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Posts Tagged ‘NAHB’

Housing Starts Drop: Whether the Weather or New Trend?

February 20, 2014 | 12:21 pm | | TV, Videos |

Yesterday I did a quick interview for CNBC at 30 Rock (right next to the new Tonight Show/Jimmy Fallon set which was all abuzz). We were talking about housing starts before they were released. While predicting this stuff is a fool’s errand, I think the bigger question was whether the recent weakening of housing metrics was a new trend or a pause caused by the harsh weather creating havoc across the US.

NAHBconf2-14

The NAHB homebuilder sentiment index (1 family) posted its largest one month drop in history – severe weather, cost of labor, materials and land with given as reasons but those really aren’t new issues other than the severe weather.

While weather played a role and probably amounts to more of a short term blip, I think the larger concern is the outlook over the next 6 months with reduced affordability (higher rates but still historically low) and the bottoming of existing home inventory in 2013 providing additional listing competition in some markets.

December housing starts
• 999k annualized and seasonally adjusted rate in December, declining 9.8% but exceeding forecasts. More weakness in multi-family starts than 1-family • +18.3% 2013 over 2012

Why I thought January Housing Starts would fall (luckily I was right with the announcement of a record 16% drop) • Same factors in place as last month: Weather, Labor and Material Costs and Land Costs. • Record m-o-m drop in NAFB confidence – looking out over the coming months – suggests a larger impact by weather. • Mortgage rates slipped from last month but still nearly a point higher than a year ago, expectation of flat or edging higher in 2014. • Implementation of Dodd-Frank Qualified Mortgage (QM) may also drag viewing traffic. • Permits already fell over last 2 months which suggests lower starts (contracts versus closed sales analogy).

Actual January housing starts release after my interview
880K annualized rate in January, dropping 16% from December 2013. • January 2014 y-o-y dropped 2%. • Permits fell for 3rd consecutive month, down 5.4% from prior month (seasonally adjusted).

STILL – the question REALLY is whether the recent construction slowdown is the beginning of a trend or a temporary set back that will clear over the next few months as the weather improves and the economy shows some improvement. Right now it feels more like the market is losing momentum and the weather is only making it worse.

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[Housing Recovery Update] Proclamations Over Reasons, Statistics Over Logic

December 13, 2012 | 10:20 am | |

Once a month a local real estate broker passes out monthly updates of our local Connecticut housing market at our commuter train station. He’s a nice affable guy and I get to hear him explain the market to people as we wait in the warm station. He said this to me after I took a look at his handout this morning,

“The statistics aren’t too shabby, eh?”

And I smiled and responded, “that’s the power of record low mortgage rates.” to which he gave me the “thumb’s up” gesture.

And he’s right, his MLS statistics show a very much improved housing market from a few years ago and nearly all of the improvement has been mortgage rate related.

His view of housing is not unlike most public economic prognosticators from Wall Street, NAR, NAHB and real estate brokerage firms, consumers and general in-the-media-all-the-time types.

However few, if any, prognosticators understand why or seem interested in understanding whether it is sustainable (aka forecasting a trend). Once a metric shows promise, it will rise forever, or something like that.

Here’s my town recap for November being presented as a report (with a wildly low 15 sale data set). All the percentages reflect November 2012 over November 2011:

  • New Listings -40%
  • Pending Sales +36.4%
  • Homes sold +15.4%
  • DOM +53%
  • Average Sales Price +29.4%
  • Average Dollar Volume +49.3%

Despite the low data set, the results are remarkably consistent with national trends. Now look at why these metrics actually changed:

  • New Listings -40% [tight credit pressing inventory down because sellers can’t buy]
  • Pending Sales +36.4% [record low (and continuing to fall) mortgage rates + high rents]
  • Homes sold +15.4% [behind pendings because pace of sales accelerating as rates fall]
  • DOM +53% [older stagnant inventory is getting sold off from lack of supply]
  • Average Sales Price +29.4% [more high end sales are moving this year]
  • Average Dollar Volume +49.3% [same as above]

If you pull the plug on low rates, the housing market (literally) plunges. No one is suggesting this is the scenario that will occur but the national housing market feels incredibly fragile to me.

