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New York Times

[Chartcentric] It’s all in the Distribution

June 13, 2010 | 10:00 am | |

One of the tools I just discovered on the NYTimes.com/realestate is pretty cool, especially to a chartcentric person like me. The user can build distribution charts by apartment size, neighborhood and boro. When narrowing down the market segment, sellers are able to see how their pricing compares to competing properties. The peak of the arc shows where the majority of the listings are priced.

These are screen shots of the Manhattan May 2010 distribution charts.










[NYTimes.com] Number of Listings with Reduced Prices Nearly Doubles

June 12, 2010 | 9:00 am | |


[click to expand]

The New York Times Real Estate section has been upgrading and tweaking the stats they provide on their listing database. The chart above shows the trend line for the number of listings seeing price reductions and increases. Increases remain nominal and constant while the number of listings with price decreases nearly doubles since the beginning of the year.

One thought I had is that more sellers thought prices were going to rise throughout the spring with the volume surge and set prices too high (a phenomenon I discussed in my 1Q 2010 report). When that strategy met resistance from buyers, a rising number of sellers capitulated and dropped their prices resulting in a leveling off of sales activity in April.

Here’s the NYTimes.com/realestate search window I used for the analysis that can be embedded.


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[Spring Market] In Like a Lion, Out Like a Lamb

June 11, 2010 | 12:01 am | |

I’m making up for lost time, not having taken art classes in school…

In the New York City metro area, prices were generally stable – the story this spring was really all about transactions. In today’s New York Times, Vivian Toy’s piece: Spring Real Estate Market Roars In but Tiptoes Out Early describes the robust sales activity that occurred in the first three months of the year but peaked by mid-April, two months early. Sales continued to remain elevated through May and June, however. Does this mean that the market is poised to slip?

Who knows?

This article portrays what we observed in our practice and it was corroborated by StreetEasy‘s contract data. This could be explained by the federal tax credit expiration in much of the US housing market, but probably less so in Manhattan due to the high price point:

Housing sales activity rose across the country in March and April, in anticipation of the April 30 deadline for the $8,000 first-time buyers’ tax credit. But economists and brokers say the tax credit was probably a less powerful incentive in Manhattan, where the average sales price for an apartment is $1.4 million.

And price metrics are rising.

Seeing another sign that the market is on the mend, Pamela Liebman, the president of the Corcoran Group, said that the average price on signed contracts at Corcoran had climbed to $1.5 million in May, from $1.31 million in February.

However, it is important not to confuse this increase with rising prices. The high end market simply “woke up” in the beginning of the year and is skewing the overall numbers. We saw this happen to our 1Q 2010 market stats. Plus its a seasonal phenomenon to see the aggregate numbers rise in the spring.

But nationally, housing market indecision is on the rise.


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[eAppraiseIT Lawsuit] Cuomo Can Proceed Action Over “Inflated”, “Bogus” Appraisals

June 10, 2010 | 10:04 am | |

Ahhh, 2007 seems like only yesterday when I wrote about NY AG Cuomo’s lawsuit against First American‘s appraisal unit, eAppraisIT

Please note: eAppraisIT’s tagline is “redefining value.”

“The attorney general claims that defendants engaged in fraudulent, deceptive and illegal business practices by allegedly permitting eAppraiseIT residential real estate appraisers to be influenced by nonparty Washington Mutual,” presiding justice Luis Gonzalez wrote in today’s unanimous decision. “We conclude that neither federal statutes, nor the regulations and guidelines implemented by the OTS, preclude the Attorney General of the State of New York from pursuing litigation.”

The institutions in my 2007 post have seen change:

  • WAMU…gone!
  • OTS…soon to be gone!
  • First American…renamed CoreLogic.
  • eAppraisIT…business as usual.

New York can proceed with a lawsuit accusing title insurer First American Corp of colluding with Washington Mutual Inc. to fraudulently inflate home values, a state appeals court unanimously ruled on Tuesday.

