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New York Times

Stickin’ It To The Man (Or Woman) And Pocketing The 6 Percent

January 6, 2006 | 12:01 am | |

The article Owners’ Web Site Gives Realtors Run for Money [NYT] talks about for sale by owner or FSBO web sites [Google] but specifically

This quirky site has been surprisingly successful, but don’t be misled. Apparently they are not doing it for the money…they get about $150 per listing. Their site sees more web traffic than the local MLS and have earned about $300,000 since the beginning. If they collected a full commission, they would have amassed $17.3M.

Madison is home to the University of Wisconsin and a city where the percentage of residents who graduated from college is twice the national level. It is also a hotbed of antibusiness sentiment, which turns out to be the perfect place for a free- market real estate revolution. Bucking the system is a civic pastime here.

Interactive Map of Sold Homes by, created by the Center for Real Estate, University of Wisconsin-Madison.

And Now…Discount Real Estate Brokers
I’d say that discount real estate brokers, like discount stock brokers, are here to stay and serve a niche. I am doubtful that full service brokers have much to worry about because they service a different market altogether. As we enter a more challenging real estate environment, I suspect that order takers, like Foxtons will see their growth cool more sharply than full service companies.

In fact, brokers that will do well in the changing environment will be those that actively market and sell the properties that they represent. There won’t be a lot of room left for order takers. Foxton (formerly YHD) changed their commission structure from 2% to 3%. Perhaps the services demanded from clients could not be provided at 2%.

UPDATE: Another variation on the discount brokerage theme is the flat fee commission with a la carte service. Once such company is (can we come up with a better name?) Help-U-Sell [North County Times].

Webmaster’s note: I remember visiting the Madison campus (from a rival school), to go to college football games, dining on Bucky Badger Dip at Jocko’s Rocketship before kickoff…but I digress.

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Manhattan 4Q 2005 Chain Links

January 5, 2006 | 12:01 am | |

We released the data for the Manhattan Market Overview I author for Prudential Douglas Elliman for the 4th Quarter 2005. Here’s a summary of the media coverage. Otherwise, here’s a list of the articles that covered the study. It provides an interesting perspective on how each media outlet covers the same story:

[NY Times]
[Int’l Herald Tribune]
[NY Daily News]
[NY Sun]
[The Real Deal]
[Inman News]
[NY Observer]
[Crains NY]
[NY Newsday]
[Honolulu Star-Bulletin]
[NY Post]


Its The Housing Payments, Stupid

January 3, 2006 | 12:01 am | |

In yet another Page One article in the Gray Lady Twenty Years Later, Buying a House Is Less of a Bite [NYT] by David Leonhardt and Motoko Rich, they address the issue of affordability and how that has played a factor in the current housing boom.

“A sharp fall in mortgage rates since the early 1980’s, a decline in mortgage fees and a rise in incomes have more than made up for rising house prices in almost every place outside of New York, Washington, Miami and along the coast in California.”

These often-overlooked changes are a major reason that most economists do not expect a broad drop in prices in 2006, even though many once-booming markets on the coasts have started weakening.”

Percentage Of Income Used To Purchase (1981=30.5%)

The emphasis in this analysis by Moody’s, is the percentage of personal income that would go towards housing. The implication is that the higher the percentage of personal income goes toward housing, the more volatile housing prices have the potential to become.

What was really interesting was the perception of housing costs as a percentage of their income versus reality. In another example of reality distortion, “a nationwide New York Times/CBS News poll conducted this month, 75 percent of respondents said they thought most families in their community spent a larger share of their income on housing now than in the 1980’s. Only 5 percent said the share was smaller.” So while people may think they are paying more of their income for housing, they are actually paying less than 20 years ago.

The final conclusions drawn by the reporters and this study is that there is does not appear to be a housing bubble in the US because the percentage of personal income that goes toward housing is lower than it was 20 years ago, with the exception of some of the higher priced coastal areas. Its an interesting way to look at the housing boom that has kept many people scratching their heads for the past several years.

Buying based on housing payment, not price
I began espousing this shift in buyer dynamic in my presentations in early 2002 as mortgage rates plummeted. About 18 months ago, my wife and I purchased a home and definitely looked at the payment as the primary driver for the purchase, not the price (we offered full list with an hour of viewiing the property the first day it entered the market.) I don’t recall having this same thought process in 1996 when we bought our prior home (and you guess it, we paid full list then too).

New Year’s Realty Eve 2006

December 30, 2005 | 12:01 am | |

Here’s a blog with a whole lof of great pictures from Times Square during the Millenium 2000 celebration.

Wishing all of you a Happy New Year. We’ll be back on Tuesday, January 3, 2006.

