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New York Times

Going Vertical With Google: A Mash-up Of Listings And Maps

December 5, 2005 | 12:01 am | |

A new kind of real estate search engine called Trulia is getting graphic about traditional listing searches [Curbed LA].

The New York Times Circuits Section discusses a whole new breed of real estate search engines, including Trulia thanks to Google Maps in A Journey to a Thousand Maps Begins With an Open Code [NYT]

“A new class of entrepreneur is jumping in as well. Pete Flint, a 2004 graduate of Stanford University’s business school, and a classmate, Sami Inkinen, started a mash-up called, which pinpoints real estate listings on a Google map. Click on a pushpin in a favorite neighborhood and up pops the listings, along with comparables from recent home sales and other nearby properties.

Trulia has posted data only for five California cities, and that data is a bit thin because it uses publicly available sources like newspapers and Web sites, not the Multiple Listing Service, the copyrighted databases belonging to local broker associations. Trulia plans on adding additional layers of information, like census data.”

Trulia is only in California but its catching on.

Click here for more on their mash-up concept.

Webmaster’s Note: Thanks Laura S.!

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The Economy and Real Estate Shows Their Strength In Beige

December 1, 2005 | 12:01 am | |

The Federal Reserve released their Beige Book today [], an anecdotal description of the US economy broken out by the 12 regions of its member banks and collected before November 21st. The information is based on interviews with businesses and other sources and is not the official view of the economy by the Fed.

View The Beige Book [Fed]

Residential real estate markets generally remained upbeat, but many districts reported slowing activity. Residential mortgage lending was down in several districts, while stronger commercial real estate markets were found by many of the banks

Home sales were reported to have eased off in the Philadelphia, Richmond and Cleveland districts. Housing sales remained fairly strong in New York City, but the New York district reported that sales in New Jersey had moderated and that inventories were high.

Both the Chicago and Atlanta districts reported flat home sales, and excess inventories were noted in the Kansas City district, though sales there were up slightly. St. Louis and Dallas said home sales were strong in most metro areas, and San Francisco said sales continued at a rapid clip.

The upbeat economic news [NYT], including the revision of GDP [Businessweek], is expected to prompt the Fed to continue raising short term rates [MSNBC].

Source: NYT

Note: Miller Samuel provides market feedback to the Fed for the Beige Book.


Front Yard Politics: Grass Losing Ground To Pavement

November 30, 2005 | 12:01 am | |
Source: NYT

In today’s article For Some, Grass Is Greener Where There Isn’t Any [NYT] the author covers the odd phenomenon of paving over front yards. This has taken on a political undertone in Kickin’ Asphalt: Pols Attack Front Yard Driveways [Queens Ledger]

“While there are no official city figures on pave-overs, it is clear that the fight is still being waged in the other boroughs and in some suburbs, where signs of creeping urbanism threaten the leafy suburban aesthetic…New York City has no rules prohibiting property owners from paving over their lawns, but Tony Avella, a city councilman from Queens, hopes to change that…Paving over has become so commonplace that it is spurring differences between neighbors and debates within households about whether to dispense with the lawn.”

Source: NYT

Apparently the same issue is a recent major concern in Dallas where a 50% coverage limit is being proposed: Council reviews ordinance to limit pavement in yards [Dallas News]

Some quick research yielded lots of pavement ordinances, but I lost interest after 2:

Garden Grove, CA

Garland Grove TX

Like Its Name Implies, Cond-ops Have Two Meanings

November 28, 2005 | 12:03 am | |

There is an excellent article on How Condops Differ From Condops [NYT] that discusses the two uses of the word and why they are different. I don’t know if this form of ownership exists in other parts of the country outside of New York, but if it does, I suspect its rare.

The Legal Entity
In the 1980’s, the housing boom created a hybrid form of ownership called the “cond-op.” This form allowed the developer (sponsor) to retain control of the commercial or retail space, usually at grade and/or keep the building from violating its 80/20 if the commercial units were throwing off too much income. [80/20 law allows co-ops their tax deductions like real estate has] It works like this. The co-op entity would be enveloped within one of the condo units (legally). If there were two ground floor commercial units, each unit would be designated as a condo unit. This way a 200 unit apartment building with 2 retail units could be converted to a 3 unit condo development. The co-op board would have no power over the retail units. To the buyer of a residential apartment, the co-op acts and functions as a co-op, because, well, it is one. The main difference being that it doesn’t have control over the retail units. We generally find no disparity or penalty in this configuration.

Flash forward to the current market.

