Matrix Blog

Sometimes, its easier to blame someone else for your troubles, especially someone you love. I’ll explain.

Red Light Theory [defined: You tend to remember all the red lights you stopped for and forget about the green lights that you didn’t.]

On one hand, the investor and real estate brokerage community can place a lot of blame on the media for poor or simplistic coverage of the housing boom, bubble, soft landing, etc. There are plenty of examples.

NAR has made a lot of mistakes in this regard by feeding them with endless stats that seem to contradict or confuse when compared to the text of their press releases. David Lereah, their economist/spokesman, has become the poster boy for anti-bubble speak spin.

However, there has also been equally insightful and excellent coverage of the housing market. Access to data is almost immediate and dissected ad nauseum. I think the issue is more about the source and bias of the data fed to the media and some of the lax reporting associated with it.

The source of some of the national data that is regurgitated locally is often made by brokers who don’t really understand what they are saying or are frustrated by their weakening ability to spin the results. For example, in the last media cycle after the end of the first quarter here in New York, prices did not fall. Somehow this became proof that there was not a housing bubble or it was proof that housing was still strong. In economic terms, I’d call that a credibility leap. One fact doesn’t support or link to another.

The media has a way of equalizing spin with reality. And thats good thing for the consumer.

In Michael Calderone’s post [Why Not Blame The Media? [NYO]](http://therealestate.observer.com/2006/04/why-not-blame-the-media.html) he makes this point with utmost clarity:

But it’s always interesting to hear a Florida real estate investor blame the media because he can’t make a quick flip. Of course, it’s alright when headlines mention a “red-hot market” but any reporting on “cooling off” is just no good for business. So, instead of blaming rampant construction, increased speculative buying, why not take a jab at the media.

The result? Despite the investor and the brokerage community’s frustration with the media coverage, the market has not caved in at this point. There are no guarantees however, but if you believed the headlines last fall, we should have been toast by now. On the other hand, if you believed the headlines two years ago, we should be seeing double digit growth right now. It cuts both ways.

But the media has moved on to other headline topics for the most part but the consumer still has a strong appetite for housing coverage.

Sure, the purchase decision is an emotional one, but consumers still tend to vote and make decisions on economic terms (ie vote with their wallet) and often don’t make that final decision from a tabloid or other big media headline. I feel its a cop out to say that:

Investors and brokers should not flatter the media as having that kind of influence on the buyers out there. Consumers really are smarter than given credit for.

