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Posts Tagged ‘Corcoran’

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

June 11, 2010 | 12:01 am | |

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

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

Who knows?

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

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

And price metrics are rising.

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

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

But nationally, housing market indecision is on the rise.


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[Bobbleheads] Known For Their Ubiquitous Media Verbosity

November 3, 2009 | 10:23 am | | Public |

In the current issue of The Real Deal magazine, the article Real estate’s most verbose talking heads: A look at the busy schedules of NYC’s go-to market pundits

…goes haywire with Adobe Illustrator and selects four go to media resources:

Barbara Corcoran, the founder of the Corcoran Group and now a regular on the “Today Show”; Jonathan Miller, the ubiquitous president of appraisal firm Miller Samuel; Dan Fasulo, managing director at Real Capital Analytics; and Bob Knakal, chairman of Massey Knakal Realty are just a few among a growing bunch of go-to contacts.

I think the bobblehead designation is a compliment? Verbosity? I always used that word in the “long-winded” connotation. Well, my phone simply rings – plus – I’ve been known to hang out on car dashboards on the weekends.

Aside: Bob Knakal is a long time colleague who has generously agreed to sit down with me on my podcast, The Housing Helix, in a few weeks.


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[Weekend At Bernie’s] Madoff House In Montauk Ready For Market

September 1, 2009 | 2:47 pm | | Public |

I had a nice conversation with Deirde Bolton at Bloomberg TV about the Hamptons Housing market and the former Madoff residence in Montauk (had to get up 4:30am to make it in for the 6:45am).

US Marshalls are readying it for market. I heard today that Corcoran was selected as the selling agent for the property.

I also got to catch up with Tom Keene of Bloomberg Surveillance in the Green Room who proceeded to tweet my appearance with a little humor.

Les Christie of CNN/Money does a nice Madoff story on the US Marshall video of the property and invited me to provide some running commentary as I watched it. Fun!

Here’s the US Marshall video. It’s apparent that they want to get as much for the property as they can – no fire sale – so they can get funds to the swindled investors (a drop in the bucket).

All this activity before 10am this morning. I might need to go to the beach and relax this weekend…I know a house…


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[Public] Tonight’s Observer Living Real Estate/Tomorrow AM Bloomberg Surveillance

May 14, 2009 | 3:05 pm | | Radio |

Fun tonight!

I hear that 1,000+ people are registered to attend the Observer Living event (although I think the room where we are speaking is half that size).

8:00 PM – Panel #3: State of the Residential Market
Moderated by: Tom Acitelli, Location Editor, The New York Observer

Featuring:

  • Ivanka Trump, EVP, The Trump Organization;
  • Dottie Herman, President/CEO Prudential Douglas Elliman;
  • Pam Liebman, CEO/President, Corcoran;
  • Jonathan Miller, CEO/President, Miller Samuel

Topics:

  • Pricing: The $1.8 Million Question
  • Refinancing
  • New Condos vs. Condos vs. Co-ops
  • State o’ Things: Misconceptions and Perceptions
  • Where to Buy in New York

Tomorrow morning at 7am on Bloomberg Radio am 1130 – I’ll be the first guest on Bloomberg Surveillence with Tom Keane and Ken Prewitt to kick off a show on the housing market. I listen to the show via podcast nearly every day – always interesting.


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[From The 92Y] Making Sense of Manhattan Real Estate

January 26, 2009 | 12:46 am | Public |

This will be either the fifth or sixth year (I’ve lost track) that Paul Purcell and Kathy Braddock of Braddock and Purcell have organized a panel discussion (that includes me) on the state of the Manhattan residential market at the 92nd Street Y in Manhattan.

The event has sold out each time, so get your tickets early. I participate in this event because its fun – Paul is a great moderator. Also, the 92Y is a fantastic resource to explore with a wide array of programs. Their 92Y Blog is very well done and worth checking out. Its been on my Matrix blogroll for quite a while.

They have also invited Pamela Liebman, president and CEO of the Corcoran Group as well as Alan Rosenbaum, president of Guard Hill Financial, a mortgage broker. I’ve known Pam for much of my career – beginning when she was an agent and I was just starting out as an appraiser. My firm has been hired periodically by Alan’s firm but I don’t know him that well so I am looking forward to his insights mortgages and underwriting.

