Altos Research Real Estate Insights

A couple of charts to chew on this morning.

How's the condo market in San Francisco? Are all those new developments flooding the market yet? Let's look at pricing and value trends for Condos in the city.

Looks like pricing trends are holding nicely in the past year. Why is that? A quick hypothesis is that despite the fact that there are tons of new developments coming on line, the existing inventory of condos is actually very low relative to the population and immigration in San Francisco.

SocketSite shows some year over year inventory charts for real estate in San Francisco today. Here's how the inventory breaks out between single family and condominiums.

Altos links: San Francisco real estate reports

Just spent a couple of fine days in Atlanta with the RE Tech South crew. Brad Nix and Matt "blog from the heart" Fagioli pulled together a great session with just a couple of weeks planning, so kudos to them. All in all a couple hundred people, interactive, interested, motived to improve their internet marketing.

Great conversations on real estate video, blogging, search optimization. I did a panel where we talked about leveraging widgets on your site and in your marketing.

For me the most informative session was on video. I've not previously been a video guy but then I'm not selling houses. But the panel had a chance to dive into some of the great innovations in video that are really exploding the medium for realtors. From cheap easy cameras, to professional videographers, and powerful presentation tools. Rock on.

Rudy proved again why Pete Flint got a steal bringing him on board as Trulia's social media guru. And I always enjoy working with Dustin, Jon, and the maniacs at Domus (who contributed a lot to this day too. golf clap for Pat and Kevin.)

We met some new friends too. Atlanta Real Estate blogger Kathy Drewien is going to be spicing up her market data posts with spiffy AltosCharts. With Michael Fournier, we're growing our reach in the Charlotte market. Michael liked to point out that Charlotte is the only one of the 20 Case Shiller-measured housing markets where median home price is up in the twelve months ending January. Desiree at Bella Web Design sums up the day nicely.

Some Altos links:

Charlotte real estate report

Atlanta real estate report

AltosCharts trend charts widgets

The February Existing Home Sales numbers were released yesterday by NAR. You probably saw the headlines. Home sales were, gasp, up!

Today the latest Case Shiller Index was released. In typical fashion, they're just getting around to telling us what happened in January. Guess what? It was ugly. Here, courtesy Fritz at TFS, are the 20 Case Shiller Markets vs. their market peaks.

	Peak Month	Peak CSI	Jan 08 CSI	Decline	Decline %
Atlanta	July 07	136.47	127.08	-9.39	-6.88%
Boston	Sept 05	182.48	162.59	-19.89	-10.90%
Charlotte	August 07	135.88	131.7	-4.18	-3.08%
Chicago	Septmber 06	168.6	156.47	-12.13	-7.19%
Cleveland	July 06	123.49	108.49	-15	-12.15%
Dallas	June 07	126.47	118.56	-7.91	-6.25%
Denver	August 06	140.27	128.98	-11.29	-8.05%
Detroit	December 05	127.05	100.17	-26.88	-21.16%
Los Angeles	September 06	273.94	224.41	-49.53	-18.08%
Las Vegas	August 06	234.78	186.05	-48.73	-20.76%
Miami	December 06	280.87	225.4	-55.47	-19.75%
Minneapolis	September 06	171.12	151.16	-19.96	-11.66%
New York	June 06	215.83	200.49	-15.34	-7.11%
Phoenix	June 06	227.42	180.06	-47.36	-20.82%
Portland	July 07	186.51	178.81	-7.7	-4.13%
San Diego	November 05	250.34	197.45	-52.89	-21.13%
Seattle	July 07	192.3	181.62	-10.68	-5.55%
San Francisco	May 06	218.37	183.81	-34.56	-15.83%
Tampa	July 06	238.09	194.64	-43.45	-18.25%
Washington DC	May 06	251.07	212.83	-38.24	-15.23%
10-C	June 06	226.29	196.06	-30.23	-13.36%
20-C	July 06	206.52	180.65	-25.87	-12.53%

Altos Links: For those of you with more than a passing interest in knowing thhe real estate data before these lagging indicators get published, Altos has two things for you:

1. Our monthly national real estate report publishes in real-time the housing price trends for all the markets covered by Case Shiller. CSI for January was published today. The Altos National Real Estate Report for February and March have already been published. April comes out next week.
2. Our full real estate data feeds are for institutions that make a living in the housing markets. You can now get data feeds for nearly 10,000 zip codes in over 40 metro markets around the country. We're publishing now an Altos National Composite price for the same markets as the Case Shiller 10. This is important because the derivatives trades are being done on the national index.
   