Tags: David Lereah, New York Observer

Comments Off on Commentary: Stop Whining About The Media’s Housing Coverage

The 1Q 2006 Manhattan Market Overview that my appraisal firm, [Miller Samuel](https://www.millersamuel.com), prepares for [Prudential Douglas Elliman](http://www.prudentialelliman.com), 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]](http://www.nytimes.com/2006/04/04/nyregion/04housing.html)
[Housing frenzy slows down[NYDN]](http://www.nydailynews.com/business/story/405603p-343485c.html)
[Wall Street bonuses lift Manhattan apartment prices [Reuters]](http://today.reuters.com/business/newsArticle.aspx?type=ousiv&storyID=2006-04-04T053356Z_01_N03305063_RTRIDST_0_BUSINESSPRO-CONSTRUCTION-MANHATTAN-DC.XML)
[Reports: Luxury Housing Boom May Be Reaching Its Crest [NY Sun]](http://www.nysun.com/article/30306)
[First Quarter Reports: Thousand Island [NYO The Real Estate]](http://therealestate.observer.com/2006/04/first-quarter-reports-thousand-island.html)
[Housing market still steady [NY Newsday]](http://www.newsday.com/business/ny-bzapar044689161apr04,0,1077170.story?coll=ny-business-headlines)
[City Apts. Defy U.S. Bubble Trouble [New York Post]](http://www.nypost.com/news/regionalnews/66406.htm)
[Condo boom boosts Manhattan real estate market [Inman News]](http://www.inman.com/inmannews.aspx?ID=50861)
[Manhattan housing market shows weakness [CNN/Money]](http://money.cnn.com/2006/04/03/real_estate/manhattan_housing_prices_sluggish/index.htm)
[Manhattan Apartment Sales Cool Off [TheStreet.com]](http://www.thestreet.com/_googlen/markets/realestate/10277177.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA)
[Manhattan Apartment Prices Climb at Slowest Pace in Three Years [Bloomberg]](http://www.bloomberg.com/apps/news?pid=email_us&refer=us&sid=aoXO2P263swQ) [IMMOBILIARE: SALE, SI SGONFIA OPPURE CROLLA [Wall Street Italia]](http://www.wallstreetitalia.com/articolo.asp?ART_ID=367343)
[Manhattan housing market booms in first quarter [The Real Deal]](http://www.therealdeal.net/breaking_news/2006/04/04/1144151403.php)
[State o’ the Market Update: Through Thick and Thin, ‘Essentially Flat’ [Curbed]](http://www.curbed.com/archives/2006/04/04/state_o_the_market_update_through_thick_and_thin_essentially_flat.php)
[Brokers say New York real estate market is cooling [Financial Times]](http://news.ft.com/cms/s/5c098a34-c3fa-11da-bc52-0000779e2340.html)
[Wall Street Bonuses Fuel Manhattan Real Estate Surge [DJ]](no link)
[A game of telephone [Property Grunt]](http://propertygrunt.blogspot.com/2006/04/game-of-telephone.html)
[Manhattan Market Up, Psychology Down in Q1 [Brownstoner]](http://brownstoner.com/brownstoner/archives/2006/04/manhattan_marke.html)
[Real Estate Rashomon [Walk-Through]](http://walkthrough.nytimes.com/?p=481)

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

[[Bloomberg TV]](https://www.millersamuel.com/press/view.php?V=1144249244VBafH)

[[WNBC-TV]](https://www.millersamuel.com/press/view.php?V=1144249378fYfdg)

[[WPIX WB11]](https://www.millersamuel.com/press/view.php?V=1144249545tLugZ)

[[WABC-TV]](https://www.millersamuel.com/press/view.php?V=1144249705YFiAU)

[[WCBS Radio]](https://www.millersamuel.com/press/view.php?V=1144249819izKqD)

Tags: Brownstoner, Wall Street Bonus, New York Observer, Radio

6 Comments

I was reading [The Real Estate](http://therealestate.observer.com/) and got a chuckle over the [The Virtual Mogul](http://therealestate.observer.com/2006/02/the-virtual-mogul.html) post about Atari’s new game Tycoon City: New York, where players will get the chance to carve their own empires out of the Big Apple from humble origins. (Well thats not reality since many New York developers are second and third generation).

Donald Trump seems to have the dominated board and video real estate games with his titles [Donald Trump’s Real Estate Tycoon](http://www.gamespot.com/mobile/strategy/donaldtrumpsrealet/index.html) and [Trump – The Game](http://boardgames.about.com/b/a/063454.htm), both of which get pretty good reviews.

A couple of questions come to mind:

• Do developers actually play real estate video games? (no way)
  
• Has the recent housing boom transcended all age levels that kids would give up Grand Theft Auto: San Andreas and Madden NFL 2006? (no way)
  
• Does Atari think that kids or teens will play real estate games or do they expect adults to? (no clue)
  

Wouldn’t Atari sell more copies if they re-named their new game:

The Real Estate Developer Wars: Assemble The Most Key Parcels Of Land With The Most [FAR](http://www.pwolfe.com/blueline/bl_zoning_corner_dec02.cfm)! ?

Tags: New York Observer

Comments Off on Got Game? For Real Estate Investors With Virtually Too Much Time On Their Hands

The front page, above the fold, article [States Curbing Right to Seize Private Homes [NYT]](http://www.nytimes.com/2006/02/21/national/21domain.html?pagewanted=print) talks about the national backlash to the Supreme Court findings in [KELO et al. v. CITY OF NEW LONDON et al.](http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=000&invol=04-108).

In a rare display of unanimity that cuts across partisan and geographic lines, lawmakers in virtually every statehouse across the country are advancing bills and constitutional amendments to limit use of the government’s power of eminent domain to seize private property for economic development purposes.