The Term “Bubble” In Real Estate Blog Titles Says A Lot

December 28, 2005 | 12:01 am | |

The real estate blogs that are springing up daily have provided the delivery of content in real time, causing many in big media to consider launching their own blogs to keep pace. One of the first Big Media real estate specific blogs was the recent launch of The Walk-through by the New York Times.

The perception by many is that small blogs are independent and a more pure source of news while Big Media is subject to influence from advertising.

Have you looked at the titles of some of real estate blogs lately?

It seems like more than half use the word “bubble” in their title. That seems akin to using “crash” that describes one side of the housing picture. Wait a sec, here is one that uses both of these words. Southern California Real Estate Bubble Crash. Conversely, there are virtually no blogs with titles that say something like “There is no bubble” or “Anti-bubble.” This certainly suggests widespread questions about the real estate market.

The word “bubble” seems to strike an emotional cord with many. Its a very effective way to steer traffic to a blog since the word bubble grabs a lot of eyeballs from Google searches. With all the talent that goes into many of these blogs, I just wonder if this stratgy isn’t too short sighted.

Imagine for a minute that the real estate market does not see the effects of a bubble over the next few years. Such a title will seem strangely out of place. If the market does see the effects of a housing bubble over the next few years, it would still seem like a relatively obsolete title after the bursting of such a bubble.

I don’t mean to get hung up on this point, and it is a relevantly minor point, but since there are so many real estate blogs named “bubble” there must be more to this issue. Here are some of my favorite real estate blogs that have “bubble” in their title.

The Housing Bubble 2
The Boy In The Housing Bubble
Bubble Meter
Bubble Tracking
Housing Panic – There Goes the Neighborhood (The Bubble Bursts)
Inside The DC Bubble
Northern NJ Real Estate Bubble
The Bursting Bubble
Seattle Bubble

Well, you get the picture

Update: Added Trackback to The Stalwart who is a must read for me.

Transit Union Walkout Ends: Lets Hope The Buses Will Start Up

December 23, 2005 | 12:01 am | |

After a series of threats and legal maneuvers, NYC and the Transit Union are back at the bargaining table. Workers Choose to Come Back and Talk [NYT]. It may take up to 18 hours to get the 24 hour system fully operational.

Mass confusion = mass transit but New Yorkers persevered.

No affect on the real estate market is known. The market was winding down this week anyway. There might be some fallout as brokers report little or no traffic at open houses as a result of the strike.

Webmaster Pontification: An event like this, while incredibly inconvenient, seems to happen once every 1-2 years. In a strange way, New Yorkers get to be nice to each other and get a break from the routine which is not so bad.

Creative Brain Drain Weakens Long Term Urban Revitalization

December 21, 2005 | 12:01 am | |

In Daniel Gross wrote a great post in Slate called: Are Journalists Underpaid? : Pity the sad, broke New York Times reporter [Slate]. Let me answer that quickly: “Duhhh!!” They are writing stories about some of the most expensive real estate in the world, not forgetting the difficulty and scrutiny their work entails.

The recent real estate article by Jennifer Steinhauer called New York, Once a Lure, Is Slowly Losing the Creative Set [NYT] addresses this point quite clearly.

In a related pattern, the eventual loss of early artisans who pioneered downtown urban locations as residential usually get priced out by hipsters only to start the cycle again somewhere else. This has been occurring with more frequency as urban areas entice residents from outlying suburban areas into their revitalized downtown markets.

The New York Times article, while a fascinating piece, doesn’t quantify the loss, but I suspect it is significant. I haven’t found great data on this yet, so perhaps its too early in the cycle to measure. This phenomenon happened in New York long ago with loft neighborhoods such as Soho, Tribeca, more recently Chelsea and moved on to parts of Brooklyn and now So Bro (South Bronx.)

Enticing the creative to remain is one of the most important issues to sustain urban revitalization efforts in the long term.


Transit Union Walkout: New Surreal City

December 20, 2005 | 8:50 am | |

As I was making my way from Grand Central to my offices off Fifth Avenue, I was struck by the surreal feel of the city. The Transit Union finally went on strike [NYT] for the first time in 25 years. I never thought they would strike because it would violate the Taylor laws with fines of two days pay for every day on strike.

Undoubtably the strike by 33,700 subway and bus workers will cause extensive economic damage to tourism and companies who do business here.

Fifth Avenue was nearly empty when I crossed it, except for several skate boarders and bicylcists who ventured out in the 22 degree weather. All the cabs had their available lights on as they picked up to 4 passengers by a zone system. I heard stories in the elevator of people begging others to get in their cars since the police were strictly following the 4 passenger per car rule for cars entering Manhattan.

Here’s an appropriate article from The Numbers Guy How to Split a Shared Cab Ride? Very Carefully, Say Economists [WSJ]

Whats not to love about New York City!