By the way, our data is highly correlated to the CSI. We'll be publishing correlations to the Existing Home Sales numbers very soon. Rock on.

I'm a big fan of the technologies shaking up the real estate industry. Though my perspective differs from the simple-minded view that agents simply make too much money and that technology will only cut the 6% commission to the bone. In fact, I've written previously that innovations in real estate may indeed help agents to charge a premium, to meet a particular need for a home seller -- if they want to sell fast or get a certain price, for example. Further, I've suggested that Redfin can save their business if they admit that some clients want a great internet home buying experience and are willing to pay a premium for a premium service.

Today Prashant Gopal at BusinessWeek has an article citing how these premium relationships are happening, even in this crazy bad market.

... [Seller] McCarty decided a year ago to give real estate agents an added incentive to guide buyers [to his] house about 20 miles outside of Minneapolis. He agreed to pay his agent an 8% commission, which would be split (55%/45%) with the agent representing the buyer.

...

"I wanted more agents to show the property," said McCarty "I was willing to take a little bit more of a hit and pay a higher percentage"

...

Frank D'Angelo, the broker for EXIT Realty Executive who represented McCarty, says he offers customers a transparent, tiered system of payment. For 6%, sellers get the typical menu of services. Sellers who agree to pay 7% get additional benefits, including a guarantee that if the home isn't sold within 39 days, he'll return up to $10,000 of his commission (2% of the sales price). For 8%, buyers also get free home-staging and a "media blitz" of advertisements.

Great stuff. The 6% should be fluid depending on your goals. Discountability is good, if that's what your clients want. Just remember that, especially in a lousy market, some are willing to pay a premium to move a home quickly.

A Look at Minneapolis Real Estate Trends

Just for kicks, let's look at the real estate data for the Minneapolis region to see if McCarty got a good deal. First lets look at the price trends for the Twin Cities.

McCarty's house was priced at about $325,000 solidly in the Second Quartile of homes in the Minneapolis region. What about the Days on Market for homes in that price range?

For homes priced around $300,000 to $400,000 in Minneapolis, the Second Quartile, homes are on the market for 3 - 5 months. McCarty's place went under contract in one. Based on that data, I'd say he got a deal!

Note: We haven't opened the Minneapolis MSA on our free research page yet,
but we're about to, so call us if you want the research report for
anything in the Twin Cities area.UPDATE: Our Minneapolis Real Estate Report is available now.

We've been ramping up with a bunch of partners this spring, and we're hitting the road in support of their programs, so for all you Altos Research groupies out there, here's what the 2008 March-April World Tour looks like:

Next week you can find us in Atlanta at the RETechSouth gig hosted by Brad Nix and Matt Fagiolli. I'll be just one of a really solid panel of real estate technology brains sharing insights. If you're in the real estate technology world and located anywhere close to Atlanta, you'll be at this gig.

The following week, April 2, we're off to the Institute for Luxury Home Marking seminar in Miami. Love the folks at ILHM and we're going to be doing more with this group in the near future. Some great opportunities, especially if you're involved in the high-end housing market.

Then, mid-April we're back in So Cal for Dustin and Jim's second 4Realz Education seminar. The first one was a rousing success, with agents getting really powerful internet marketing insights. This time the session is in Orange County. This is a session for anyone ramping up their internet marketing presence. A must-see event.

As always, give us a buzz if you're coming to any of these events and let's get together.

Our National Real Estate Report measuring current real estate data trends in a couple dozen housing markets around the country was published today. You can download the PDF here.

