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Posts Tagged ‘Radio’

[In The Media] Real Estate Radio USA Appraisals & Bits

July 15, 2008 | 12:23 am | Public |

I had the pleasure of being a guest on Real Estate Radio USA for a discussion of mortgage securitization, how to value a property in a declining market, AVMs and the spin cycle.

I was on last week, but like all my posts in the last two days, I had to wait until the last stop, Brooklyn.

I enjoyed the questions, especially those that were generated from a provocative post by my friend Mike Lefebvre.

Discussions about who should be estimating market value was particularly interesting to me. As if appraisers or agents set the price? Wrong. The market sets the price.

To listen to the interview.

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[Achooo!] Proving Once Again That Real Estate Is Global, Not Local

May 23, 2008 | 9:54 am | Radio |

Ok, not really.

Last month I did an interview on BBC Radio and the producer said the interview was based on the old adage that “when America sneezes, the world catches a cold.”

There was a pretty interesting article in The Economist, which has been a housing bear since 2003, called Structural cracks: The pain in Spain falls mainly on Mr Drains

Other than trying to get the inner meaning of the title, the chart clearly shows that the countries on the list are performing differently or are in different phases of their respective cycles.

So in a global sense, housing is local after all?

It is, but there are a heck of a lot of local markets that comprise the global housing market.

Some locales that stood out to me:

Singapore and Hong Kong are doing well lately while Japan and Germany are not.

Both Spain and Ireland have parallels with the American housing market, where the inventory of unsold homes has hit a 20-year high, according to Capital Economics. There the pace of price decline, as measured by the S&P/Case-Shiller indices, has been accelerating.

Monetary policy is changing across the globe, weakening buying power like it is in the US. Because (insert tired phrase here:) when America sneezes, the world catches a cold.

Or something along those lines…

If house-price weakness does spread more widely, there may be important economic consequences. There is plenty of debate about the size of the “wealth effect” of higher property prices on consumer demand. But it will hardly help that fuel and food prices are soaring at the very moment when the value of bricks and mortar looks about to sag.

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[Mandatory Reading (Please)] The Giant Pool Of Money

May 12, 2008 | 12:16 pm | Podcasts |


One of the biggest podcast downloads on iTunes is This American Life by Chicago Public Radio hosted by Ira Glass. It’s an hour long program that is diverse and interesting. The May 9th broadcast was particularly interesting to me called: The Giant Pool of Money.

It is a simple narrative on a complex subject and how the last five years evolved from a housing boom to housing crisis.


  • $70 Trillion Dollars
  • boiler rooms
  • keeping up with the competition
  • thirst for high returns
  • NINA loans
  • subprime investors
  • from tending bar to buying mortgage pools
  • Wall Street
  • 2% default rates actually 50% default rates
  • Very smart people using the wrong data to manage risk.

I listened to it twice just because it is rare to hear a complex topic that is presented so clearly.

Intelligence beat common sense to a pulp.

Listen to the episode.

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[Indebtor’s Ball] Subprime Discussion Without The Junk

April 29, 2008 | 9:50 am | | Radio |

Lost a reliable Internet connection at home for the past 3 days so my posting has been non-existent (but I did change a few lightbulbs with my free time)

Back in the day, I loved to read books like Barbarians at the Gate, Den of Thieves and Liars Poker covering the truth and mythology of Wall Street (now I read books like Pontoon). Michael Milken was directly or indirectly connected to many of those stories, as well as the firm he worked for Drexel Birnham Lambert because of the financial vehicle he championed, the fabled junk bonds.

When the subprime crisis first became kitchen table talk last summer, initially there was discussion that it was another “junk bond” crisis. I cringed because junk bonds weren’t bad in and of themselves. The investors that used or purchased them got into trouble, because didn’t appreciate the risks associated with them. Higher returns, equals higher risk. Sounds a lot like subprime market participants doesn’t it?

