Altos Research Real Estate Insights - Housing and Real Estate Trends

Rock On Chicago

Mike Simonsen — Mon, 30 Jun 2008 09:30:29 -0700

Yesterday I wrote about Chicago's dubious distinction as the most socially regulated city in the US. I argue that trend does not bode well for the creative class, the city's future prosperity and ultimately its real estate values over the long haul. However today I came across a glowing article on Chicago in Fast Company, calling it "City of the Year". Indeed it's a city I love, so let's look at the positives.

Fast Company lauds some of the city's social restrictions as forward thinking "Greening" efforts. (Ironically they also posit that the city's position as anchor of 20th century architecture happened here because there was "no one to tell [the developers] to do it differently.")

Construction Booms
Most of what FC is happy about though derives from, Chicago's marvelous growth spurt. The city is the fastest-growing non-Sun Belt city in the US. The economy is growing faster than New York or LA. Immigration remains strong from all over the world.

The Chicago Spire

While highrise condo development has slowed from it's frenzied pace a few years ago, I'm still excited about the Chicago's recent construction boom. The famed skyline is remains one of the most moving in the world. And its development continues. (I highly recommend the Chicago Architecture Foundation's boat tour if you have 90 minutes to spare while you're in town.) Between the 150-story Chicago Spire and the new Trump tower (who let him in there?) the city will remain on the forefront of skyscraper architecture.

With all this development, it's worth a look to see how the downtown Chicago condo market is holding up. Here's a handful of zip codes:

Price trends for condominiums in Chicago's West Loop and Near North neighborhoods. Data as of June 27 2008

Let's look at demand rates also.

Days on Market trends for select zip codes in Chicago. Condo data as of June 27 2008

Like much of the country, the most desirable parts of town have (those with the higher prices already) show reasonably consistent demand and stable prices. This is not the case as you leave the hot neighborhoods.

So what's in store for the City? Construction, investment, and immigration warm my heart. Laws to dictate my diet chill me to the bone. The good news is that buildings last a long time. Bad laws can be as ephemeral as the foie gras they're restricting. Let's call this one a net positive.

Rock on Chicago.

Link: Chicago Real Estate Data

Home Prices in Oakland vs. Berkeley

Mike Simonsen — Sat, 14 Jun 2008 13:18:02 -0700

Checking out Andy Kaufman's blog this morning, I couldn't help but noticing the contrasting AltosCharts he's showing for Oakland and Berkeley California.

Oakland of course is the bigger city, but these next-door-neighbors share some parts that are virtually indistinguishable from each other. There are some spectacular parts of Oakland and sketchy parts of Berkeley and vise versa. But look at the home price trends over the last year.

Real estate prices in Oakland and Berkeley, California as of mid-June 2008. Data for single family homes.

Likewise look at the trends in inventory levels for the same to cities.

Real estate inventory levels of homes for sale in Oakland and Berkeley, California. Data for single family homes through mid-June 2008

You couldn't have a clearer picture of the real estate pricing phenomenon we're seeing all over the country. It works like this:

Demand is off everywhere and everyone knows it.
So if you're a home buyer in the East Bay with good cash and good credit, you get your pick. In this case, Berkeley has generally better schools, more cachet, etc., so the buyers go there first.
There's enough demand to keep the market afloat.
If you don't have good cash and good credit, you get nothing. There is literally no spillover demand for Oakland.
A few years ago, a home buyer might look to the nicer neighborhoods in Oakland for additional inventory or a lesser school-premium price. Not the case any more.

Actually, I'm sure we could dig through the zip code level data in Oakland and illustrate a similar phenomenon within the cities themselves. But this particular story jumped out at me this morning, so that's what gets covered.

Altos Links: Oakland real estate data, Berkeley Real Estate Data

February 2008 National Housing Market Report

Mike Simonsen — Tue, 12 Feb 2008 12:41:34 -0800

Last week we published the February editition of our National Housing Market report [PDF download]. I was traveling and forgot to add it to the blog, so here it is. We've expanded the coverage this month and added a few more cities ebyond the initial 20 covered by the Case Shiller Index. We'll add a few more important cities in the upcoming versions of the reports too.

Here are the highlights from this month's report.

