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Archive for September, 2007

Trulia Trends Report: September 2007 Consumer Search Patterns/Spilling The Beans About Beantown

September 29, 2007 | 2:11 pm | trulialogo |

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.



[Curbed] Three Cents Worth: Entering Markets Without ARMs

September 28, 2007 | 10:42 pm | curbed | Charts |

Its 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.


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Business As Usual+: Miller Samuel Is To Be Acquired By Radar Logic

September 27, 2007 | 9:00 am | delogo |


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”

Whats new?

  • We will be able to leverage our valuation and market reporting expertise with the groundbreaking data analytics pioneered by Radar Logic.

Stay tuned!

Press release [pdf].
Press Release [Market Wire].

Update:

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]

News stories:

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]



Business As Usual+: Miller Samuel Is To Be Acquired By Radar Logic

September 27, 2007 | 12:01 am | delogo |


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”

Whats new?

  • We will be able to leverage our valuation and market reporting expertise with the groundbreaking data analytics pioneered by Radar Logic.

Stay tuned!

Press release [pdf].
Press Release [Market Wire].

Update:

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]

News stories:

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]


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Legacy Turbulence: Irrational Book Advances

September 25, 2007 | 10:01 am | bloomberglogo |

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”.


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Crains New York Business Economic Spotlight Chart – September 2007

September 24, 2007 | 12:01 am | crainslogo | Charts |

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.


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[Fee Simplistic] Do We Need An Aspirin Or Major Surgery?

September 23, 2007 | 9:48 pm |

Fee Simplistic is a semi-regular post by Martin Tessler, whom after more than 30 years of commercial fee appraiser-related experience, gets to the bottom of real issues by seeing the both the trees and the forest. He has never been accused of being a man of few words and his commentary can’t be inspired on a specific day of the week. This week Marty gives everyone a headache because the problem with underwriting is not a quick fix. …Jonathan Miller


Without attempting to belabor the obvious it should be apparent to all of us who toil in the various niches of the world of real estate that the sub-prime implosion and its impact on the credit markets calls for: major surgery or, for those with a different outlook, some over-the counter aspirin palliative. For those who remember my previous posting calling for companion legislation to FIRREA, namely FURREA-FINANCIAL UNDERWRITING REFORM & RECOVERY ENFORCEMENT ACT-it should be mentioned that there is already some legislative sparks as noted by President Bush’s call for relief to those homeowner’s who suffered from the flim flam come-ons of the mortgage originators but who have a decent credit history (speculators and investors need not apply). The fact that Sen. Chuck Schumer endorsed Bush’s proposal (an extreme rarity in this political climate) and which involves FHA, FNMA and FREDDIEMac marching to the rescue brings no comfort to this corner as it does nothing to remove any of the past industry practices that brought this problem on with the continuing phenomenal growth of securitization.

The problem is manifold and does not only stem from the non-verification of credit and income, along with introductory low interest rates and optional payment modes allowed borrowers but also has its roots in legislation that allows the financial industry to “game” the mortgage/credit markets by off-loading risk and mortgage portfolios from the originator/lender/packager underwriters and banking institution balance sheets to bond investors who are more likely to pull the trigger on delinquent borrowers and sell off their holdings at discount rather than wait out the market as banks formerly did up through the late 80′s before the advent of securitization. For those with institutional banking experience such as the writer you may recall the people who were in “workout”in the late 80′s through the early 90′s-a vanished undertaking in today’s world of securitization and maybe even a lost art as well.

Also for those of us who are in the lowest rung of the securitization “food chain”, namely appraising, I’m sure we all have stories of phone calls and other nagging requests for lowering fees, making the value, jiffy-quick turnaround times, and other horrors which the readers of Soapbox probably know by heart. Until Congress recognizes that having fixed the lowest rung-fraudulent appraisals coupled with banking institution lending back in 1989 with FIRREA it still needs to regulate a financial market that controls the originating, assembling, tranching of risk and underwriting and sale of the bonds collateralized by these mortgages. Not the least of this regulation awaiting enactment is the fact that the sellers (a/k/a Wall Street) retains and pays the appraiser and the rating agencies. Talk about conflicting interests-is it any wonder that a recent “Sounding Bored” by blogmaster Jonathan Miller addressed the issue of compressed or low appraisal fees (no relation to compressed cap rates).

We may have separated the appraisers from the borrowers under FIRREA but we have not separated the bond issuer/sellers from the appraisers and the rating agencies. Clearly. Congress must address this issue or else we will have history repeating itself probably about 20 years from now when all of the executives responsible for today’s crisis have either been downsized or retired and a new cadre of investment bankers is at the helm with no institutional memory.

Getting back to Bush and Schumer seeing eye-to-eye on the FHA, FNMA & FREDDIEMac Rangers coming to the rescue is the equivalent of taking an aspirin for temporary relief. It will help the poor honest home owner with decent credit who was enticed into a wrongful loan and that is certainly valid and it will leave the investor/speculator licking his wounds and bank account and that is as it should be. But what is called for is transparency in the marketplace, the removal of conflicting interests, and keeping the professional inputs of appraisal and risk rating at arm’s length from the people doing the hiring and paying the fees. For those of you who remember Economics 101-Gresham’s Law where bad money chases out good money-you may want to keep in mind that Wall Street at year end 2006 doled itself $36 billion (yes-with a”b”) in bonuses and that’s after congressional campaign contributions. Do you think $36 billion is “good” money or “bad” money? And the appraisers are complaining about “compressed” (a/k/a low) fees give me a break, Chuck.

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[In The Media] On The Dollar Menu: WNYC, BBC

September 22, 2007 | 11:42 am | curbed | Public |

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?


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Repeat Sales, Fancy Math and Shaking The Tree

September 20, 2007 | 12:26 pm | trdlogo | Public |

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-Shiller® 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-Shiller® 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.

In addition:

  • 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.

Stay tuned!


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[Curbed] Three Cents Worth: Bad Case of Shrinkage

September 20, 2007 | 12:01 am | curbed | Charts |

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.


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