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Crains New York Business Economic Spotlight Chart – November 2008

December 1, 2008 | 12:01 am | | Charts |

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 my Crains’s New York Economic Spotlight charts that have been published. They are organized by year.


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[Bonus Thinking] All Children Are Above Average

November 10, 2008 | 12:43 pm | | Radio |

A survey found that despite all the gloomy economic news, 1/3 of Wall Street think their compensation will exceed last year’s levels.

If people think that, it’s a combination of human nature and the Lake Wobegon effect,’ he said — a reference to the mythical town in Garrison Keillor’s “Prairie Home Companion,” where “all children are above average.”

Don’t forget that “all the women are strong and all the men are good looking.” (I am long time podcast devotee of Lake Wobegon.)

One of the key reasons that the New York City metro area was one of the last residential housing markets to be impacted by the housing market slow down was the financial might – that is Wall Street bonus compensation. Last year bonuses accounted for just under 50% of total wages paid out in the financial services sector. It’s a long time annual economic ritual in New York.

It’s going to get painful for many in NYC over the next few years. I have many friends on the Street who work hard and make a decent living, but have or will lose their job as a result of a sector of Wall Street that went haywire. It’s simplistic reasoning to lump all segments of Wall Street all together. However, we do like to do that, especially when pointing fingers. Lower bonus compensation will impact the housing market in the New York region over the next few years with less income making it’s way toward mortgage payments.

Bonuses, which soared to record heights in recent years, could drop by 20 to 35 percent across the industry, according to a private study to be released on Thursday. Bonuses for top executives could plunge by 70 percent.

If 50% of your total compensation drops 50% or more, that’s a major decline in spending power. It’s very easy to be generic about all of this. The message given out is: Wall Street is BAD and all Main Street is GOOD. Yet, they are not mutually exclusive.

Is some of the logic for compensation crazy? You bet (no pun intended).

Should New York Attorney General Cuomo go after financial abuse and fraud? You bet. Of course it furthers the notion that bonus compensation is somehow criminal so he needs to walk the path very carefully. Judging by how Cuomo handled appraisers’ role in the mortgage crisis, I suspect he will do it right.

Somehow along the way, the word “bonus” has become another word for “greed”. Sure, there are upper bracket wage earners who make mind boggling compensation. But that is not the masses.

Main Street was pitted against Wall Street as an election theme (just like small town America was presented as the ‘Real America’).

Greg David, editor of Crains New York writes in his post “In defense of Wall Street Bonuses” He makes the case that:

The mayor gets 9% of his revenue from Wall Street, and the governor relies on it for 20%. Bonuses are key to spending on education, health care and police.

One of Greg’s students at the CUNY Graduate School of Journalism gives a more ground level perspective:

So, every time I hear about Wall Street cutting jobs or cutting salaries, all I think of is Eddie. A 25-year-old guy who works his tail off about 50 hours a week–and even more since the financial crisis made its landfall.


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Crains New York Business Economic Spotlight Chart – October 2008

October 20, 2008 | 12:01 am | | Charts |

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 my Crains’s New York Economic Spotlight charts that have been published. They are organized by year.


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Crains New York Business Economic Spotlight Chart – September 2008

September 21, 2008 | 10:07 pm | | Charts |

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 my Crains’s New York Economic Spotlight charts that have been published. They are organized by year.


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Crains New York Business Economic Spotlight Chart – August 2008

August 18, 2008 | 12:31 pm | | Charts |

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 my Crains’s New York Economic Spotlight charts that have been published. They are organized by year.


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Licensing Doesn’t Really Work, But A Necessary Revenue Opportunity

July 31, 2008 | 7:45 pm | |

I think the future holds more licensing requirements in store for real estate professionals. After entering a credit crisis like we are currently experiencing, all professionals connected to the real estate industry may face new licensing or additional requirements.

