Matrix Blog


[The Housing Helix Podcast] Stuart Elliott, Editor-In-Chief, The Real Deal Magazine

August 20, 2009 | 12:01 am | | Podcasts |

I had the pleasure of interviewing Stuart Elliott, the Editor-In-Chief of The Real Deal Magazine. Together with Publisher Amir Korangy, The Real Deal pushes out a lot of content on the residential and commercial real estate markets in New York City and South Florida, making their publication a must-read.

Check out the podcast

The Housing Helix Podcast Interview List

You can subscribe on iTunes or simply listen to the podcast on my other blog The Housing Helix.


Wrapping Up Foreclosure Properties, Literally

July 7, 2009 | 12:06 am | |

Did a lot of boating this weekend and there seemed to be a lot of boats still under “wraps.” So today I saw an interesting article in The Real Deal/Miami (hat tip to WSJ Developments Blog) Foreclosures could put houses in plastic

Foreclosures, dried-up financing and simple bad timing means countless South Florida construction projects now sit unfinished and all but abandoned. In the subtropical climate, the wood develops mold and degrades and the metal rusts.

…the company has wrapped three homes in the past several months, and is working with a group in Pennsylvania to begin wrapping 240 homes in the Northeast.

It’s a growing problem – not sure this is the answer but perhaps it beats the alternative.

[Gears in Motion] Standard Mortgage Practice Was Often Mortgage Fraud

June 1, 2009 | 12:06 pm |

Does this actually surprise anyone?

In Kenneth Harney’s article Half a Billion Dollars Says U.S. Is Getting Serious About Busting Fraud, he identifies mortgage fraud practice and what the US is doing to fight it.

The funny thing is, many recent practices were fraudulent and commonplace, yet ignored by lenders, mortgage brokers, borrowers, appraisers, and pretty much anyone semi-connected the the housing busines – all were more interested in the final goal of a successful mortgage closing so everyone got paid or got their house.

Here are some interesting facts:

  • 2/3 of mortgage fraud occurs at mortgage application
  • 28% involve “deliberate misinformation” about tax returns
  • 22% involved appraisal value “padding”

As far as appraisal padding goes, that is a wildly low percentage IMHO. I’d say it was more like 80%.

Well, I’ve resided in 4 of these states…

According to the 2009 report from the mortgage researchers, the top 10 states where disproportionate numbers of frauds occur are not necessarily where you’d guess. For example, the No. 1 state for mortgage frauds last year was tiny Rhode Island. Next came Florida, Illinois, Georgia, Maryland, New York, Michigan, California, Missouri and Colorado.

Aside from the organized fraud rings, lenders essentially knew this was occurring, but were more interested in making loans. Regulators were asleep at the switch, afraid to upset the apple cart. Appraisers wanted more assignments. Borrowers knew they were lying on their applications and mortgage brokers showed them how to manipulate the process.

Now we all get to pay for the clean-up and act like everyone is innocent and it’s just one of those unfortunate things that happen.

This just in.

Mortgage fraud is still happening. I can speak for the appraisal portion of this process. Aside from dealing with fewer mortgage brokers due to the Home Valuation Code of Conduct or (HVCC), NOTHING HAS CHANGED.

There is pressure – the lenders are dealing with appraisers who play ball and appraisal management companies are eliminating competency in valuation of collateral for mortgage lending.

The gears are still in motion.


[Promoting The Homeownership Cycle] Obsessive Housing Disorder

May 17, 2009 | 11:06 pm | |

The City Journal, a quarterly must-read urban affairs journal published a terrific article on the cycle of Washington’s efforts to encourage homeownership called Obsessive Housing Disorder by Steven Malanga.

The author suggests our troubles began in the 1922 with Herbert Hoover’s Own Your Own Home Campaign and was seen in nearly all of the following decades.

The author suggests it’s based on an unsubstantiated political premise without empirical data – a “cliche of political discourse” that:

Homeowners make better citizens.

As a result, homeownership continues to be pushed and the view is myopic:

In December, the New York Times published a 5,100-word article charging that the Bush administration’s housing policies had “stoked” the foreclosure crisis—and thus the financial meltdown. By pushing for lax lending standards, encouraging government enterprises to make mortgages more available, and leaning on private lenders to come up with innovative ways to lend to ever more Americans—using “the mighty muscle of the federal government,” as the president himself put it—Bush had lured millions of people into bad mortgages that they ultimately couldn’t afford, the Times said.

When I think back to our recent housing boom and the mantra of Fannie Mae and the former administration, we paid a significant price for a 5% boost in homeownership from 64% to 69% in a decade. The resulting economic damage render moot the effort – we got the ownership numbers boosted through artificial financial means.

Although I tend to believe that owner occupied housing is better cared for by its occupants (speaking as a former renter), I had never considered the idea of history repeating itself in this economic sector, in such a specific way.