But why should I (or anyone else) actually care whether we understand what’s actually going on? The stats show sales and price numbers are higher than last year – “bullet dodged” – that’s all we need to know – we did the math.

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Why Doesn’t NAR Lobby Against Standard Time?

November 4, 2012 | 1:30 pm | |


[click to read about Daylight Savings Time]

We got an extra hour of sleep last night (in theory) as we left Daylight Savings Time.

I came across this post yesterday that got me thinking (more like chuckling), why doesn’t the National Association of Realtors rally public support for shifting the US from using Standard Time to go all Daylight Savings Time in order to promote more housing activity?

Afterall, who wants to get up early and view a purchase or rental property and isn’t housing significant part of the economy? Daylight in early hours benefits farming while daylight in later hours benefits housing activity. Agriculture is about 1% of GDP and housing is 17% to 18% of GDP.

From Wikipedia:

As modern societies operate on the basis of “standard time” rather than solar time, most people’s schedules are not governed by the movements of the earth in relation to the sun. For example, work, school and transport schedules will generally begin at exactly the same time at all times of the year regardless of the position of the sun…if “standard time” is applied year round, a significant portion of the longer sunlight hours will fall in the early morning while there may still be a significant period of darkness in the evening.

Admittedly this idea is way out there, and NAR would be unlikely to lobby this point anytime soon because they would look foolish.

I guess I just don’t like it getting dark at 5pm and I don’t even sell real estate.

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[NAHB] 26% Of Appraisals Faulty While AMC’s Talk Parrots

July 14, 2009 | 12:53 am | |

NAHB regroup on the HVCC/Appraisal issue from after a very silly press release a few weeks ago to a more coherent message in the to the current press release [FAULTY APPRAISAL PROCESS HARMING HOUSING AND THE ECONOMY} which has more stats.

Twenty-six percent of builders are seeing signed sales contracts fall through the cracks because appraisals on their homes are coming in below the contract sales price, according to a nationwide survey conducted by the National Association of Home Builders (NAHB).

“Home builders are increasingly concerned that inappropriate appraisal practices are needlessly driving down home values. This, in turn, is slowing new home sales, causing more workers to lose their jobs and putting a drag on the economic recovery,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.

Ok, I can relate to this but the 26% figure is much higher than I would have thought, and I see myself as an appraisal pessimist these days. NAHB essentially defines faulty as “killing the deal” which is a very thin standard, but still their argument has merit.

This press release comes on the heels of the NAR press release in the form of research that said that 37% of all realtors have had 1 or more deals blow up because of the appraiser.

Lost sales were reported by 37 percent of Realtors® attempting to complete home sales, with 17 percent reporting one lost sale and 20 percent reporting more than one lost sale.

Approximately 85 percent of NAR Appraiser members reported a perceived reduction in appraisal quality.

Although these are trade groups and are known for spinning on behalf of their members, in this case, I do believe they are right. Appraisal quality has fallen sharply and the fact that Appraisal Management Companies (AMC) being enabled by HVCC has a lot to do with that.

Here’s how the AMC trade group responds to appraisal criticism from real estate agent and mortgage broker trade groups.

Realtors and mortgage brokers say the new procedures tend to produce below-market valuations that can delay or kill pending deals. Consumers are paying for the changes in higher fees and subsequent appraisals when the property doesn’t price right initially, they claim.

Such complaints are a “gross mischaracterization” that merely parrot talking points circulated by industry trade groups, said Jeff Schurman, executive director of the Title Appraisal Vendor Management Association, itself a professional organization representing AMCs.

“The way they tell the story, it sounds like we’re a bunch of cowboys who have come on the scene to take advantage of the situation,” he said. “We’ve been around since the 1960s.”

Yes that’s true Jeff, but it became an issue on May 1 when HVCC was implemented. The 1960’s cowboy analogy is like saying the Internet has been around since the 1960s.

Technically a true statement but a wildly misleading reference (much like many AMC appraisals).


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[NAHB] New Guidelines For Appraisers: Break Into Houses?

