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Posts Tagged ‘Radio’

Finally, A Different Appraisal Pressure, And Its A Good Thing

November 4, 2007 | 12:05 am | | Public |

Back in June of 2005, I was interviewed by Bob Moon of American Marketplace. I was very PO’ed about the pressures placed on the appraisal profession because the structure (the relationship between the independence of the appraisal process and mortgage origination) was inherently flawed. About a month later I launched Soapbox as well as Matrix and the interview became my first post.

This past Friday, several people told me about an NPR radio piece called: Inflated home appraisals? Rings a bell where they referenced my warning of two years ago.

It was back in June of 2005 when we heard from a leading property appraiser in New York City, Jonathan Miller. He told us lending institutions were colluding to get people loans that they were going to have big trouble paying back.

New York State Attorney General Andrew Cuomo’s office is suing eAppraisiIT, the appraisal management company, for yielding to reported pressure from Washington Mutual (‘WaMu’) to inflate appraisal values. (Apparently the AG can’t sue WaMu because the bank is federally chartered.)

This is action is unprecedented, and Cuomo suggests there are more cases to follow. In fact, the Office of Thrift Supervision [OTS] is getting in on the action which suggests a turf war may even develop as the states took more vigorous action before the feds did.

Kevin L. Petrasic, managing director of external affairs for the Office of Thrift Supervision, the Treasury Department agency that oversees Washington Mutual, says the agency is “looking into the allegations that were put forth in the [New York] complaint.” He added that it “concerns us” that the attorney general “had information that consumers were not protected…but didn’t bother to contact the federal regulators. Isn’t that the whole point of regulation?”

Whether or not the parties in this particular case are guilty, the complaint drafted by the AG’s office is one of the best presentations of how portions of the lending industry think of the appraisal profession and how the appraiser is readily placed in a position that compromises their neutrality.

You gotta pay to play” becomes “You gotta play to get paid.”

If you want to understand the topic of appraisal pressure, the following documents are a must-read:

NYS AG Cuomo Press Release
AG Complaint against eAppraisIT [essential reading – pdf]

The AG Complaint is very well written. It lays out the systemic problem of appraiser independence in a clear and logic way. I feel its essential reading for everyone involved in real estate in some capacity.

It’s going to be interesting to see how the AG tries to prove that the defendant actually carried out its client’s wishes and was guilty of systematic fraud (i.e. the appraiser intentionally appraised a property 7 or 8 or 10% too high). This particular measurement is the key metric required to flush out this fundamental problem.

While I don’t work for either of these two companies and therefore cannot comment on their guilt or innocence, I can say, in the larger perspective, that it is refreshing that something is finally happening to on the appraisal pressure front. The appraisal profession is not flashy, has limited lobbying influence in Washington and is not very well understood by the public. It is also not well compensated, and yet it is at the center stage in the mortgage-origination process where trillions of dollars are at stake.

WaMu used to have an in-house appraisal review function that served to insulate appraisers from the pressures of the sales function within the bank. Last year, however, in a cost cutting move, Miller Samuel, as well as many other independent appraisers, lost WaMu as a big client when they closed all their in-house review functions and went with appraisal management companies, eAppraisIT and Lenders Service.

As evidenced by the charges, it would appear that this change called into question the independence of the appraisal process exposing it to more pressure, especially given this situation in which 267,000 appraisals per year from one client were at stake. That’s the proverbial “all eggs in one basket” scenario and places such a large firm even more dependent on the whims of a client, not less as WaMu suggests.

The $50,000,000 in appraisal fees paid out by WaMu at that volume level, makes the average appraisal fee $187.27. Combine this with a 48 hour turnaround time and I start wondering about quality.

WaMu has stated that they have no incentive to pressure appraisers. While I am not passing judgement on WaMu, I don’t see how that’s possible when the risk inherent in the mortgages can be offloaded to unwitting investors. As Floyd Norris mentions in his blog:

But maybe, just maybe, it is not a good idea to arrange for a lender to have no stake in whether the loan is repaid.

Certainly a big part of the unwillingness on the part of the secondary market investors are reluctant to buy any mortgage paper right now is a direct function of their skepticism about the credibility of the appraisals underlying the loans.