A good read.

UPDATE: Another excellent article in the same publication: Spendthrift Sunbelt States
Arizona, Florida, and Nevada have run through the riches of their boom and are starting to look more like cash-strapped New York.

[Economic Landscaping = Pound Sand] Sand, Industrial, Financial, Energy and Agricultural

April 29, 2009 | 12:00 pm |

The FDIC has an interesting analysis provided by their economists on the varying impact of the recession on the four regions of the US: The 2009 Economic Landscape: How the Recession Is Unfolding across Four U.S. Regions. Of all the alphabet soup of federal agencies and their output on housing and economics, FDIC tends to be the best.

South and West, Sand States – (Sand States?)

The housing downturn has been most acute in four states—Arizona, California, Florida, and Nevada— that had experienced some of the highest rates of home price appreciation in the first half of the decade. While these states are not all contiguously located, their similar housing cycles and abundance of either beaches or deserts have led some analysts to label them “Sand States.”

Midwest, Industrial –

Although the Industrial Midwest did not experience the significant home price appreciation of the post- 2001 housing boom to the same degree as other regions, its residential real estate markets have still suffered. Existing home sales in the Industrial Midwest declined 33 percent from their second quarter 2005 peak, roughly in line with the nationwide decline. In 2008, home prices fell in all of the region’s states, led by Michigan, where prices declined by more than 10 percent. Further, in half of the Industrial Midwest states, foreclosure rates are at or slightly higher than the national rate.

Northeast, Financial Sector –

Job losses and reduced compensation in New York City’s financial sector are also having a detrimental effect across real estate markets. Home prices in the New York City metro area declined by 9.2 percent on average in 2008. This year-over-year decline in home prices was the largest in the 22-year history of these data, slightly exceeding the previous high recorded in March 1991. Still, New York City home prices fell much less during 2008 than in some other major cities, which saw double-digit declines.

Midsection, Energy and Agriculture –

Though the economies in the nation’s midsection continue to perform well relative to the nation, the downward trends in the energy and agricultural sectors may weigh on the region in the near future. Moderating commodity prices are likely to put a damper on the area’s economic conditions, and the region may not only cease to be a source of economic strength but also could enter recession at a much later stage than the nation.

Download full report from FDIC.


[1 In 5 Underwater] So Bubbles Are A Great Way To Illustrate

March 5, 2009 | 1:37 am | |

We used to ignore bubbles, explaining them away because they were scary. Now we see them as a clearer conduit to clarity when illustrating a point related to mortgages. Not housing. Remember, we experienced a mortgage bubble from 2003-2007, not a housing bubble. Housing was merely a way to keep score.

James Hagarty at WSJ talks about the First American CoreLogic report with the following results:

The problem is most acute in Nevada, where the percentage is 55%, followed by Michigan (40%), Arizona (32%), Florida (30%) and California (30%). Stripping out those five hard-hit states, the national percentage is about 14%. In New York State, the tally is just 4.7%.

BBC News uses bubbles to illustrate the Stim plans.

[Fore-Stalling-Closure] Delaying Doesn’t Solve The Problem

December 2, 2008 | 1:20 am | |

One of the techniques employed to delay or ease the foreclosure problem has been to place a moratorium on foreclosures. I for one didn’t understand the concept. I still don’t. Usually the delay is 3 to 9 months.

Is that enough time to allow the homeowner to get back on their feet and start making payments again?

The economy is eroding (and now officially a 1-year recession), unemployment is still rising and credit is still frozen. For many it would seem to be an illusion or false hope. To some of course, the delay to keep lenders at bay is helpful and effective.

It is sort of ironic (I am seeing irony in just about everything these days) that delaying the foreclosure process was necessary by many who delayed the process (of paying for things).

Julie Satow at The Daily Beast (a terrific new Tina Brown – created site) brings us evidence of the false-positive that is foreclosure moratoriums in her article: New York’s Impending Real Estate Doom.

Back in August, state legislators in Albany set a 90-day freeze on foreclosures that’s created a backlog of foreclosure filings. The 90-days are up next month. Banks will be bringing foreclosure filings “by the wheelbarrow,” said one court officer in Queens, where the number of filings dropped to just 60 per week from a rate of 150 per week before the law took effect.

California, Florida and Connecticut are proposing moratoriums while Massachusetts already has one.

One of the first to enact a foreclosure delay was Massachusetts. It set a three-month freeze in May, creating a backlog in foreclosures that built up to August. In the end, foreclosure filings ballooned 456% between August and September, according to RealtyTrac, a site that tracks foreclosures nationally.

It seems to me that a delay, while well-intentioned, doesn’t do anything but compress more properties into foreclosure at the end of the moratorium, ultimately creating more listing inventory at the same time, placing even more distress, ultimately, on property values.

