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[Three Cents Worth DC #214] The Real Reasons House Prices Are Rising

October 24, 2012 | 7:00 am | curbed | Articles |

It’s time to share my Three Cents Worth (3CW) on Curbed DC, at the intersection of neighborhood and real estate in the nation’s capitol. And I’m simply here to take measurements.

Read this week’s 3CW column on @CurbedDC:

…I wrote this post a few hours before the third presidential debate and since the topic covers foreign policy and the first two debates (plus the VP debate) had only scant mention of housing, I didn’t think I’d get anymore insights on what our policy makers think is happening in the housing market. Both parties clearly see no bonus points in bringing up a complex subject that won’t score any points (and only happens to be our nation’s largest asset class).

So I am asking the question – Why are housing prices rising in the DMV (and the US)?…

 

[click to read column]


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[Three Cents Worth DC #208] Keep Your Eye On The Numbers (For The Past Decade)

September 13, 2012 | 12:24 pm | curbed | Articles |

It’s time to share my Three Cents Worth (3CW) on Curbed DC, at the intersection of neighborhood and real estate in the nation’s capitol. And I’m simply here to take measurements.

Read this week’s 3CW column on @CurbedDC:

…I thought it would be visually helpful to show the ebb of and flow of the DC Metro area’s housing market. And since I just learned how to rotate a GIF image, I’m making up for all the art classes I never took in high school (band). I trended a decade’s worth of the robust web data from the regional MLS (RBI, a division of MRIS)—monthly new pending home sales and median sales price in a two year moving window. I also inserted some commentary on the milestones during the decade (i.e. highest points for price and sales, lowest points for price and sales, Lehman/credit crunch, tax credit, etc). Hopefully it’s not too distracting…

 

[click to read column]


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[Three Cents Worth DC #205] Does The History of The DMV’s New Listings Predict The Next Housing Slogan?

August 29, 2012 | 4:57 pm | curbed | Articles |

It’s time to share my Three Cents Worth (3CW) on Curbed DC, at the intersection of neighborhood and real estate in the nation’s capitol. And I’m simply here to take measurements.

Read this week’s 3CW column on @CurbedDC:

…No. But please read on. It’s been a while since I’ve placed a chart of Curbed DC, and even longer since I was politically correct (but hey, I’m really trying). With the RNC underway and DNC up next, I thought I’d try to find some sort of correlation to the DC Metro housing market that coincides with the party of the president voted into office and their slogan/theme. Obviously the elections aren’t all about housing, but housing is very important in terms of its economic impact and “Wealth Effect” influence” on the US economy. Doh! I looked at MRIS’ awesome online resources and thought that new listing history might tell the story – I clearly went overboard so please indulge me. My thinking was new listings reflect people placing listings on the market in reaction to their view or opportunity with the world around them. Job transfer, lost job, trading up, cashing out, etc….

 

[click to read column]


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[Three Cents Worth DC #194] DC’s Housing Market Turns The Tide; Good News For Sellers

June 11, 2012 | 11:01 am | curbed | Articles |

It’s time to share my Three Cents Worth (3CW) on Curbed DC, at the intersection of neighborhood and real estate in the nation’s capitol. And I’m simply here to take measurements.

Read today’s 3CW post on @CurbedDC:

Here’s my chart version of the May 2012 report published by RBI/MRIS. They’ve got terrific data and when Curbed DC asked me to go old school and bring back the charts so the trends would be easier to understand, I gladly obliged. I called up my inner Three Cents Worth days in DC…

[click to expand]


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[CoreLogic] Home Price Index 2.6% YOY and 0.8% MOM Increase

June 21, 2010 | 9:58 am |


[click to expand]

CoreLogic (Formerly First American) released their Home Price Index Report for April 2010

“The monthly increase in the HPI shows the lingering effects of the homebuyer tax credit,” said Mark Fleming, chief economist for CoreLogic. “We expect that we will see home prices remain strong through early summer, but in the second half of the year we expect price growth to soften and possibly decline moderately.”

Of the biggest markets, Washington DC best, Chicago worst:

Of the 50 states, Idaho and Illinois show largest YOY decline:

Notes: The index is a compilation of repeat sales transactions going back to the mid-1970s, from CoreLogic’s own property information and its securities and servicing databases covering all 50 states. The index tracks increases and decreases in sales prices for the same homes over time, which provides a more accurate “constant-quality” view of pricing trends than basing analysis on all home sales.