The event will be held on Thu, Mar 5, 2009, 8:15pm-9:30pm at the East 92nd St/Lexington Avenue location.

Click here for tickets.


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[Solid Puff Piece] Goldman Research Note Clouds Manhattan

January 13, 2009 | 1:43 am | |

On Thursday there was a widely viewed and discussed research letter by Goldman Sachs covering the Manhattan housing market. Lockhart Steele at Curbed first reported it on Thursday, followed by the WSJ on Friday.

I thought Lock broke it down thoroughly — Curbed style — and there was nothing more to it. Later, I got about a bunch of emails asking for my thoughts on the research note so I thought I would take another look (since my work is part of their commentary).

I placed the full text of their research note at the bottom of this post.

Frankly, I thought the Goldman research letter was surprisingly thin, with weak logic and a bit self-serving since Goldman was the first licensee of the S&P/Case-Shiller Home Price Indices.

Some of my observations about their observations:

  • Goldman predicts housing prices will drop a total of 35% to 44% to late 1990’s levels. (Since prices have already fallen 20%, that means we are halfway there.)
  • Goldman uses the phrase “these types of arguments are difficult to quantify and are often heard just prior to a real estate market downturn” twice in this paper. Gotta love boilerplate!
  • Goldman refers to me as an analyst (dammit Jim, I’m an appraiser not an analyst! a la “Bones” on Star Trek) as in “one analyst estimated that the prices of apartments that were under contract but had not yet closed fell by 20% from August to December.”
  • Goldman criticizes the “brokerage reports” for not considering price per square foot since the firms publish mean and median prices for both co-ops and condos on a quarterly basis, but these are difficult to interpret due to significant changes over time in the size and quality of apartments being sold. Of course the report I prepare as well as my competitors’ reports all use price per square foot as a basic price metric. I was the first to do this many years ago for the co-op market.
  • Goldman alludes to one of the research companies cited as having only one year of price per square foot data. Of course Goldman forgot to mention our reports contain price per square foot data going back to 1989 broken out quarterly and annually by number of bedrooms (size) and property type (co-op, condo and 1-5 family).
  • Goldman relies on only matched price observations involving successive transactions in the same condominium for estimating the overall change in prices. This is actually a logical point. Since about 38.3% (in 4Q08) of condo sales were from new developments, using them as a basis of establishing a trend would reflect market conditions 12-18 months ago when the typical contract was signed. Any report or index that does not extract new development from the condo sales data can be as much as 12-18 months behind the market. I have found re-sale activity to be more reliable for establishing condo price trends which is something that can be captured using the CSI repeat sales methodology, despite many reservations that I have.
  • CSI continues to omit co-ops from its product suite, which represents about 75% of the housing stock in Manhattan. Which begs the question: “How do you track a housing market without 75% of the housing stock considered?”
  • Goldman uses the CSI index (which covers all of New York City, not the individual boroughs) yet analyzes income in Manhattan to establish ratios for affordability. This is perplexing to me since prices in the outer boroughs are half their equivalent in Manhattan. With the way this part was written, I get the feeling that using the CSI index was simply easier to plug into their ratios.

In short, I see this research note is more of a “puff piece” using the “faith and credit” of Goldman’s brand to hump the new Case Shiller condo index which was why I didn’t pay much attention to the Goldman report when initially released. I understand it is not a white paper, nor was it meant to be backed up by lots of footnotes and appendices. However, the fact that it was released by the gold standard of (former) investment banks, is a bit disappointing.

Here it the research note text:

We use the recently introduced S&P/Case-Shiller index for condominium prices to assess the valuation of the New York apartment market. Although housing market valuation typically has little predictive value for the near term, it is useful for anticipating longer-term moves, especially when prices are far away from equilibrium.

Indeed, New York apartment prices are very high relative to the observable fundamentals. Using three alternative yardsticks—price/rent, price/income, and affordability —we find that prices would need to decline by 35%-44% to return to the valuation levels seen in the 1995-1999 period, before the start of the recent boom.

The uncertainty is substantial. On the one hand, the picture would worsen further if per-capita incomes in Manhattan returned from their current level of 3 times the national norm toward the pre-1990s average of 2 times the national norm. On the other hand, it would brighten somewhat if jumbo mortgage rates converged toward conforming rates, perhaps because of a broadening of the Fed’s support measures. In addition, societal and demographic changes could also help, though these types of arguments are difficult to quantify and are often heard just prior to a real estate market downturn.