Highlights from the March 2008 National Real Estate Report:

• The Altos 10-City Composite median home price declined by 0.4% in February. That's a slightly slower pace than the 1.6% three month decline from December 2007 - February 2008.
• Central cities like Denver and Dallas continue to outperform the coastal bubblevilles. By outperform, I mean housing prices were essentially flat. The Dallas Morning News already picked up the story. As I said in the article, Dallas never climbed as high as say, San Diego, so it has less to fall.

Here's the press release

MOUNTAIN VIEW, CA - March 12, 2008 -
The Altos 10-City Composite showed a decline in asking prices of 1.6% over the past three months and continued that decline in February with a decrease of 0.4% for the month. Prices of properties listed for sale fell in 15 of 22 major markets according to the Real-Time Real Estate Report, jointly published by Altos Research, the premier source for real-time real estate
research, and market analysis consultancy Real IQ™.

Asking prices fell at the fastest rate in San Diego, down 3.0% during February and 5.2% for the most recent three-month period. Prices also fell by more than two percent in the Detroit, Los Angeles and Las Vegas markets during February. Prices increased in Chicago, Charlotte, New York, Dallas, Phoenix and Houston during February and were flat in Seattle.

"We are seeing some stability in asking prices as a result of seasonal reductions in inventory during the past winter months," said Stephen Bedikian, partner and research director for Real IQ. "Unfortunately we also saw an increase in listed property inventories this month which is atypical this early in the year. Only a sustained reduction in inventory will arrest the market's fall nationally."

For sale property inventories increased in 19 of 22 markets during February. The Altos 10-City Composite showed a supply increase of 2.5% for the month. Property inventories declined in only three markets: Chicago, Indianapolis and San Francisco.

Data in the Real-Time Real Estate Report is based on analysis of over one million homes currently listed for-sale in 22 metropolitan markets across the country. The report is the most timely source of real estate data available.

"Inventory growth combined with the recent rise in mortgage rates and reported job losses does not bode well for future price stability," said Michael Simonsen, CEO and co-founder of Altos Research. "We expect housing price declines to resume in earnest during the next several months."

The Real-Time Real Estate Report also found that time-on-market remained high. Miami and Detroit experienced the longest time-on-market spans with an average days-on-market of 146 and Minneapolis was close behind at 145 in February. Seventeen of 22 markets had an average days-on-market of over 100. Denver led all markets with the fastest rate of inventory turnover at an average of 77 days-on-market, followed by Dallas at 79 days.

The report examines housing pricing, inventory levels and market conditions in 22 major U.S. metropolitan statistical areas (MSAs): Atlanta, Austin, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Houston, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington, DC. The Real-Time Real Estate Report is released every month.

Links:

The Altos Real Estate Data services

This month's National Real Estate Report PDF

RealIQ

Interesting report from the Anderson b-school at UCLA today. The economists there write the periodic Andersen Forecast on US and California economies. Theirs is an interesting perspective, as they've been vocal housing bubblistas for several years.

Some key points [My comments in brackets]:

• The data doesn't yet indicate recession. [This jives with my most trusted sources, which I've written about recently. Despite the obvious weaknesses in the economy, exports are strong and employment hasn't tanked. Money is cheap, if you've got good credit. But we're on the precipice.]
• The downturn in real estate related employment in California is an order of magnitude less than the manufacturing related job losses of the last two recessions. [true around the country]
• The higher conforming loan rates will not save us. [Lenders are so afraid that they're not generating anything right
  now...]
• The fact is that we've not seen an asset driven recession previously, though it could very well be coming. We're in new territory. "Stinky, but new." [ahh that new economy smell.]

ht: Inman

Some Altos coverage in Wall Street insider publication Merger Market recently. I met writer Hana Askren in New York last month at the O'Reilly Money:Tech conference. Her article on us is out now. Merger Market's output is all behind a paywall, so here's a snippet of the contents.