Central Park: No Price Can Be Attached To The Center Of The Universe

December 20, 2005 | 12:01 am | |

Courtesy of Satellite Imaging/New York Magazine

One of the reasons to love Manhattan is clearly Central Park. New York Magazine asked us to venture a wild guess as to what Central Park was worth in the article Reasons to Love New York: Because We Wouldn’t Trade a Patch of Grass for $528,783,552,000.

So there is no confusion, this is a purely hypothetical, far-fetched, non-scientific wild guess based on so many caveats (and done in about 3 minutes) that reality doesn’t enter into the equation so we are not violating any licensing requirements…got it?

After the dust settled, here’s the math used.

Webmaster’s Note: Its quite possible, and highly likely, that the net value of all of Manhattan would be less after Central Park was developed. A very high level of inventory that might take decades to absorb would be created, but assuming instant absorption, units facing the park would lose their views, proximity to the park would not matter anymore and a cultural and recreational resource would be lost to all homes in Manhattan. In other words, it would likely be bleak on the real estate front.

Imagine Central Park on the real estate market [The Real Deal]
Appraised value of Central Park: $528,783,552,000. Sell! [Curbed]

Central Park: $528.8 Billion [The Walk-Through]


When House Is A Closet: Thats Good Product Placement

December 19, 2005 | 9:24 am | |

I was reading the New York Times new real estate blog The Walk-Through for the first time this weekend and thought they have done a nice job with it.

One of their posts Build Big, Live Small [The Walk-Through] featured a link to an article about a 710 square foot house occupied by an architect who builds large houses for his clients [LA Times]

I couldn’t help but notice the irony of the display ad in the LA Times post for closets [seen to the left – name edited out to protect the guilty]. 710 sq ft houses…closets…is that synergy or what? 😉

Derailing Conventional Wisdom: Creating Public Space and Inspiring Development From Abandoned Rail Line

December 19, 2005 | 12:01 am | | Radio |

Source: Friends of the Highline

In New York, urban renewal took the form of an elevated 22-block long section of train tracks to be turned into a future park called The Highline and has spurred new residential and commercial development. Thats the result of the efforts of an organization called Friends of the Highline [] and the New York City government.

Source: Friends of the Highline

From Wikipedia, the story goes:

“The West Side Line, also called the West Side Freight Line, is a railroad line on the west side of Manhattan, New York, USA. North of Penn Station, at 34th Street, the line is used by Amtrak passenger service heading north via Albany. South of Penn Station, a roughly 1.5 mile (2.4 km) section of the line, popularly known as the High Line, is elevated and has been abandoned since 1980. The High Line (40°44.9′N 74°0.3′W) is in a state of extreme disrepair, although the elevated structure is basically sound. Grass and trees grow along most of the line, making it a natural oasis in urban Manhattan. There is a movement by community residents to turn the High Line into an elevated park similar to the Promenade Plantée in Paris. In 2004, the New York City government promised to invest $50 million in the proposed park. On June 13, 2005, the U.S. Surface Transportation Board granted a “certificate of interim trail use”, allowing the city to remove the line from the national railway grid.”

“The southernmost part of the High Line has since been demolished; as of mid-2005, the rest of the High Line is owned by CSX, which acquired it after the 1998 breakup of Conrail.”

There’s a really good podcast that can be downloaded from Smart City, a great resource for innovative thinking on urban development: Smart City: New Uses For Old Railroads

Highline under construction in 1930s

Roughly the same spot today

Additional photos
Friends of the Highline Photo Gallery
Forgotten Subways & Trains
[LTV Squad: Urban Exploration](
MOMA Exhibit

Additional background
Future of the Highline (Design Trust 2001) [pdf]
Reclaiming the Highline (Design Trust 2001) [pdf]


In Through The Out Door: Is Japan Seeing A Housing Boom?

December 5, 2005 | 12:02 am | |

The rise and fall and rise of Japanese real estate is covered in Floyd Norris’ colum this week: Remorseful or Not, Buyers Start to Return to Japanese Real Estate [NYT]

The market bottomed out there after 15 years of decline. The increase had been so pronounced in the 1980’s that the Imperial Palace in Tokyo was said to be worth more than the entire state of California.

A typical apartment in Tokyo of 750 square feet is worth about $330,000 (40M Yen) but a few years ago you could have paid $1.5M. Prices are still below 1996 levels but the number of sales are now above 1996 levels. Of course fixed mortgages there are at 2%.

In New York during the last housing boom, Japanese investors single-handedly extended the boom, saving residential developer’s skins in the late 1980’s as domestic purchasers rapidly became scarce after the ’87 stock market crash. The cost of housing in New York was seen as a bargain against Japanese housing prices.

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