Following a decade-long boom, activity in the New York City apartment market is now slowing sharply. The sales reports for the fourth quarter of 2008 released on Monday by two of the largest New York real estate brokers—the Corcoran Group and Prudential Douglas Elliman—suggest that sales dropped by 25%-30% from the fourth quarter of 2007 (see “Striking Declines Seen in Manhattan Real Estate Market,” New York Times, January 6, 2009, page A20). Although the prices of closed sales were little changed from a year earlier, one analyst estimated that the prices of apartments that were under contract but had not yet closed fell by 20% from August to December. Moreover, it is well known that prices lag sales activity in the housing market, so most observers agree that both contract and closing prices are likely to decline in the near term.

Information on sales and price momentum is very helpful for predicting near-term moves in the real estate market. But in order to gauge the longer-term outlook, it is better to look at fundamental valuation indicators, such as the level of prices relative to rents or incomes, either directly or adjusted by mortgage interest rates. These types of variables don’t have much predictive power over the near term, but they start to become much more powerful at horizons longer than 1-2 years.

Until recently a fundamental analysis of the New York apartment market was hampered by the lack of high-quality price data. The various brokerage firms publish mean and median prices for both co-ops and condos on a quarterly basis, but these are difficult to interpret due to significant changes over time in the size and quality of apartments being sold. In addition, research firm Radar Logic, Inc., publishes a “price per square foot” series for the New York condo market. However, there is only a year’s worth of history, and changes in the average quality of homes sold can still distort the data even though the Radar Logic approach does control for variations in size.

But the data situation has improved dramatically with the recent broadening of the S&P/Case-Shiller (CS) repeat sales home price index to cover five of the nation’s largest condominium markets, including New York. These indexes stretch back to 1995—not as far as we would like but much better than what is available currently—and they adjust for changes in both size and quality of the condos by using only matched price observations involving successive transactions in the same condominium for estimating the overall change in prices.

Admittedly, a repeat sales index does not perfectly adjust for quality changes. In theory, the bias could work in either direction. On the one hand, wear and tear will reduce the value of a given condominium over time if the owner does not look after the property well. On the other hand, upgrades such as new flooring or a nicer kitchen may raise the value. While the CS index seeks to eliminate the influence of these factors by downweighting price change observations that are far out of line with local comparables, this is unlikely to eliminate all sources of bias. Still, we believe that a repeat sales index is far superior to the available alternatives for the purpose of measures changes in underlying real estate prices.

In analyzing the data, it is useful to look first at the raw numbers for New York condo prices. As shown in the table below, nominal prices tripled from 1995 to 2006, went essentially sideways in 2007, and have declined by about 3% in 2008. The stability since 2005 is somewhat at odds with reports from the New York real estate brokers that still show meaningful gains in mean and median prices over this period. However, we suspect that the apparent contrast is resolved by a shift in transactions toward larger and higher-quality apartments over this period, which would increase the mean and median price figures but leave the CS index unaffected.

Index

(Jan 2000=100)

Oct-95 75.3

Oct-96 75.4

Oct-97 80.6

Oct-98 89.2

Oct-99 97.5

Oct-00 111.3

Oct-01 126.7

Oct-02 144.3

Oct-03 161.2

Oct-04 188.8

Oct-05 222.6

Oct-06 227.4

Oct-07 226.7

Oct-08 221.1

Source: Standard and Poor’s.

But are the price gains sustainable? To assess this, we focus on three primary valuation measures:

  1. Price/rent ratio. We divide the CS index by the Bureau of Labor Statistics’ index of owners’ equivalent rent for the New York metropolitan area, and index the resulting ratio to 100 for the average of the 1995-1999 period. We choose this base period because it mostly precedes the recent boom but covers a period when the quality of life in Manhattan had already improved significantly from the 1980s and early 1990s. Hence, a return to the average 1995-1999 valuation level might seem like a fairly neutral assumption.

  2. Price/income ratio. We divide the CS index by the Bureau of Economic Analysis’ measure of personal income per capita, and again index the resulting ratio to 100 for 1995-1999. Although the condo price index covers the entire New York metro area, we use an income series for the County of New York (i.e., Manhattan) rather than the entire metro area. The New York condo market is quite concentrated in Manhattan; this concentration is particularly pronounced in the CS index because it is weighted by value rather than units and therefore typically assigns a much greater weight to condo sales on Fifth Avenue than in Queens. (Note that New York County income is only available through 2006; we somewhat optimistically assume that it has grown at the average national rate since then.)