The report is the only major one I am aware of that breaks out distressed properties from actual – I tend to ignore the breakdown since I don’t see these markets as mutually exclusive. In other words, distressed properties compete with non-distressed and by simply removing the distressed properties from the mix, price trends of the non-distressed properties were still impacted by distressed sales.



[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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[Affordable Housing] In The Zone, Being Inclusionary

April 5, 2008 | 10:35 pm | furmanlogo |

I recently got a copy of The Effects of Inclusionary Zoning on Local Housing Markets: Lessons from the San Francisco, Washington DC and Suburban Boston Areas researched by Jenny Schuetz, Rachel Meltzer, and Vicki Been of the Furman Center for Real Estate and Urban Policy at New York University. I have had the pleasure of knowing Vicki Been and the good work of the Furman Center. Last summer I had honor of having a paper I co-authored with the Furman Center back in 2003 published in the Journal of Legal Studies.

I’ve always been intrigued by the influence of zoning on housing: why a town or neighborhood has a consistent housing stock, higher end type of property, limited multi-unit dwellings, limited of commercial space, (let alone the lack of chain-link fences, a key source of suburban blight).

Zoning tends to be exclusion based to keep affordable housing out of specific areas and has a lot to due with whether a housing market is higher priced in certain markets and not in others.

Inclusionary zoning, also known as inclusionary housing, refers to municipal and county planning ordinances that require that a given share of new construction be affordable to people with low to moderate incomes.

the average annual number of single-family permits issued during the 1980s, 1990s and since 2000. As shown in the first two groups, the changes in annual permits since 1980 are quite similar when comparing all jurisdictions that had not adopted IZ by 2006 and all those that had adopted IZ at some point. However, this comparison obscures considerable variation among jurisdictions with IZ, as shown in the last four groups of columns. In particular, those jurisdictions that adopted IZ prior to 1980 or after 2000 issued substantially more permits, both before and after adoption, than jurisdictions that adopted IZ in the 1980s and 1990s. The most recent adopters seem to have been developing much more rapidly in the early decades and saw dramatic drops in the number of permits, even before adopting IZ.

Although less pronounced, there is also considerable variation in changes in housing prices among jurisdictions with IZ (Figure 7.2). Jurisdictions that adopted IZ prior to 1980 had higher than average housing prices as early as 1980 and have seen some of the sharpest increases in prices between 1980 and 2000. This would be consistent with either the explanation that IZ resulted in higher prices in those locations, or that jurisdictions with strong location-specific demand were some of the first to adopt IZ. As of 1980, jurisdictions that adopted IZ in the 1980s and 1990s more closely resembled those that have never adopted IZ, and have seen price increases roughly comparable to the non-IZ group since then. The most recent adopters, which had some of the lowest housing prices at the beginning of our study period, have seen relatively modest price increases, and in 2000 were still relatively affordable.

Such zoning can be controversial. It is often done without public funds and can promote economic and racial integration, but can restrict development of open market properties, creating higher priced housing, reducing affordability.

The report draft is a good read.

While you’re at it, take a look at The Effect of Community Gardens on Neighboring Property by Vicki, and my co-author Ioan Voicu. Interesting stuff.



Northern Virginia Is For Weak Housing: July 2007

August 27, 2007 | 3:00 pm |

[This market recap on the Northern Virginia from MLS data is compiled by Butch Hicks, a former president of RAC (Relocation Appraisers and Consultants) (that I am a member of), a friend and an experienced appraiser in Northern Virginia. The results of his efforts are published on his web site as a series of charts, each with a brief summary. (As a kid growing up in the Washington DC area, I was bombarded by "Virginia is for Lovers" tourism ads, and of course "DC is for US, by George")] -Jonathan Miller


View the charts [BHicks.com]

Rising inventory, flat sales levels and prices slipping…same news as March 2007.

Here’s a sample of the charts available online.




  • The median price paid at the end of July, 2007 was $452,167, a decrease of 1% from the same time period 12 months earlier.
  • At the end of July, 2007, inventory was eight months, an increase of 24% from one year earlier.


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Givin’ Speeches About Mortgages And Housing: No Answers, Only Solutions

July 21, 2007 | 6:13 pm | bloomberglogo |

On the same day last week, Wednesday to be precise, presentations touching on the housing market were given by two influential financial leaders: Fed Chairman Ben Bernanke and James B. Lockhart III, Director of OFHEO, which oversees Fannie Mae and Freddie Mac (GSE’s). Both are accomplished individuals whose jobs influence the housing market to a certain degree. I am not sure which one I would have liked to have heard in person so could only hope for a double header.