Rarely has a Supreme Court ruling created such a universal reaction that was not made up along party lines. The idea that the loss of private property to private development seems to have struck a cord with state and local legislatures and they are passing laws that would disallow many situations that would involve emminent domain. In fact, one of the justices seemed to apologize after the 4-3 decision and said that “We emphasize that nothing in our opinion precludes any state from placing further restrictions on its exercise of the takings power.”

“It’s open season on eminent domain,” said Larry Morandi, a land-use specialist at the National Conference of State Legislatures. “Bills are being pushed by Democrats and Republicans, liberals and conservatives, and they’re passing by huge margins.” Americans see property ownership, and the rights associated with them, as a right of citizenship. This ruling seemed to bypass American sentiment.

Like everything to do with real estate, Americans tend to go from one extreme to the other. More neutral observers expressed concern that state officials, in their zeal to protect homeowners and small businesses, would handcuff local governments that are trying to revitalize dying cities and fill in blighted areas with projects that produce tax revenues and jobs. Many emminent domain situations need to be judged on a case-by-case basis.

[USA Today provided a list of strategies that legislatures are taking:](http://www.usatoday.com/news/nation/2006-02-19-eminentdomain_x.htm?POE=NEWISVA)

• Explicit bans. Some bills would ban the use of eminent domain for economic development. Others would do so indirectly by stating when it can be used and leaving commercial development off the list.

• Narrower rules. Many states are considering making it harder for cities to declare a neighborhood “blighted” just for economic development.

• Economic penalties. New York and Indiana are among states considering making eminent domain more expensive. The government would have to pay 25% or 50% above market value when it confiscates a property for commercial development.

_Here’s a sample of the action that is taking place to limit takings:_
[Eminent-domain bills given a hearing [Baltimore Sun]](http://www.baltimoresun.com/news/local/politics/bal-condemn0221,0,2264041.story?coll=bal-local-headlines)
[Limiting eminent domain [Journal-Advocate – CO]](http://www.journal-advocate.com/Stories/0,1413,120~7826~3246118,00.html)
[Rethinking eminent domain: Lawmakers want to curtail the power of local governments [Bradenton Herald – FL]](http://www.bradenton.com/mld/bradenton/13921339.htm)

_Prior Posts In Matrix_
[The Kelo Backlash: Now Many Are Rethinking Eminent Domain [Matrix]](http://matrix.millersamuel.com/?p=289)
[Wrecking Ball: Taking Eminent Domain Private [Matrix]](http://matrix.millersamuel.com/?p=142)

Tags: London, New York Observer

Comments Off on State Legislatures to Supreme Court: Don’t Tread on Me

At a party recently, I had the chance to meet Richard Barton, the founder of Zillow and he mentioned he was starting up a real estate site. He was a nice, very low key guy who happen to be one of the founders of Expedia.com, which turned the travel industry on its ear. His new site, [Zillow](http://www.zillow.com/) got everyone’s attention and no one knew what it was – until yesterday. Inman spent a lot of effort peaking our curiousity and I got a lot of calls from people in the industry asking what the heck it does.

Wednesday was launch day. I read four articles this morning about the site and got excited to check it out for myself when I got into work. The NY Observer article was especially good. In fact I read it on my Treo as I commuted in to work.

• [Manhattan Swept Up In Zillow’s Midnight Ride [New York Observer]](http://www.observer.com/20060213/20060213_Michael_Calderone_finance_newsstory1.asp)

• [A New Web Site For Real-Estate Voyeurs [WSJ]](http://online.wsj.com/article/SB113935396648967688-search.html?KEYWORDS=zillow&COLLECTION=wsjie/6month)

• [How much is your house worth? Zillow knows [NYT]](http://www.nytimes.com/cnet/CNET_2100-1038_3-6036441.html)

• [What’s your home worth? Get a ‘Zestimate’ [CNN]](http://money.cnn.com/2006/02/08/real_estate/money_zillow/?cnn=yes)

As far as the media coverage goes, I find it interesting that technical tools like this are often painted as spelling the end of full service brokerage services. I find this point hard to accept. I think that tools like Zillow and others are a natural evolution of technology and special services like this offer something that full service brokers cannot provide and really aren’t in business to provide. I think its kind of like the iPod. Apple builds them but third parties build all the add-on accessories.

