Matrix Blog

Residential real estate is all about homes and housing, but the terms house and home are often used interchangeably and they can mean or imply different things.

In the copywriting article [The seven irrefutable laws of sizzling sales copy [SiteTube]](http://sitetube.com/web-writing/the-seven-irrefutable-laws-of-sizzling-sales-copy.shtml) a number of examples are provided:

“Cost” versus “investment;”
“Beautiful teeth” versus “beautiful smiles;”
“Skinny” versus “slim” or “slender;”
“Products” or “services” versus “solutions;”
“Cost-effective” versus “return on investment;”
And “house” versus “home.”

Again, words are not messages in themselves. They have different meanings to each of us and can be interpreted differently. While many words can be used to communicate a single message, the words you choose can dramatically alter its emotional impact. In copywriting, it is not so much the message that’s important but the meaning behind it that is.

I used a definition of each to illustrate the subtle difference between them. Their use is not mutually exclusive but its important to be aware of their differences.

• [Home](http://dictionary.reference.com/search?q=home) – A place where one lives; a residence. (Interpretation: There is more of an emotional component to this word and it is more often used when incorporated into selling a property.)

• [House](http://dictionary.reference.com/search?q=house) – A structure serving as a dwelling for one or more persons, especially for a family. (Interpretation: This is a more clinical description of a physical unit that provides shelter.)

Ever wonder why the NAR uses the word “home” in all their stats like [Existing Home Sales](http://www.realtor.org/research.nsf/pages/EHSPage?OpenDocument) and the Census Bureau uses “house” in their stats like the [New Residential Sales Index (pdf)](http://www.census.gov/const/newressales.pdf) does?

Tags: Commerce Dept, Census, NAR, National Association of Realtors

Comments Off on When Is A House Not A Home?

Its been a busy day…here are a few stat links of interest:

• [The Conference Board Consumer Confidence Index Rises Again [CB]](http://www.conference-board.org/economics/consumerConfidence.cfm)
  
• [Graph the trends: See how rates have changed over time [Bankrate]](http://www.bankrate.com/brm/graphs/graph_trend.asp)
  
• [Mortgage Application Volume Survey [MBA]](http://www.mortgagebankers.org/news/)
  
• [Intended Federal Funds Rate [FOMC]](http://www.federalreserve.gov/fomc/fundsrate.htm)
  
• [Effective Federal Funds Rate [Fed Reserve]](http://research.stlouisfed.org/fred2/series/FF/118)
  
• [New Residential Sales in December [PDF]](http://www.census.gov/const/newressales.pdf)
  
• [Gross Domestic Product 4th Quarter 2005 [BEA]](http://www.bea.gov/bea/newsrel/gdpnewsrelease.htm)
  

Tags: Commerce Dept, Census, Bankrate.com

Comments Off on Tuesday Night Stat-Link Fest

The Commerce Department released their new home sale data on Friday and it showed [an unexpected increase of 2.9% [TheStreet.com]](http://www.thestreet.com/_tscs/markets/realestate/10264731.html). This was unexpected because December existing home sales information released by the NAR the day before had shown a 5.7% decline over the prior month.

However, existing home sales data is 45-60 days behind the market since it is based on closed sales data and new home data is based on units currently under contract. The December existing market data was influenced by rising mortgage rates, the effects of the two hurricanes, rising gasoline prices among other negative economic conditions back in October, and is not necessarily reflective of the current market.

It seems like every month these two statistical releases contradict each other, but perhaps that largley because they are based on different points in time and the market is in transition.

[NAR Existing Home Sales [pdf]](http://www.realtor.org/Research.nsf/files/REL0512EHS.pdf/$FILE/REL0512EHS.pdf)
[Commerce Department New Home Sales [pdf]](http://www.census.gov/const/newressales.pdf)

Tags: Hurricane, Commerce Dept, Census, NAR, National Association of Realtors

Comments Off on These Days, Expect The Unexpected, Rather Than Existing

United Van Lines has been publishing a report on [traffic patterns of the moves [United Van Lines]](http://www.unitedvanlines.com/mover/united-newsroom/press-releases/2006/2005-united-migration-study-01-06.htm) that are ordered within the moving company each year. This report has been published annually since 1977.

