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Archive for March, 2010

[HUD] Housing Market Conditions, Loan Mod Redefault Risk

March 29, 2010 | 11:23 pm | delogo |


[click to open map]

Today I received a nice note from an economist at HUD saying they are using the market report series we prepare for Prudential Douglas Elliman in US Department of Housing and Urban Development’s US Housing Market Conditions site, specifically their annual Regional Activity summary. Using-our-market-reports-aside, its a pretty good overview of what happened in each region. Sort of reminds me of a Beige Book-like housing analysis.

Not only that, but they provide access to a slew of data, research papers and reports as well as interactive maps that allow you to drill down to local levels.

This isn’t a sales pitch so check it out.

Here’s a hot button research paper on their site now:

Loan Modifications and Redefault Risk: An Examination of Short-Term Impacts

A primary concern with loan modification efforts is the seemingly high rate of recidivism. Within 6 months, more than one-half of all modified loans were 30 days or more delinquent and more than one-third were 60 days or more delinquent (OCC and OTS, 2008). Do these high rates of redefault imply that loan modifications are failing?

I would say as currently structured – YES.


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[In The Media] Bloomberg News 3-23-2010

March 24, 2010 | 12:18 pm | bloomberglogo | Public |


[click to play clip]

I did a short interview on Bloomberg yesterday regarding their coverage of Knight Frank’s 2010 Wealth Report

The Bloomberg coverage was in reference to my contribution to the report via interview where they matched me up against their analyst Xavier Wong, Head of Research for Greater China and Hong Kong.

The prime New York market, where prices fell 12.5% in 2009, is gaining strength , but the recovery is tentative, says Leading New York property commentator Jonathan Miller

The frozen market in Manhattan in the first half of 2009 gave way to a much stronger second half of the year. By the summer, the market began to see a recovery in sales activity following an improvement in economic confidence prompted by a revival in the stock market.

While the market has undoubtedly improved compared with last year, we ought not to get too excited. The recovery of late 2009 was a short-term uptick, due in large part to a release in pent-up demand. My view is that the surge in demand is not the start of a rising housing market. While sales are up sharply, prices have moved “sideways.”

I have some lingering concerns for the New York market in 2010. The market has been aided by government stimulus measures – tax credits for first time buyers, in particular. This package will expire in mid-2010. While the US economy is growing, the high rate of unemployment – around 10% and somewhat higher locally – as well as a tight mortgage lending environment do not provide a firm basis for ongoing growth in house prices.

A real fear for 2010 is rising mortgage rates, currently at near record lows. The potential for growing foreclosures, which were not a problem in 2009, is another real factor.

One segment of the market that has seen a noticeable uptick has been international demand, where the weak dollar has prompted interest from Asia, Europe and South America. Demand from South Korea has also become more noticeable.

Looking outside New York, both Boston and Washington DC have also improved, with rising resale volumes in both markets. On Long Island, the Hamptons luxury second home market has surprised everyone with its resilience to date. As a discretionary market, there was general concern that this region would see large declines in prices and sales from the 2008 and early-2009 market turmoil. In fact, both sales and price trends have remained in line with the Manhattan market.

Watch the clip which summarizes the report [Bloomberg]
Open 2010 Wealth Report [Knight Frank]


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[NAR] Existing Home Sales – 3 Month Decline, Supply Most in Nearly 2 Years

March 24, 2010 | 12:06 pm |


[click to open report]

NAR released their February Existing Home Sales report.

Its becoming apparent to even the most optimistic that job growth will be the yardstick that determines when housing will improve to a point where it is self-sustaining.

“It’s a fragile recovery” in housing, said Scott Brown, chief economist at Raymond James & Associates, in St. Petersburg, Florida. “We ultimately need to see job growth to get a sustainable rebound.”

Seasonally we expect inventory to rise in the spring, we also expect sales to rise.

Purchases dropped 0.6 percent to a 5.02 million annual rate, the lowest level in eight months, figures from the National Association of Realtors showed today in Washington. There were 3.59 million houses for sale, a 312,000 increase from January that marked the biggest gain since April 2008.

NAR’s chief economist is calling for a second surge or we are headed for problems.

Sales are up 7% compared with a year ago, the NAR’s data showed.

“We need to have a second surge,” said Lawrence Yun, chief economist for the real estate lobbying group. However, the jury’s still out, he said.

“Has everything in the gas tank been used up?” Yun asked. “Or is this just a pause before the next step up?”

It’s hard to imagine a “pause” in February. I was surprised a complaint about the weather wasn’t used.


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[Knight Frank Research] The Wealth Report 2010 – Global High End Housing Down 5.5%

March 23, 2010 | 6:30 pm | bloomberglogo | Public |

[click to open report]

The Wealth Report 2010 was released today by Knight Frank Research. It is a much anticipated annual survey targeted at the high end consumer with great detail on global residential property trends. The report covers 56 high end housing markets across the globe.

Check out The Housing Helix podcast for my interview with Andrew Shirley, Editor and Liam Bailey, Head of Residential Research for the Knight Frank Wealth Report 2010.

I had provided commentary on the NYC housing market for the report.