  3. Affordability. Using a standard mortgage calculator and assuming both a jumbo mortgage and a 30-year maturity, we calculate (an index of) the share of Manhattan per-capita income spent on condo mortgage payments at the current level of the CS index and the current level of jumbo mortgage rates. We again index the resulting ratio to 100 for 1995-1999.

The table below shows what all three of our indicators say about the current valuation level, as of October 2008. We focus on the percentage decline in nominal condo prices that would be required to bring our three valuation measures back to the 1995-1999 average, assuming no changes in other inputs such as rents, incomes, and mortgage rates.

Price/Rent Price/Income Affordability

Required Decline* -44% -37% -35%

*In order to return to 1995-1999 valuation levels.

Source: Our calculations. See text for additional explanations.

Our indicators suggest that New York condo prices would need to fall by between 35% and 44% to return to a neutral valuation level, depending on the valuation measure we choose. Under the (admittedly unrealistic) assumption that prices decline by the same percentage in each market segment, this type of drop would imply that a 1-bedroom condo whose price currently averages roughly $800,000 would decline to $480,000; a 2-bedroom condo would decline from $1.7 million to $1 million; and a 3-bedroom condo would decline from $3 million to $1.8 million. (All these figures are approximate and are loosely based on the brokerage firms’ fourth-quarter reports.)

Since economies typically grow over time, one would normally hesitate to predict that “mean reversion” in a price/income or price/rent ratio should occur entirely via a decline in prices rather than an increase in incomes or rents. In our case, however, the assumption of flat nominal incomes and rents does not seem excessively pessimistic. In fact, it is quite possible that nominal Manhattan incomes will decline for a while. Such a nominal decline would be extremely unusual at the national level but did occur in Manhattan following the 2001 recession, which was much less severe than the downturn we are currently seeing.

In fact, it is instructive to consider the potential implications of a return of relative Manhattan incomes toward the national norm prevailing before the Wall Street boom of the past two decades, either because of pay cuts in the financial industry or because of a possible out-migration of affluent individuals. From 1969 to 1986, Manhattan per-capita income averaged 2 times the national average, with no clear trend. Over the next two decades, however, it grew to 3 times the national average. If incomes fell back to the pre-1986 level of 2 times the national average—and if national per capita income remained unchanged—prices would need to fall as much as 58% to return to the 1995-1999 price/income ratio. (The 58% drop is calculated as the 37% drop shown in the table assuming constant income, plus the 33% drop in per capita incomes, minus a term for negative compounding.)

So is there any hope for the New York apartment market? Apart from a dramatic turnaround in the city’s economic fortunes, the most plausible story is a drop in jumbo mortgage rates. So far, jumbo rates have not benefited much from the recent decline in mortgage rates, but this could change if the Fed (presumably in conjunction with the Treasury) decided in the course of 2009 to broaden its support from the conforming market to the private-label mortgage market. To make an extreme assumption, if the jumbo mortgage rate fell from the current 7% to 5%, this would reduce the “required” price decline from 35% to 19%. Of course, this assumes that affordability is the only measure that matters for home prices and there is no role for the “raw” price/rent or price/income ratio, and that Manhattan incomes stay at 3 times the national average.

In addition, it could be that societal and demographic changes will keep New York apartment valuations above the levels that prevailed in earlier periods. For example, one might argue that the memory of high crime rates was still fresh enough in 1995-1999 to make this period an excessively pessimistic benchmark. If crime stays low during the current economic downturn, perhaps Manhattan real estate will retain its higher valuation in coming years. Alternatively, one might argue that the aging of the baby boomers will continue to support the New York market as “empty nesters” want to live closer to the city’s attractions. These types of arguments are difficult to quantify and are often heard just prior to the start of a real estate downturn, but they do underscore that our analysis of the observable data on prices, rents, incomes, and interest rates only provides a very partial view of the New York apartment market.