The result of these tools is a more efficient market because of the additional flow of information. Its also raises the bar for full service brokers to have staff that are more fully informed about the market. There is opportunity to interpret information. Over this next year or so, the number of transactions is likely to drop and many brokers who have relied on being order takers will now have to actually market. Those that always marketed in boom times, should have nothing to worry about.

Since the Zillow involves valuation, and I am an appraiser, I was especially curious because its such a daunting effort to automate valuation on such a large scale. In fact, for the most part, the lending industry has been trying to do this for the past 5 years with limited success (If you base success on accuracy rather than simply pushing paper for the files to keep the regulators happy). A few months ago, a national lender told me that out of the 10 major automated valuation services (AVM’s), 8 were totally unreliable, 1 was marginal and 1 was pretty good. This lays the groundwork for my initial skepticism about Zillow, but I am open minded. I think it will evolve and will have more strength in certain markets than others depending on the data they are fed.

Well, apparently, the public relations juggernaut the emerged over the past few weeks with the build up, overwhelmed the site early in the day and as of 11:51pm tonight they are still of the air. I found their [ZillowBlog](http://www.zillowblog.com) which explained the problem and put a human spin on it. They should definitely link the blog to their home page to keep a dialog of their technical progress.

For those who were lucky enough to get access, the reviews were pretty good but basically mixed (after all this is a beta and there is a lot more data for them to tap into.) Of course the “red light theory” seems to apply here. Users will likely only remember the valuations that were not accurate and not those that were.

I anxiously await my turn. I am sure this is going to be fun. More to come.

_As seen from their web site_

Tags: Zillow, New York Observer, Zestimate

5 Comments

We released the data for the Manhattan Market Overview I author for Prudential Douglas Elliman for the 4th Quarter 2005. Here’s a summary of the [media coverage](https://www.millersamuel.com/press). Otherwise, here’s a list of the articles that covered the study. It provides an interesting perspective on how each media outlet covers the same story:

[[NY Times]](http://www.nytimes.com/2006/01/04/nyregion/04real.html)
[[WSJ]](http://online.wsj.com/article/SB113634174112837185-search.html?KEYWORDS=housing&COLLECTION=wsjie/6month)
[[CNN/Money]](http://money.cnn.com/2006/01/04/real_estate/manhattan_prices_hit_wall/?cnn=yes)
[[Int’l Herald Tribune]](http://www.iht.com/articles/2006/01/04/properties/web.briefs11.php)
[[Reuters]](http://today.reuters.com/business/newsArticle.aspx?type=ousiv&storyID=2006-01-04T060209Z_01_FLE421651_RTRIDST_0_BUSINESSPRO-PROPERTY-MANHATTAN-DC.XML)
[[NY Daily News]](http://www.nydailynews.com/business/story/379839p-322542c.html)
[[NY Sun]](http://www.nysun.com/article/25299)
[[The Real Deal]](http://www.therealdeal.net/tools/print_article.php?article_num=/breaking_news/2006/01/04/1136389944.php&article_name=Manhattan+housing+sees+modest+4Q+price+gains)
[[Inman News]](http://www.inman.com/inmannews.aspx?ID=49438)
[[NY Observer]](http://www.observer.com/finance_manhattantransfers.asp)
[[Crains NY]](http://www.newyorkbusiness.com/news.cms?id=12596)
[[NY Newsday]](http://www.nynewsday.com/business/ny-bzapt044574265jan04,0,6390179.story?coll=nyc-business-headlines)
[[TheStreet.com]](http://www.thestreet.com/_googlen/markets/realestate/10259927.html?cm_ven=GOOGLEN&cm_cat=FREE&cm_ite=NA)
[[Honolulu Star-Bulletin]](http://starbulletin.com/2006/01/04/business/bizbriefs.html)
[[NY Post]](http://www.nypost.com/news/regionalnews/60941.htm)

Tags: New York Observer

1 Comment