June 24, 2009 | 9:55 am | |

Ok, so I’m kidding. But read further.

In my previous post, I address the swirl of interest in the appraisal part of the home sale process brought about by NAR’s Existing Home Sale press release yesterday where they blame appraisers for preventing the housing recovery.

On the same day, the National Association of Home Builders issue a press release specifically addressing the need for new appraisal guidelines. Betting money says the two organizations (NAHB & NAR) coordinated release to get more bang for the press buck, so to speak.

Did you ever think something was terribly wrong, but you didn’t understand why? If you haven’t, then you should definitely read NAHB’s press release.

I’ll lay it out here commenting on each paragraph. It you find it to be too much (most sane people), skip to the conclusion at the bottom.

Using foreclosed and distressed sales as comparables with appraisals on single-family homes without adequately reflecting the differences in the condition of the respective properties is needlessly driving down home values, according to the National Association of Home Builders (NAHB).

If foreclosures are competing with the open market sales in the neighborhood – guess what? That’s the market at that point in time. I strongly agree with their point that appraisers need to confirm condition of foreclosure sales if they use them as comps. It’s not that hard. AN APPRAISER SHOULD NEVER USE A COMP UNLESS THEY KNOW SOMETHING ABOUT IT. Otherwise, it can’t be comparable, by definition. Of course, the caliber of appraisers performing mortgage lending appraisals is falling rapidly with the proliferation of AMCs. That’s the real issue here.

“Any home buyer can recognize the difference between a well-kept home and a distressed property that is damaged or not properly maintained. So it only makes sense that an appraiser should be required to consider the overall condition of a property and the specific factors related to a foreclosure or distressed property sale when selecting and adjusting the value of comparables,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla.

We already are required to verify the sales to be able to make adjustments but the Cuomo/Fannie Mae deal called Home Valuation Code of Conduct (HVCC) has enable a whole army of inexperienced or incompetent appraisers at the expense of competent experienced appraisers who can’t afford to work for half price and turn around assignments in 20% of the time without verifying the data.

I was told by a senior risk officer at a national lender that the bank uses several hundred appraisers in Manhattan. There are less than a half dozen long-time Manhattan-based firms here (with more than 1 employee). Where do all these companies come from? Out of state and up state New York. These appraisers will drive 3-4 hours to come to bang out a dozen reports in a day working for half the market rate.

Appraisers are often only required to conduct exterior inspections of properties that are being used as comparables because they are normally unable to enter these homes and examine their interiors. Too often, properties that have been subject to foreclosure or distressed sales have issues related to deferred maintenance or internal damage that an external inspection simply cannot reveal.

Think about what NAHB is saying here in the first sentence. We are not required to inspect the interior of the comps nor can we be made to. Do we have the right to go in all the comps? Simply walk up to the house across the street and say: “I am doing an appraisal of that house over there and the bank requires me to go inside your house and see what you have.” Good grief. A very poorly worded press release.

The actual point they are making here is that they want the appraisers to consider the condition of the houses being sold at foreclosure and adjust for their inferior condition. NAHB is absolutely correct.

However, the alternative bigger picture, between the lines, inference being delivered in the release is: ALL foreclosure sales are INFERIOR in condition to the house being appraised – that’s why they sell for less. That’s simply not true. Are they more likely to be inferior in condition than houses sold that are not foreclosures? Yes. The seller of a foreclosure is often a large institution not as close to the property as an owner occupant would be and may have a different objective/time frame than a typical seller might.

“While most appraisers do a fine job, there needs to be proper regulatory guidelines for those who use distressed or foreclosed properties as comparables when determining home values,” said Robson. “It is essential that appraisers have the proper experience and guidance to accurately assess values in distressed markets.”

You can’t mandate what comps to use, if they are “comps.” I don’t want the FDIC mandating what wattage of light bulbs I can use in my upstairs hallway either. However, I agree completely with the second point. NOTHING has changed to improve the quality of appraisals since the financial meltdown began. HVCC was intended to remove the high bias in valuation caused by the mortgage brokerage industry’s 60%+ market share of origination controlling and ordering the appraisals. That was removed with HVCC. The growth in mortgage broker market share of bringing business to the banks allowed lender relations with local appraisers and the existence of inhouse appraisal review departments to whither and die. The bank solution appears to be to use AMCs to order appraisals, a process which was enabled by HVCC, which is an accident waiting to happen. While mortgage broker ordered appraisals were biased high, AMC ordered appraisals are biased low.