The Marketed Entity
The term condo-op has morphed into something else. The limited availability of sites have stimulated developments built or converted on land that is leased. This form of ownership can not be condo because the land is not owned in fee simple. These new developments are legally developed as co-ops but have rules that are more flexible than typical co-ops and are often called cond-ops. Easier board approval, more flexibility in renting are among the inferences the term implies. In fact, new developments like Astor Place (445 Lafayette), actually use the term condo-op on the cover of their offering plan, when they are, in fact co-op apartments.

UPDATE: Changed Lexington to Lafayette above – sorry about that. 😉

Trendy Restaurants Can Tell Us What Gentrification Is On The Menu

November 21, 2005 | 8:46 pm | |

This weekend, there was an Op-Ed piece by Tim and Nina Zagat, publisher of the Zagat Survey guides called There Goes the Neighborhood [NYT]. The idea here is that, of the two conversations that dominate get togethers — real estate and the latest new restaurant — the new restaurant is more important.

Trendy new restaurants are often found in upcoming real estate areas. “It starts when adventurous nightlife-seekers set their sights on an out-of-the-way or underdeveloped area where the bars and clubs give them the freedom to cut loose. Capitalizing on the scene, a handful of restaurateurs then set up shop to nourish the now hungry hordes. And finally, as more restaurants with more offerings take root, people recognize the viability of the neighborhood as a place to live and work.”

This pattern is consistent with gentrification [Wikipedia] of areas such as Soho, Tribeca, MePa, SoBro, Park Slope and Williamsburg in New York, Hoboken, NJ and in many other urban areas across the country.

Sometimes there can be a backlash, like Manhattan experienced in the 1980’s, especially in the East Village, which saw protests and the adoption of the phrase “Die Yuppie Scum” [Univ of Minn. Press] as the rallying cry for activists.

One of the patterns of the current housing boom, as compared to the prior boom in the 1980’s, is that both this boom and the overall economy have been improving for a long enough period of time to allow many emerging neighborhoods to adequately develop residential support services. The adequate supply of groceries, dry cleaners, restaurants, drug stores, etc. in many of these markets is expected to help stabilize neighborhoods should the residential market cool off. Many of these areas have developed their own “legs,” rather than depending on the services of nearby areas. Nobody wants to walk 20 blocks to a grocery store indefinitely.

Affordable Housing Is Remotely Available

November 20, 2005 | 7:32 pm | |

There is interesting article called Where The Affordable Homes Are [BW] that provides suggestions on how to find affordable housing and what to focus on.

The article contends that if we are truly at the peak, “the risk is high risk that you’ll get zero or negative returns on your investment over the next few years” so you should focus on affordability (and therefore stay away from the coast line) and there are plenty of options.

The premise of the article largely depends the buyer’s flexibility to move anywhere in the country for the sake of affordable housing.

One of the problems with these options for many consumers is simply the reason these housing options are cheaper to begin with. The income potential in many of these areas is lower which keeps housing prices down. Career opportunities could be more limited. Areas on the fringe that require a 2 1/2 hour commutes often see limited appreciation because its more difficult to find buyers for properties in these areas. Quite often, the employment base is weaker and opportunities for someone to pack up and move to a new job in that area are more remote (no pun intended).

Today’s New York Times had a real estate article called What You Can Get for $220,000 that took a different tact. In a housing market like New York, which is among the most expensive in the US, the article covered the options to buyers to find housing that was priced at about the national median sales price for US housing at the moment, as defined by the National Association of Realtors (ok, ok I was quoted in this one).

Resources to find an affordable markets
3Q 05 Existing Home Sales [NAR pdf]
House Valuations In Major US Metro Areas [National City pdf]

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Bonuses Expected To Save The Day

November 8, 2005 | 10:47 pm | |

Wall street bonuses are expected to rise 20% to 25% over last year [WSJ] which was already a good year. Investment bankers are expected to reap the largest gains [NYT].

Historically, bonus money flows through the real estate economy in New York at the beginning of the year. Wall Street provides in the vicinity of 20% of personal income and only 6% of the jobs. Its important to the real estate economy.

Other Bonus Stories
Manhattan After The Hoopla Over A 12.7% Drop: What Really Happened In 3Q 05? [Matrix]
Brokers Anticipate Sales Boost As Wall Street Awaits Bonuses [NY Sun]


More On The Sacred Cow: Mortgage Tax Deduction Recommendation Goes To The President

November 3, 2005 | 10:15 pm | |

When the president formed the tax advisory panel to simplify the tax code (explore a replacement scenario for the Alternative Minimum Tax), he requested that the group preserve support for home ownership – read between the lines: keep the mortgage interest and property tax deductions.