Attorney General Andrew Cuomo had accused First American and its eAppraiseIT unit in a November 2007 lawsuit of having “caved” to pressure from Washington Mutual to use a list of pre-approved appraisers who provided inflated appraisals, in an effort to win more business.

I have to confess I’m not too neutral here on this issue – a few years ago, I decided not to renew one of our FirstAmerican subscription resources (floorplans) since we had access to more cost effective resources. Despite the cancellation at the end of the contract period, FirstAmerican continued to bill us every month for a year despite dozens of calls by me, then proceeded to threaten us with collection and then ultimately sent us to collection. This was because I opted not to renew my subscription. They couldn’t get us out of their billing system. Scary. On top of that, they never sent the product (they always send the product and then bill you).

I finally resorted to screaming and yelling until I finally got it resolved. I’ve never experienced anything like that before.

Double Whammy
So its hard to believe an appraisal management company owned by FirstAmerican was above reproach but the courts will decide, not a disaffected (you should see the emails between Wamu and FirstAmerican presented in the Cuomo lawsuit. The link to the original lawsuit document is broken now but trust me, the emails were a doozy – here’s the Wamu 10k filing).

A False Premise and a Certain Irony
Here’s irony I can’t shake. Cuomo’s Home Valuation Code of Conduct agreement between Fannie Mae and his office change the landscape of bank appraisal work forever. What started out as good intentions to stop the conflict of interest between mortgage brokers and appraisers, ended up enabling the appraisal management company (AMC) institution which is what eAppraisIT is. The lawsuit shows that AMC are MORE exposed to bank pressure than individual appraisers are.


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[Westwood Capital] Punting On Financial Industry Regulatory Reform

June 2, 2010 | 2:57 pm | |

Hindsight is supposed to be 20/20, no?

We don’t seem to be laying adequate groundwork for placing a regulatory infrastructure in place that will reduce the odds of repeating another financial market meltdown. Congress had the spotlight turned away from them during the recent Greek/Euro crisis but continues to push the coherent decisions to future study.

My friend and colleague, Daniel Alpert of Westwood Capital lays out all out for us in his position paper on NYT’s Dealbook Blog today: Another View: Punting Financial Reform.

Politically, it turns out, the Senate bill owes its surprisingly robust content to its ambiguous scope: 1,566 pages that don’t really address how the landscape of our financial system will look. To move the legislation through the various committees that came together to promulgate it, onto and off of the Senate floor (and ultimately, over the next several weeks, through conference committee to pair it off with an even less specific bill, H. 4173, passed by the House of Representatives in December), both the Senate and House effectively leave most of the heavy lifting to future study and regulation-writing by a host of new and existing regulatory bodies.

My own obsession with a financial reform resolution lies on the laps of the credit rating agencies, the enablers of the debacle that crushed the financial positions of millions of people by placing market share/greed ahead of objectivity/investor protection. Even as an outsider to Wall Street (I’m an appraiser) I could see the disconnect as early as 2004.

The Congressional hearings via C-Span on the role of credit ratings agencies were riveting but the agencies are still doing business nearly as usual and haven’t been hit hard legally, financially and structurally. How can you improve investor confidence when the same agencies with no real modifications, are still placing letters like AAA next to securities?

I draw a lot of parallels with my profession (appraisal) and mortgage brokers. The person ordering the service can’t pick an expert to value the collateral that others rely on if they are paid on the outcome of that advice. Its an insane concept.


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[Eye on Real Estate] WOR NewsTalk Radio 710 May 29, 2010

May 31, 2010 | 9:21 pm | | Public |

For each week’s Eye on Real Estate Show on WOR NewsTalk Radio 710, we include a segment called “The BlogCast” where I discuss several housing related (sometimes a stretch) posts from some of my favorite blogs. They cover topics that are current, funny or simply a “must read”.