Fed Chairman Ben Bernanke (Its been a year and a half, so I feel like I can refer to the Fed Chair as Ben) spoke in front of Congress, before the Committee on Financial Services, U.S. House of Representatives. He is required by law to do this twice per year and I kind of feel sorry for him. I listened to his live testimony on CNBC and was struck by how smart he is and how weak most of the questions posed to him were. After 2 minutes of thank-you’s from each member of the committee, they asked him to explain things like core inflation and how he was going to protect subprime borrowers in the future. The media coverage of the testimony was extensive and rather than spending much of the time talking about the economy, the bulk of the questions from Congress was spent on protection of borrowers, the problems with hedge funds, lax underwriting and why didn’t the Fed see this coming. Bernanke’s macro perspective seemed a little out of sync with the questions posed. I was struck by his references to the housing market, which suggest more weakness to come:

The pace of home sales seems likely to remain sluggish for a time, partly as a result of some tightening in lending standards and the recent increase in mortgage interest rates. Sales should ultimately be supported by growth in income and employment as well as by mortgage rates that–despite the recent increase–remain fairly low relative to historical norms. However, even if demand stabilizes as we expect, the pace of construction will probably fall somewhat further as builders work down stocks of unsold new homes. Thus, declines in residential construction will likely continue to weigh on economic growth over coming quarters, although the magnitude of the drag on growth shoul

…and subprime, which was more dire:

For the most part, financial markets have remained supportive of economic growth. However, conditions in the subprime mortgage sector have deteriorated significantly, reflecting mounting delinquency rates on adjustable-rate loans. In recent weeks, we have also seen increased concerns among investors about credit risk on some other types of financial instruments.

James B. Lockhart III, Director of OFHEO (Its been a year since he took over OFHEO and my rule of thumb for someone with roman numerals after their name is to avoid nicknames so I’ll refer to him as James) gave a year in review speech in Washington DC. He referred to unexpected challenges: housing and subprime. In other words, it was a surprise that the housing market is currently experiencing problems. How could an agency that deals with two large mortgage bemoths be in the dark about the housing market? However, he makes the observation that the GSE’s should be “fulfilling their mission of stabilizing the housing markets.” He refers to the “triple-witching” of the subprime market because of the tripling of subprime originations, the shift to non fully amortizing mortgages and the drop in lending standards. His emphasis was on subprime lending and how the GSE’s can help:

Despite the many problems in the subprime mortgage market it has made a positive contribution toward getting low-income individuals into their first homes. (#12)
Hopefully, the changes I have been talking about today will be continued to help place people into affordable housing without putting them and their neighborhoods into high- risk situations.

It is my belief that Fannie Mae and Freddie Mac can do even more to help in what is one of their key mission areas – affordable housing. It is also my belief that to do so they must be fully remediated with strong systems to address the credit issues in this sector and that they need a strong regulator to help ensure that they are healthy, well-managed companies.

To recap both speeches

We have both banking and mortgage oversight institutions caught unaware of the growing problems with subprime, we have a government agency responsible with the oversight of government sponsored enterprises (GSE’s) saying that it should be dissolved and a new oversight agency formed that would be more effective and we had lending standards drop sharply without reaction from regulators.

So I think I am impressed with everyone’s intentions of fixing things, but don’t we need to understand what went wrong? How can we fix it if we didn’t see it coming? I think Congress was really asking questions of Ben that it could have been answered by James. The whole thing is backwards.


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Northern Virginia Is For Slipping: March 2007

May 3, 2007 | 11:05 pm |

[This market recap on the Northern Virginia from MLS data is compiled by Butch Hicks, a former president of RAC (Relocation Appraisers and Consultants) (that I am a member of), a friend and an experienced appraiser in Northern Virginia. The results of his efforts are published on his web site as a series of charts, each with a brief summary. (As a kid growing up in the Washington DC area, I was bombarded by "Virginia is for Lovers" tourism ads, and of course "DC is for US, by George")] -Jonathan Miller


View the charts [BHicks.com]

Rising inventory, flat sales levels and prices slipping…sound familiar?

Here’s a sample of the charts available online.




  • The median price paid at the end of March, 2007 was $442,336, a decrease of 3.6% from the same time period 12 months earlier.
  • At the end of March, 2007, inventory was six months, an increase of 46% from one year earlier.


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