Taking Issue With $lamptons Article
Posted by Jonathan J. Miller -Sunday, March 4, 2012, 1:40 PM
3 Comments
Yesterday’s New York Post Article “The $lamptons: Unsold & foreclosed homes plague East End” got a number of people I know upset with the context of the piece. The article quotes reputable people (assuming I’m reputable) but not to reference the premise of the Property Shark report being cited.
Here’s the lead article quote:
Five years after the housing bubble burst, the number of unsold Hamptons homes has hit a 30-year high while prices have plummeted.
Reality: Prices fell sharply after Lehman collapse in 2008, but the overall market generally remained stable for the past 3 years so I’ll focus on the foreclosure numbers.
One of those upset with the piece was Enzo Morabito, a real estate broker who has long been a top producer in Long Island and the East End. He cites the article’s disconnect with his first-hand experience and emailed me this comment along with data to back up his view:
As I’m sure you all agree, this poorly researched article is sensational, inflammatory and potentially very damaging to the real estate market in the Hamptons.
For me, the New York Post has always been a guilty pleasure of mine for my commute home. Details such as their trademark use of “$” as replacement for “S” in real estate headlines are part of the package – hey, it’s a tabloid. While I’m always appreciative of being included in the New York Post for their real estate coverage, I happen to agree with Enzo and think this one went too far with hyperbole. Admittedly I am skeptical that this single article will damage the East End housing market – and I do think the real estate brokerage industry nationally worries too much about the power of the media over the housing market. But I get their concern because the appraisal industry has been a recipient of blame for housing’s woes in recent years.
The story is based on some sort of report by Property Shark, who is an essential NYC data provider trying to get traction on the East End. I’m sure reports like this are designed to garner PR attention – hey that’s how the media world works.
Are foreclosures expected to rise nearly everywhere in the United States over the next few years? Of course but by widely varying degrees – and that’s not the point being made in this post.
I haven’t been privy to the Property Shark report, but I know the BBC segment and the NY Post article were based on their report – the following quote and link was at least a part of it:
More than 48 homes in the Hamptons worth more than $1 million each are in foreclosure.
Here’s a Suffolk County “distressed” property map by Property Shark which would include short sales that was sent with their release to the media. The problem with this map, as with the old Google Base maps for distressed housing (don’t think they are displayed anymore?) is they are not updated and give the impression that every single property in every market is distressed.
Here’s the latest MLS data crunch recap sent to me by Enzo:
There are 117 Hamptons properties listed on the MLS that are “Short Sale” or “REO/Bank Owned.”
Hamptons includes: East Hampton and Southampton Townships: Eastport, Montauk, Flanders, Water Mill, Bridgehampton, Amagansett, East Hampton, Speonk, Sag Harbor, Westhampton Village, Westhampton, Quogue, Remsenburg, Hampton Bays, East Quogue, Southampton and Southampton Village.
- 74% are under $500K
- 14% are in $500-700K range
- 8% are in $700K to $1 million range
- 4% are over $1 million
HLS/Realnet (MLS) currently 5,116 properties listed as being actively for sale in all of the Hamptons (same communities as noted above), 2,728 above $1M
So I took a look at the numbers provided by Enzo, consistent with my experiences, and applied my math:
- 53% of all East End listings are above $1M
- 34% of all East End 2011 sales were above $1M
- 4% of all East End listings above $1M are short sale/REO
- 1.76% of all East End listings above $1M are REO.
- Market share of foreclosure activity declines moving from bottom to top.
I would guesstimate that overall foreclosures in the East End market are historically just under 1%.
After considering all this, I found Property Shark’s pronouncement that 48 foreclosure listings are the highest total in 30 years is misleading because no context was provided.
Although I don’t have and historical data series for Hamptons REO going back 30 years, just because Property Shark cites it as the “highest” doesn’t mean it is a “high” number.
I’m not being an apologist for anyone here but c’mon data providers and media, let’s remember to provide context for everything we analyze and present. People trust information they read to be at least reasonably reliable.
