Matrix Blog

Homebuying Process

Bloomberg View Column: Want a House? Good Luck With the Down Payment

June 25, 2015 | 10:56 pm | BloombergViewlogoGray | Charts |


Read my latest Bloomberg View column Want a House? Good Luck With the Down Payment. This post also went #1 on the Bloomberg Terminal and on the public facing site for 2 days. Super crazy.

down payment chart

Here’s an excerpt…

Saving for a down payment has long been a big challenge for anyone who wants to buy a home. And it got harder after the financial crisis, as lenders insisted on down payments of 20 percent or more for conventional mortgages, which make up the bulk of the market…

[read more]

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Bloomberg View Column: Real-Estate Agents Ride High Again

March 1, 2015 | 8:00 am | BloombergViewlogoGray | Charts |


Read my latest Bloomberg View column Real-Estate Agents Ride High Again.


It was disappointing to have so many Realtors go on the attack over this piece showing they missed the entire point – I was writing about the trend, not the dollars or the splits. Are commission incomes higher in say Manhattan than in rural Texas. Doh! The very idea that incomes are rising after years of low transaction volume plus the lack of resurgence in NAR membership since the financial crisis has made for a little less competition today. This seems like good news to me for the industry. But with the barrier to entry so low, the window will close sooner than later.

I even had a PR executive at NAR send me a critical email concerning my numerical calculations and results but made the mistake of exposing her significant lack of understanding about what data NAR actually publishes. To avoid embarrassing her I opted not to share the letter in this post.

Here’s an excerpt…

This is turning out to be a pretty nice time to be a residential real-estate agent. As the housing market recovers, average income has been rising faster than sales largely because there are fewer agents planting for-sale signs…

[read more]

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Brick Underground: Timeline For Selling A NYC Apartment

February 9, 2015 | 8:44 am | bulogo |

Leigh Kamping-Carder over at Brick Underground put together a pretty cool infographic that covers the sales process of a NYC apartment.



Bloomberg View Column: Housing Market Blows Hot and Cold

February 8, 2015 | 5:32 pm | BloombergViewlogoGray | Charts |


Read my latest Bloomberg View column Housing Market Blows Hot and Cold.


Please join the conversation over at Bloomberg View. Here’s an excerpt…

The northern third of the U.S. is locked in a straitjacket of snow, ice and bleak weather better suited to staying at home than going out and hunting for a new one. I can almost hear it now: Remember how awful last year’s polar vortex was for the fledgling housing-market recovery?…

[read more]

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…and the Home Seller will give you a Free Tesla!

July 12, 2014 | 7:26 pm | nymaglogo |


Back when I was in college, a good friend of mine owned a large Michigan sod farm with his father – acres and acres of putting green quality sod. They wanted to upgrade their big tractor so I joined him on his visit to the local tractor dealership – International Harvester (my parents tell me I am a distant – really distant – relative of John Deere).


[Source: Hemmings]

The tractor they were looking at included air conditioning and a surround sound stereo system. It was impressive. The salesman said that if they bought the tractor that month the dealership would throw in an International Harvester truck.

My friend’s comment to me under his breath was something along the lines of “looks like we are actually buying the truck too.”

Jhoanna Robeledo’s New York Magazine piece on the guy who throws in a Tesla if you buy his condo talks about this marketing technique.  Using a Tesla is buzz worthy as a well thought of brand – after all marketing is about getting eyeballs on the listing – but is it effective?  Does this technique actual sell properties?

In my view throwing in such a large concession is a red flag signifying the property is over priced enough to cover the seller’s cost of the “gift.”

Econ 101:  There is no such thing as a free lunch.

We’ve seen this marketing gimmick attempted with other cars such as a Prius, a Porsche, a Cadillac and Ferrari.

The funny thing is, you never read a follow-up article that shows how this marketing technique/gimmick was successful.


A buyer for the condo in Jhoanna’s article would have the financial wherewithal to buy their own Tesla and likely isn’t thinking about buying a car during their visit to the property.

We don’t see these extreme marketing gimmicks tried with low margin properties. “If I buy this $75,000 condo I get a free Tesla!” Of course not – the condo seller in this “Tesla” story is telegraphing to a potential buyer the listing is over priced.

Yes, in a typical suburban transaction, a seller may throw in a used lawnmower to close the sale, but this is not something that is usually promoted during the actual marketing of the property.

NEWSFLASH Buyers are a lot smarter than this Tesla-giving away seller is giving them given credit for.

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We’re at “Peak Anti-Homeownership”

May 21, 2014 | 11:00 am |

Joe Weisenthal, Executive Editor of Business Insider, pronounced we’re at “Peak Anti-Homeownership” after reading Barry Ritholtz’ Bloomberg View piece on homeownership a few weeks ago.

If financial journalists and housing pundits today truly reflect the US sentiment about housing and homeownership, then we’re clearly manic about our largest asset class.

The conversation by a number of financial journalists and a particular Nobel Prize winning economist has morphed into a homeownership-is-a-false-aspiration pronouncement, almost entirely supported by treating this asset class as a stock. Didn’t we learn the hard way that this was flawed thinking during the prior boom? And unless I’m mistaken, the majority of US homebuyers, aside from investors, used leverage for much of the last 50 years. How about we estimate the ROI on what real people actually do and stop thinking about homeownership as a stock transaction? Good grief.

2012-2013 – Last year’s housing market “recovery” pronouncement was based on nothing fundamental, merely Fed policy of QE and years of pent-up demand released after the “fiscal cliff” came and went without a major catastrophe. Pundits caught up in the price euphoria said the housing market was firing on all cylinders. Yet surging price growth was largely based on sales mix-shifting, less distressed sale buying, tight credit causing, lack of inventory inducing, fear of rate rising, double-digit price growth. Positive housing news was refreshing news to many, but there was nothing fundamental driving the market’s performance to such incredible rates of growth. I couldn’t wrap my arms around 13% price growth with tight credit, stagnant income growth and unacceptably high under-unemployment as economic fundamentals.