Last Saturday’s BlogCast covered the following blog posts:

[Gothamist] Where’s The City’s Worst Cell Service? The best cell phone service can be found in the Lincoln Tunnel, which sees the fewest dropped calls. The worst spots include the Cross Bronx Expressway, along the river on the West Side Highway, Long Island City and Sunnyside in Queens, as well as part of the Upper East Side between 87th and 94th streets…

[Brick Underground] Hold that hotdog! 4 ways to rat-proof your patio before the other guests arrive A friend of ours lucky enough to live in a Chelsea apartment with a rear patio noticed she had company this spring: A gypsy contingent of rats was using her rear wall as a superhighway to the restaurant next door, occasionally detouring to her place for a refueling stop… This topic was timely given the weekend’s NYT/Real estate article on outdoor space.

[Credit Slips] How to Find the Owner of Your Mortgage Concerns continue about parties filing foreclosures when they do not own the note. Florida recently enacted a rules requiring plaintiffs in foreclosure to verify ownership of the note…


If you missed this past Saturday’s show or any prior show, you can listen to the podcast at any time or subscribe to it for free via iTunes to always get the latest show delivered automatically to your computer or handheld device. My Blogcast is usually in the first hour of the show.

Listen to the most recent Eye on Real Estate podcast.

Subscribe to the free weekly Eye on Real Estate podcast.

Become a fan on Facebook.

Or visit the Eye on Real Estate Website.


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[NYT] Developers Need Blind Optimism

May 26, 2010 | 10:28 am | |

[click to expand]

I don’t think I am cut out to be a developer.

While I get the hard work and analysis part, I’m missing the blind optimism part.

And no, I’m not blindly pessimistic either – during the boom years blog commenters periodically accused me of being a shill for the real estate industrial complex (I liked the phrase so much I bought the domain).

Blind optimism is what makes developers successful because everyone tells them they can’t do it. But it is also their downfall because builders build until they can’t build anymore.

Today’s New York Times article by Charles Bagli “Building a Tower of Luxury Apartments in Midtown as Brokers Cross Their Fingers” which announces Barnett’s 1,005 foot condo with a hotel at the base. The site is due south of the Essex House between West 57th Street, a retail corridor and West 58th Street, a service road for Central Park South (West 59th). I’ve got a “let’s consider reality” quote and graphic in the piece.

The project is the first major construction start in New York since the fall of Lehman Brothers in September 2008, and it is an ambitious, even risky undertaking. Unemployment still hovers at 10 percent in the city, which has only just begun to gain back some of the 150,000 jobs lost during the recession. Not so long ago, the real estate industry was right behind Wall Street and the nation’s automakers in crying for a federal bailout.

Access to financing determines when and how something gets built – in this case it was Abu Dhabi since US banks are not interested new luxury condo development given the excess inventory that needs to be absorbed first.

Barnett said “We think it’ll be the nicest project ever built in New York.” Given the proximity and the success of nearby 15 Central Park West – my vote for the best Manhattan condo ever built, I’m guessing that’s the comparison being made. Although recent sales there have topped $6,000 per square foot, the building fronts Central Park and straddles Midtown and the Upper West Side, I’m not so sure its a reasonable comparison to make but I do wish them well.

Remember I’m not cut out to be a developer.

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[Eye on Real Estate] WOR NewsTalk Radio 710 May 22, 2010

May 24, 2010 | 10:03 pm | | Public |

For each week’s Eye on Real Estate Show on WOR NewsTalk Radio 710, we include a segment called “Jonathan Miller’s BlogCast” where I discuss several housing related posts from some of my favorite blogs. They cover topics that are current, funny or simply a “must read”.

Last Saturday’s BlogCast covered the following blog posts:

[The Curious Capitalist] The hidden changes in financial reform The Senate passed its financial reform bill. Huzzah! What did the Senate wind up with after three weeks of such intense lobbying and debate?…

[Trulia Blog] Trulia RealtyTrac Survey: American Attitudes Towards Foreclosure Today, Trulia.com and RealtyTrac released the latest results of an ongoing survey tracking home buyers’ attitudes towards foreclosures. The new online survey conducted on their behalf from May 10-12, 2010 by Harris Interactive® showed a notable decrease in consumers’ willingness to buy foreclosed properties compared to one year ago…

[WSJ/Developments Blog] U.S. Mortgage Delinquencies Appear to Level Off The number of American households behind on mortgage payments appears to be leveling off at a high level, a survey showed Wednesday… I also discussed the MBA confusion over the results in a great New York Times article.