There is some speculation that the foreclosure phenomenon in California is starting to ebb, perhaps because they have been seeing heavy activity for nearly two years.

And yes, like construction permits, demolition permits are plummeting in New York.

And yes, we are now realizing that we have been in a recession for a full year (one of the longest since the Great Depression) and we haven’t yet seen two consecutive quarters of negative GDP growth. Apparently rising unemployment, falling real personal income, falling industrial production as well as falling wholesale and retail sales declines somehow reflected a weaker economy. Call me crazy.

Aside: Noted economics blogger Tanta passed away on Sunday. She was a terrific writer for one of the best financial/econ blogs out there, Calculated Risk. Cancer has hit close to home in my family and it is never fair. In fact, it sucks.

[Analysis Paralysis] Calling The Bottom Of Calling The Bottom Of The Real Estate Market

August 19, 2008 | 3:48 pm | |

One of the real estate conversations that everyone seems to have involves calling a bottom. Why are we so obsessed with calling a bottom?

If you’re right, you can claim it and tout it on your resume for the rest of your career.

I’ve certainly been asked the “bottom” question like a gazillion times. We should learn from the prior conversation, which was “calling the top.” In the prior scenario economists and pundits got lots of air time doing this. Call the top for several years and eventually you’ll be right. Consistency is a virtue.

Bob Toll said:

“People are looking for a reason to get off the fence. The most asked question in America today other than who Obama’s Vice President is going to be is probably when is the bottom? And if you even smell as though you are in real estate, people ask you that question all day long.”

Let’s have that real estate conversation now:

Q: When is the housing market going to bottom?
A: I don’t know.

One thing I do know, it is not going to be this year. And so what?

What does “calling a bottom” do for anyone, anyway? …especially if it’s only a gut feeling. Yun of NAR has been calling for a bottom more times than I care to recite and even his most loyal fans are getting numb.

The idea that we want to have finality with the problems of the housing market is certainly understandable. When someone is stepping on your foot, you’d like to get an idea when they’ll get off of it.

We simply need to know. Or as said in the movie “Dirty Harry” by a criminal who was staring down the barrel of a 44 magnum (the most powerful handgun in the world) …”I gots to know.”

“V” versus “L” shaped bottom
My biggest issue with the answer to this question is that it is misleading. To most consumers, the “bottom” means the end of housing market stress and it marks the point where things will get better. Trough to peak.

Have you looked at the credit situation lately? The health of the GSEs?

Calling a “bottom” today likely means the point where things stop getting worse. And a flat bottom could stick around for a number of years. Think about it. What constructive actions to restore faith in the credit/investor/financial markets which provide liquidity for mortgages have occurred since last summer?

Steep and Deep, Short and Shallow
Another issue that is clearly perverse and often baffling in the answer to the “bottom” question concerns the vastly different performance characteristics of each market. There is no national housing market.

Some markets will see the housing market deterioration as steep and deep, others will be short and shallow, and the remainder in between. While all markets are connected by credit and mortgage quality and quantity, local conditions rule. I think the upturn in Michigan, with it’s auto industry woes, is much farther away than south Florida, the current poster child for rampant speculation and five year inventories of the past several years.

I’m looking forward to getting to the bottom of the bottom discussion. Please.

UPDATE: The Economist is calling it: Behind the housing gloom is an improving backdrop

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[Acronym Update] FHFA From OFHEO Over GSE With HUD And FHFB

August 7, 2008 | 12:55 am |
Source: RedKid

Just when I was able to cite “OFHEO” and Office of Federal Housing Enterprise Oversight (who comes up with these names?) from memory, along comes a new agency created from the Housing and Economic Recovery Act of 2008 recently passed into law.

FHFA: Federal Housing Finance Agency. No web site yet – I tried

It has to compete with a bunch of others organizations that use the same acronym:

FHFA Fairfax Hispanic Firefighters Association (Virginia)
FHFA Fairly Homogeneous Farming Area
FHFA Family Health Foundation of America
FHFA Federal Housing Finance Agency
FHFA Florida Health Freedom Action (South Miami, FL)
FHFA Florida Home Furnishings Association
FHFA Florida Housing Finance Agency
FHFA Foot Health Foundation of America

I am hopeful the new agency will be better suited to provide better oversight than OFHEO did. OFHEO was essentially a rubber stamp for the GSEs until a few years ago when the FNMA accounting scandal woke it up. A new director took the reigns at OFHEO, James Lockhart, who seems to be doing all the right things (and one heck of a lot of press releases).

From the latest press release, it looks like the current director of OFHEO had a big hand in creating the new agency, FHFA. Since Lockhart has been pretty coherent, I’ll try to consider this as a good thing.

No web site, no information on the structure. Nothing but a press release so far. We’ll have to wait. Of course, credit and liquidity are very limited and need to be fixed before housing takes a turn for the positive, so I hope its not too long.

