Posted by Jonathan J. Miller -Tuesday, February 7, 2012, 11:30 AM
Posted by Jonathan J. Miller -Tuesday, February 7, 2012, 11:30 AM
Posted by Jonathan J. Miller -Tuesday, January 17, 2012, 11:00 AM
…referring to Manhattan’s premium for larger contiguous space on a price per square foot basis.
When I was contacted for last weekend’s article On Fifth Avenue, 1+1+1 = $25 Million? I had gleefully suggested a modification to my phrase:
…in reference a story about a triple-combination apartment and how all the sellers would likely benefit by allowing a buyer to return the apartment to its origination (or close to it’s) configuration. In combination sales, while the value of the total usually reaps a premium over the sum of the individual values, the resulting layout may turn out to be something less valuable as compared to an apartment similar in size that was originally designed that way.
When there is an opportunity to restore an apartment back to it’s original configuration before it was cut up (commonly during the housing shortage after WWII in Manhattan), the value of the apartment would likely be comparable to similar sized apartments originally designed to be single units.
Like domain parkers, I’m staking my claim to a third phrase:
Posted by Jonathan J. Miller -Monday, November 28, 2011, 7:00 AM
Real estate agents have long been teased about questionable babble in their listing ads. But is the teasing still justified? Or has the shift to online advertising reduced the problem?
I was sent this “broker babble” generator by a soon-to-launch online rental company that doesn’t need real estate agents (an assumption based on the “sick of brokers?” link on the bottom of the web page). Besides the generator not being very good (but looks very cool), I feel like the language of real estate agents has actually been improving over the past decade and this attempt at humor was out of sync with today – designed to “buddy up” with consumers directly.
Does the industry still use silly language in some of its listing ads? Of course! Descriptions that include “triple mint” and “fab vus” are still used to excess. Then why did this attempt at low brow humor seem so hollow?
Perhaps it comes down to the decline of classified print advertising for real estate listings. Limitations on print space back in the day cried out for choice words to get the attention that would drive the sale.
Since listings are shifting to the web whether it’s with the online classified ads of the New York Times, online services like Trulia or StreetEasy or brokerage firms, whose space constraints are less daunting for agents.
Perhaps the modest upgrade in the qualifications of people entering the industry and the rising emphasis on professional development has played a role?
Or it is still just as bad and because I’ve been involved in the real estate industry for too long and it’s become white noise.
Whatever it is, this sort of promotional stunt is just a silly.
Posted by Jonathan J. Miller -Thursday, October 28, 2010, 10:34 AM
A few months ago, I did an analysis by floor level of Manhattan co-ops and condos, which illustrated the market phenomenon of the missing 13th floor in Manhattan. Superstition played a strong a role in floor level delineation but that trend is fading. Older buildings are more likely to be missing the 13th floor than new ones.
Last weekend’s New York Times Real Estate section cover story by Vivian Toy “Sometimes, Lucky Numbers Add Up to Apartment Sales” revived my interest in the topic.
So then there’s this research paper…
In the very interesting Department of Economics, University of British Columbia October 2010 research paper “Superstition in the Housing Market” by Nicole M. Fortin, Andrew Hill and Jeff Huang, the impact of superstition was measured by the the last number of the street number in a property address.
Think “8″ not “4″.
Apparently my batting average is not very good in my own residences, but then again, I don’t believe that each housing market I have lived in since college has been composed of at least 18% Chinese buyers as defined in this research.
Roughly every other residence we’ve had since college suggests death. I’m glad my lucky number has always been “7.”
The paper is simply presented and clear. I especially love the the academic formula variable for “Chineseness” census tract variable denoted as “Ec” and the use of the word “tetraphobia”.
Here are some results:
And several footnotes are especially interesting including:
It sounds like one should never under estimate the power of superstition. After all, a key component of value is the perception of future worth as defined by market participants. After reading this paper, I now get the Feng Shui consultant marketing thing as a phenomenon — for non-believers, in a market with more buyers guided by a form of superstition, the goal for a seller should be to reduce purchaser obstacles in order to expand marketing exposure to get the highest price for their investment.
I still think “7″ is a pretty lucky but for some reason I’ve never lived in a house including my childhood that ended in “7″ that I recall. Maybe that’s why it’s my lucky number.