Andrew Ross Sorkin’s excellent article in the New York Times today called Junk Bonds, Mortgages and Milken addresses this issue:

“The financial crisis we’re in today stems from the invention by Drexel Burnham Lambert of the junk bond,” Martin Lipton, the superlawyer who co-founded Wachtell, Lipton, Rosen & Katz, said derisively at a conference last month. “You can draw a straight line from Drexel Burnham to the financial world today.”

Milken disagrees:

Critics who compare the subprime debacle to the bubble in high-yield, high-risk corporate bonds that Drexel helped inflate two decades ago are “people who don’t understand markets very well,” Mr. Milken said. He suggests that “their rationale is that both types of financial instruments are risky.”

And he says junk bonds, or those rated below investment grade, “have little in common with mispriced subprime mortgages,” which he says are the real culprits.

“Having financed several of America’s largest home builders, I know a few things about the housing industry,” Mr. Milken said. “What happened to housing was not a failure of securitization, but rather a disastrous lowering of underwriting standards and other unfortunate practices.”

Criticizing securitization — the slicing and dicing of debt that he helped popularize — is “like condemning scalpels because a few unqualified surgeons have injured patients,” he said.

With the introduction of new financial instruments, users tend to go overboard at the end of the cycle and then new regulation is introduced that tends to go to far (ie mortgage current underwriting standards will become a self-fulfilling prophecy).

Ultimately what junk Bonds and subprime mortgages really had in common, were the people that used them. They didn’t reflect adequate risk into their pricing. A more pro-active SEC might keep that in check, but then squash innovation.

I need to change some more lightbulbs.

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[In The Media] BBC World Service Radio Clip For 4-21-08

April 22, 2008 | 7:43 am | Public |

This weekend, in between cleaning my garage and taking my family to the Met (150 year old graffiti on the 2000 year old Temple of Dendur was a fav), I was called by the BBC to give my views on housing. They selected experts from leading economies in Europe, Asia and Latin America to provide their views and wanted perspective on the linkage to the US and it’s housing troubles. Pricing slipping, mortgage costs rising…

For the record, its all about credit.

Here’s the BBC broadcast (6:28).

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[Transition Report] 1Q 2008 Manhattan Market Overview Available For Download

April 2, 2008 | 12:02 am | | Public |

The 1Q 2008 Manhattan Market Overview that I author for Prudential Douglas Elliman was released today. Other reports we prepare can be found here.

The data and a series of charts will be uploaded today as well.

An excerpt

…The elevated pace of sales from the past 5 quarters cools as the volatility in the financial markets begins to touch Manhattan. Based on activity in the first quarter it is likely that the record number of sales in 2007 will not be repeated in 2008. Sales in the current quarter declined to levels seen two years ago. The reduction of available credit, less favorable mortgage terms, the national economy moving towards a recession and the specter of additional layoffs in the financial services sector over the next two years has begun to restrain the demand for Manhattan residential real estate. Still, the regional economy is performing well, tourism and hotel occupancy rates are at or near record levels and the New York City government is financially well positioned for the next two years. The US dollar has set new lows against several currencies, which continues to bring new sources of demand, with specific emphasis on condo new development projects….

In 2005, I began posting the links of the coverage of each report to see how each media outlet reports the market using the exact same data. I find it to be an interesting experience.

The media coverage of the report will be provided here as they are released over the week.

Manhattan Apartment Prices Hit Record High Despite Slump [NYT]
Housing Slump — in New York ? [WSJ]
Manhattan Condo, Co-op Sales Decline Most in 18 Years (Update2) [Bloomberg]
Trouble in the sky-rise? [The Economist]
Co-op, condo sales dive in Manhattan [NY Daily News]
Manhattan apartment prices increase [The Real Deal]
Manhattan Home Sales Slow, Prices Rise [AP]
Manhattan apartment prices rise but sales fall [Reuters]
First Quarter Reports: Real Estate Cooling [New York Sun]
Average Manhattan home hits record $1.6 million [CNN/Money]
Manhattan apartments: prices up, sales down [Crain’s]
First Quarter Market Reports: Prices Up, Sales Down [Curbed]
Condos Ascendant! But What Price Victory? [New York Observer]
Manhattan Apartments Remain Pricey, Slowdown Ahead [Gothamist]
NYC home sales drop [Times Leader (PA)]
Housing Market Tracker – It’s About Affordability, Stupid.[Seeking Alpha]
Manhattan Home Sales Slow, Prices Rise [Huffington Post]
Manhattan apartment sales drop off in 1st quarter, but prices still climb due to luxury sales [MN Star Tribune]
Real estate data show market cooling [Metro.US]
Property in Manhattan at an 18 year Low [Investment Markets]
What Slump? Manhattan Housing Prices Hit Record High [NY1]