After the dot-com bubble crash in 2000, investment banks were forced to erect much tougher “Chinese Walls” to insulate equity analysts from the pressures of investment banking clients who could only imagine that all their stocks were a ‘buy’ and never a ‘hold’, much less a ‘sell’. Maybe this is an important precedent for the mortgage lending industry if they want to (or are told that) they must reestablish the credibility of the appraisal function.

Check out:

The Trouble With Appraisals [New Developments Blog – WSJ]
New Headache For Homeowners: Inflated Appraisals [Page One – WSJ]
WaMu faulted on home loans Colluded to inflate property values, N.Y. attorney general says [SeattlePI]


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[Crustacean Update] Matrix Takes A Week Off During Lobster Wars

October 18, 2007 | 8:12 am | Radio |

There has been a lot going on this week, but its been radio silent at Matrix.

Last weekend I caught my first lobster. Investing in four pots, a boat and gas, it was probably the most expensive lobster ever caught in North America. So I threw it back in.

I am still reeling from the rush. Ok, ok, so I am exaggerating a bit. Actually a lot of exciting work is being done at my appraisal firm Miller Samuel and the mothership, Radar Logic.

Its been 24/7 and I haven’t had a day off in about a month (in Lobster years).

A lot is happening in the real estate economy and I am anxious to write about it.

Related reading: The lobster wars [The Economist Magazine]

Be back next week.


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[Crunch Report] 3Q 2007 Manhattan Market Overview

October 2, 2007 | 11:23 pm | | Radio |

The 3Q 2007 Manhattan Market Overview [pretty version will be posted later this week] that I author for Prudential Douglas Elliman was released today. The report is prepared in the same manner as in quarters past but in association with Radar Logic, where i am the director of research.

The numbers were released and my summary of their interpretation were provided to the media for the coverage today. The actual data and charts will be available later this week as well.

More than a year 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.

This list of articles is presented basically when I found them. I also include some duplicate news feeds because I like to see what regions are interested in the story – I place those near the bottom because of the repetition. I’ll keep adding links through the end of the week.

The Link List

Manhattan Home Prices Rise 2.3% on Luxury Condo Sales [Bloomberg]
Home Prices Buck Trend, for Now [New York Times]
Manhattan continues to buck U.S. housing trend [Reuters]
Manhattan housing boom continues [CNN/Money]
Manhattan apartment market prices hit record high [New York Daily News]
Manhattan Apartment Prices Soar, Bucking the Trend [CNBC]
MANHATTAN CONDOS $KYROCKET [New York Post]
Manhattan Housing Market Still Sturdy, For Now [TheStreet.com]
Manhattan housing market still healthy [The Real Deal]
No City For the Young [The Real Estate/New York Observer]
Manhattan real estate bubble hasn’t burst [Newsday]
Your Morning Credit Crunch: Manhattan Stays Bullish [Curbed]
Manhattan real estate sales, prices still climbing [Inman News]
Pre-Credit Crunch Apartment Prices Increase Real Estate [New York Sun]
NYC Real Estate Prices Strong – For Now [Gothamist]
No Surprises In Manhattan Real Estate Poll [NY Press]
Manhattan housing prices in record high [Construction Digital, UK]

Radio and TV clips

[October 2, 2007] CNBC

[October 2, 2007] Bloomberg Television

[October 2, 2007] NY1 News

[October 2, 2007] Bloomberg Radio


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[In The Media] On The Dollar Menu: WNYC, BBC

September 22, 2007 | 11:42 am | | Columns |

Coverage of the weak dollar as it relates to real estate is now front and center. A page 1 story in the New York Times yesterday Dollar Remains at Low Ebb laid it all out.

Until a few years ago, my family and I would go skiing over Christmas break every year to either Mont Tremblant or Mt Orford in Canada. It felt free (and cold) because the exchange rate made the cost about 1/2 that of going to Vermont. With 4 sons, 3 of whom are teenagers, the food costs alone were staggering (important note: Kentucky Fried Chicken (KFC) in Quebec is known as PFK.)

Now, the exchange rate between US and Canadian dollars are at parity. The exchange rate with the British Pound is two to one and the Euro is 41% higher than parity.

On Wednesday, I posted (after a 2 month hiatus) my Three Cents Worth column on Curbed which specifically addressed the weak dollar. Because of my Curbed chart, I was interviewed on the WNYC’s The Brian Lehrer Show yesterday. The segment was called: Following Up: Are Foreigners Propping up House Prices? Note: The interview starts at the 3 minute mark.