What about a neutral middle ground? Good grief.

In neighborhoods where comps include a large number of short sales or foreclosures, appraisers should have the option of expanding the geographic area or extending the time frame for eligible sales to get a more representative basket of the value of homes sold in the area, Robson added.

They basically want appraisers to ignore all foreclosure sales because they are “low” and be allowed to expand search guidelines to find higher sales. Property values in a neighborhood that are hurt by rising foreclosure activity isn’t caused by appraisers. They are competition to the non-foreclosure homes (and should be properly adjusted for condition). If the appraiser is determining market value of a property, he/she can’t cherry-pick the high sales. Their logic is a fall-back to credit boom reasoning which was all about finding the highest sales to make the deal happen.

Currently, improper or insufficient adjustments to the comparable values of foreclosed and/or distressed homes often results in the undervaluation of new sales transactions.

The best message in this release and it is absolutely true. Condition of the comps should be discovered and adjusted for. Otherwise they aren’t comps – they are merely sales.

“This practice must be corrected because it contributes to the continuing downward spiral in home prices, forestalling the economic recovery,” said Robson.

Overstated but not entirely incorrect, due to the growing AMC issue. The legion of incompetent appraisers being enabled through HVCC and AMCs are resulting in less accurate valuations. This problem sticks like a sore thumb in a declining market with low sales activity, compromising the public trust.

Conclusion

Foreclosure comps are like the new breed of appraisal management appraisers proliferating in a down market. * The quality of appraisals should be much higher than it currently is, whether or not the housing market is rising falling or flat.
* Nothing has been done to address the poor quality of appraisals performed for lending institutions. * National retail banks have all gone the AMC route to get their appraisers.

If the user of an appraisal report (bank, Fannie/Freddie, secondary market investor) doesn’t care about the quality and reliability of the valuation process, then the use of AMCs are enabled and becomes the new market for appraisal services, damaging the livelihoods of competent and diligent appraisers.

The use of AMC appraisers is beginning to sound a lot like the way foreclosure comps are being used in an appraisal.


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[Snowball Pile] NAR Says Sales Higher, Blame Appraisers For Stalling Housing Recovery

June 24, 2009 | 12:38 am | |

The National Association of Realtors released their May Existing Home Sales Report today and reported:

The Realtors said that home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million last month, from a downwardly revised pace of 4.66 million in April. Prices, meanwhile, were 16.8 percent lower than a year ago.

That’s all well and good, but there was a new wrinkle this month. Someone to new blame for continued weakness in the housing market.

You guessed it: The Appraiser.

“We have just been flooded with e-mails, telephone calls on the appraisal problems,” said Lawrence Yun, the Realtors’ chief economist.

“Poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.”

This unleashed a flood of appraisal coverage today.

The NYT’s Floyd Norris writes a great blog post on this topic called Realtors: Blame the Appraisers

ACRONYM Alert!!! AMC = Appraisal Management Company.

I was on Fox Business last night with Neil Cavuto. Don’t have the clip yet but the topic was..you guessed it…appraisers and whether we are killing the recovery.

Most of the good appraisers I know don’t work for Appraisal Management Companies nor are they getting much work from the national retail banks. Why? Because they don’t agree to work for half the market rate, crank out work in 24 hours that doesn’t allow enough time to research and cut corners because of their low fee structure.

But they likely got most of the appraisal volume during the spring mortgage boom with record low mortgage rates.

AMC’s are the unregulated byproduct of the Cuomo/Fannie Mae deal called HVCC or Home Valuation Code of Conduct. Generally, the lowest common appraisal denominator work for AMCs and you get what you pay for – usually garbage.