Posted by Jonathan Miller -Tuesday, May 4, 2010, 8:45 AM
Admittedly I am getting annoyed about the lack of closure on this credit crunch thing. Can’t we simply point fingers, have someone apologize but indirectly deny responsibility and then we can then get back to buying stuff and building extensions on our houses?
Make no mistake, the credit crunch is one big mistake. It’s called a systemic breakdown because so many in the economy played a role in our economic demise. Moral hazard, government backstops, bailouts, stimulus, bonuses, trillions, synthetic CDOs have been placed in the forefront of our thinking.
But no clear financial reform path is being taken – in fact it took an investment bank using swear words in an email to get Washington’s attention and break the political maneuvering. Each party is planning to oversteer the solution to their agenda which was part of the problem that lead to this crisis. While we all worry about “free markets” we have forgotten how important it is to create a level playing field. Without rules, free markets degrade to chaos and lack of investor participation. We are seeing this now within the secondary mortgage market, especially jumbos.
We can never remove the human factor from the problem since regulators were clearly asleep at the switch (since Clinton) compensation had perverse incentives favoring short term profits over long term viability, regulators were neutered by the prior administration (think prior SEC under Bush) so its dumb to have some sort of czar. It’s never one factor – it a combination of people, events, institutions and politics that light the fuse.
I am looking forward to some sort of meaningful financial reform. If neutrality isn’t baked into the system, then this is all a big waste of time. Regulators need authority and can not be influenced and investment banks can’t pick the regulator they want. Rating agencies should not be paid directly by the investment banks whose products they rate. Appraisers can not be fearful of their livelihood because they don;t hit the number, etc.
Here’s what it all boils down to now: blame and being sorry.
I’m not doubting those conditions exist and it appears to be a creative way to get your money back.
Saying I’m Sorry
When it gets to this point, its too late. Let’s try to be proactive with some sort of meaningful financial reform. Not more regulation, not fewer protections for neutral parties.
If we can’t do this as a country, well, don’t blame me.
Posted by Jonathan J. Miller -Wednesday, May 6, 2009, 12:52 AM
There was a front page above the fold story in the New York Times this morning talking about the Sacramento, California housing market and how it seemed to be stabilizing. California is the poster child for subprime lending and was the subject of a sobering 60 Minutes special with James Grant last year.
Prices there are down by more than 50% from peak but sales activity is rising.
Could this mean that the housing market is stabilizing?
The idea pushed in the story is FIFO (first in first out). Markets first to experience weakness may be the first to improve. I don’t see this is a viable explanation on what to anticipate in other markets. The reasons the south and west fell first is from rampant speculation, largely absent in the midwest and northeast.
Perhaps in that specific location. California has been experiencing heavy sales volume as prices come into alignment with the market.
So I wouldn’t hold your breath after the spring market ends. Seasonality means demand is higher now, buoyed by record low mortgage rates and a slew of foreclosures pressing prices to lower levels – making affordability within sight of many.
In addition, there may be a new wave of mortgages in the near future as a result of the Senate’s politicalization of the housing issue with bankruptcy actions.
Still we can all use some glimmer in our lives. I prefer it over green shoots.
Posted by Jonathan J. Miller -Monday, April 27, 2009, 11:54 AM
One of the market indicators that people like to get their arms around is the negotiability of housing prices a la the listing discount metric. In other words, what is the spread between asking and sales price? The inference in this metric is that in a weak market (most markets in the US), sellers are more negotiable than they were a few years ago. Of course and this metric’s orientation tends to be toward the seller. If the property is overpriced, the seller has “farther to travel” to meet the buyer for a “meeting of the minds” to occur (a sale).
Trulia now has a “Search by price reduction” tool which I think is pretty neat and I’m not aware of this available elsewhere.
More price slashing infers that sellers are more negotiable when the discount is higher. Trulia’s tool allows sellers to see the percentage of listings that have been reduced, the dollar amount and the percentage of reduction off the original list price. While it doesn’t connect the relationship between contract price and list price, it does help consumers understand the asking price trend.
I’d like to take the inference it provides one step further.
Rather than look at this metric as a test for how much or quickly a market is falling or how desperate a seller is, I tend to see it as an indicator of what degree sellers are “behind” the market and perhaps this is related to how quickly the situation has changed in that given market. In other words, if listing prices are declining rapidly, it is more likely for the sellers to be further behind the market when pricing their property because they tend to overprice more at the onset – and have to travel further to meet the buyer on price. It also means that real estate agents are having a more difficult time with more sellers in denial about current market conditions.
