Posted by Jonathan J. Miller -Thursday, December 21, 2006, 10:29 AM
As some of you might have noticed, I have been largely absent from posting much of anything this week (as much as I tried). Apparently, there isn’t enough time in the day, let alone time to stand in line from midnight to 10am to get the new Wii game console (for my kids, of course [wink]).
…And lets bring out the Holiday Hawk while we are at it!
UPDATE: An added bonus: Carol of the Fippers from Flipper Nation.
Its been a really interesting year for real estate and 2007 already promises to be more complex.
Thanks for reading and I hope to see you bright and early on Tuesday, January 2, 2007.
Posted by Jonathan J. Miller -Tuesday, December 19, 2006, 7:44 PM
I have been bombarded with year end data and recaps on the housing market, so I thought I would address something even more important and critical to the real estate economy…
Housing market t-shirts.
In August of 2005, there was a new t-shirt on the scene that got a lot of attention for its housing bubble reference. I printed that image out and hung it in our office.
Well, in perhaps a sign (questionable) that we have reached bottom (haven’t decided if I am referencing the housing market or taste), there are some new choices entering the fray that provide a housing market message that is contrary to the original.
There is yet another t-shirt company trying to cash in on the housing market (?) that has emerged, wearing (sorry) a different message.
Makers of Led Zeppelin (“market is falling” pun intended) t-shirts have found a new niche.
Posted by Jonathan J. Miller -Monday, December 18, 2006, 8:24 AM
[This market recap on the Northern Virginia from MLS data is compiled by Butch Hicks, a former president of RAC (Relocation Appraisers and Consultants) (that I am a member of), a friend and an experienced appraiser in Northern Virginia. The results of his efforts are published on his web site as a series of charts, each with a brief summary. (As a kid growing up in the Washing DC area, I was barraged by "Virginia is for Lovers" tourism ads, and of course "DC is for US, by George")] -Jonathan Miller
View the charts [BHicks.com]
Here’s a sample of the charts available online.
The median price paid at the end of November, 2006 was $438,618, a decrease of 4.6% from the same time period 12 months earlier.
At the end of November, 2006, inventory was 7.4 months, an increase of 85% from one year earlier.
Posted by Jonathan J. Miller -Monday, December 18, 2006, 12:01 AM
Since 2003, I have provided a chart that appears once a month in the Economic Spotlight section of Crain’s New York Business magazine. Here is this month’s chart appearing in the current issue of Crain’s New York Business.
Source: Crain’s New York Business
Go here for a complete archive of all my Crains’s New York Economic Spotlight charts. They are organized by year.
Posted by Jonathan J. Miller -Monday, December 18, 2006, 12:01 AM
[This monthly market report is provided by Chip Wagner and Robert Headrick of the Headrick-Wagner Appraisal Group in their November eNewsletter. I have had the pleasure of knowing them for most of my appraisal career. They are both very active in appraisal industry matters having held a large number of leadership positions. Their firm has been covering the Chicagoland market since 1970 and as a result, they both have a wealth of insight. Their focus is on relocation, litigation and lending appraisals as well as slayers of appraisals myths. Chip and Bob also author a series of market reports on the Chicagoland real estate market They tell me they are also working on a big revamp of their web site as well.] -Jonathan Miller
NOVEMBER LISTING INVENTORY DROPPED
This is the first time in 2006 that the Months Supply of Inventory has decreased. Although this is a good sign, it is too early to draw any conclusions that the market is improving, as we are in the period between Thanksgiving and New Years when many less-motivated sellers remove their homes from the market. Hopefully, in the coming months we will be able to see a decline in the Absorption Rates, reflecting the market either beginning to eliminate some of this supply, or sellers who are in no immediate need to sell will remove their property from the market allowing demand to catch up with supply.
Posted by Jonathan J. Miller -Monday, December 18, 2006, 12:01 AM
Haute Living, a magazine that covers the luxury lifestyle, has gotten a lot of attention in New York over the past year. Publisher Seth Semilof began contacting me about a year ago, asking me to write a column. He wanted an analytical perspective of the the luxury real estate market.
[Although I am not part of the Jet Set, have any real estate dynasty or blue blood in my heritage, nor do I smoke fine cigars (allergic), play polo, have three homes in different states, nor do I grasp where the small fork is supposed to go in the place setting, I do enjoy dissecting values and explore relationships of amenities in the residential property market. In this issue, I began using a more Trump-esqe photo.]
