Posted by Jonathan J. Miller -Saturday, September 29, 2007, 2:11 PM
Here is the September issue of Trulia Trends, a report of listing trends and consumer search patterns.
The report is based on a continuing evolution of ideas that has come as a result of the collaboration between Trulia and my firm Miller Samuel. (disclosure: I am a member of Trulia’s advisory board.)
In this month’s issue the spotlight focused on the Boston, MA area.
Download the September 2007 Trulia Trends Report [PDF] here.
Here is Trulia’s post about the new report.
Posted by Jonathan J. Miller -Friday, September 28, 2007, 10:42 PM
Wednesday, Thursday, Friday, so its that time of the week to provide my Three Cents Worth as a post on Curbed. This week I ponder how first time buyers adjust to financing their first home. Answer: Who knows.
To view Three Cents Worth: Entering Markets Without ARMS
Check out previous Three Cents Worth posts.
Posted by Jonathan J. Miller -Thursday, September 27, 2007, 9:00 AM
Its an exciting day for all of us at Miller Samuel.
Our firm, which has been tirelessly providing unbiased appraisal reports and market studies since 1986, is being acquired by Radar Logic, the data and analytics company enabling derivatives trading in the RPXâ„¢ market based on daily prices for residential real estate.
We are “business as usual”
- We will be able to leverage our valuation and market reporting
expertise with the groundbreaking data analytics pioneered by Radar Logic.
Press release [pdf].
Press Release [Market Wire].
Wonderfully complimentary blog posts:
A Champion reigns [Property Grunt]
Radar Logic to Acquire New York Real Estate Appraisal Firm Miller Samuel [Sellsius]
Radar Love for Miller Samuel [Altos research]
Miller Samuel, Appraiser, to Be Sold to Radar Logic [Bloomberg]
Radar Logic to buy Miller Samuel [The Real Deal]
Miller Samuel acquired by Radar Logic [Crains]
Radar Logic acquires Miller Samuel [Inman News]
Posted by Jonathan J. Miller -Tuesday, September 25, 2007, 10:01 AM
Hey I admit it, I bought the former Fed Chair Greenspan’s new book The Age of Turbulence on Monday, the first day it was available. Of course I bought as a birthday present for me, not to be opened for a few weeks when my maturity age of 17 clashes in screaming technicolor with my actual age, even louder than a rate cut. We have strict rules around my house. If I buy something under the pretense of it being a birthday present, its not to be opened until then.
Well its been a week and I have had some time to reflect on the events associated with the new book, before I have even read it.
What thought first comes to mind? Incredible timing. Who says you can’t time a market?
Announce a book the day before one of the most anticipated FOMC meetings in recent memory, support your successor, admit some flaws but no regrets, criticize the administration as well as both the Democrats and Republicans in Congress, acknowledge a housing market problem but keep your reputation in tact. Hey, the $8M advance needs to be earned.
All this gets you a number one ranking on Amazon.com, ahead of Water for Elephants, Playing for Pizza and Math Doesn’t Suck: How to Survive Middle-School Math Without Losing Your Mind or Breaking a Nail.
Since I admired Greenspan during his tenure, I can’t tell if the insight being provided during the media blitz is helpful in understanding how we got here, or merely spin.
Caroline Baum, one of my favorite columnists on Bloomberg sums it up nicely:
Greenspan, who reportedly received an advance of more than $8 million for this memoir, seems eager to stave off criticism for keeping short-term rates too low for too long in 2003 and 2004, stoking a housing bubble in the process. He was aware of reduced credit standards on subprime mortgage loans, he says, “but I believed then, as now, that the benefits of broadened home ownership are worth the risk.’”
That view is being challenged as the housing bubble deflates, delinquencies and foreclosures rise and financial losses mount. The reader is left wondering if a more introspective Greenspan, and one less interested in shaping his legacy, wouldn’t have found a regret or two along the way.
With a possible recession looming and housing on the downslide (a word?), I am experiencing my own personal turbulence and have officially added it to my economic vocabulary in addition to “contained”, “frothy” and “irrational exuberance”.
Posted by Jonathan J. Miller -Monday, September 24, 2007, 12:01 AM
4 Year Anniversary Special: This is chart no. 49… and so begins my fifth year producing them. Its been four years of graphics bliss with ideas for many more in the future.