Radio and TV clips

[April 2, 2008] CNN en Espanol
[April 2, 2008] Bloomberg TV
[April 2, 2008] NY 1
April 2, 2008] Bloomberg Radio

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[Shelter Propaganda] The Legacy Risk Of Housing History

March 18, 2008 | 12:16 am | Radio |

Following the collapse of one of the largest asset bubbles in the history, the credit and housing markets, everyone is trying to figure out what went wrong. One of the biggest figures in the asset price run up was former Fed Chair Alan Greenspan, whom radio host Don Imus used to refer to as the Zen-God or Crazy Al when talking to Greenspan’s wife Andrea Mitchell, NBC News Chief Foreign Affairs Correspondent.

A lot as changed since Greenspan moved on to the other things. He has written a book and has spent a lot of energy distancing himself from the problems that were put into play under his watch at the Fed.

On Sunday he wrote a piece for the Financial Times called We will never have a perfect model of risk.

In other words, there is no such thing as a sure thing. He says:

The American housing bubble peaked in early 2006, followed by an abrupt and rapid retreat over the past two years. Since summer 2006, hundreds of thousands of homeowners, many forced by foreclosure, have moved out of single-family homes into rental housing, creating an excess of approximately 600,000 vacant, largely investor-owned single-family units for sale. Homebuilders caught by the market’s rapid contraction have involuntarily added an additional 200,000 newly built homes to the “empty-house-for-sale” market.

Home prices have been receding rapidly under the weight of this inventory overhang. Single-family housing starts have declined by 60 per cent since early 2006, but have only recently fallen below single-family home demand. Indeed, this sharply lower level of pending housing additions, together with the expected 1m increase in the number of US households this year as well as underlying demand for second homes and replacement homes, together imply a decline in the stock of vacant single-family homes for sale of approximately 400,000 over the course of 2008.

Apparently the reason that this credit market bubble was missed was because the EXACT same thing had never happened before. Therefore the sophisticated models could not possibly work?

The most credible explanation of why risk management based on state-of-the-art statistical models can perform so poorly is that the underlying data used to estimate a model’s structure are drawn generally from both periods of euphoria and periods of fear, that is, from regimes with importantly different dynamics.

How about an application of common sense? Mortgage origination ran amok from 2004-2006 with virtually no oversight – isn’t this the banking system? There were no checks and balances in the underwriting decision process. Salesman ruled the planet and risk was something to deal with later on.

We will never be able to anticipate all discontinuities in financial markets. Discontinuities are, of necessity, a surprise. Anticipated events are arbitraged away. But if, as I strongly suspect, periods of euphoria are very difficult to suppress as they build, they will not collapse until the speculative fever breaks on its own. Paradoxically, to the extent risk management succeeds in identifying such episodes, it can prolong and enlarge the period of euphoria. But risk management can never reach perfection. It will eventually fail and a disturbing reality will be laid bare, prompting an unexpected and sharp discontinuous response.

A series of predictably irrational commentsGood grief.

Speaking of irrational behavior, check out the most daring magazine cover EVER.

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[In The Media] Giving Bloomberg, Marketwatch and Forbes A Swollen TV Eye

February 5, 2008 | 5:20 pm | | Public |

Here’s a series of clips that cover the release of our RPX Monthly Housing Report on Friday. I am recovering from an eye infection (my left eye for those who think I look the same as always) so it looks like the market beat me up.

Radar Logic released the November 2007 RPX Monthly Housing Market Report last Friday at 9 AM. Here is a sample of the coverage:

Bloomberg TV On The Economy interview

Kathleen Hays always does a great job covering the residential housing market while able to dropping the hyperbole that plagues residential real estate news coverage.