Source: Goldman Sachs

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[Reuters Housing Summit] Concentrated Real Estate Snippets

February 21, 2008 | 10:34 pm | Public |

I was invited to participate in the Reuters Housing Summit this week (which happened to be during my vacation and how cool is it to talk about housing when you are taking time off from work?) It was quite an interesting experience – I thoroughly enjoyed it. Each participant gets grilled for an hour by Reuters senior editors and reporters. I felt I needed another twenty four hours to address all the housing issues of the day, but alas, it was my vacation. The interviews were recorded and snippets were released as audio files.

Check out:the summit blog for more interviews and the housing section of the Reuters site.

And to continue with the shakey market theme (supposedly) our satellite was intentionally shot down and an earthquake struck northwestern Nevada.

In other words, a good week for a vacation.

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A Market Still Shaken, Not Stirred, Except For The Talking Heads

January 26, 2008 | 11:39 pm | |

According to the Mortgage Bankers Association, there has been a surge in refi applications this week has resulted in a refi-boom. Mortgages rates are falling.

Its been a week since the Fed’s rate cut and we are already seeing reports that the market is stirring in some locations…although this strikes me as basically anecdotal-based reporting, no?

“Blood in the streets!” Ms. Gable said cheerfully. “That’s the best time to buy.”

This week, the average 30-year fixed rate was 5.48 percent; the rate was approaching 7 percent as recently as last summer.

…At what point will buyers be compelled to act, thinking they are getting a price they can live with and a rate they do not want to miss?

One indisputable effect of the Fed action is a rise in refinancing applications, continuing a trend that started late last year.

Talking head hoopla…

It’s hard to understand the world clearly without watching The Daily Show. Here’s the recent appearance by CNN real estate show host Gerri Willis with Jon Stewart on Comedy Central. The whole clip is entertaining, but if you don’t have time, fast forward to the 5 minute mark to catch the talking head chatter (Barbara Corcoran?). Wow.


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Can We Reach A Freakin’ Quorum About Housing?

August 20, 2007 | 12:01 am | |

Besides having a lot of admiration for the never ending contrarian ideas of Stephen J. Dubner, a la Freakonomics, it provides a great excuse to use “Freakin'” in public and not get scolded or lose my temper.

He gathered 5 real estate veterans to get their take on the questions: Is it finally time to believe in the housing bubble? And how much should the average American care?

He solicited comments from:

Robert Shiller: author of Irrational Exuberance and one of my economics’ heroes, who seems to be more optomistic than his introductions before various interviews would seem to suggest:

It is not clear whether the boom has come to an end; there is still investor enthusiasm out there.

Lawrence Yun: the new chief economist for NAR, who has taken the torch from his predecessor by dissappointingly finding obscure positive elements to expound upon that conflict with each other.

All real estate is local, and there are many local variations…The national median price was 1.1% lower in the second quarter of 2007 than its comparable period the year before….If people want to call the 1% price decline a bubble collapse — well, everyone has an opinion

David Lereah: the former NAR chief economist who gave this job title a bad name. He missed the opportunity to make NAR a trusted resource during the housing boom and post-housing boom periods, re-inventing phrases like “housing expansion” and balloons. A number of my agent colleagues were embarrassed by the things that he said during his tenure.

Bubble is the wrong imagery for today’s housing markets. Bubbles inevitably “pop.” A more useful image for the housing markets is a balloon. Balloons expand and deflate.

Barbara Corcoran: the former head of one NYC’s largest brokerage firms that bears her name. She was a brilliant marketer who really needs to re-connect with the market today. I am thinking that what worked 10 years ago doesn’t work today because I doubt that people believe she is running around the country snapping up property like picking apples from trees. But then again, I don’t understand marketing.

I’m yahoo-ing, low-bidding, and snatching up deals wherever I can find them…I’m grabbing as many over-priced, over-stuffed, and over-rated homes as I can get my greedy little hands on.

Aviv Nevo: one of the authors of the controversial Madison FSBO article who raised a lot of eyebrows with the study for his sharp insight, but also its limited applicability to the national market (not his fault at all). BTW, have you been to Madison lately? and is Jocko’s Rocketship near the football stadium still there?

I don’t know if it is time to believe in a housing bubble, and, frankly, I am not sure the average American should care.

Amir Korangy: founder and publisher of The Real Deal, to whom I have a particular bias, being in their publication a number of times, but for good reason: its a go to resource that is growing fast and has seemingly bigger than a Manhattan White Pages (8 pages of Millers, last time I checked).