In an interesting piece written by two economists—Fed visiting scholar Morris Kleiner, of the University of Minnesota, and Richard Todd, vice president of Community Affairs at the Minneapolis Fed called Licentious Behavior:

On the face of it, this makes perfect sense: If incompetent or dishonest brokers have encouraged borrowers to take out loans beyond their means, then targeting these abuses through stricter governmental requirements on brokers should help prevent future problems.

But a recent empirical examination by two Fed econ- omists casts doubt on that solution. In the first compre- hensive assessment of relationships between mortgage broker licensing and market outcomes, the economists find that most regulatory steps appear to have no clear connection to consumer outcomes, but one financial regulation (surety bond and minimum net worth requirements) is consistently related with conditions that seem worse for both brokers and borrowers.

Deja Vu

The appraisal industry faced new licensing requirements in 1991 as a result of the S&L crisis of the late 1980s. Think Vernon Savings & Loan and property values being appraised higher every few hours by appraisers who must have possessed incredibly precise and masterful valuation skills and adequate supporting data (yeah, right).

Appraisers ended up being licensed, waiting in line with other professionals in the testing centers such as pool cleaners and hair stylists.

Appraisers were part of the problem in the current credit crunch as well. Licensing did not prevent bad appraisers from crossing the line then or now. In fact, I would venture to guess that the quality of the average appraiser (not the median) declined sharply after implementation of licensing 17 years ago.

Was it licensing that created the deterioration in quality of appraisers?

No. It was a bigger systemic problem but it did play an unintended role. Licensing of any profession provides a false premise of quality. In this case it was presented to the mortgage industry, but more importantly, allowed a shift in liability to the appraiser who had a freshly painted bullseye on his or her back.

Licensing alone does not promote better quality work.

Quality only gets noticeably better by an incentivized private sector who is enticed through regulation to require better quality reports. It is not enough to say you “can’t do something.”

Is licensing a good thing?

Absolutely. It provides a minimum barrier to entry and a process to allow for the removal of bad appraisers from the business.

Licensing alone won’t improve quality, however. An example would be a town whose police department cracks down on speeders – this alone doesn’t make everyone a better driver, but it does play a role in improving safety. People still get into accidents when they have a drivers license.

A side benefit to municipalities becomes an important revenue opportunity for the licensing bureau, especially with a weakening economy in most of the country. Revenue funds some enforcement for blatant violations, and provides some oversight and regulation. I am fairly certain that a portion of earmarked licensing revenue ends up channeled to other departments, essentially defeating a primary argument for licensing.

What about mortgage brokers?

So for mortgage brokers who are on the verge of being licensed in New York state, with a economic slowdown already being felt, I think it is a long shot that this effort will be defeated.

Will it increase the quality of mortgage brokers in New York state? I doubt it, only on the lower fringe.

I saw first hand the basic financial conflict in their role as commissioned provider of mortgage business, paid only if the loan closed. As in every profession, there are good and bad “professionals.”

All who touch the mortgage should to be licensed, at the very minimum.



Crains New York Business Economic Spotlight Chart – July 2008

July 21, 2008 | 12:01 am | | Charts |

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 my Crains’s New York Economic Spotlight charts that have been published. They are organized by year.


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[No Sleep Till Brooklyn] 2Q 2008 Brooklyn Market Overview Available For Download

July 11, 2008 | 12:52 am | | Reports |

The 2Q 2008 Brooklyn Market Overview that I author for Prudential Douglas Elliman was just released.

It is the first comprehensive report of the entire borough, which is sort of surprising to me. Look for lots of additional data and charts on the market in the coming weeks. No sleep till Brooklyn!

Other reports we prepare can be found here.

A year’s worth of historical aggregate data (will have 5 years online in the coming weeks) and a series of charts will also be available soon.