I have had the pleasure of providing a monthly chart for the Economic Spotlight section of Crain’s New York Business magazine since September 2003. Here is the latest, which appears in the current issue of Crain’s New York Business.
Source: Crain’s New York Business
Go here for a complete archive of all Crains’s New York Economic Spotlight charts that have been published. They are organized by year.
Posted by Jonathan J. Miller -Saturday, September 22, 2007, 11:42 AM
Coverage of the weak dollar as it relates to real estate is now front and center. A page 1 story in the New York Times yesterday Dollar Remains at Low Ebb laid it all out.
Until a few years ago, my family and I would go skiing over Christmas break every year to either Mont Tremblant or Mt Orford in Canada. It felt free (and cold) because the exchange rate made the cost about 1/2 that of going to Vermont. With 4 sons, 3 of whom are teenagers, the food costs alone were staggering (important note: Kentucky Fried Chicken (KFC) in Quebec is known as PFK.)
Now, the exchange rate between US and Canadian dollars are at parity. The exchange rate with the British Pound is two to one and the Euro is 41% higher than parity.
On Wednesday, I posted (after a 2 month hiatus) my Three Cents Worth column on Curbed which specifically addressed the weak dollar. Because of my Curbed chart, I was interviewed on the WNYC’s The Brian Lehrer Show yesterday. The segment was called: Following Up: Are Foreigners Propping up House Prices? Note: The interview starts at the 3 minute mark.
Also on Friday, a portion of the text of my radio interview on BBC News Worldwide was published on their web site in Investors see Manhattan as a safe haven. Here’s the web page and the audio version. From some of the commentary made by the other guests, you can hear the front line observations and confusions about the impact of the weak dollar.
Will we ever get change back from our dollar?
Posted by Jonathan J. Miller -Thursday, September 20, 2007, 12:26 PM
There was a great Page One article in the New York Sun by Bradley Hope today Amid Market Uncertainty, a New Hedge that covers Radar Logic’s property derivative product RPX. (note: I head up Radar Logic Research). As a good reporter should, Bradley gathered a quote from Karl Case, one of the creators of another property index, the S&P/Case-ShillerÂ® Home Price Indices that has been available for more than a year.
While I have met the widely quoted Yale economist Robert Shiller and recently appeared with him at Lincoln Center at the Real Deal New Development Forum, I have not had the pleasure of meeting his longtime associate, Karl Case.
Mr. Case, who has been involved with research into real estate indices, said the RPX caters more toward dealers, but includes more “unpredictable random error” by using complex mathematics to calculate the values on a daily basis.
“They add fancy math, but they don’t add data,” he said.
Coming from a respected economist, I am surprised by his lack of understanding of RPX, and for making this type of comment, especially when RPX methodology is transparent and fully available on the Radar Logic web site.
Professor Case has really got it backwards. RPX has added data which is specifically excluded from the S&P/Case-ShillerÂ® Home Price Indices:
- Condos – “Condominiums and co-ops are specifically excluded” (from CSI)
- New construction – “new construction is excluded” (from CSI)
It is fair to say that the real estate markets in the metro areas covered in their index have been significantly influenced by condo and new construction activity.
- Foreclosures – “subsequent sales by mortgage lenders of foreclosed properties are
candidates to be included in repeat sale pairs” (from CSI) How is this determined?
As far as the fancy math comment goes, all I can say is: “good grief.” The RPX proprietary methodology was created by an affiliate of Radar Logic, Ventana Systems who for more than 20 years have been creating and deploying robust, comprehensive models of a complex environment for strategic visibility and control and whose current projects include modeling the national airspace system, research and development productivity, national economy, energy, climate, disease epidemiology and intervention. Ventana is run by the brightest people I have ever met.
Posted by Jonathan J. Miller -Thursday, September 20, 2007, 12:01 AM
After taking two months off from Curbed and the fact that it was Talk Like A Pirate Day I decided it was a good time to start giving my Three Cents Worth to Curbed again. This week I divide three cents into a dollar by taking advantage of the exchange rate.
To view post: Bad Case of Shrinkage
Previous posts can be found here.