2014 – This year’s housing market, which is being compared to the year ago frenzy, is showing weaker results. The housing recovery “stall” is being blamed on the weather, falling affordability and weaker first time buyer activity. This has brought some in the financial media to conclude that homeownership is over rated.

An aside about the weather – a homebuyer last January didn’t say “Gee, since it is 0 degrees outside, let’s cancel our appointment with the real estate agent and delay our home buying plans for 5 years.” Of course not – the harsh weather merely delayed the market for a month or two. However since it hasn’t “sprung back” yet, then clearly there is something else going on besides the weather.

Falling homeownership and anemic household formation is the result of a lackluster economy and a global credit crisis hangover. I can’t make the connection how these weaker metrics have anything to do with a flaw in the homeownership aspiration. Homeownership is falling because it rose to artificial highs (Fannie Mae was shooting for 75% during the housing boom) and is now overcorrecting because credit is unusually tight, the byproduct of a lackluster economy, the legacy of terrible lending decisions and fear over additional forced buybacks of flawed mortgages among other reasons.

I’m quite confident that a significant, sustained economic recovery will go a long way to ease credit conditions and eventually revert homeownership to the mean and we can stop with the “cart before the horse” orientation. While homeownership has never been right for everyone, recent calls that it’s not right for anybody is just as flawed.

Then we’ll pronounce “Peak-Homeownership” in our own manic way.

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Demanding More: terms of sale are now as important as the price

May 18, 2014 | 7:00 pm | delogo | Articles |

[click to open article]

Sellers and their real estate brokers are more focused on the qualifications of the buyer than ever before. “Flexibility of terms,” “limited contingencies,” and “paying with cash” have become well-used phrases in the current home-buying process.

Here’s an article I penned for the current issue of Elliman Magazine. It’s about the concept that the terms of a sale are now just as important as the price.

The latest issue of Elliman Magazine, including my article, as well as the most recent market reports we author are available in the Elliman App.


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[Book] Next Generation Real Estate by Brendon DeSimone

May 4, 2014 | 5:10 pm | Books |


My friend Brendon DeSimone has penned a tome on today’s relevant issues in the home buying and home selling process. Yes, there are a lot of real estate “how to” books out there, but his presentation is refreshingly straightforward. He provides a slew of tips from well regarded people in various walks of real estate life.

Even better, Brendan allowed me to rant about the current state of the appraisal industry and how buyers and sellers can navigate through the process in today’s challenging and confusing market conditions.

And yet even better, here’s my back cover quote for Brendon’s book:


You can pick up a copy in a bunch of places, and here’s one:

Next Generation Real Estate: New Rules for Smarter Home Buying & Faster Selling [Amazon]

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How Real Estate Brokers Can Negotiate With Foreign Buyers, Illustrated

March 29, 2014 | 12:33 pm |

Saw this visual over at Business Insider that shows how communication patterns differ around the world – from Richard D. Lewis’s book “When Cultures Collide“.

[Source: Click to expand]

I haven’t read the Lewis book yet but I’ve always been fascinated by the topic of communication and linguistics – another book got me interested in the topic: That’s Not What I Meant!: How Conversational Style Makes or Breaks Your Relations with Others by Deborah Tannen circa 1992. I’ve read it three times.

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[Leverage] Calculating Your Home Investment Return Realistically

March 16, 2014 | 9:00 am | Infographics |

[click to expand]

I think many, if not most people calculate the return on their home as an investment as this CNN/Money calculator does. After seeing this, I whipped up a theoretical infographic illustrating how the use of leverage in a home purchase factors in to your return. It’s super simplistic, not factoring in opportunity cost, use and enjoyment, tax deductions, improvements and other factors because I wanted to show the power of leverage.

Forget about price indices like Case Shiller or similar. I can’t tell you how many times I have seen a home price index paired up against a stock price index as a way to determine which investment is better. Apples and oranges.

Measure your ROI using what you invested (down payment) and what your home equity expanded (or contracted) to.

The CNN/Money rate of return calculator is really only a measurement of home price appreciation compared to the same period for stocks and bonds as an opportunity cost – comparing different asset types side by side – yet that’s not how the majority of homebuyers interact with their home as an investment.

It’s most often about leverage.

An appraisal colleague and friend of mine pointed out that in my original version, I incorrectly used the word “profit” within the infographic rather than what I was actually talking about: “equity” ie return on investment (ROI) – how much the original down payment gained over time. The numbers all remained unchanged.

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[Appraisal Infographic] Common Myths About The Homebuying Process

March 15, 2014 | 1:07 pm |

The Appraisal Foundation published an appraisal infographic that attempts to clarify common misconceptions by the borrowers about the appraiser’s role in the home buying process. The content is amazingly simplistic, but that’s the point.

I continue to be amazed at how so few people don’t understand what the appraiser’s role is in the home buying process. Perhaps this is why the appraisal industry continues to be marginalized in the lending process (ie appraisal management companies, Appraiser Independence Requirements) and the exodus of competent appraisers into other disciplines outside of residential mortgages continues.


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[In The Media] WNBC Channel 4 “Tightest Squeeze In Years” 2-11-2013

February 12, 2013 | 5:00 pm | Public |

Andrew Siff, a reporter for WNBC Channel 4 in New York did a great job articulating the tight inventory phenomenon we are seeing in both the region and nationally.

Tri-State Real Estate Market Under Tightest Squeeze in Years [WNBC Channel 4]
Listing Inventory Is, Well, Listing [Matrix]

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