Matrix Blog

Archive for April, 2009

[Three Cents Worth] Absorbing With A Wet Sponge

April 30, 2009 | 3:53 pm | curbed | Charts |

Sure happy it’s Thursday to share my Three Cents Worth on Curbed, at the intersection of neighborhood and real estate.

This week I wipe the counter with a wet sponge.

Click here to view this week’s post.

Check out previous Three Cents Worth posts.


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[FOMC Parse] Nowhere To Go, Although Badness Troughs

April 30, 2009 | 3:44 pm | fedny |

The Federal Open Market Committee cut the federal funds rate another 25 basis points to 2%. The WSJ breaks out the announcment FOMC statement in a feature called Parsing The Fed.

Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing.

With talk of green shoots and everyone digging hard to find silver linings, the Fed announcement was consistent with other news as of late. In other words:

Things are getting worse but not as fast as before.

I’ll take that.

GDP was -6.1% however consumer consumption is up since January which suggests this may be the trough of its decline. The recent Case Shiller index results brought similar comments about housing, that the worst may be over but demand and prices are still falling and have more to go.


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[The Housing Helix Podcast] Home Valuation Code of Conduct: Y2K of Appraising?

April 29, 2009 | 3:34 pm | Podcasts |

Ok this week, I tackle the Home Valuation Code of Conduct which begins on May 1, 2009. I wonder, is this a Y2k event or does this make matters worse?

This change effects the entire mortgage food chain: Appraisers, Mortgage Brokers, Lenders and Real Estate Agents. It’s worth getting your arms around it.

(I forgot to post this on Monday)

Home Valuation Code of Conduct: Y2K of Appraising?

You can subscribe in iTunes or simply listen to the podcast on my other blog The Housing Helix.



[In The Media] The Real Deal 4-29-09

April 29, 2009 | 12:42 pm | trdlogo | Public |

Here’s a recent interview I did with Jen Benepe of The Real Deal Magazine on the East End and the market report 1Q 09 market report covering the Hamptons and North Fork.

You can stick a “fork” in it as much as you want, but the Hamptons aren’t “done,” by the way.

View the interview.


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[Economic Landscaping = Pound Sand] Sand, Industrial, Financial, Energy and Agricultural

April 29, 2009 | 12:00 pm |

The FDIC has an interesting analysis provided by their economists on the varying impact of the recession on the four regions of the US: The 2009 Economic Landscape: How the Recession Is Unfolding across Four U.S. Regions. Of all the alphabet soup of federal agencies and their output on housing and economics, FDIC tends to be the best.

South and West, Sand States - (Sand States?)

The housing downturn has been most acute in four states—Arizona, California, Florida, and Nevada— that had experienced some of the highest rates of home price appreciation in the first half of the decade. While these states are not all contiguously located, their similar housing cycles and abundance of either beaches or deserts have led some analysts to label them “Sand States.”

Midwest, Industrial -

Although the Industrial Midwest did not experience the significant home price appreciation of the post- 2001 housing boom to the same degree as other regions, its residential real estate markets have still suffered. Existing home sales in the Industrial Midwest declined 33 percent from their second quarter 2005 peak, roughly in line with the nationwide decline. In 2008, home prices fell in all of the region’s states, led by Michigan, where prices declined by more than 10 percent. Further, in half of the Industrial Midwest states, foreclosure rates are at or slightly higher than the national rate.

Northeast, Financial Sector -

Job losses and reduced compensation in New York City’s financial sector are also having a detrimental effect across real estate markets. Home prices in the New York City metro area declined by 9.2 percent on average in 2008. This year-over-year decline in home prices was the largest in the 22-year history of these data, slightly exceeding the previous high recorded in March 1991. Still, New York City home prices fell much less during 2008 than in some other major cities, which saw double-digit declines.

Midsection, Energy and Agriculture -

Though the economies in the nation’s midsection continue to perform well relative to the nation, the downward trends in the energy and agricultural sectors may weigh on the region in the near future. Moderating commodity prices are likely to put a damper on the area’s economic conditions, and the region may not only cease to be a source of economic strength but also could enter recession at a much later stage than the nation.

Download full report from FDIC.

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Dumb Money Yields Paradox of Thrift

April 29, 2009 | 10:55 am |
The Colbert ReportMon – Thurs 11:30pm / 10:30c
Daniel Gross
colbertnation.com
Colbert Report Full EpisodesPolitical HumorGay Marriage Commercial

My friend Dan is at it again – he claims to be on the “C” list of regular guests on MSNBC Countdown – now he’s achieved the pinnacle of every writer’s dream, to be interviewed by Stephen Colbert. He’s humping his new book, Dumb Money.

Colbert Nation summarizes:

Daniel Gross urges rich cable TV personalities to buy steaks, cigars and whiskey.

Very salient interview and I must say, very entertaining.


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[Listing Discount] Trulia Looks At Our Behind(edness)

April 27, 2009 | 11:54 am | trulialogo |

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 reductiontool which I think is pretty neat and I’m not aware of this available elsewhere.

Trulia’s new price reduction tool enbles home searchers to see new reductions in their neighborhood.  So whether the properties have been reduced by 4% or 14%, buyers know exactly what they’re getting.

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.



[World Series Undervaluation] Philly Real Estate Declines, But Less Than Other Metro Areas

April 27, 2009 | 11:31 am |

This quarterly market report is provided by Dr. Kevin Gillen, an economist at the Real Estate Department of the Wharton School and Fellow of the University of Pennsylvania. He analyzes the Philadelphia real estate market using the city’s real estate database through Econsult, an economics consulting firm based in Philadelphia PA that provides statistical & econometric analysis in support of litigation as well as business and public policy decision-makers. His results are published in a research paper called Philadelphia House Price Indices each quarter as a public service to the Philadelphia real estate community. Here’s his methodology [pdf].

Kevin does a great job parsing out the market and it is a pleasure to share his results on Matrix —Jonathan Miller

Download the full report [pdf].

Read Kevin’s analysis: Philadelphia’s Housing Market Deteriorates Sharply in Q1: But city now considered “under-valued” for the first time since 2003.

According to the latest analysis by Wharton and Econsult economist Kevin Gillen, the typical Philadelphia home fell in value by an average of 8.4% on a quality- and seasonally- adjusted basis this past winter. This is an accelerated rate of decline from previous quarters. And, when added to previous price declines, Philadelphia house values are down cumulatively by 17.1% from the local market’s peak of nearly two years ago.

  • Price changes across the city’s neighborhoods were uniformly negative, with no areas exhibiting any price appreciation.
  • According to the data, 2,530 homes transacted under arms-length conditions this past winter; an all-time low.
  • …it still seems to out-perform its peers in its relatively low foreclosure rate.
  • Philadelphia’s housing is now actually considered to be under-valued.



Home Valuation Code of Conduct: Y2K of Appraising?

April 27, 2009 | 4:40 am | Podcasts |

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[The Housing Helix Podcast] Hamptons-North Fork + Queens Market Overviews 1Q 2009

April 23, 2009 | 10:38 pm | Podcasts |

This is a recap of the two market reports we published today covering the Hamptons/North Fork (East End of Long Island) and Long Island Market Overviews. The news is grim as the situation continues to unfold.

Here’s whats new on The Housing Helix Podcast

[Special Reports] Hamptons-North Fork + Long Island Market Overviews 1Q 2009

You can subscribe in iTunes or simply listen to the podcast on my other blog The Housing Helix.