Also on Friday, a portion of the text of my radio interview on BBC News Worldwide was published on their web site in Investors see Manhattan as a safe haven. Here’s the web page and the audio version. From some of the commentary made by the other guests, you can hear the front line observations and confusions about the impact of the weak dollar.

Will we ever get change back from our dollar?


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Happy Birthday: Matrix Enters Terrible 2’s

August 26, 2007 | 12:43 pm | Radio |

Well, its August 26th and I am now 25 days late to celebrate the 2nd complete year of running Matrix. This “birthday” dawned on me yesterday during my just-turned-9 year old son’s birthday party sleepover with 6 of his buddies. A lot of commotion and ruckus but the chemistry was great between them and the party was a success.

A feel the same way about this blog. There has been a lot of commotion and ruckus in real estate to write about over the past 2 years, but thats what made it so fun. In fact, its been a pure joy to work on, and especially to receive great feedback and insight from readers, colleagues and people who send private notes. I have learned a lot and would love to devote even more time to it than has been possible.

My first post to Matrix was on August 1, 2005 on a topic I am still very passionate about, the pressuring of appraisers. We provided the basic story idea to National Public Radio and they expanded on it.

Thanks to everyone for reading and paticipating in Matrix. As they said in the original movie The Matrix:

Everything that has a beginning, has an end.

Well at this point, there is no end in sight for Matrix. There’s way too much commotion and ruckus out there to write about.


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The State of The States Of The Market: Party Like Its 2009

July 26, 2007 | 10:26 pm | | Radio |

Click here for interactive table (and to see straight)

James Hagerty and Ruth Simon performed their quarterly survey of the US residential housing market in 28 metro areas.

While the general state of the majority of the 28 residential markets were weak, the stats showed some light at the end of the proverbial tunnel, although I suspect that means 2009. The big wild card now is the state of consumer credit. Restrictions placed on the sale of properties overlay more difficulty in obtaining mortgages and thereby restrict the odds of recovery anytime soon.

Tighter credit is prolonging a deep slump in home sales, but a quarterly Wall Street Journal survey of 28 major metro areas shows that the surge in inventories of unsold homes is slowing. In two of those markets — Boston and Denver — the number listed for sale has actually declined from a year ago.

Home sales and prices generally should bottom out around mid-2008, says Mark Zandi, chief economist at Moody’s Economy.com, a research firm in West Chester, Pa. “The market will not revive quickly, however,” he says. “It won’t be until the turn of the decade before housing activity returns to more normal conditions.”

I agree. Zandi is really saying 2009-2010 before things return to normal (whatever normal really means).

The NAR released their monthly existing home sale stats yesterday indicating more weakness as the number of existing sales fell 3.8% below the same period last year. Since these are the numbers for June, which is one of the most active months of the year for residential real estate, the decline suggests more weakness on the way.

The day before, Countrywide reported a 33% drop in net income, which triggered a 200 point drop in the stock market on Tuesday. Angelo Mozilo, CEO and cofounder blamed housing. It was surprising that Countrywide reported weak earnings since Mozilo has always been direct about the housing market so it would seem that they would have anticpated the current state of affairs (He also has the best sun tan of any Fortune 500 CEO).

Today, the DJIA dropped 311.50 on lending and credit worries. Take a listen to the mp3 in the article. Its worth listening too, plus the interface is very slick (NYT Radio?) Home builders reported lower earnings, combined with $77 dollar a barrel oil and several days of bad housing news caused some jitters.

However, relative to 14,000, a 311.50 drop doesn’t seem that catastrophic as the housing hyperventilating suggests.

This week has been a heck of a housing party.


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2Q 2007 Long Island/Queens Market Overview Available For Download

July 25, 2007 | 2:50 pm | | Radio |

The 2Q 2007 Long Island/Queens Market Overview [pdf] that I write for Prudential Douglas Elliman [PDE] is available for download. We created this market area study in 2006.

You can see the methodology that went into the report.

You can also build your own custom data tables using the aggregate report data (from 2Q 2003 through 2Q 2007 [2Q 2007 – to be uploaded shortly]). I have created a series of quarterly market charts that may also be of interest.