The likelihood of fragile deals blowing up because some out of area yahoo comes to bang out a dozen reports in one day and has no idea what is going on in the local market is likely to come in low on the value because they think that’s what the bank wants. And guess what? AMCs and the appraisers they use got most of the work during the spring.

NAR doesn’t seem to understand this – they seem to be inferring appraisers are singlehandedly stalling the housing market. Appraisers don’t all get together and say “Gee, lets all do a really bad job on our appraisals these days. It systemic. Banking wants to use AMCs. AMCs want to make a profit so they hire cut rate appraisers.

The NAHB press release today was even more silly. More on that in the next post. Like anything associated with appraisals, many know something is wrong, but they have no idea what it is.


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[In The Media] Fox Business Interview for 6-17-08

June 17, 2008 | 1:35 pm | | TV, Videos |

This morning I was invited to comment on housing starts for Fox Business Network’s Money For Breakfast show hosted by Alexis Glick.

Here’s this morning’s clip.

I wasn’t at my best on this one – no coffee prior to the interview – but it was interesting to see starts fall yet again. The May housing start figures were released by US Commerce just as the interview began at 8:30am.

Privately-owned housing starts in May were at a seasonally adjusted annual rate of 975,000. This is 3.3 percent (±10.7%)* below the revised April estimate of 1,008,000 and is 32.1 percent (±5.1%) below the revised May 2007 rate of 1,436,000. Single-family housing starts in May were at a rate of 674,000; this is 1.0 percent (±9.9%)* below the April figure of 681,000. The May rate for units in buildings with five units or more was 280,000.

April’s rise seems to be an anomaly. Expectations for housing continue to be negative as evidenced not only by these start figures which suggest there is excess inventory, but the record low NAHB/Wells Fargo Builders Confidence Index announced yesterday, was at a record low. In other words, builders, who are some of the biggest risk takers and optimists out there, are not feeling good about the situation.

It’s funny but with all the excess inventory out there, I find it hard to believe that builders continue to build, even at their “half full” output compared to 2006 levels. The decline in housing starts (which are fraught with crazy statistical problems to begin with) would likely be lagging the drop in demand as measured by inventory.

We really need a better national inventory figure.


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[In The Media] Fox Business C-Suite Interview for 5-16-08

May 16, 2008 | 11:09 am | | TV, Videos |

Well this morning, I got up at 4:15am to do a live C-Suite interview on Fox Business News at 6:45am. Always fun and I enjoyed meeting Jenna Lee in person after having known her only via telephone when she was a reporter. I must have done ok since they invited me back next friday morning. 😉

Here’s this morning’s clip.

We talked about both housing starts and my appraisal firm, Miller Samuel. I had thought that the April numbers would show further decline. March was the lowest in 17 years and was down by 2/3 from the January ’06 high. Economists surveyed generally thought starts would be down around 1.4%.

Surprisingly, starts were up.

Starts jumped 8.2% but that was due to multi-family starts. Single family starts were actually down 1.7%. Overall starts are down 30.6% from the same time last year.

Bad Stats 101

Check out the Census’ press release quote:

Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,032,000. This is 8.2 percent (±14.5%)* above the revised March estimate of 954,000, but is 30.6 percent (±6.7%) below the revised April 2007 rate of 1,487,000.

Translation of up 8.2 percent (±14.5%): Overall housing starts were anywhere from -6.3% to +22.7%. Seems wildly vague, doesn’t it?

Single-family housing starts in April were at a rate of 692,000; this is 1.7 percent (±11.7%)* below the March figure of 704,000. The April rate for units in buildings with five units or more was 326,000.

Translation of down 1.7 percent (±11.7%): Single-family starts were anywhere from -13.4% to +10%. Seems wildly vague as well.

If you think about it, nothing has really changed since last summer’s credit crunch that would change the direction of the housing market.

  • How can we talk about a bottom yet?
  • What market force is going to get more people to buy right now?
  • What economic force is going to stimulate demand as we approach or are in a recession?

The credit markets are still frozen, mortgage rates have risen, underwriting standards are higher and reduced the buyer power of consumers.

The headline increase in starts means nothing; it is all due to a rebound in the hugely volatile, but essentially trendless, multi-family sector,” said Ian Shepherdson of High Frequency Economics.