Posted by Jonathan J. Miller -Wednesday, September 19, 2007, 1:17 PM
(or 1:15pm Central Time)
Yesterday was one of the most anticipated Federal Open Market Committee meetings in recent memory. The economy has been showing signs of slipping, housing was continuing to weaken and the futures markets were evenly divided on a .25 and a .50 cut in the federal funds rate.
At 2:15pm EST, when the announcement was to be made, I was linked in to WSJ, Yahoo Finance, MSN Money, and several other sites and was having a problem loading them as 2:15 approached. It was kind of like the drop in water pressure experienced when there were commercial breaks during the original I Love Lucy Show in the 1950’s (note to Clark: it was before I was born).
Should the Federal Reserve lower the federal funds rate? The Fed had just dropped the discount rate a few weeks ago to little apparent affect, other than to assuage (is this a word?) investor concerns. The federal funds rate hadn’t been lowered since 2003 and there were concerns that a .50 move would rattle the markets. Wrong!
Stocks surged after the Federal Reserve’s interest rate cut Tuesday as investors viewed the half-point reduction as strong medicine that would avert a recession.
The Dow Jones industrial average shot up 335.97 points, or 2.5%, to 13,739.39, its biggest one-day rally since April 2003.
Not only had the Federal Reserve cut the federal-funds rate by a half point to 4.75%, it cut the discount rate by a half point to 5.25%.
The Bloomberg Terminal I had access to through Radar Logic showed a wild spike in the DJIA immediately after the announcement… resounding vote of approval from the markets. However, treasury yields rose a bit afterwards on concerns over inflation, however, today’s CPI announcement shows it to be less of a concern: core cpi up .2 and non-core cpi down .1 suggesting limited inflation risk.)
I also found it slightly humorous (in an economic sort of way) that there were those that thought the fed should not help the housing market as a way of punishing borrowers, lenders and Wall Street for making bad credit decisions. Hey, you can’t separate housing from the rest of the economy. The painful lesson here has been a rediscovered understanding of what risk actually is. If decisions are based on a lack of understanding of what the underlying asset is, then a wildly volatile variable has been introduced into the risk decision.
Immediately, the National Association of Realtors posted a (what I assume to be a pre-packaged) press release that said:
“We believe that the Federal Reserve Board made the right move today in lowering the interest rate,” said Pat V. Combs, president of the National Association of Realtors Â® and vice president of Coldwell Banker-AJS-Schmidt in Grand Rapids, Mich. “Making borrowing more affordable will make money more available and this could go a long way in helping turn around the sluggish housing market.”
Will the fed move turn around the housing market?
I don’t think so. I think it slows the bleeding. More cuts would need to be applied, excessive inventory would need to be absorbed. Remember the old days are over. Lenders are actually following their lending guidelines rather than bending over backwards to allow exceptions and investors have largely dissappeared. The flow of transactions will likely remain at much lower levels than a few years ago.
Bill Gross of Bond fund giant PIMCO, who had called for the cut, says there is another 1% drop needed in the federal funds rate before.
Housing will provide the impetus to lower and lower fed fund yields
Confidence among U.S. homebuilders tied a record low in September as more lending restrictions and higher borrowing costs concerned buyers, a private report showed today.
To keep economic growth near 2.5 percent or 3 percent, that implies “ultimately at least a 3.75 percent destination for fed funds,” Gross said.
Only twice in the last 20 years has the Fed started a rate cutting cycle with a half-point reduction, Gross said. Both times, the economy fell into recession, he said.
In other words, housing is part of the economy. With that epiphany, now lets try to build in some intelligent mortgage safeguards.
Posted by Jonathan J. Miller -Wednesday, September 19, 2007, 12:01 AM
For the uninformed, today is International Talk Like a Pirate Day.
Its got a lot of the crew rattlin’ their swords and celebratin’...well…nothing really, just like we did in 2006 and 2005.
The story is a long and twisted yarn. Arrghhh! It started with Dave Barry, the humor columnist and one of his recently divorced friends. Arrrh!
What does this have to do with the real estate economy? Nothing.
UPDATE: My web developer’s site TalkLikeAPirateDay.com was taken down. It shares servers with us and tens of thousands came to it today and brought my blogs and web site to a stand still. Amazing.
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