_An excerpt_

…Both average sales price and median sales price indicators approached stabilization, after two years of decline. However, changes in price levels varied by price strata and market area. The most notable price changes occurred in a weaker North Shore market and a stronger Queens condo market. Despite stabilizing prices, the overall number of sales fell across the entire region with the North Shore market being the only market to show a gain as compared to the same period last year. As a result of diminished demand, inventory levels have continued to rise, causing other market indicators like days on market and listing discount to expand. A decline in the overall number of sales in one of the most active quarters of the year suggests that the housing market may experience continued weakness in the near future…..

Download report: 2Q 2007 Long Island/Queens Market Overview [pdf]

Here’s a brief summary of the media coverage for the study. Its interesting to place the coverage side-by-side because its based on the same data.

Here’s the recap:

Queens-Long Island Home Prices Little Changed in Second Quarter [Bloomberg]
HARSH REALTY IN QUEENS. [New York Post]
LI, Queens housing sales still cool [Newsday]
LI, Queens housing sales still cool [amNew York]
Queens prices down in 2nd quarter [The Real Deal]
Queens Residential Market Drops, Except for the Pricey Stuff [Curbed]
Queens-Long Island Home Prices [Bloomberg Radio (no clip yet)]


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[In The Media] Bloomberg TV – On The Money Clip for 7-3-07

July 4, 2007 | 10:59 pm | | Public |

Video clip for Manhattan Market 2Q 2007 [Part I]

The interview touches on the key characteristics of the Manhattan real estate market this quarter and its contrarian position as compared to the national real estate market. In these clips, I was first interviewed by Kathleen Hays, who is an accomplished journalist. I have been interviewed by her before and she is very sharp, and also very good at making her guests feel relaxed, so she gets more out of the interview.

Bloomberg does a really great job at interconnecting their media properties. For example, when their newswire posts a story, the story is also covered on television and radio.

Here’s the second interview:

This is a subsequent interview where Kathleen interviews me as well as Elaine Clayman, a senior broker at Brown Harris Stevens.

Video clip for Manhattan Market 2Q 2007 results [Part II]


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[Media Pre-Holiday BBQ Coverage] 2Q 2007 Manhattan Market Overview

July 3, 2007 | 2:26 pm | | Public |

My firm released the 2Q 2007 Manhattan Market Overview [pretty version will be posted on Thursday] that we author for Prudential Douglas Elliman today. Its about all I have done over the past week, except for the quality time spent with my new iPhone, prepping for our family’s clam bake on July 4th and riding into Manhattan in an RV with the Joe and Rudy from Sellsius, so I have been largely absent from Matrix since the middle of last week.

The numbers were released and my summary of their interpretation were provided to the media for the coverage today. The actual data and charts will be available Thursday as well.

A little over a year ago, I began posting the links to 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.

This list of articles is presented basically when I found them. I also include some duplicate news feeds because I like to see what regions are interested in the story – I place those near the bottom because of the repetition. I’ll keep adding links through the end of the week.

The Link List

Manhattan Co-Op Prices Fall as Buyers Favor Condos [Bloomberg]
Manhattan apartments brush off U.S. housing slump [Reuters]
Co-ops Slip, but Condos Lead Rise in Manhattan Apartment Prices [NY Times]
New York home prices: No place but up [CNN/Money]
WALL ST. FUELS RUN IN APT. SALES [NY Post]
Manhattan apt. sales rise [NY Daily News]
Weak Dollar Fuels City Real Estate [NY Sun]
NYC a Bright Spot in Dismal U.S. Real Estate Market [TheStreet.com]
Manhattan Residential Market Indicates High Sales Volume, Declining Inventory, Rising Prices and Shorter Time on Market [RISMedia]
Curbed Roundtable: July State O’ the Market Report [Curbed]
Record Prices, Avoiding Co-ops in Manhattan [Gothamist]
Manhattan residential real estate market; falling inventory, rising prices and a record number of sales [Firstrung.com]
Manhattan Residential Market Indicates High Sales Volume, Declining Inventory, Rising Prices and Shorter Time on Market – Continued Strong Market Momentum against National Real Estate Trends [Digital50.com]
Manhattan apartments brush off U.S. housing slump [Reuters, India]
Housing Bubble and Real Estate Market Tracker [Seeking Alpha]
Real Estate Market Still Hot in NYC [WNYC]
Manhattan apartments brush off U.S. housing slump [Valuation Review]
Manhattan market still on the rise [Inman News]
Manhattan co-op prices fall as condos flourish [NorthJersey.com]

Radio and TV clips

[July 3, 2007] Bloomberg TV – On The Economy (Part I)
[July 3, 2007] Bloomberg TV – On The Economy (Part II)
[July 3, 2007] Bloomberg Radio

Have a great 4th of July!