- The ‘$lam’ptons: Unsold & foreclosed homes plague East End [New York Post]
- Property Shark
- Enzo Moribito Team
This is Laura Gatea from PropertyShark.
We’d like to clear the air regarding the New York Post’s article “The $lamptons: Unsold & foreclosed homes plague East End”. The article came as a surprise to us too, as recently we haven’t sent The Post any stats on the Hamptons real estate market nor were we contacted by them in relation to this topic. Our best guess is that the article is a follow-up on a story on distressed properties, based on data provided by PropertyShark, which appeared in Curbed Hamptons on February 14th (http://hamptons.curbed.com/archives/2012/02/14/propertysharks_map_of_distressed_suffolk_properties_2011.php) The map that was featured in the Curbed story showed every property that was in foreclosure or pre-foreclosure in 2011 in Suffolk County. There were 5,481 such properties; out of these, 380 were located in the Hamptons and 48 had a lien or mortgage amount greater than $1M. The map does not necessarily reflect the current state of distress, as some of those owners might have started paying their mortgages again and therefore would no longer be in pre-foreclosure. We made no statement on home prices nor on the inventory levels in the Hamptons. Regarding the BBC article – oddly enough they haven’t mentioned any of their sources. As in the case of The Post, the BBC did not contact us for any foreclosure stats in the Hamptons. We can assure everyone that we do not state misleading information for PR purposes and that our data is thoroughly researched before being released.
Thanks Laura – very helpful – clearly stated – I’ve officially been “handled” by Property Shark PR.
It’s good to know that “distressed” = foreclosure + pre-foreclosure even though that’s not on the map the reporter or I had: http://millersa.mu/ArKiHB labeled “distressed sales in 2011″ – This is not what the data actually is – it infers that all the data points are foreclosures in 2011 when they actually reflect a much longer time frame. The Curbed post you cite had this link http://millersa.mu/wYZHbQ which clearly breaks out the pre-foreclosures (I never saw the Curbed post) since the reporters indicated they had a report from PS but the link also shows the 2011 label. Based on the first map, I had opined it might be foreclosure + short sale since that’s a common definition for “distressed” and there are lots of short sales.
Even though I was not citing the Hamptons in my quote in the article – I was there for US context – the math I gave to the NY Post was to divide the 48 $1M+ sales by 3 since the foreclosure process takes over 1,000 days (3 years) in NY state on average. That works out to 16 per year which is nominal.
However this situation evolved, the lack of context in the map presentation provided fodder for incorrect media coverage and subsequent broker backlash could be avoided – even though you had best intentions of providing transparency. We have long used your services in NYC and love it.
Ok, back to work.
While you might be skeptical of the distressed figures, we do many price opinions for “distressed” (in whatever capacity- loan mod, preforeclosure, short sale)far more in the Hamptons than in the surrounding areas. If we’re doing 15 a week, and are only one provider, multiply that by the several other companies providing this service to the area. This has been going on for the last three years. In the large majority of cases, the houses are either not on the market, or listed in the orex system with no indication of short sale status- it appears that even some listing agents are unaware of the fact that the seller is in arrears/experiencing problems. Identifying distressed through the listing system used there is not possible; identifying the numbers through any mls is not possible, due to delays in New York in passing muster for bank paperwork (homes not yet on the market) and the realtor community out there appear in the dark, as well. While the article may have added padding to the reality, it’s not a good situation there, and there appear to be many more properties in trouble than most know. Trying to gloss over it as inaccurate is fine, if it is- however, the problem remains significant relative to previous years, and those looking for homes should be aware of the coming price adjustments down, once/if the foreclosure process (read: banks) finds a way to provide legal docs to the courts and move forward. Short sales will also create downward pricing pressure. Also keep in mind that many cases are dismissed after a certain period of time, if the banks don’t ante up a case- so discovering exact numbers is impossible, as those properties are often no longer listed in lis pendens status, despite the reality that they will be. As a price opinion provider, there’s definitely trouble in the Hamptons- and it isn’t going away any time soon.