Builders have been reluctant to build because demand for new homes has plunged and the supply of unsold property remained high. The latest data show new-home sales, for March, were down 36.6% from a year earlier. On Thursday, the National Association of Home Builders reported its index for sales of new, single-family homes slipped to 19 in May from 20. The gauge is based on a survey of builders asked about prospects for sales.

“The magnitude of the housing bubble was unprecedented, and the corrective process promises to be a long and painful one,” MFR Inc. Joshua Shapiro said of the NAHB data. “Hence, it is hardly surprising that builder sentiment is still languishing very near its all-time low.”

As far as Miller Samuel (my appraisal firm) goes, we have been booming since February. Fox Business inadvertently inserted a text banner during my interview that referred to our now defunct acquisition by RL from last fall. I had terminated the take-over in March.

Our firm is built for a down housing market because lenders as well as other clients actually want to know what the value is and the nuances of housing markets we cover, rather than only the number needed to make the deal. We did not fare as well as others during the housing boom because of the erosion of underwriting standards and the shift of appraisal work from retail lenders to mortgage brokers.

The current lending environment is encouraging, in a contrarian sort of way, by getting back to basics. Hopefully this will permeate the entire lending process.

The housing boom was tough for appraisers who refused to bow to pressure to push values higher than they should have been and the work was given to those who would.

But the world is changing, and like the IRS, we are here to help…




From the:

Who Cares But
It’s Still Cool
Department:

Christine Haughney’s Collateral Foreclosure Damage for Condo Owners in the NYT yesterday that sourced and used us for background, was the most emailed article in the New York Times both yesterday and today. THAT is cool (to me). It was designated to be an A1 story but was bumped for the earthquake in China coverage.


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Builder Confidence Not Building

March 20, 2008 | 12:01 am | |

The Commerce Department released its new residential construction stats and starts are down 28.4% below last year and permits are down 36.5%. This is consistent with the NAHB Builder Confidence stats released the day before:

I find it interesting to follow trade associations like the National Association of Homebuilders (NAHB), and observe how they present their take on the housing market. In one of the worst environments for construction in recent memory (hard to find either financing and buyers), optimism still prevails:

“Our surveys confirm what I’ve been hearing personally from builders across the country, which is that interested buyers are out there, but they are either reluctant to go ahead with a home purchase or they are unable to find mortgage financing they can afford,” said NAHB President Sandy Dunn, a home builder from Point Pleasant, W. Va.

I am guessing this is an understatement of the year, no?

The headline of the press release says: Builder Confidence Remains Unchanged In March.

Which makes it sound like a neutral market when actually confidence is almost at its lowest level in 23 years since the index has been published. Yes?

Builder confidence in the market for new single-family homes remained unchanged in March, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), released today. The HMI held firm at 20, which is near its historic low of 18 set in December of 2007 (the series began in January of 1985).

To their credit, they provide constructive suggestions to fix the housing slump and even though there is sugar coating (they are a trade association, after all), they do not stray from the realities of the market. No?

This just in: NAR Chief Economist Named Among Top Forecasters for Accuracy. ????

I’m feeling a bit rhetorical today, yes?


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There Is No National Housing Market

December 2, 2007 | 1:47 am | | Milestones |

The use of national housing statistics has been a key source of confusion for consumers, real estate brokers, lenders, media, financial markets and government agencies among others. The statistics are often applied to local markets and properties. The reliance on these numbers for ground level use has a pet peeve of mine for many years.

When Radar Logic rolled out its first RPX Monthly Housing Report on October 2, 2007, we made sure that the focus was geographical housing patterns.

The report effort was based on the premise that there is no national housing market; rather, each of the MSAs, while having some economic influences in common like mortgage rates, is influenced primarily by local conditions.

I was encouraged by the release of the latest batch of market reports this week that have begun to make this point more clear in their press releases. When the market was rising, press release jargon tended to be much more focused on national numbers. I suspect we will see a shift in orientation since this is really a false premise.