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[In The Media] BBC World Business Report Clip for 6-13-07

June 14, 2007 | 12:00 am | Public |

I have always loved watching BBC TV for news and listening to BBC radio because it provides an outsider’s perspective, a clinical interpretation of world events. I made the mistake of walking to the studio for this interview and it was very humid outside. Sort of like sitting in a sauna with a suit on (which I try not to do). The host Dharshini David, a former economist, is very personable and has the best British accent on television (if you take note of that sort of thing).

This clip covered the doubling of the number of foreclosures in the US as compared to the same period last year.

Foreclosures are rising as mortgage rates reset and homeowners can’t refinance their way out of trouble.

However, one of the reasons we have a higher potential for the number of foreclosures (versus percentages), is the fact that home ownership is near record levels at more than 68% of all households. The BBC and some economists (and one appraiser) suspect that the inflation threat is short lived. I suggest that the impact of the weakening US housing market has not had the opportunity to fully impact the US economy. Comprising 25% of GDP, housing plays a significant roll in the US economy and by rote, the global economy.


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Booked: Diary of a Real Estate Rookie

June 9, 2007 | 10:18 pm | | Radio |

Alison Rogers, a talented writer and editor (who on occasion, points out my gramatical shortcomings with a distinct sense of glee, yet supports me when blog commenters stray from topic), launched the New York Post’s successful Real Estate Section on September 6, 2003.

Why she gave up the slow pace, low stress, high pay and luxurious office accommodations in 2005 that the New York Post is known for, only she will ever know (hint: sarcasm). But she did it and documented the drama of her new adventures along the way. You may have read her column on Inman over the past year.

Ali provided me with the announcement, which I’ll simply post here since I am not the talented writer that she is.

My new book launches today. It is the “Read” pick in Newsweek this week. Please buy it.

In order to explain to you why to buy it, I have compiled the following list of Frequently Asked Questions:

Q: What’s your book about?
A: It’s about my adventures in my first year of real estate, which was also my first year of marriage. It’s called “Diary of a Real Estate Rookie.” It’s also been called funny.

Q: Called “funny” — by you?
A: Actually, it got a starred review from Publishers’ Weekly, which is kind of a big deal. They called my dedication to Rupert Murdoch “cheeky.” Also, there’s a movie star, a heroin scene, and some condos.

Q: That sounds intriguing. What do you want me to do?
A: Go to here to buy the book. Also, please forward this e-mail to others. Finally, please use the following phrase as often as possible: “Hey, have you read ‘Diary of a Real Estate Rookie’ by Alison Rogers, available now at your finer local bookstores or on amazon.com? It’s fast-paced and funny and has lots of real estate tips!”

Q: Alrighty then. Where am I supposed to do that?
A: Great places to use this phrase are: in Graydon Carter’s office; while riding the Lexington Avenue Line; on urbanbaby.com; in Pop Culture Love Letters; within earshot of any Hollywood producer; on National Public Radio; near anyone who has ever met Oprah or Stephen Colbert . . .

Q: So this is the launch, did you forget to invite me to a party, you b*!ch?
A: No, in keeping with the speed of publication (Rookie was commissioned just last summer) there hasn’t been time to set up a launch party. Keep your eyes open for a “Thank You” event later in the summer . . .and thank you!

Q: I’d go to a party. What else can I do? A: Blog about the book (much gratitude to the editor of Fortune for kicking this off). Write about the book in a local or national publication (thank you to the editor of Money magazine for starting this one, please check out the August issue.) Leave the book on your desk or carry it on the subway (face out please). Come to the signing at McNally Robinson on July 23rd.

Q: Do I get a discount on a co-op if I do this?
A: We’ll talk.


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[List-o-links] 5-14-07 Subprime Cuts: Boiler Room, Bailout, Toll, FICO & IPO

May 15, 2007 | 9:18 am | Public |

With a bunch of USDA acronyms like FICO and IPO, 4-letter builder names and Boiler Room sales pitches, this cow has chewed more CUD than it can swallow.


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