If you missed this past Saturday’s show or any prior show, you can listen to the podcast at any time or subscribe to it for free via iTunes to always get the latest show delivered automatically to your computer or handheld device. My Blogcast is usually in the first hour of the show.

Listen to the most recent Eye on Real Estate podcast.

Subscribe to the free weekly Eye on Real Estate podcast.

Become a fan on Facebook.

Or visit the Eye on Real Estate Website.


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[Newspaper Wars] Appraisers Finally Get Editorial Recognition

May 18, 2010 | 12:28 pm | | Public |

For a housing market obsessed by real estate coverage, residents of New York City are like drug addicts being given heroin (or like an appraiser being giving perfect sales comps) by the sheer volume of real estate market coverage.

But that’s not the point I’m trying to make here. The appraisal profession has entered the media fray by name in major publications.

A few months ago the Wall Street Journal announced they were expanding their news coverage to include the New York metro area to compliment their national coverage. They expanded their staff and made a commitment to a new section called Greater New York and includes local real estate market coverage.

To counter the move, the New York Times is beefing up its real estate coverage to supplement its iconic weekend real estate section.

Within WSJ’s new Greater New York section is a page devoted to real estate. Among one of the daily features is a section called “The Assessor” which includes a graphic and some factual housing tidbits. One of the early names under consideration for the feature was “The Appraisal” but eventually became “The Assessor” (same diff).

The New York Times added a weekly column: “The Appraisal” by Christine Haughney, a former real estate reporter for the Sunday real estate section and a current New York (Metro) section reporter, she provides weekly buzzworthy real estate articles of substance.

While the appraisal profession remains a mystery to many (including me), the coverage of real estate certainly doesn’t.

Well, that’s my appraisal of the situation, anyway.



[97% Financing] National Debt In Perspective

May 11, 2010 | 8:33 am | |


[click to open source post]

I came across this amazing table (hat tip: Robert Paterson’s Weblog) that lays out the percentage of each European country’s national debt to GDP compared to the US. The author applies a 5% debt repayment rate to estimate how long it would take to pay it off (assuming no more additional debt).

While the US is far better than the 19 other countries listed, I am more concerned about the continued growth US debt – it appears to be growing unabated.

Irish eyes are NOT smiling. It’s hard to imagine an influx of foreign investors providing meaningful real estate demand from Europe anytime soon, in addition to the restraint caused by the rising dollar relative to the euro.

Reality check – At 97% financing for 19 years, the US is beginning to feel like an FHA mortgage. Hey, isn’t FHA losing money?


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[Bubbletheory] Lets Not Re-write History

May 10, 2010 | 12:00 am | |

I have been coming across what I believe to be somewhat weird rear view looks at the credit/housing bubble we just went through from some well respected voices. I’m thinking there is perhaps an academia disconnect from the front lines.


[click to open article]

Casey B. Mulligan is an economics professor at the University of Chicago writes “Was it really a bubble?

According to the bubble theory, for a while the market was overcome with exuberance, meaning that people were paying much more for housing than changes in incomes, demographics, technology and other basic factors would suggest.

But why would the blue line need to be where it is? Housing prices are stickier on the downside and the slope should not form a bell curve as the drawing suggests. It should be a lesser slope and drawn out over several years, shouldn’t it? And wasn’t that the whole point of the stimulus plan in reference to the first time home buyers’ and existing homeowner’s tax credit? It stimulated sales activity and as a result, artificially pushed sales price levels sideways.

Take a look at my colleague at Westwood Capital, Dan Alpert’s chart showing the exuberance of housing prices. You can slice it and dice anyway you want but THAT’s a bubble.


[click to open article]

And one of my favorite economist/writers Edward Glaeser writes “What Caused the Great Housing Maelstrom?