MarketWatch TV interview

Its always fun to do an interview on MarketWatch. Besides MarketWatch TV, the clip was posted in the WSJ’s Developments Blog which has become a regular read for me. They are upgrading their control room and did the interview right in the middle of all their reporters. I asked to switch sides with Kelsey so my swollen eye wouldn’t look so obnoxious.

Forbes TV interview

The Forbes TV interview was painful (physically) as my eye condition got worse during the day. Still, I appreciated the opportunity to be on their program and see Malcolm Forbes’ motorcycle in their lobby.

WCBS Radio interview

The WCBS Radio interview was impromptu and done from a corner of the lobby of the Forbes building while there was a torrential downpour occurring outside.

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[Contrarian Report] 4Q 2007 Manhattan Market Overview

January 19, 2008 | 1:28 am | | Radio |

The 4Q 2007 Manhattan Market Overview that I author for Prudential Douglas Elliman was released earlier this month. I neglected to post this on Matrix earlier because [insert excuse here]. Other reports we prepare can be found here.

The data and a series of charts are also available.

About two years ago, I began posting the links of the coverage of each report to see how each media outlet reports the market using the exact same data. I find it to be an interesting process.

Here was some of report coverage based on the same data (you get the idea):

The Link List

The New York Times Wall Street Journal Bloomberg New York Daily News The New York Post CNN/Money Reuters The Real Deal Financial Times The New York Observer Inman News Pravda New York Magazine The Guardian (UK) Gothamist

Radio and TV clips

[January 3, 2008] WNBC-TV
[January 3, 2008] Bloomberg – On The Economy
[January 3, 2008] WCBS
[January 3, 2008] WPIX
[January 3, 2008] Fox 5 TV
[January 3, 2008] Bloomberg TV
[January 3, 2008] WABC TV
[January 3, 2008] WNBC HD TV
[January 3, 2008] NY -1
[January 3, 2008] Fox Business Network
WCBS Radio
NPR Radio

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New Urbanism: Walking Distance Gets Closer

December 24, 2007 | 6:47 pm | Radio |

Nobody goes there anymore because its too crowded. – Yogi Berra

Gen Xers seem to have a pulled one over on baby boomers, whom are known for their love of driving. Here’s a good public radio broadcast on walk-able urban places.

The Brookings Institute released a study called Footloose and Fancy Free: A Field Survey of Walkable Urban Places in the Top 30 U.S. Metropolitan Areas which dissects 30 cities for their walkability (hat tip to John Mason). This trend goes hand in hand with the housing boom as new urbanism trends pulled people from the suburbs to revitalized downtown centers.

The post-World War II era has witnessed the nearly exclusive building of low density suburbia, here termed “drivable sub-urban” development, as the American metropolitan built environment.. However, over the past 15 years, there has been a gradual shift in how Americans have created their built environment (defined as the real estate, which is generally privately owned, and the infrastructure that supports real estate, majority publicly owned), as demonstrated by the success of the many downtown revitalizations, new urbanism, and transit-oriented development.

There are two types of walk-able places:

  • Regional-serving – areas that provide culture, employment, medical, higher education and other purposes.
  • Local-serving – areas that are residential and provide support services for everyday needs.

Its a fascinating demographic shift that is also correlated with the trend towards green with greater reliance on public transportation and walking.

I wonder if the cooling of the housing market in many locals will slow or stop this change or if it already has its own legs? My sense is that the macro trend will continue to move in this direction.