I write a column on the luxury market appearing in the New York edition called Buy The Numbers.
Here’s my second Buy The Numbers column which is titled: Penthouse Living Provides A Clear View.
I’ll post the link to the digital version of the magazine shortly.
Posted by Jonathan J. Miller -Friday, December 15, 2006, 10:42 PM
Its Friday, so I am fairly sure its the time of the week to provide my Three Cents Worth as a post for Curbed. This week I got to use the word “onus” in public for the first time, and as an added “bonus,” it rhymes with a wildy popular topic these days, well, er, “bonus”.
To view post: Three Cents Worth: The Onus of the Bonus
Previous posts can be found here.
Posted by Jonathan J. Miller -Friday, December 15, 2006, 9:56 AM
Over the past few weeks, discussion of the impact of the Wall Street bonus has increased as rapidly as the housing prices did in 2004. Its a big economic event in the New York region and provides a significant impact on the local economy.
Bonuses been get a lot of coverage with more to come:
Huge Profit at Goldman Brings Big Bonuses [NYT]
Brokerages report record profits [AP]
Unbelieva-bull spending spree [NYDN]
Downtown realtors ready for bonus time [Metro]
Jaw-Dropping Bonuses on Wall Street [US News]
However, I don’t think that bonuses are the only reason why 2007 looks more promising today than it did 6 months ago. While bonus income seems to have more impact on pricing than the number of sales, the consensus is that a wider market strata will be affected this time.
Last year, the bonus income had more of an impact on the upper 2% of the market, for properties priced above $5 million dollars. This year however, as the saying goes, its different. But no real reason has been given as to why things are different this year other than bonuses, it just feels different. For example, its my impression that there have been more bidding wars in the last month and a half than in the early part of the year.
Here are some thoughts on why the outlook for 2007 could be better than last year in New York real estate:
- Bonus income is higher than last year and its no surprise. Each quarter, news coverage of the pace of bonus money tracking has remained on target. The news gradually built expectations over the year.
- Bonus income has seen 4 successive years of gains (assuming this year is), which provides a cumulative effect. Bonus payouts don’t necessarily go into the housing market in the first year of payout. Activity today may originate from payouts made a few years ago.
- Mortgage rates have been generally in decline or flat for the past 6 months. Mortgage applications are rising including refi activity which adds to the churn. The Fed is largely expected to cut the federal funds rate in mid-2007 because of a cooling economy. However, the NYC economy is expected to be fairly solid so the market benefits from weaker conditions in other parts of the country through tapping into lower mortgage rates.
- International buyers have been coming to the market in increasing numbers, (but less than I would have thought by this point). Favorable exchange rates due to the weakening dollar makes NYC properties increasingly affordable to foreign buyers.
- Lending (underwriting) standards continue to erode making it easier to get deals done.
- Some developers are starting to get the message that its all about accurate pricing and that marketing alone doesn’t move units. We are hearing that some stalled projects are being re-priced and then see units started to move. Placing ego aside is a huge step int he right direction.
- Overpriced listings from non-serious sellers started to expire and not be renewed last spring, reducing the clutter and frustration for buyers. Inventory levels in the region have remained level for more than 6 months, after seeing substantial gains for the prior 18 months. There is some evidence of inventory bottoming out nationally after several months of gains but the jury is still out.
- Rental rates spiked this year as a result of people moving into rentals for safety and lower cost. They became disillusioned after seeing bidding wars and 20 to 25% rent hikes in the luxury sector.
- The local economy is on solid footing and the city is projecting a surplus.
- The recent national election brought significant change to the Congress, implying some sort of changes in the future.
To expound on the last thought, the real estate market is often defined by negative milestones, ironic for such an upbeat industry. One of those milestones could be the recent national election.
With the president’s approval rating at record lows for his tenure and the situation in Iraq deteriorating, I thought that a change in control of the Congress could be one of those milestones. The looming election had turned the focus away from the housing market. While the change in power may or may not impact housing, it was a change and seemed to precipated a change in perception.
The latest wrinkle is the sudden illness of Democatic Senator Tim Johnson, who, if unable to continue in office, would be replaced by someone appointed by the Governor, a Republican by presumeably, a Republican. This would move the Senate to 50/50 representation by both parties just after the newly majority that the Democrats earned last month. However, I suspect that this is a non-event for housing. The momentum has already been initiated by the election.