If the easy credit hypothesis is correct, then we can take comfort in the thought that we understand the great housing convulsion, and we can start pointing fingers at those institutions, like the Federal Reserve System, that play a role in determining interest rates.

He and his colleagues through their research seem to be saying that low interest rates and high lending approval rates don’t explain enough of the rise in housing prices.

In all due respect, I don’t know exactly how they proved their points empirically but this research seems to be a bit disconnected to what most of us observed on the ground during the boom itself.

For example, a five percent increase in loan-to-value ratios is associated with a 2.5 percent increase in prices, and loan-to-value ratios rose by less than five percent during the boom.

That seems like a very low ratio to me. As appraisers we could clearly see the pressure we were under to hit the number for the mortgage approval and that most people were placing 5%-10% down. I contend that credit was easier than anytime in modern history and that combined with interest rates kept on the floor from late 2001 to mid 2004 caused a frenzy of demand or as Professor Robert Shiller characterizes it as “Irrational Exuberance.”

This was a credit bubble and that housing was merely a way to keep score. Perhaps I am not following their logic but having lived through it and saw the lending environment first hand, its hard to imagine this whirlwind of the past 7 years was not a bubble of some kind.


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[WSJ Appraisal] Professional Appraiser Stereotypes Proliferate

May 9, 2010 | 11:02 pm | |

In today’s WSJ has an article that was on the front page of the online edition (not sure about the print version) called “How to Appraise Home Appraisers

The core idea behind the article was that appraisers:

  • had little data to work with these days
  • make mistakes
  • are in an environment where a low appraisal is more likely to kill a deal
  • banks are seeing people appeal the value
  • lenders may appeal value with the appraiser
  • appraisers may have used foreclosure or short sales as comps
  • appraisers may not be from the area so request a local expert

Ok, my response to all of this is [Doh!]

  • had little data to work with these days [not true with robust sales activity in past 6 months]
  • make mistakes [moi?]
  • are in an environment where a low appraisal is more likely to kill a deal [why should that be any different now – should appraisers be more flexible now – seriously?]
  • banks are seeing people appeal the value [didn’t need to during the boom because values were higher through mortgage brokers]
  • lenders may appeal value with the appraiser [that’s rare – lenders aren’t interesting in pushing values higher now as they did during boom]
  • appraisers may have used foreclosure or short sales as comps [yes and why shouldn’t they, especially in a market where they are common? as long as condition and terms are adjusted for.]
  • appraisers may not be from the area so request a local expert [lenders are predominantly using appraisal management companies and national firms who DO NOT CARE about local expertise, only the fee and turn time.

This article reflects conditions of more than a year ago. Today with the advent of HVCC, the quality of appraisers has fallen precipitously due to the popularity of appraisal management companies. For the most part working for national retail banks as an appraiser is an abomination of the profession.

None of these checklist items have much to do with today’s mortgage process that rewards lenders for hiring a middleman (AMC) who simply finds appraisers who are certified in a state and can turn work around in 24 hours and often are hours away from the property working for nominal fees.

Lenders are afraid to lend right now and the disconnect between upper management and the front lines is bigger than ever. Apparently there is great comfort by national lenders for a poor valuation product in exchange for homogenous nationwide conveyor belt style ordering with rapid turnaround and nearly non-existent oversight. The appraisal process within the mortgage process is a complete joke – it makes me want to scream.

Can we all be so blind and so dumb? Haven’t we learned anything over the past 18 months? [Nope. Not a thing.]

Good grief.

To the media – please spare everyone the misleading portrayal of our industry as professionals willing to use their eraser on occasion when the banks ask us to reconsider. Thats a mischaracterization – we have no choice and no real voice in the mortgage lending process. I’d estimate that 20% of our profession is terrific. The remainder are not.

Garbage in [AMC’s], garbage out [their appraisal quality].


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#Housing analyst, #realestate, #appraiser, podcaster/blogger, non-economist, Miller Samuel CEO, family man, maker of snow and lobster fisherman (order varies)
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