Note: Since this pub writes about mergers and acquisitions, the article is centered on the very hypothetical question, Who might acquire Altos Research? With that caveat, enjoy some rampant, totally unfounded speculation:

Altos Research, a Mountain View, California-based real estate data company, could become a target for strategics in the information industry...The startup is profitable, self-funded, and is not actively seeking investments, Simonsen said. Several companies have approached Altos seeking strategic partnerships and some have sought to buy a stake in the company, he added, although none have yet pursued a buyout. One of these strategics may eventually buy the company, he said, but declined to name potential bidders, adding that Altos already has "several relationships in place" with partner companies.

...

An industry executive ... said it would make sense for title insurance companies to acquire a real estate data startup like Altos in order to add to their data offerings. This news service reported that First American has acquired a number of data and analysis companies in recent years, including Basis100.

...

Paul Kedrosky, a venture capitalist in the financial technology industry, also said it would make sense for Altos to be acquired as a "tuck-in" by companies like Fidelity National Information Services or Core Logic. He added that a company like Thomson would also find Altos attractive, as an addition to its information services...A futures exchange might acquire Altos, said the industry executive. Kedrosky agreed, saying that exchanges are becoming aggressive about providing more services to listed companies...Altos collects weekly real estate data and sells it to individual brokers, realtors, and real estate information companies, said Simonsen, as well as Wall Street firms and hedge funds which use the data for trading. Because of the nature of real estate transactions, he added, publicly available data can be more than six months old.

...

The company's first revenue-producing year was 2007 and it is growing at a rate of 20% each month, Simonsen said. While not disclosing revenues, he said that the company has thousands of customers and half of its revenue comes from Wall Street firms. Altos uses Farella Braun & Martel for its legal advising and does not have a relationship with an investment banker. Altos was founded in 2005 by Silicon Valley executives Simonsen and Jason Buberel, who own a majority of the company.

The Times points out today that some New York lawmakers are proposing legislation to prohibit mortgage foreclosures for a year.

Portfolio Magazine's Felix Salmon describes it as "too early." I'll describe it as "insane."

Look, if I'm a lender, and I can't rely on my ability to collect the collateral against which the loans are made, do you really think I'll keep lending? Next thing you know the legislators will be trying to compel me to lend.

Look out below.

Felix pointed out the strength in the Altos Manhattan Condo Index. We haven't yet started publishing the New York real estate data on our free research page, so I'll have to dig in manually to get the goodies on the rest of the area.

[trivial aside: I was the anonymous source of the visual details of the U2 concert described in the first paragraph of this article in the inaugural Conde Nast Portfolio magazine last year.]

No, I'm not talking about buying into the Trump Tower. I'm referring to what the Wall Streeters call synthetic investment. Get exposure in your vast financial portfolio to profits in the Manhattan real estate market via a derivative contract. And you never have to worry about dealing with property taxes, garbage collection, cockroaches, or Donald Trump.

On Wednesday, real estate derivatives firm Radar Logic announced their Manhattan Condos Index. Radar publishes these indexes upon which the derivatives contracts are based. Go long and you make money when the New York Condo market is strong. Go short and you make money when the Condo market in Manhattan tanks.

This contract marks the first time a housing futures market has been local enough to accurately hedge against value declines in a specific property. If you already have your Manhattan pied-a-terre, you can lock in your gains.

This product is doubly sexy because most of the people likely to trade this index live in... you guessed it... Manhattan Condos. I'm really looking forward to seeing if they get some volume.

Altos Manhattan Condo Data

So how's the market? Since we publish data and reports for all the Radar Logic markets, on Thursday we released the Altos Manhattan Condos composite. Like all our real estate derivatives data, the Altos Manhattan Condo composite covers the same ground as the Radar Logic version, but watches the properties as they're on the market, so leads the index by several months. Here's what the Manhattan Condo market looks like:

Holding up nicely, eh? We'll see how this winter's credit carnage impacts the prices in Manhattan in the coming year. New York has an added dimension that most American cities do not: the cheap dollar means that rich Europeans are seeing bargains in NYC for the first time in a decade. That dynamic is adding to condo demand.

But even if you're not paid in euros, you can now get your slice of the action too. Rock on.

More details on our real estate derivatives products here.  Contact us if you want to see some sample data.