Sure, the bonus money is an important, and perhaps primary component of the recent surge in activity in Manhattan, but it can’t claim all the credit.
Posted by Jonathan J. Miller -Thursday, December 14, 2006, 8:52 AM
Trulia, the real estate search engine, formed an advisory board to help with strategic planning from a diverse group of real estate professionals. Here’s the release. Yours
trulia truly was recently invited to join, along with a wide range of experts ranging from traditional brokers to new concept brokers representing both national and regional markets. Technology and analytical real estate types are part of the group because, after all, this is a technology venture.
Lots of opportunities to crunch new types national market data by location [hint, hint]. They now have more than one million listings. What intrigued about them from the beginning was their focus on clean, quality data rather than generic feeds with a lot of duplicates. They also collect public record information. Brokers and consumers have access to all sorts of data for free including both listing and sales data plus extras like heat maps. Cool stuff.
Still, the awareness of what this service provides to the brokerage community has remained under the radar but it is growing. Here’s a previous post about Trulia.
Trulia.com today announced its ten-member real estate advisory board, made up of established industry leaders, who provide expertise to the national real estate search engine on its strategy for delivering consumers the best neighborhood and home search experience online. Through interactive heat maps, neighborhood guides and property listings in all 50 states, a consumer researching a home for sale on Trulia.com is easily connected to the property page of the real estate professional most knowledgeable about the attributes of that home: the listing broker or agent.
The new Advisory Board is comprised of a diverse, well respected group of real estate brokers and industry leaders representing markets across the country including:
- Anthony Azar, CEO, Realty Executives Southern Arizona
- Sherry Chris, COO, Coldwell Banker Real Estate Corporation
- Van Davis, Consultant and Former CEO, Foxtons
- Michael Koval, CTO, Long and Foster Companies
- Jonathan Miller, President/CEO, Miller Samuel Inc.
- Robert Moles, Chairman, Intero Real Estate Services
- Steve Ozonian, Chairman, Realty Information Systems Inc./Help-U-Sell Real Estate
- Michael Pappas, President, The Keyes Company
- Bob Peltier, President, Edina Realty, Inc.
- Kaira Rouda, COO, Real Living, Inc.
Cream of the Crop UPDATE: Here’s Trulia’s blog post about the announcement.
Posted by Jonathan J. Miller -Wednesday, December 13, 2006, 8:39 AM
The Fed held firm for the fourth consecutive meeting, keeping the federal funds rate at 5.25%. Short-term rates are therefore more likely to hold steady for a while. They gave us the “hi” sign that rate cuts may be coming next year [Bankrate.com].
They do seem to be raising more warnings about the housing market [WaPo] at each of the 4 meetings where they have kept rates unchanged, inferring that housing is keeping inflation in check.
This makes me wonder…if inflation is really not that much of an immediate threat because they are inferring future rate cuts, then perhaps the Fed is overstating the economic weight of the housing market’s problems to serve as an offset? Housing seems to be their out for not raising rates right now.
During the heady days of the Greenspan reign, the WSJ journal developed a really cool graphic [ESJ] that parsed the language of the FOMC after each meeting. Likely because of greater transparency under the Bernanke era, there wasn’t a need because the language is less cryptic.
Here’s the Federal Open Market Committee’s statement on the federal funds rate [Federal Reserve]
Note the concept that Bernanke introduced by warning everyone about inflation to make investors jittery, which then causes the same effect as having a rate increase, but still gives clues that a future rate cut is coming [LA Times].
In the statement explaining its decision, the central bank’s Open Market Committee signaled new concern about risks that the economy could sputter, noting that “recent indicators have been mixed.”
With such slight changes in language, the Fed reinforced the consensus view that the nation’s monetary policymakers could begin to lower rates next year. Still, the Fed warned, “some inflation risks remain” that might necessitate credit tightening.
The Fed is walking a fine line here: [TheStreet.com]
The Federal Open Market Committee completed 2006 by telling investors to follow the data just as they would follow the bouncing ball when singing along to a Christmas carol on television. That’s what the Fed is doing. To wit, the central bank toed a careful line Tuesday by acknowledging slower growth, but maintained a tightening bias.
Definition of a diplomat: someone who informs you that you are in trouble, but you are happy they told you.
The power of words…fascinating.
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