the efforts of an organization called [Friends of the Highline []]( and the [New York City government.](

Source: Friends of the Highline

From Wikipedia, the story goes:

“The West Side Line, also called the West Side Freight Line, is a railroad line on the west side of Manhattan, New York, USA. North of Penn Station, at 34th Street, the line is used by Amtrak passenger service heading north via Albany. South of Penn Station, a roughly 1.5 mile (2.4 km) section of the line, popularly known as the High Line, is elevated and has been abandoned since 1980. The High Line (40°44.9′N 74°0.3′W) is in a state of extreme disrepair, although the elevated structure is basically sound. Grass and trees grow along most of the line, making it a natural oasis in urban Manhattan. There is a movement by community residents to turn the High Line into an elevated park similar to the Promenade Plantée in Paris. In 2004, the New York City government promised to invest $50 million in the proposed park. On June 13, 2005, the U.S. Surface Transportation Board granted a “certificate of interim trail use”, allowing the city to remove the line from the national railway grid.”

“The southernmost part of the High Line has since been demolished; as of mid-2005, the rest of the High Line is owned by CSX, which acquired it after the 1998 breakup of Conrail.”

There’s a really good podcast that can be downloaded from Smart City, a great resource for innovative thinking on urban development: [Smart City: New Uses For Old Railroads](

Highline under construction in 1930s

Roughly the same spot today

Additional photos
[Friends of the Highline Photo Gallery](
[Forgotten Subways & Trains](
[LTV Squad: Urban Exploration](
[MOMA Exhibit](

Additional background
[Future of the Highline (Design Trust 2001) [pdf]](
[Reclaiming the Highline (Design Trust 2001) [pdf]](


Bubble Challenge: Just The Facts

December 12, 2005 | 12:01 am | Radio |

In George Chamberlin’s column [By George: Words for Investors [North County Times]]( in San Diego provides some plain language to the discussion of the current state of the real estate market. He is a TV and radio commentator.

  • After the Fed release its quarterly household wealth report, CNBC ran alerts that Americans were deeper in debt than ever before but the report said that net worth rose to a record level.

  • Foreclosures are lower today than a year ago

  • As far as a slowdown in sales, the California Association of Realtors said it took 34 days to sell a house in October. A year ago it took 33 days.

  • The NAR report that pending home sales dropped 3.3% in November and that was reported as a sign of collapse yet in California, they rose 0.8% indicating that real estate is local.

  • The UCLA Anderson Forecast calls for a crash of Southern CA real estate prices over the next few years yet excludes San Diego county from their stats.

  • Wall Street has a vested interest in seeing housing slide to prompt more people to return to the financial markets.

Although this commentary is California-orientated and I am not an advocate for the real estate industry, the lesson here is for the media to fairly interpret the information released.

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Manhattan After The Hoopla Over A 12.7% Drop: What Really Happened In 3Q 05?

October 9, 2005 | 9:05 am | | Milestones |

After the release of our 3rd quarter [Prudential Douglas Elliman Manhattan Market Overview]( last Tuesday to the media and [the frenzy of coverage]( during the week as a result, the New York Times ran an excellent overview of the market story this weekend called [A Mixed Message [NYT].](

Since then, I have received many inquiries about the state of the market over the week from real estate brokers, wall street firms and lenders to interpret the statistics in the report that were played over and over in the media firestorm. Whats been fascinating about this whole experience is how much coverage was given to the average sales price statistic, which could not stand on its own without explanation. Hopefully I don’t sound too cynical but this stat was likely used because it showed the most negative result.

Here’s a quick list of the highlights of the current market that are most useful:

  • The average price per square foot set an all-time record reaching $984 per square foot and rising 1.4% from the prior quarter. This is the telling statistic. The overall market increased this quarter, but not at the same torrid pace as before. The rate of appreciation has eased. In fact, since larger apartments generally sell for more on a per square foot basis than smaller apartments, one could make the argument that the shift in unit mix also tempered this indicator as well.
  • There was a significant shift in the mix of apartments that were sold. The average sales price dropped 12.7% because the market share of entry-level apartments (studio and 1-bedrooms) spiked 5% and activity at the upper end dropped off.
  • Entry-level sales surged because of concerns over modest increases in mortgage rates are expected. Of course, this has been the speculation since mid 2003 but this time, with rising fuel prices, comments from the Federal Reserve about housing, mortgage rates may actually rise.
  • High end sales activity eased rather than prices dropped. The luxury market average sales price dropped 26% from last quarter because fewer sales at the upper end occurred. There were 17 sales at or above $10M in the 2nd quarter and only 4 sales at or above $10M tracked in the 3rd quarter. In fact, a high end broker contacted me to say there were 5 such sales this quarter, but didn’t realize that one of them closed in the prior quarter. Nevertheless, whether 4 or 5, the sales activity was well below 17 sales. This doesn’t indicate that prices collapsed, but that a shift in the mix of apartments that sold in the upper 10% of the market.
  • Inventory did increase this quarter and was more heavily weighted with condos than co-ops. Since inventory came on at generally the same pace as the number of sales eased, inventory built up. This was attributable to seasonal considerations (thats a stretch) and bad economic news, rising gasoline prices, over saturation of bubble speak for the past 6 months and negative economic news relating to the 2 hurricanes.
  • There are expectations of record Wall Street bonuses at yearend due to the solid year seen by investment bankers and a number of other sectors in the financial district. Historically, Wall Street bonus income has flowed through the real estate economy after the New Year.

Here are a handful of all the interviews I did which basically re-iterate most of these points.

[[Focus on Business (Canada)]](

[[Bloomberg Television]](

[[WCBS Channel 2]](

[[WNYC Radio (Brian Leher Show)]](

[[WNYC Radio]](

[[Bloomberg Radio]](

[[WCBS Radio]](

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“Appraising the appraisers” on National Public Radio

August 1, 2005 | 9:37 pm | Public |

A few years ago, I decided to be more outspoken about the predicament that appraisers are in. We really don’t have a collective voice over the issue of the flawed structure that currently exists in our profession. It is essentially this:

Those who are paid on commission in the origination of a mortgage, determine which appraiser(s) to use. The system of checks and balances no longer exist.

Bob Moon of the Marketplace show on American Public Media radio showed great interest in the story. He researched and put together a broadcast aired on National Public Radio on June 23, 2005.

At about 6 minutes, it was one of the longest stories they had done in the past year. That meant either I was a fascinating interviewee or the story was compelling. (I assume the latter but was secretly hoping it was the former).

American Public Media “Market Place” Radio Broadcast Appraising the appraisers

UPDATE This was my first post on Matrix. The earlier posts were part of my original Soapbox Blog that I began in early July 18, 2005 and eventually merged into Matrix.

The Marketplace audio file link is broken so I don’t hope they mind me placing the audio file of the June 23, 2005 segment on my blog. This was the moment I came out on the situation appraisers were facing in public. If you’ve been following our industry or are part of it, the solutions set by Dodd-Frank have made the reliability of an appraisal done for a bank even worse.

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