In fact, that is how I have always seen the listing discount metric. Less about negotiability or falling prices, and more about how disconnected the sellers are.
At a rate of 39% of listing, NYC is number 1 on the list so everyone else is looking at our disconnect with the market (translation: our behind) caused by our market being the last to join the housing weakness party and the suddenness (never used this word before) of the decline.
Posted by Jonathan J. Miller -Monday, April 13, 2009, 12:57 AM
The weather is improving and I’m feeling the “this time of year optimism” where we get out of our log cabins after a long cold winter and admire the greenery around us.
The first thing you notice is that 1 in 9 houses in the US are currently pretty vacant:
According to an article today in USAToday, census numbers show:
But the spring metaphor favorite is Shoots of Green or simply Green Shoots.
Here are some warnings about its use:
Caroline Baum at Bloomberg, one of my favorite economic columnists said in her Wall Street Swaps Zegna for Denim, Tool Belts piece:
Justin Lahart at WSJ, in his Fed Chairman Chauncey Gardiner: You Must Believe In Spring
But more mundane, weed-like uses on the presentation of economic news are more like these (no offense meant to the authors):
Dallas Fed chief points to ‘green shoots’: A few signs of life are sprouting in the U.S. economy, but it’s too soon to say whether these “green shoots” will lead to a sustained recovery, said Richard W. Fisher, president and chief executive of the Federal Reserve Bank of Dallas.
I’m thinking a Green Jacket is even better than a Green Shoot – or shooting on the Green is better than being green with a regular jacket on.
Posted by Jonathan J. Miller -Monday, February 2, 2009, 1:28 AM
I am a bit taken aback by the army of real estate marketing gurus and top line real estate agents that are openly talking about the weak housing market as part of their public image.
It does seem to give the real estate brokerage industry more credibility but I have a hard time processing this new market acceptance, perhaps because the hard sell was on prime time for so long. Heck, even Lawrence Yun of NAR has injected less rosy projections into the converation than his predecessor David Lereah would have ever dreamed of.
In fact Doom & Gloom has proved very lucrative for some as of late (they’re all in Davos): Nouriel Roubini (Dr. Doom), Robert Shiller (Irrational Exuberance), Nassim Taleb and others. And I say good for them!
It’s been completely fascinating to witness the seemingly overnight global change in the financial investment perspective. I am not clear on whether this is a long term change or simply an immediate reaction to everyone’s smaller paycheck.
Posted by Jonathan J. Miller -Wednesday, November 19, 2008, 1:03 AM
Dan Gross brings us the Starbucks theory of international economics:
Gross contends that Starbucks fueled the housing boom as “The Seattle-based coffee chain followed new housing developments into the suburbs and exurbs, where its outlets became pit stops for real-estate brokers and their clients. It also carpet-bombed the business districts of large cities, especially the financial centers, with nearly 200 in Manhattan alone.” Incidentally, the company is named for Captain Ahab’s first mate – Starbuck in Moby-Dick.
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Well I’ve got my own (admittedly very thin, but please give it to me, I’ve never had an economic theory before) economic theory/correlation/indicator: Pirate theory of credit crunch aversion:
It’s been exactly two months since Talk Like A Pirate Day and apparently pirates are dominating the high seas (well, it pays better than fishing).
My pirate theory goes like this:
[Take a look at the ICC Commercial Crime Services Piracy Map for 2008.]
(the map shows the locations of the activity, not the source)
What does this all mean? Well for starters, pirates are not likely eating at McDonald’s for lunch while sipping a mocha frappuccino grande with enough whipped cream to be esthetically pleasing, after boarding a container ship full of tanks and guns.
And they don’t have a 2/28 subprime ARM with a 2% teaser rate about to reset to a fully indexed rate of 11% with a significant pre-payment penalty. They merely get paid the ransom for the crew or get shot.
And of course, Somalian coffee served at Starbucks is quite good.
UPDATE: Infectious Greed: Somali Pirates and TARP
UPDATE2: Freakonomics: Spreading the Pirate Booty Around
[Interview PART II] Barry Ritholtz, CEO, Director of Equity Research, Fusion IQ, Author, Bailout Nation, The Big Picture Blog
Had a fun interview with Tom and Sara this morning on the always MUST watch/listen Bloomberg Surveillance. We talked housing, rentals, vacancy and inventory. An added bonus was the addition of Adam Davidson – co-founder and co-host of Planet Money... Read More
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