[Fee Simplistic] The Paper Moon in the Cardboard Sky; Bewitched, Bothered & Bewildered; Don’t Know Why There’s No Sun Up in the Sky-Stormy Weather: How Tin Pan Alley Can Better Explain the Credit Crunch Than Alan Greenspan

December 22, 2007 | 7:06 pm | Radio |

Fee Simplistic is a regular post by Martin Tessler, whom after 30 years of commercial fee appraiser-related experience, gets to the bottom of real issues by seeing the both the trees and the forest. He has never been accused of being a man of few words and his commentary can’t be inspired on a specific day of the week. Marty, by way of Greenspan, and using the longest blog post title in the history of modern real estate, discusses supply and demand forces and the concept of buying low and selling high, or was that buying high and selling low?_ …Jonathan Miller

For those of you who read Alan Greenspan’s four column Wall Street Journal Opinion article of December 12th entitled, “The Roots of the Mortgage Crisis“, I wonder how many were elucidated by his macro-economic “gobbledygook” of the current situation. After spending some 1,500 words on the origins of the mortgage crisis as being too much savings from global accounts resulting in “equity premiums (that) were inevitably arbitraged lower by the fall in global long -term interest rates”. In other words we had too much money chasing deals. Mr. Greenspan then goes on to his final summation after more doctoral dissertation nomenclature that would be infinitely more palatable with a glass of scotch or bourbon. With this as background we are finally told by the former Fed chairman that the “The current crisis will come to an end when the overhang of inventories of newly built homes is largely liquidated, and home price deflation comes to an end”. In other words Mr. Greenspan has discovered the Law of Supply & Demand.

Surprisingly, there’s no mention of the flim-flam mortgage brokerage, underwriting/rating agency, CDO bond issue bonfires in which the financial world was enjoying roasting its rich gourmet marshmallows and for which it is now suffering severe dyspeptic cramps. There’s also no mention of the failure of the Fed’s actions in adding liquidity at the discount window and the Federal Funds Rate to move the large institutions into the lending mode. It is here that I, having no econometric pedigree to compete with Mr. Greenspan, offer my own version of the reason for the credit shyness by the banking world.

Back in the 1990’s and prior to the world of securitization the banks kept their mortgage lending on their balance sheets. Every quarter the banks (or at least the one I had worked for) would schedule CSR (Credit Surveillance Review) meetings comprised of the lending and appraisal teams that would review each borrower’s debt and the status of where the real estate collateral stood in the current market. As the collateral was reviewed a summary of each account’s loan to value would be brought up and a “mark to market” application would be made. Where a downturn indicated that a write-down would have to be taken the credit side would generally indicate the extent of the reserve and if the write-down was substantial it would be an orchestrated write-down of “X” dollars this quarter and “Y” dollars the following quarter. With securitization this process was done away with-enter the rating agencies whose livelihood depended on their bonhomie with the underwriters and bond issuers.

If you read the daily financial pages you will see how the write-downs by the big Wall Street firms are playing out. Each month there is another announcement of how the firms had underestimated the previously announced write-down and how they have discovered that additional write-downs and reserves would have to be revised upwards. It has already cost the CEO’s of Merrill Lynch and Citigroup their jobs and there are others such as Countrywide and WaMu that are teetering on the brink. They are all playing this game and it is no wonder that the banks are reluctant to lend when they are still grappling with the extent of their losses and write-downs and cannot expose their Tier 1 capital and balance sheets.

When I was in graduate school studying city planning at the University of Pennsylvania I lived in a rooming house across from the Wharton School on Locust Street. One of the Wharton seniors who lived directly below me would delight in imparting to me the wisdom he gathered after 4 years. “Marty”, he would say, “buy low, sell high, and remember its short term liquidity, long term solvency-follow that and you won’t go wrong”.

Somehow Mr. Greenspan left this out of this Wall Street Journal article but then again-he’s an NYU grad.

PS-I always used to study with the radio on usually listening to the old Tin Pan Alley tunes which probably should be incorporated into Economics 101.

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Thanksgiving Tranches

November 24, 2007 | 12:05 pm | Radio |

I hope everyone had a great Thanksgiving. Its my extended family’s favorite holiday to get together. My kids and I overwhelmingly concur that the best benefit of the post-thanksgiving festivities are the amazing sandwiches comprised of leftovers: turkey, stuffing, cranberry sauce, horseradish/mayo, mashed carrots, turnips, potatoes on fresh bread.

However, in subprime tranches, investors didn’t know what ended up in their sandwiches [?????] so the lesson is… eat them at your own risk.

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