An excerpt

…The median sales price of a residential property in Brooklyn slipped 1.9% to $525,000 from $535,000 in the prior year quarter. Average sales price increased overall due to the influence of new condo development activity on overall prices. The average sales price of a Brooklyn property was $588,441 this quarter, 2.4% higher than the prior year quarter average sales price of $574,454. Condo prices, on a price per square foot basis, were up 16.4% to $575 from $494 in the prior year quarter. There is broad disparity between new development and re-sale condo prices. The price per square foot of a condo in a new development was $649 per square foot, up 27.5% from the $509 price per square foot of the prior year quarter. Over the same period, re-sale condos averaged $496 per square foot, up 7.4% from the $462 price per square foot of the prior year quarter…

In 2005, I began posting the links of the coverage of each report to see how each media outlet reports the market using the exact same data. I find it to be an interesting way to look at how this information is interpreted and presented.

The media coverage of the report will be provided here as they are released over the week (in no particular order).

Brooklyn home sales skid 44%; prices slip [New York Daily News]
Brooklyn Home Sales Drop 44% as Banks Tighten Lending [Bloomberg]
Brooklyn’s home sales and prices cooling [Crains New York]
Williamsburg, Greenpoint Home Prices Jump As Borough-Wide Sales Slump [NY Observer]
New Condos Saving Brooklyn Housing Market [NY Sun]
Brooklyn sales volume sees sharp drop [The Real Deal]
Second Quarter Brooklyn Market Report: Sales Nosedive! [Curbed]
Miller Samuel Report: Sales Down; Bstone, Burg Prices Up [Brownstoner]
‘KINGS’ ZINGED [NY Post]


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[Party Like Its 2009] 2Q 2008 Manhattan Market Overview Available For Download

July 2, 2008 | 11:58 am | | Public |

The 2Q 2008 Manhattan Market Overview that I author for Prudential Douglas Elliman was released today. Other reports we prepare can be found here.

The data and a series of charts are also available

An excerpt

…Like the prior quarter, fewer sales occurred compared to the prior year quarter, but more than the corresponding quarter two years prior. There were 3,081 co-op and condo sales collected at the close of the quarter, down 21.8% from the prior year quarter. The decline in activity was evenly spread across coop and condo property types with the lower level of demand related to tighter credit and a weaker economy. With tighter credit conditions for market participants existing today as compared to last year, it is reasonable to expect a lower level of activity relative to 2007 for the remainder of 2008. In fact, there were more co-op and condo sales in 2007 than in any other year over the past 20 years…

In 2005, I began posting the links of the coverage of each report to see how each media outlet reports the market using the exact same data. I find it to be an interesting way to look at how this information is interpreted and presented.

The media coverage of the report will be provided here as they are released over the week (in no particular order).

Manhattan Second-Quarter Apartment Sales Fall by 22% (Update1) [Bloomberg]
Manhattan apartment prices zoom but more on market [Reuters]
Wall Street’s ills weaken Manhattan apartment sales [NY Daily News]
Curbed Roundtable: July State O’ the Market Report [Curbed]
Manhattan housing prices edge up, but sales slow [The Real Deal]
The High-End End? [New York Observer]
Manhattan apartment sales drop, but prices climb [Associated Press/Businessweek]
Manhattan housing market slows [Crains New York Business]
Manhattan real estate starts to soften [CNN/Money]
Apartment Sales Remain Vigorous in Manhattan [New York Times]
City Housing Slump May Hit In 2009 [New York Sun]
MANHATTAN HIGH ROLLERS’ HIGH-RI$E HEAVEN [New York Post]
Sales still falling in Manhattan [Inman News]

[July 2, 2008] Bloomberg TV

[July 2, 2008] NY1 TV


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Crains New York Business Economic Spotlight Chart – June 2008

June 23, 2008 | 9:26 pm | | Charts |

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 my Crains’s New York Economic Spotlight charts that have been published. They are organized by year.


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Crains New York Business Economic Spotlight Chart – May 2008

May 19, 2008 | 12:01 am | | Charts |

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 my Crains’s New York Economic Spotlight charts that have been published. They are organized by year.


Tags:


Crains New York Business Economic Spotlight Chart – April 2008

April 21, 2008 | 12:01 am | | Charts |

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 my Crains’s New York Economic Spotlight charts that have been published. They are organized by year.


Tags: