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Housing News: November 2, 2009 November 2, 2009

Posted by John Watch in AccuriZ News, AccuriZ Reports, News Feed.
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http://online.wsj.com/article/SB10001424052748703790404574471683619819154.html?mod=djemRealEstate

http://themortgagereports.com/2009/11/how-long-do-mortgage-rates-last.html

http://www.biggerpockets.com/renewsblog/2009/11/02/real-estate-stimulus-golf-carts-government-credit/

http://www.smartmoney.com/investing/economy/why-us-does-not-need-more-home-buyer-perks/?ref=patrick.net

http://seekingalpha.com/article/170419-how-bloomberg-fabricates-u-s-housing-numbers?ref=patrick.net

http://www.thenation.com/blogs/edcut/489583?ref=patrick.net

http://www.newsweek.com/id/220080?ref=patrick.net

 

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Single Family Housing Starts: Dog Days of August August 18, 2009

Posted by John Watch in AccuriZ News, News Feed.
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As we all sit inside our air conditioned offices wondering what will be the next “big” news regarding real estate, the Commerce Department released its estimate of New Single Family Home Construction today.

Stop!  We can be happy with this news or we can take it in stride.  Every article that I have read, the author comes from a point of strength in that there is some unique data set that only they have access to.  There never appears to be any common sense applied and invariably there are always quotes from interested “economic advisors”.  The latest news is a classic example. 

581,000 new single family homes were built in 2009, according to public records.  Now that is a dismal number compared to the hay day of 2005/2006 when over 2 million homes were being built (See Housing In Crisis Report). But is this really a bad number?  Based on property data records, every year in the United States each market replaces existing inventory with new inventory because older homes need to be rebuilt and because of natural disasters.  There also is the market for individual, non development homes that are built to meet unique demands of property owners.  So 581,000 is a good number.

But let’s not forget that over 3.5 million vacant housing units that were newly built remain in the market.  Let’s not forget that Supply and Demand need to be in balance for a healthy real estate economy to exist.  And let’s not forget that supply is reduced by people buying homes and presently this is occurring through natural population growth.  So with the national population growing at about 4 million people annually, we will only see about 1 million of the excess inventory absorbed annually.  This means three more years before true market levels begin to appear.

Of course in areas where overdevelopment was held in check, the housing markets are already in full recovery.  But for areas in Florida, Nevada and Arizona, recovery may be five years away.

Let us know what you think, what you are experiencing in your communities and what you think about the housing recovery!

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Afternoon Real Estate News:8/17/09 August 17, 2009

Posted by John Watch in News Feed.
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NYC Square Footage and Median Price Difference

Mortgage Assistance Program for Homeowners

Real Estate is: Cyclical, Seasonal and Emotional

Housing In Crisis

Home Buyers want a Bargain: Are Sellers Getting the Message?

Landlords with Violations get Stimulus Funds

Home Sales grew in Second Quarter in 39 States

The New American Dream: Renting

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Manhattan Condo Market Projected to Stabilize: Glass is Half Full and Topping Off! August 12, 2009

Posted by John Watch in AccuriZ Reports, News Feed.
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The Manhattan Condominium Market is about to “shock the skeptics”.  There have been numerous reports published by noted “Manhattan Experts”, but a recent article in Crain’s Business week begs of the question “Who is manipulating What and Why? (See the NYC Square Footage Report) (See our repsonse to the Crain’s Business Report)

Has a “Shadow” fallen on the NYC condo market, or is it just another game of smoke and mirrors?  We thank the New York City Department of Finance for enabling those who have the desire to do the actual analysis, assuming one has the ability to do so.  The Department of Finance has provided public records of a rolling sales history since 2003.  This represents all property sales in New York City;  not listings, not possible listings and not sales that didn’t close or the seller backed out.  But Real Sales data! 

DoF also provides public records to the Assessment Rolls for Class I, II, III and IV Properties.  From this Assessment Roll we can find out how many properties exist in each borough and when the property was built.  An individual with some basic computer skills can than run a query to append the sales file with the Assessment file.

Once completed, a further level of skill is required; not a lot of skill, but just a little.  Invalid sales should be stripped out of the analysis.  An invalid sale would be a property that transferred for less than $1,000 dollars.  As a seasoned valuation analyst, I would actually go an additional step and remove all sales that sold for under a $125 per square foot in Manhattan.  The simple fact is that such sales would not be representative of the market and do not come close to representing the actual cost of construction.

So common sense prevails.   In the end, a valid set of sales and property data is available for analysis. The table below indicates that the average and median sales price for condos is declining at a rate of about 8% for the first six months of 2009.  This is much lower than some reports have indicated, but HOLD ON.. there’s more.

Manhattan Condo Market 1

Source: AccuriZ.com

Manhattan Condo Market 2

Source: AccuriZ.com

The chart above considers the rolling average of sales from July 2008 to July 2009.  We have applied this property data to adjust for the over correction in the markets and the seasonal affect of winter sales.  Based on the trend line, we are projecting that for the months of July, August and September sales activity will increase and property values will adjust upward.  Furthermore, the 4th Quarter – which usually shows weaker activity and valuation – will indicate a level of stability.

In short, when you analyze data with a known common factor such as “Square Footage”, manipulation of the data is difficult.  Combine this with an open policy of NYC to provide data free for analysis when it used to cost over $20,000, analyst can now openly check one another.

There is a true check and balance and the latest reports about the Manhattan market are misleading.

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Staten Island Square Footage and Median Price Differentials August 7, 2009

Posted by John Watch in AccuriZ Reports.
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A new AccuriZ report titled “Square Footage and Median Price Differentials,” highlights the property data and  sales activity of New York City and the differnces between median sale price and price per square foot. Below is an excerpt from the Staten Island section of the report. To see the full Staten Island report, as well as the additional boroughs, CLICK HERE.
 
Real Estate is like a set of Russian Nesting Dolls.  Analysts tend to focus on the entire market, with minimal effort given to the underlying components.  As you examine various segments of the markets, different pattern emerge. Generally in real estate there are three rules:  Location, Location and Location.   And in the current market, if you do not have to sell you don’t.
 
It is comprised of three elements:  Cyclical, Seasonal and Emotional. . The present market comprises of all three, which is extremely rare.
 
Change by Property Type Staten Island

 Public records show that Staten Island is experiencing the slowest value decline of all of the Boroughs at -5.17%.  In complete opposite of the other Boroughs, Staten Island is experiencing a greater decline in the Single Family market, but showing increases in two to three family units, as well as properties with a residential unit and commercial unit. 

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NYC Square Footage and Median Price Differentials: Brooklyn August 6, 2009

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A new AccuriZ report titled “Square Footage and Median Price Differentials,” highlights the property data and  sales activity of New York City and the differnces between median sale price and price per square foot. Below is an excerpt from the Brooklyn section of the report. To see the full Brooklyn report, as well as the additional boroughs, CLICK HERE

Real Estate is like a set of Russian Nesting Dolls.  Analysts tend to focus on the entire market, with minimal effort given to the underlying components.  As you examine various segments of the markets, different pattern emerge. Generally in real estate there are three rules:  Location, Location and Location.   And in the current market, if you do not have to sell you don’t.

Real Estate comprises of three elements:  Cyclical, Seasonal and Emotional. The present market comprises of all three, which is extremely rare.

Source: AccuriZ.com

Source: AccuriZ.com

Public records and statistical analysis show that unlike Queens and the Bronx, Brooklyn appears to be experiencing more of a valuation decline in the two and three family market, as well as properties with residential units with a commercial component.  Single family residences are declining at a lower rate than the Borough as a whole.

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NYC Square Footage and Median Price Differentials: Bronx August 5, 2009

Posted by John Watch in AccuriZ Reports.
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A new AccuriZ report titled “Square Footage and Median Price Differentials,” highlights the property data and sales activity of New York City and the differnces between median sale price and price per square foot. Below is an excerpt from the Queens section of the report. To see the full Bronx report, as well as the additional boroughs, CLICK HERE

Real Estate is like a set of Russian Nesting Dolls.  Analysts tend to focus on the entire market, with minimal effort given to the underlying components.  As you examine various segments of the markets, different pattern emerge. Generally in real estate there are three rules:  Location, Location and Location.   And in the current market, if you do not have to sell you don’t.

Real Estate comprises of three elements:  Cyclical, Seasonal and Emotional. The present market comprises of all three, which is extremely rare.

Source: AccuriZ.com

Public records show that residential properties in the Bronx are also decreasing and reflect a similar pattern that exists in Queens. One notable difference is that properties that contain a residential unit and commercial unit appear to be declining at a greater rate.

For more Real Estate Reports and detailed statistical analysis, CLICK HERE 

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NYC Square Footage and Median Price Differentials: Queens August 4, 2009

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A new AccuriZ report titled “Square Footage and Median Price Differentials,” highlights the sales activity and property data of New York City and the differnces between median sale price and price per square foot. Below is an excerpt from the Queens section of the report. To see the full Queens report, as well as the additional boroughs, CLICK HERE

Real Estate is like a set of Russian Nesting Dolls;  analysts tend to focus on the entire market, with minimal effort given to the underlying components.  As you examine various segments of the markets, different patterns emerge. Generally, in real estate there are three rules:  Location, Location and Location.   And in the current market, if you do not have to sell you don’t.

Source: AccuriZ.com

Source: AccuriZ.com

Analysis of public records, the Price Per Square Foot and Median sales price track closely in Queens, with a variance of less than 1% on an overall basis.  However, further stratification based on property class indicates that the price per square foot varies by more than 1% for specific property types.  Single Family homes appear to be affected by square footage more than two and three family properties.

This would indicate that buyers have different perceptions of the market for the various property types.  The overall decline in Queens is 11.18% with only Two-story Single Family Homes and Single Family with Stores exceeding this level.

For more information on Real Estate Reports, Mortgage Assistance Program and more CLICK HERE

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New York City Feels Affects of Housing Weakness August 3, 2009

Posted by John Watch in AccuriZ News, AccuriZ Reports.
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Real Estate is like a set of Russian Nesting Dolls.  Analysts tend to focus on the entire market, with minimal effort given to the underlying components.  Examination of  various  market segments can indicate a different pattern as recent sales activity in New York City is showing. (Northeastern Queen Report)

According to public records, the overall decline in values in the city is roughly 10%, but what is alarming is the number of sales transactions has declined significantly since the peak of 2004.  With fewer than 5,000 sales for the first six months for Class I properties (excluding condominiums), the annualized rate of sales is projected to be below 15,000 units.  This represents a 65% drop in sales which is impacting the value of home sales. (See Square Footage and Median Price Differentials for more information).

Simply stated, only those individuals who must sale are selling.  Over the 5,000 sales recorded through June 30, 2009 over 25% are distressed sales.

There is a silver lining to all of this:  many sales that occurred in April, May and June have yet to close.  As such, sales activity and values are projected to increase for the third quarter reporting period, based on property data.  Many of these sales should be not be distressed sales and will most likely benefit from lower financing conditions.  In addition, analysis of properties based on location within each Borough and Size of home indicates different buying patterns are emerging.

Compared to the National change in values, New York City has faired reasonably well, but the true measure of property value changes will not be able to be measured in a reasonable manner until the 2010 selling season of April to August.  Statistical analysis of 2009 will show corrections in certain neighborhoods and a return to more sustainable values in others.  With increases in population and limited building in 2008 and 2009, New York City is expected to recover ahead of the rest of the nation.

However, this all depends on the looming concerns for financing Commercial Properties in 2010 and 2011 as mortgages with five year adjustments begin to mature.

For more information regarding Real Estate Reports and detailed statistical analysis, CLICK HERE

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Cyclical, Seasonal or Emotional: Where is the Real Estate Market Today? July 31, 2009

Posted by John Watch in AccuriZ News, AccuriZ Reports, News Feed.
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seeking2This was originally a comment made to a SeekingAlpha.com article by Tim Iacono titled, ‘Has the Housing Market Hit Bottom?’

Real Estate is three things:

  • Cyclical

  • Seasonal

  • Emotional

Cyclical Cycles run about 15 years in length with the current cycle beginning late 2006.  Looking at public records, we can track the beginning of this down cycle to the last down cycle in 1990-1991 and we have heard thousands of comments on this.  When the cyclical adjustment occurs it is an adjustment to the underlying structural issues in the market.  For this real estate cyclical cycle, the structural problem is comprised of two elements:

A. Influx of new home buyers who received mortgages through non-standard financing.  That is the emergence of No Asset, No Docs, Interest Only, Mortgages at 125% of Value programs.  We all know the affect these had on the market.

B. Excessive over development which created 5 million vacant housing units not supported by population demand.  Expectations of Baby Boomer migration and new homeowner growth fueled this development.  The existing oversupply issue will take at least two, if not three more years to be absorbed and new housing starts will remain below 800,000 units in 2010 and 1 million in 2011.

Seasonal Changes occur every year and follow a fairly consistent pattern.  The news today and for the next several months is a result of seasonal changes, not necessarily structural ones.  The spring and summer selling seasons always show the top values in any market, and the fall and winter show the bottom.  This is one of the prime effects of the recent crash; it began in late 2006 and early 2007, but did not pick up speed until late 2008.  By that time, the snow ball going down the hill was an avalanche and the population and financial system reacted accordingly:  they ran!  The actual correction or rebound in housing will not show signs until the beginning of the spring 2010 selling season.

Emotional changes are best described by many of the commentaries.  Because we lack so much important property data on the real estate markets, such as the sales price per square foot which the rest of the industrialized world uses and because of our own ignorance or arrogance (we all know the answer) our emotions take control.  Fear of the unknown is the worst element of any financial market.  That is what we’ve experienced for the past nine months. 

What creates fear is the lack of information.  In real estate, we always are reporting on the past and trying to guess the future.  Utilization of more quantitative data will permit us to evaluate data more accurately and track the markets in an efficient manner. 

How many of the commentators and authors have the actual data?  How many are relying on other data sources to build their articles?  I have the actual sales and inventory data from over 1,000 assessment offices covering the top 100 MSA’s; but I must rely on Census, Commerce, Labor for their data and we all know there are issues with the data.

So I finish with this, the Free Market must develop an independent solution to track and predict the real estate market, or we will all be talking about this again in 15 years.

For more information on Real Estate Reports and Property Data, CLICK HERE

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