Methodology: “For 2005, the accounting is based on the 226,353 interstate household moves handled by United among the 48 contiguous states, as well as Washington, D.C. In its study, United classifies each state in one of three categories — “high inbound” (55% or more of moves going into a state); “high outbound” (55% or more of moves coming out of a state); or “balanced.” Although the majority of states were in the “balanced” category last year, several showed more substantial population shifts.”

Inbound

• While Florida (54.2%) has been inbound since the survey commenced, this year marked the lowest number of relocations to the state since 2000.
  
• Texas (53.9%) continued inbound movement since 1989 and saw slightly (1.3%) more people move in as compared to last year.
  
• As compared with 2004, Washington (53.4%) became the destination for 2.7% more residents.

Outbound

• California (55.7%) – 2005 marks the first time the state has seen a high outbound number since 1995.
  
• Louisiana (57.9%) – With many difficult challenges throughout the year, the state saw 4.5% more outgoing moves after being classified as a balanced state for the past four years.
  
• North Dakota (67.8%) – This year marked the highest outbound migration since 2001 for the state.
  
• Michigan (63.9%) – From the inception of the study, Michigan has been an outbound state.

I thought it would be neat to try to correlate inbound and outbound traffic to housing demand. The idea that a state with high outbound traffic would have lower appreciation rates than states with higher inbound traffic. However, the census data does not fully correlate with this report. I can only assume that its a factor of the client demographic the moving company works with, or this is a flawed methodology.

Nevertheless, United Van Lines map concept is very cool.

US Census Division Map: Change in House Prices By Region

Tags: Commerce Dept, Census

1 Comment

It is affecting population shifts, congressional representation and housing demand.

_Population Shifts_
In the article [People Fleeing Pricey Coastal States for South, West [USAToday]](http://articles.news.aol.com/business/article.adp?id=20051222070509990001&%20id=505) an analysis of the census data halfway through the decade, Americans are shifting away from the coasts toward more affordable locations such as the Southwest, Southeast and the Rocky Mountains.

The quest for affordable housing and jobs is driving Americans from expensive coastal states to more moderately priced parts of the country.

• At its current rate of growth, Florida will exceed the population of New York in 5 years.

• Upstate New York population losses more than offset the boom in New York City.

• California’s gains were more attributable to births than to new residents.

• Virginia gained more population than 9 northeastern states combined due to employment growth.

_Affordability_
A growing number of people are simply [Too Poor for Hot Housing Market, Too Affluent for Buyer Assistance [Washington Post]](http://www.washingtonpost.com/wp-dyn/content/article/2005/11/30/AR2005113002248.html)

Government officials “are scrambling to provide “workforce housing” — price-controlled homes for families with high five- and even six-figure incomes.”

While urban areas like New York have long provided housing assistance for low and middle income residents, areas like Washington, D.C. have focused on low income. As a result, there are a lot of residents simply priced out of the current boom.

The National Association of Realtors released its affordability index [Housing Affordability Hits 14-Year Low Higher Prices, Rising Rates Hurt Buyers as Creative Loans Lose Some of Their Punch [WSJ]](http://online.wsj.com/article_print/SB113522076238329211.html)

“There are signs that the growing costs of homeownership are also beginning to take a toll on the housing market. “There’s a systematic erosion of affordability,” says David Seiders, chief economist of the National Association of Home Builders. That decline is “the main reason … the market is starting to cool.””

Tags: Commerce Dept, Census, NAR, National Association of Realtors

Comments Off on In Search Of Affordable Housing, Many Are Moving Away From The Coasts

If there is one thing that mortgage servicers learned from the last downturn in the housing cycle (1989-1995) was that foreclosure were expensive and had the potential to be a public relations nightmare. In the today’s market, Ken Harney’s article [Mortgage Servicers Help Avoid Foreclosures [Washington Post]](http://www.washingtonpost.com/wp-dyn/content/article/2005/12/23/AR2005122300849.html) discusses how mortgage servicers do everything they can to avoid foreclosures.

In the 1990-91 market downturn, lenders had to maintain large in-house departments to manage inventory as well as manage vendors that were needed in the process such as lawyers, brokers and appraisers. As an appraiser, I stood with many a broker and locksmith in the early 1990’s, getting into a foreclosed apartment, only to find the interior was picked clean.

Daniel Gross, in his article [Didn’t Pay Your Mortgage? Don’t Worry. Why banks are so afraid to foreclose on you [Slate]](http://www.slate.com/id/2132094/) he discusses why this is happening. Lightening up on those who fell victim to the hurricanes is understandable and would be a public relations disaster. But what about everyone else?