Real estate prices are a local phenomenon based on employment, industry, and other factors including climate, quality of education, cost of living, immigration, and crime. Therefore, if the concept of a national housing market is ultimately a false construct, there simply cannot be a national housing bubble.

So why am I rambling about all these commentators in one column by a really smart contrarian economist? Because it speaks volumes about the residential housing market and how we see (or don’t see) it. The commentary represents a world filled with mixed signals, spin (cherry picking), more spin, limited applicability, out in left field silliness and rational thought, which leaves us freakin’ hungry to read more.

Oh, and by the way, I don’t think there was a quorum on the state of housing here.

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Real Deal Totals Lincoln Center

March 26, 2007 | 12:05 am | | Public |

90. entire panel laughing

Well, Real Deal magazine sold out their “Science of Real Estate” New Development Forum at Lincoln Center last week. It was an event! Over 3,000 tickets were sold.

Some thoughts…

  • It was the first real estate event in the history of Lincoln Center.
  • It was the first sellout event in 2007 for Avery Fisher Hall at Lincoln Center.
  • Amir and Stuart proved once again, that they are truly unable to think small.
  • Additional confirmation that the backstage green room, is never green.
  • Amazed that Fritz was able to crash the green room.
  • Glad that Cathy H picked Real Deal red.
  • The constant and very loud church bells that ring behind the black curtain.
  • The spotlights were so bright, I now know how a deer feels.
  • Steve Cuozzo was our fearless conductor.
  • Admiring developers Kent Swig and Steven Ross’ incredible knowlege and the lion’s share of questions.
  • New understanding for the looming 421a tax abatement expiration.
  • Memories of bursting with answers and comments, but couldn’t figure out how to get a word in.
  • Appreciated Amanda Burden’s stance in not apologizing for critics accusations of micromanagement.
  • Wished Professor Shiller would not be so apologetic for his contrarian views on housing. He’s a smart man and has a lifetime of work to show for it.
  • Kudos to Pam Liebman of Corcoran and Bob Knakal of Massey Knakal for asking the first questions of the panel, achieving a strong pr play without being on stage.
  • Relieved that so many other people aside from myself have real estate centric existences.
  • Glad to get that free chocolate bar in the Real Deal goodie bag.
  • Sure that The Real Deal has been around longer than 4 years.

86. Miller Cuozzo 5. Shiller and Burden 68. Pre-event over shot room filled


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[Matrix Zeppelin Series] utter desperation, Madden Curse, collapse city, anonomous wolves, sales are way off, listen to the CEO’s, parallel universe, blink first, entry barrier, fierce competition, stretch to buy, WAY south

October 6, 2006 | 2:36 pm | |


A lot of grumbing about the economy and real estate brokers this week (that isn’t hot air) as well as some carry over on the herd mentality discussion last week. Here’s a few notable comments from the Matrix Zeppelin:

  • Concerning the issue about the media and the herd mentality – There is no question in my mind that the media helps create a mindset that pushes the trend to the extreme. I am a regular reader of Money.com. Last year, they ran a regular series of articles called “Mogul in the Making” that show cased how some average person (like a fireman or a housewife) was making big bucks in real estate. The articles mostly made you feel like you were missing out if you were not investing in real estate. During that time, never once did I see an article about someone’s home not selling. Now, they run an article about once a week called “Help – my home won’t sell” and showcase someone who had high hopes of a quick sell and it’s just not happening. The articles are written to show utter desperation on the part of the seller. In the “hot” market, I know of homes that sat on the market for months, and I now know of homes that have sold in a matter of days (I am in Atlanta). Once a trend starts, the media shows no balance at all, which in turn helps drive the “herd” to the extreme.

  • The funny thing about Herd Mentality (and something that Wall Street veterans know) is that going in other direction can be much more profitable. I look at Money Magazine cover stories and I think of the Sports Illustrated Curse. If you’re younger than 25, you may also know this as the Madden Curse. Anyway, I am envious of homebuyers in the market right now. Not only are mortgage rates the lowest that they’ve been in 6-8 months, but sellers are fearful of not being able to sell. Low rates and low prices — an excellent buying situation.

  • I would hate to be in a fox hole with Ms. Corcoran. Her suggestions have panic written all over them. If I were interested in her clients home I would know beyond a shadow that they were in “collapse city” mode. Maybe some creativity and good old fashion overtime would help. Problem is these sellers have signed up for a closing as quick as possible evidently. Buyers lick your chops. It’s time to unleash the capital now that everyone is locking down.