Office Of Housing Enterprise Oversight [OFHEO] – November 29, 2007

The figures were released today by OFHEO Director James B. Lockhart, as part of the quarterly report analyzing housing price appreciation trends.

“While select markets still maintain robust rates of appreciation, our newest data show price weakening in a very significant portion of the country,” said Lockhart. “Indeed, in the third quarter, more than 20 states experienced price declines and, in some cases, those declines are substantial.

National Association of Realtors – November 28, 2007

NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., emphasized that all real estate is local. “Keep in mind that home prices are up in 93 out of 150 metro areas, and there is a lot of confusion in the market from reports about national data. Broadly speaking, home prices in most areas are up modestly or fairly stable,” he said. “Areas with population or job growth are seeing the strongest home price gains.”

National Association of Home Builders [NAHB] – November 27, 2007

Their comments on the release of the S&P/Case-Shiller numbers this month…

“We need to put these numbers in proper historical context by analyzing them over the long term, rather than in one-year increments,” said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from El Segundo, Calif. “The statistics released today also reaffirm that all housing markets are local, and conditions in them are dictated by the local economy and job market.




UPDATE: Economist Humor: A friend of mine, who happens to be a well respected economist, mentioned to me last week:

…there are 3 kinds of economists: the kind that can count and the kind that can’t.


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Housing Market Depreciates The Politics Of Future Expectations

November 14, 2007 | 11:34 pm | |

Whatever your political persuasion, the housing industry is moving through politics like a freight train these days.

And why not? Housing is a key source of employment, wealth, taxes, consumer spending and personal identity in the US. The cynic in me strongly believes that the average citizen votes with their wallet. Well, the wealth effect associated with a weaker housing could make for a higher voter turnout next year (ok, ok thats a “glass is half full” political forecast).

Andrew Leonard’s The politics of home price depreciation in Salon.com that addresses the subject.

A key idea in the article is that the exurbs (beyond the suburbs) have been the bastion of new housing development championed by the current executive branch, yet those areas are among the hardest hit by the housing market slowdown. This housing-politics link resonates with me because of all the recent politics associated with housing:


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The National Numbers Don’t Feel Your Pain

January 12, 2007 | 8:26 am | | Public |

I think there has always been a real disconnect between housing statistics being presented nationally and their perception of accuracy to local markets.

On one hand, you’ve got the consumers who read, watch or listen to this information being provided everyday. They live their life and those facts are absorbed for later use.

And then there are the people that are currently trying to sell or buy a property and their personal experience does not connect with the national numbers they are reading about.

In Les Christie’s Housing market pain not revealed by stats [CNN/Money] the piece explores real world feedback and how local housing situations have no real relationship with national statistics and its confusing and upsetting many as the market deteriotates in some parts of the country.

We have had a few years of handwringing about a bubble or market correction.

One one end of the spectrum, there are real estate trade groups like NAR are trying to downplay the negative implications of the latest information for their constituents (hey, thats a trade group’s job), yet it will ultimately provide the trade group with a disservice by weakening their credibility.

At the other end, there are pundits in the blogosphere who trying to call the crash and its drives traffic to their sites for Adsense dollars (hey, thats their passion and belief plus their right to make a living), yet eventually the message is said so often that it becomes white noise.

The consumer is stuck in the middle trying to figure out which way is most accurate for their situation or market, when it is often neither.

The blogoshere has made its impact by rooting out problems with the way national stats by the government, real estate trade groups and others are calculated or interpreted. Thats good. It has opened our eyes to stats like the wild deviations in new housing starts from the Commerce Department, CPI calculations, OFHEO’s use of refinance data in their median sales price and many others.

NAR, NAHB and other trade groups provide useful information for us to digest plus there is something reassuring about knowing the the whole country’s housing market is not going down the drain like a particular market may be. Thats good.

We have more information than ever to filter and absorb. The real problem is the lack of understanding as to what statistics and other information relate best to their particular market. So remember these rules in the spirit of rinse, lather, repeat.

  • Rule 1: National housing statistics DO NOT apply to your local housing market.
  • Rule 2: Restate Rule 1 to all those who are scratching their heads wondering why national statistics do not apply to their property.


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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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