In the process of [raising the percentage of home ownership [Census]](http://www.census.gov/hhes/www/housing/hvs/historic/histt14.html), the lending industry is trying to avoid the expense of foreclosure. [The delinquency rate as of the 2nd quarter, according to the MBA was 4.34%, but less than half of those are in excess fo 90 days. [MBA]](http://www.mortgagebankers.org/marketdata/index.cfm?STRING=http://www.mortgagebankers.org/news/2005/pr0915.html)

Gross notes that the delinquincy rates of ARM mortgages is 10.04% and subprime loans is 9.06%, which means that the rate for conventional loans is barely on the radar, clearly a pattern related to the pressure to expand the base of customers to those who are a higher risk.

He concludes that when borrowers get behind in their payments, lenders prefer to do workouts and these often can come into the form of another refinance, with the homeowner getting deeper in debt. They have in effect, like lenders 20 years ago, become too big to fail.

Tags: Hurricane, Dan Gross, Commerce Dept, Census, Sub-Prime

Comments Off on Home Owners: Too Big To Fail

Bonus Timing Summary

Our long admired Under The Counter put together the [The Master Chart [UTC]](http://www.underthecounter.net/archives/2005/12/bonus_timing_ro_1.html) on bonuses by firm with help from [Here Is The City](http://news.hereisthecity.com/).

We usually read about the percent increase of the average bonus over the prior year in a press release from the New York State Comptroller but could only guess when they are paid out. Finally, we can get a sense of the bonus timing instead of generalizations.

The concensus seems to be:

• Told amount of bonus in mid-December to mid-January.
  
• Get paid bonus at end of January to March with a few stragglers.
  

Of course, the act of physically receiving the check seems to be an afterthought. The driver of the first of the year frenzy seems to be the availability of new listings, not whether the check is in the bank.

Tags: Commerce Dept, Census

Comments Off on Of Real Estate And Bonuses: Plenty Of Time For The Checks To Clear

A new kind of real estate search engine called [Trulia](http://trulia.com/) is [getting graphic about traditional listing searches [Curbed LA].](http://la.curbed.com/archives/2005/11/trulia_google_h.php)

The New York Times Circuits Section discusses a whole new breed of real estate search engines, including Trulia thanks to Google Maps in [A Journey to a Thousand Maps Begins With an Open Code [NYT]](http://select.nytimes.com/search/restricted/article?res=FB0F12FD395B0C738EDDA90994DD404482)

“A new class of entrepreneur is jumping in as well. Pete Flint, a 2004 graduate of Stanford University’s business school, and a classmate, Sami Inkinen, started a mash-up called Trulia.com, which pinpoints real estate listings on a Google map. Click on a pushpin in a favorite neighborhood and up pops the listings, along with comparables from recent home sales and other nearby properties.

Trulia has posted data only for five California cities, and that data is a bit thin because it uses publicly available sources like newspapers and Web sites, not the Multiple Listing Service, the copyrighted databases belonging to local broker associations. Trulia plans on adding additional layers of information, like census data.”

Trulia is only in California but its catching on.

[Click here for more on their mash-up concept.](http://trulia.com/about)

Webmaster’s Note: Thanks Laura S.!

Tags: Commerce Dept, Census

1 Comment

Well, not exactly.

The [OFHEO](http://www.ofheo.gov/) press release said [Housing Price Appreciation Slows From Record-Setting Pace, But Remains Strong [pdf]](http://www.ofheo.gov/media/pdf/3q05hpi.pdf)

Key Stats:

• 12.02% Annualized Appreciation Nationwide
  

• 2.86% Appreciation From Prior Quarter
  

• Price Momentum In the Pacific and Northeast has pulled back
  

The coasts are seeing the greatest rates of appreciation because there is less excess land, and therefore more price volatility.

US Census Division Map: Change in House Prices By Region

US Census Division Map: Change in House Prices By State

Tags: Commerce Dept, OFHEO, Census

1 Comment

The National Association of Realtors did not see its shadow and believes [spring will come early this year. [Groundhog.org]](http://www.groundhog.org/)

There has been a tremdous amount coverage on the shift in gears of the real estate economy of late and I have read more articles on the housing market than I care to admit. Besides the Census Bureau, the NAR has been one of the primary sources of statistic and interpretation to the public on this market transition. While I can’t verify the stats they use, their description of the market has been generally accurate and largely absent of the grossly exagerated spin we would expect from a trade group with a built in bias. Of course there is plenty of spin, but hey, they are a trade group.