….While the market has undoubtedly improved compared with last year, we ought not to get too excited. The recovery of late 2009 was a short-term uptick, due in large part to a release in pent-up demand. My view is that the surge in demand is not the start of a rising housing market. While sales are up sharply, prices have moved “sideways.”…

Some interesting data points:

  • Overall annual global decline was 5.5%
  • Monaco saw prices as high as $5,900 p/SF US.
  • 73% of cities saw year over year declines versus 40% last year.
  • Middle East down 27.5% – the largest decline – Dubai showed a 45% drop.
  • Asia Pacific up 17.1% – the highest increase – Shanghai showed a 52% gain.

In light of this strong growth, the Hong Kong government has threatened measures to restrict the market – notably through mortgage lending restraint, reducing, for example, the mortgage limit for luxury property from 70% to 60%. Despite these potential restrictions the market continues to grow.

This example points to an interesting development. The crippling impact of property bubbles bursting in Europe and the US has created a much more confidently interventionist approach in China, Hong Kong and Singapore (where cooling measures were introduced in September last year) among other markets.

Listen to the interview with Knight Frank [The Housing Helix Podcast]
Download The 2010 Wealth Report [Knight Frank]


[click to play clip]

Update: Just came across the Bloomberg video and my interview giving a quick take on the US luxury portion.


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[Interview] The Wealth Report 2010 Knight Frank, Andrew Shirley, Editor + Liam Bailey, Head of Residential Research

March 23, 2010 | 4:55 pm | kflogo | Podcasts |

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[The Housing Helix Podcast] Phil Tesoriero, Gelip Inc. Consulting, TheBigForeclosureSecret.com, Foreclosure Guard, NYC Firefighter

March 22, 2010 | 5:00 am | inmanlogo | Podcasts |

After moderating a foreclosure panel at the recent Inman Real Estate Connect conference in New York, I thought it would be great to have a conversation with one of the panelists, Phil Tesoriero principal of Gelip Inc. Consulting. A former New York City Firefighter, his experience includes rehabbing REO’s and distressed properties as an investor and contractor, working as a sales agent specializing in the sale of HUD and REO properties and owner of a real estate brokerage firm, Phil now helps real estate professionals with the sale and management of distressed real estate.

You can find out more about Phil’s services at TheBigForeclosureSecret.com (Hint: its all about short sales) and his new product ForeclosureGuard.net.

Check out the podcast

The Housing Helix Podcast Interview List

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



[CDO] ‘The Big Short’ Meets Harvard Graduate Thesis Paper

March 22, 2010 | 12:28 am | wsjlogo |

I’m a big fan of Michael Lewis’ writings starting with Liar’s Poker (think onion cheeseburgers for breakfast and traders owning more speed boats than suits) and much of his other work including Money Ball, Panic (a collection of his favorite news accounts of the credit crisis) and The Blind Side (Academy Awards), but I am very much anticipating reading his new work “The Big Short: Inside the Doomsday Machine.

Admittedly I am growing weary of Wall-Street-what-went-wrong books and I still need to read Andrew Ross Sorkin’s “Too Big Too Fail” compendium on my nightstand (worrying its becoming “Too Big To Read”) but I definitely will. But the Lewis book has got my attention for some reason. It’s weird to sound like I am recommending a book I haven’t purchased or read yet but I guess I am relying on past experience.

In the book acknowlegements, the WSJ Deal Journal blog points out that Lewis:

praises “A.K. Barnett-Hart, a Harvard undergraduate who had just written a thesis about the market for subprime mortgage-backed CDOs that remains more interesting than any single piece of Wall Street research on the subject.”

And my favorite quote referring to the idea of making the numbers say what you needed them to say.

“If you just randomly start regressing everything, you can end up doing an unlimited amount of regressions,” she said, rolling her eyes.

Read the thesis.

She was able to track down information and cover the looming CDO disaster completely on her own through basic research.

Perhaps most disturbing about these losses is that most of the securities being marked down were initially given a rating of AAA by one or more of the three nationally recognized credit rating agencies, essentially marking them as “safe” investments.

A lot can be said for taking a detached or neutral look at a complicated situation. Sometimes the collective mindset takes on blinders, or in this case, blind folds.

A couple of charts to peak your interest.


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[Interview] Phil Tesoriero, Gelip Inc. Consulting, TheBigForeclosureSecret.com, Foreclosure Guard, NYC Firefighter

March 22, 2010 | 12:01 am | inmanlogo | Podcasts |

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[Street Scenes] Market Street San Francisco Circa 1906

March 21, 2010 | 11:37 pm |

I already tweeted this youtube video a week ago but I find myself going back to it again and again. The detail of daily life on Market Street in San Francisco, the organized chaos, congestion, horse and buggy meets trolley and cars, supposedly 4 days before the 1906 earthquake – amazing. Not too many people during this period owned their own homes. A lot of the cars have steering wheels on the right side – strange.

First version I came across – set to mezmerizing music.

Easy link for wide screen version.

Better quality version that goes longer but without the music.



[The Housing Helix Podcast] Dave Perry, Director of Sales and Leasing, The Clarett Group, Developers

March 19, 2010 | 5:29 pm | Podcasts |

In this podcast I check in with Dave Perry, Director of Sales and Leasing for The Clarett Group, a real estate development company. I’ve known Dave for for a number of years and was always impressed me with his understanding of pricing.

Check out the podcast

The Housing Helix Podcast Interview List

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