Takeaway: Odds are government will move too slow to provide meaningful solutions to the credit crunch in a world that moves much faster. In fact, the lack of action over the past several years set the stage for the condition we are currently in so I am not sure what we are waiting for.

By the way, …isn’t.

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[In The Media] Fox Business Network Money For Breakfast 7-25-08

July 28, 2008 | 2:00 pm | | TV, Videos |

Last week I was attending the Inman Real Estate Connect in San Francisco and was contacted by Fox to discuss the latest RealtyTrac foreclosure numbers just released that day and the conversation spilled over into other related topics such as the Housing bill.

The segment was to air live at 7am EST time, 4am in San Francisco, and I had to get there by 3:30am, meaning I got up at 2:45am. Well, sleep is overrated anyway.

Alexis Glick was the host – she’s sharp and thinks at 100mph. Always a pleasure. Here’s her blog post on the segment. She seemed pretty excited about the foreclosure features on

After the segment, I teased my colleague at RealtyTrac, thanking them for giving me content and for giving me a reason to wake up at 2:45am.

What’s particularly interesting about the foreclosure numbers is that 16 of the 20 major metro areas tracked were located in California and Florida. I think that the average consumer thinks half of all sales in their locale are foreclosures which is simply not true, however, it is a serious concern. I keep harping on the lack of activity in the MBS markets and lack of liquidity out there.

All else feels like “cart before the horse.” Until financing is more readily available I find it hard to see much of an end to this mess in the near future.

Here’s the clip

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Florida, Florida, Florida

June 16, 2008 | 12:02 am | |

The passing of Tim Russert was very much a shock. It caused me to reflect on my own mortality for a good part of this Father’s Day. For years I watched Meet The Press and it’s one of my regular podcasts – loved it. I was drawn to Russert’s youthful enthusiasm, work ethic and ability to provide clarity to Byzantine world of politics. My father met him when we appraised his property a number of years ago and he was as genuine in person as he came across on television.

The use of a dry erase board in the 2000 presidential election was classic.

Amid the high-tech wizardry of television, it was Russert who picked up a white board and marker on Election Night 2000 and plotted the progress of the Bush/Gore all-nighter, scribbling “Florida, Florida, Florida” before anyone knew the race would not be settled there for 36 days.

And other moments.

Of course, Florida foreclosures aren’t going to settle down for quite a while because of the backlog in the foreclosure pipeline, unlike other markets.

LOL becomes ROTFLOL ;-) becomes :[email protected] becomes Eat In Kitchen

May 29, 2008 | 9:50 am | |

I’ve been AWOL since Monday. Got out of the hospital. Ouch! In for the same reason I went in 1997 and 2003, which coincidentally were the same years the Marlins won the World Series. I got the opportunity to mention this to the current owner a few years ago for a chuckle. The Marlins are in first place right now and then I go to the hospital. Coincidence? Don’t bet on it. They’re a lock.

Source: Wikipedia

So this emoticon thing, we think we’re pretty clever and original. It’s a language created in a growing world of Instant Message, Twitter, Text Message, etc. The emoticons in this post header are from 1881.

Abbreviations have a way of expanding (remember when MacDonald’s only served hamburgers?), creating the need for something simpler to replace it. I have talked lot about abbreviations used in property listings in newspaper advertising, where a language of real estate abbreviations evolved incentivised by pay per word pricing which is becoming more diluted as classified listings move online.

There is an awesome article in William Saffire’s column On Language in NYT Magazine last weekend called Emoticons: The seamy side of semiotics where he makes the case that language is in the third stage of compression.

  1. Three centuries ago, we were fed the short’nin’ bread of contraction; won’t, don’t, I’m, you’re made the apostrophe the king of cant, which caused a 19th-century lexicographer to denounce writers “carrying contraction to such an excess as to make their writings unintelligible to all but the initiated.”

  2. Then came the period of portmanteau terms, named after the French suitcase with hinged compartments: chuckle and snort blended into chortle; breakfast and lunch fused into brunch; and, in our time, broadcast and the World Wide Web morphed into webcast (still capitalized as “Webcast” by the New York Times copy czar).

  3. Electronic communication has whisked us into a third phase of compression: the Age of Shortspeak. As we listen and watch replays of multicasts to suit our scheduling convenience, those above-mentioned interminable, bor-r-ing four-second pauses are edited out. Humanizing uh, er, ah, um moments of meaningless vamping are pitilessly erased; even the dramatist’s “pregnant pause” has been digitally aborted.

In other words, intro a new “short” way to communicate. It evolves. Repeat.

I know people who use IM who are not good at communicating emotional nuance and some that are. This all boils down to the constant change and evolution of language. Some people are good at adapting and some aren’t.