Here’s a typical article written from a NAR press release.

[NAR Sees Soft Landing as Housing Bubble Transitions To Expansion [Mortgage News Daily]](http://www.mortgagenewsdaily.com/10262005_Housing_Market_Bubble.asp)

However, on a local level, I find that the word is often not getting to the brokers on the front line. Realtors are under no obligation to predict the market. They are only obligated to present as much accurate information as they can for their clients so the client can make the decision that is right for them. Quite often, the arguments for a “strong” market is based on the fact that the prior period saw record prices. First of all, that would mean that the market, by definition, would never fall. And by the way, what does “strong” mean? A lot of sales? Rising prices? Not as sharp of a price drop as was expected?

Here’s a few articles that are based on good old-fashioned hard selling:

*[Realtors: No sign of price bubble here [Orlando Sentinel]](http://www.orlandosentinel.com/business/orl-homeprice0605oct06,0,7188322.story?coll=orl-business-headlines)
*[Bubble talk overblown, according to top Realtor [Contra Costa Times]](http://www.contracostatimes.com/mld/cctimes/12831639.htm)
*[Home prices — and competition — strong [Seattle PI]](http://seattlepi.nwsource.com/business/243756_homesales07.html)

Tags: Commerce Dept, Census, NAR, National Association of Realtors

Comments Off on Its Real Estate Groundhog Day And NAR Did Not See Its Shadow

Since we are in a changing market, it is also important to look at price indicators that are closer to the point where the “meeting of the minds” occurs between buyers and sellers. As I indicated in a [prior post on Matrix](http://matrix.millersamuel.com/?p=195), the national housing stats for existing home sales (NAR) are based on closed sales and new home sales (Census) are based on contracts. The NAR also has an indicator based on contracts called the [Pending Home Sales Index or PHSI [PDF]](http://www.realtor.org/Research.nsf/files/PHS0509.pdf/$FILE/PHS0509.pdf/)

PHSI

Source: NAR

Pending sales eased from last month but was at its [second highest mark on record [RISMedia]](http://www.rismedia.com/index.php/article/articleview/12393/1/1/)

Whats really interesting about the stats is the difference between seasonally adjusted stats and the stats that were not seasonally adjusted. For example, the seasonally adjusted national numbers showed a 0.3% drop in contract prices while the unadjusted numbers showed a 12.7% drop. Quite a difference betweent the results. Annual changes were up 3.3% seasonally adjusted and up 2.7% unadjusted.

At the end of the day, these numbers tell us that contract prices, as a leading indicator, were slightly weaker nationwide compared to the prior month.

Tags: Pending Home Sale Index, Commerce Dept, Census, PHSI, NAR, National Association of Realtors

Comments Off on NAR Pending Home Sale Index Weakens, But Still Nearly At Record Levels

The [US Census Bureau](http://www.census.gov/const/www/existingvsnewsales.html) clarifies the difference between new home sales and existing home sales. “New home sales and existing home sales are released each month at about the same time. Many comparisons are made between the two series, but before doing any comparisons, one must be aware of some definition differences that affect the timing of the statistics. “

New Home Sales
“The Census Bureau collects new home sales based upon the following definition: “A sale of the new house occurs with the signing of a sales contract or the acceptance of a deposit.” The house can be in any stage of construction: not yet started, under construction, or already completed. Typically about 25% of the houses are sold at the time of completion. The remaining 75% are evenly split between those not yet started and those under construction. “

Existing Home Sales
“Existing home sales data are provided by the National Association of Realtors®. According to them, “the majority of transactions are reported when the sales contract is closed.” Most transactions usually involve a mortgage which takes 30-60 days to close. Therefore an existing home sale (closing) most likely involves a sales contract that was signed a month or two prior. “

To Summarize
Given the difference, the indicated trends in New Home Sales would probably lead Existing Home Sales by 30 to 60 days, the length of time it takes for an existing home sale to close from point of contract.

However, New Home Sales are more volatile from the standpoint that it is a much smaller data set as they represent something like 10% the number of Existing Home Sales.

Tags: Commerce Dept, Census, NAR, National Association of Realtors

Comments Off on New Home Sales and Existing Home Sales Are Way (30 to 60 Days) Apart