  • [re Curved: Three Cents Worth] Holy Crap did you get thrown to the anonomous wolves! I love that when one person voices their opinion openly, it is criticized by those unwilling to stand by their opinion with their name. At least I like the graph… Good job.

  • I don’t see why anyone would be envious of buyers when affordability is at an all time low. The fact that sales are way off in an environment of low interest rates and solid employment reveals just how far prices are from sustainable.

  • I think the key point that needs to be highlighted is that the July numbers were revised significantly lower than previous. If you go with the original July numbers Aug would be lower. My guess is they will futher revise the Aug numbers lower once all the new construction cancellation factors in. One just needs to listen to the CEO’s of Lenar, Toll, etc on what the market is doing.

  • I’ve thought since this spring the short term rates would be falling simply as a corrective response to Greenspan paranoia. The inflation he was constantly fighting simply didn’t exist, at least to the extent he wished us to believe. The economy has been absorbing all the ‘extra’ money supply. What I’m really eager to see is how the Fed responds to $45 oil, becuase it appears it’s in our near future. Will they call the positive economic response inflationary? If so, we’re in trouble again. Sometimes I think the Feds live in a parallel universe.

  • So whats it going to be. Are owners going to blink first or buyers. Will it be a soft landing,or will prices continue to decline gradually over a long period of time? I have a question for every owner trying to sell their apt in manhattan. Can they afford to buy their apt today for the price they are asking. Do they have the cash available for the down payment, do they have have the income necessary to service the mortgage debt. I bet the answer to this question by most sellers would be no. So what makes them believe that someone else out there can?

  • It is unfortunately true that the entry barrier for real estate brokers is very low, especially in New York. I have always found it odd that one of the toughest real estate markets in the world has such low qualification requirements for its professionals. Good news is, Department of State has decided to raise the bar. If there is no change in plans, as of January 2007, the number of hours required for licensing as well as continuing ed will increase. Although it is not quite sufficient to bring the industry standards to the necessary level, it is a start.

  • Thanks for posting this. I am seeing articles on line that indicate that new agents had it easy and will be the first to leave when things get tough. This business has never been easy. New agents had fierce competition because there are so many of us. Some of the experienced agents are the ones the coasted through the boom years and they may have trouble. They were so busy they did not take the time to learn new skills. They will wake up and realize that if they can’t use a computer they may be in for a rough ride.

  • I’m surprised the number of people in NYC spending 30% of their income is so low. I certainly spent more than that when I lived on Avenue A. On a side note, I will suggest to the NYT that Boulder and College Station, where nearly 50% of renters spend 50% of their income are both home to large public universities, so the incomes may be skewed. As one who now manages a portfolio of workforce housing communities across the midwest and south, we’re noticing a nice uptick in occupancy and a gentle increase in rents. We don’t operate in markets like DC, where the ‘conversion’ fad removed a large portion of the managed rental stock (as opposed to investors who will rent individually), so rents are rising because of demand, not a lack of supply. That said, I don’t agree with Mr. Frey that people necessarily stretch to rent as much as they stretch to buy. I think they rent where they feel safe, find attractive amenities, and can make their rent payments without unreasonably stretching.

  • If inflation continues to be a concern (as it is now, accorsing to fed statements), the Fed cannot cut rates. If it does, long rates will rocket up, making refis impossible. If inflation plummets and allows the Fed to cut rates, that means the economy is heading WAY south next year. I see no good outcome here.


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Live At The 92Y: Making Sense of Manhattan Real Estate

October 6, 2006 | 12:01 am | | Public |

For each of the last two years, Paul Purcell and Kathy Braddock of Braddock and Purcell have organized a panel discussion on the state of the Manhattan residential market at the 92nd Street Y in Manhattan.

Pamela Liebman, CEO of the Corcoran Group, Alan Rogers, former Chairmer Chairman of Douglas Elliman and moi, moderated by Paul. We have lively discussions with very good chemistry. I always learn something from them.

This year the event was again slated for all three of us, but Alan, with a last minute conflict, is being replaced by a mystery guest. It should be fun. Hope to see you there.

The event will be held on Thursday, Oct 12, 2006 at 8:00pm. Click here for tickets.

BTW, the 92nd St Y blog is a pretty cool resource and well-written.


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