Long considered untouchable, the deductions for mortgage interest and property taxes represent $75 billion in lost tax revenue for the federal government and was recommended [NYT] for elimination by the panel.

limiting the home mortgage interest and real estate tax deduction: Essentially “cutting it from the current cap of a little more $1 million to as low as $227,000 in cheaper housing markets like Springfield, Ohio, to as high as $412,000 in places like New York and many of its suburbs.”

giving a tax credit a tax credit: “equal to 15 percent of the interest paid on a mortgage below the cap, rather than a deduction that can be worth as much as 35 percent for taxpayers at the high end of the income scale.”

Critics of the deduction say that it has done very little to increase homeownership:

“For all the talk of bolstering home ownership, said Edward L. Glaeser, an economics professor at Harvard [Miller Samuel], the mortgage tax deduction has done very little to help people into homes. He said the subsidy to taxpayers implicit in the deduction had varied widely over the last 40 years, going up and down with the fluctuation of inflation and interest rates. Yet home ownership over the period has drifted in a band of 63 to 69 percent.”

The deduction would be phased out over 5 years.

Its interesting to see well-respected economists like Mr. Glazer, and Mark Zandi of come out against the deduction. Analysis as to its impact on the housing market will undoubtedly be done. One would expect that there would be a loss of a significant amount of home equity since nominal monthly housing payments could be 30% to 40% higher. It has been speculated that the loss of the deduction would result in a loss in US property equity of at least 15% if the deduction takes effect.

I wonder if the tax panel expects this would be a zero-sum gain or close to it based on the premise that all other revenues would still be maintained if the deduction was enabled. Since housing is one of the largest economic sectors there is, construction and other services related to housing would be hit hard, lowering tax revenues from those sources.

…all for the sake of simplifying the current tax code.

Webmaster’s note:
The anecdotal use of the phrase sacred cow appearing in the NYT article was used here first on Matrix yesterday 😉
Those Evil Hamburger Eating Rich, The Tax Panel Wants Their Fair Share Of The Sacred Cow [Matrix]

Frank Lloyd Wright Meets His Match, Martha Stewart Is Designing Homes

October 12, 2005 | 8:13 am | |
Source: WSJ

Its a Good Thing? [WSJ]

Martha Stewart is lending her expertise to one of the nation’s largest home builders, KB Homes in building 650 houses. They are expected to be about 4,100 square feet and offer high end amenities in North Carolina.

Priced at $200,000 to $450,000 they are more expensive than typical homes in the area. I would imagine her inspiration house in Bedford, New York is 15 to 20 times more expensive.

I am still trying to motivate myself to hand paint my holiday wrapping paper.

Manhattan After The Hoopla Over A 12.7% Drop: What Really Happened In 3Q 05?

October 9, 2005 | 9:05 am | | Milestones |

After the release of our 3rd quarter Prudential Douglas Elliman Manhattan Market Overview last Tuesday to the media and the frenzy of coverage during the week as a result, the New York Times ran an excellent overview of the market story this weekend called A Mixed Message [NYT].

Since then, I have received many inquiries about the state of the market over the week from real estate brokers, wall street firms and lenders to interpret the statistics in the report that were played over and over in the media firestorm. Whats been fascinating about this whole experience is how much coverage was given to the average sales price statistic, which could not stand on its own without explanation. Hopefully I don’t sound too cynical but this stat was likely used because it showed the most negative result.

Here’s a quick list of the highlights of the current market that are most useful:

  • The average price per square foot set an all-time record reaching $984 per square foot and rising 1.4% from the prior quarter. This is the telling statistic. The overall market increased this quarter, but not at the same torrid pace as before. The rate of appreciation has eased. In fact, since larger apartments generally sell for more on a per square foot basis than smaller apartments, one could make the argument that the shift in unit mix also tempered this indicator as well.
  • There was a significant shift in the mix of apartments that were sold. The average sales price dropped 12.7% because the market share of entry-level apartments (studio and 1-bedrooms) spiked 5% and activity at the upper end dropped off.
  • Entry-level sales surged because of concerns over modest increases in mortgage rates are expected. Of course, this has been the speculation since mid 2003 but this time, with rising fuel prices, comments from the Federal Reserve about housing, mortgage rates may actually rise.
  • High end sales activity eased rather than prices dropped. The luxury market average sales price dropped 26% from last quarter because fewer sales at the upper end occurred. There were 17 sales at or above $10M in the 2nd quarter and only 4 sales at or above $10M tracked in the 3rd quarter. In fact, a high end broker contacted me to say there were 5 such sales this quarter, but didn’t realize that one of them closed in the prior quarter. Nevertheless, whether 4 or 5, the sales activity was well below 17 sales. This doesn’t indicate that prices collapsed, but that a shift in the mix of apartments that sold in the upper 10% of the market.
  • Inventory did increase this quarter and was more heavily weighted with condos than co-ops. Since inventory came on at generally the same pace as the number of sales eased, inventory built up. This was attributable to seasonal considerations (thats a stretch) and bad economic news, rising gasoline prices, over saturation of bubble speak for the past 6 months and negative economic news relating to the 2 hurricanes.
  • There are expectations of record Wall Street bonuses at yearend due to the solid year seen by investment bankers and a number of other sectors in the financial district. Historically, Wall Street bonus income has flowed through the real estate economy after the New Year.

Here are a handful of all the interviews I did which basically re-iterate most of these points.

[Focus on Business (Canada)]

[Bloomberg Television]

[WCBS Channel 2]

[WNYC Radio (Brian Leher Show)]

[WNYC Radio]

[Bloomberg Radio]

[WCBS Radio]

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Flipping (Is) Out, In The Big Apple

October 3, 2005 | 9:27 pm | |

The New York Times asked my appraisal firm, Miller Samuel to research the “flipping” phenomenon in Manhattan, which is noted for its high housing prices and dominance of co-ops. So much has been written about real estate speculation over the past several months in other markets like Florida but no one has quantified the phenomenon in Manhattan.

The idea here is that a real estate market with rampant flipping (we define a flip as re-selling a property within 18 months) as a danger sign for future price volatility. A market based on flips is ultimately doomed, like a fee simple ponzi scheme with a foggy end point. In fact, developers in Miami encourage flips and have sales agents in place (for a 2nd commission on the same property) to sell your unit for you. Easy money.

Our study, as noted in the New York Times article on October 2, 2005, determined that property flips, after controlling for typical moves like job transfers or changes in income, was about 3% of all sales activity, far less than the national average of 23% compiled by the NAR. [Matrix].

When electricians and health care workers are quitting solid secure jobs to flip real estate, then its time to get out. Fortunately, this is not happening in Manhattan.

So in some respects, one could consider that high housing prices and difficulties with co-ops in Manhattan, actually makes the housing market there less volatile.

Rent vs. Buy Analysis Leaves Use And Enjoyment Out Of The Equation

September 25, 2005 | 9:15 pm | |


The New York Times this weekend released the results of an analysis of the costs and benefits of home ownership and renting, considering the tax benefits [NY Times]. It is a difficult topic to cover.

The article concludes that now may be a better time to rent than buy since prices are rising, rents are just beginning to rise and buyers place too much emphasis on the tax deduction.

We have to give credit to the New York Times Real Estate Section for publishing this analysis since they depend largely on advertising revenues from real estate brokers. Whether or not you agree with their analysis, it is refreshing to see this sort of thing.

One point of contention I have with articles like this is the concept of valuing the bundle of rights of ownership. This is left largely out of rent to value equation because it is so subjective. For example, the Economist magazine has been trying to call the collapse of the housing market for the past 4 years [Economist] using the spread between rents and sales prices as the predictor of housing price inflation but does not attempt to quantify home ownership within their analysis.

rentdue Nearly every article like this has an advantage of ownership as a feature such as the freedom to change the “color of their living room walls,” but its not quantified. It seems to me that the rent that a property is worth does not reflect all components of its value.

In other words, if a premium is placed on owner occupancy in a given market, then the value to the purchaser would be higher for an owner occupant than it is to an investor. For example, even during the darkest days of the recession in New York, the Manhattan townhouse market reflected a premium for single family houses over two to four family houses. The rental income of the units in the building did not justify the prices being paid for two to four family houses using the multipliers and overall cap rates used by investors at that time as buyers opted to convert these houses to single family.

Using rents as the only way to quantify use and enjoyment of a property paints an incomplete picture.

In addition, the rent versus buy decision should only apply on a case by case basis. It sort of like saying that nationally housing prices went up x% and then applying that amount to your property. The same goes for the opposite end of the spectrum. Rosy reports of rising prices do not always apply to all properties in the same manner.

Related Links
Housing: Buy or Rent [Angry Bear]
NYTimes: Is It Better to Buy or Rent? [Calculated Risk]


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