Listing prices declined in 19 of 22 markets during January. Prices only increased in the New York metro area during January and were flat in Dallas and Phoenix.
The largest monthly decline of 3.6% occurred in San Francisco. Over the three month period, listing prices in San Francisco have fallen by 6.1% from $708,551 to $665,100. The other California markets of Los Angeles and San Diego logged declines of more than 2% for the month of January.
Property inventories declined in most markets except in the Northwestern markets of Seattle and Portland. Inventories tightened sharply in the Midwestern markets of Cleveland and Detroit with decreases of 10.4% and 5.4% respectively during January. Seasonal declines in listing inventories are typical during the winter months.
Markets with the longest time-on-market are Miami and Minneapolis at an average of 144 days-on-market. Miamiâs days-on-market only increased slightly from the previous monthâs 143 days while Minneapolis jumped over 5% from 136 to 144 days. Sixteen of 22 markets had an average days-on-market of over 100.
Denver led all markets with the fastest rate of inventory turnover at 61 days, followed closely by Dallas and San Diego at 80 days. The sharp decrease in Denverâs days-on-market indicator â almost 39% during the past three months â coupled with an inventory reduction of over 11% during the same period, should be a positive for listing prices in the coming spring selling season.

AltosCharts - More data for you junkies!

Scott Sambucci — Fri, 08 Feb 2008 04:20:56 -0800

Our tech/engineering team (the REALLY smart guys here at Altos Research) have developed a new way to display market stats using AltosCharts. We can now show two market stats on the same AltosChart! Check it out:

The Y-axis is labelled twice. On the left, you see Median Price. On the right, you see Inventory level. The end result? Tada - housing market supply and housing market price trends together. Pretty cool stuff!

This AltosChart shows that Inventory in Orlando has flattened out since about mid-2007, while median prices are continued to decrease throughout the year. We do see that prices in January 2008 have flattened out. The question is, of course, is this a stop on a continued downward trend, or could this mean that the market may be reaching it's bottom? (I think that's actually two questions....)

US Housing Market - Forbes' Top 10 Markets for Bargains

Scott Sambucci — Fri, 08 Feb 2008 03:54:57 -0800

Forbes Magazine released its "Best Cities for Bargain Hunters" yesterday. They based their criteria on markets that have sound economic fundamentals, not necessarily markets hit only by the lending and mortgage events. Here's their list in reverse order. You can research the market trends for most of these markets here at Altos Research.

If you're a home buyer or seller, our "Market Reports" are a great way to keep up-to-date with your local market. We also have free research available on our main website. Just click on the city name -

10. Houston, TX

9. Richmond, VA

8. Jacksonville, FL (coming soon!)

7. Las Vegas, NV

6. Seattle, WA

5. Phoenix, AZ

4. Charlotte, NC

3. Orlando, FL

2. Raleigh, NC (coming soon!)

1. Salt Lake City, UT

Denver vs. Las Vegas, Phoenix

Scott Sambucci — Thu, 07 Feb 2008 04:59:43 -0800

Over my morning cup of coffee(s.. that is...), I was reading a bit about the Denver real estate market. John Rebchook keeps a blog on the Rocky Mountain News, and wrote yesterday about local prices in Denver and possible collusion to prop up the market. He offered some examples for relativity, including a mention about Las Vegas and Phoenix. For me, the alarms went off - "AltosChart alert! AltosChart alerts!"

Looking at price in these three cities since the Spring, we can see that single-family homes in Denver held very strong throughout 2007 when Phoenix and Las Vegas were getting hammered, until the the fourth quarter, when Denver joined much of the rest of the nation with a strong downward pricing trend.

It's interesting to note though, that early in 2008, there's a bit of an uptick - some relative strength for single-family homes in Denver compared to Las Vegas and Phoenix.

I was interested to see how single-family homes compared to the Townhome/Condo market in Denver. Looks like the Condo market never weakened in 2007 and is even stronger in early 2008.

We're on pins and needles to hear from some of you in the local market as to what the reason might be? Does John's article make a good point, or are things just plain good in Denver?

Arlington, VA - been strong, staying strong

Scott Sambucci — Wed, 06 Feb 2008 04:50:57 -0800

Mike's at the O'Reilly MoneyTech Conference in NYC. (Shhh - don't tell him that I know where he hides the key to the Altos Research blog! And I get to be the first to use our new "intermediate" size AltosChart!)

I came across an article from Realty Times about the Arlington, VA market heating up over the last couple of months. We certainly saw this coming - both from the conversations with local agents and brokers, but also from the market data we've been collecting.

Overall, we've seen strengthen in the Northern Virginia market throughout 2007 and into 2008. Comparing median prices in Arlington, Alexandria, and Vienna since mid-2007 shows all three towns avoided the dip felt by many other real estate markets across the country.

Examining the Arlington real estate market in more detail, we also see strength across the board.

22201 - Rosslyn area

22207 - Includes the Washington Golf & Country Club

22206 - The southern end of Arlington, including the Army Navy Country Club and bordering Alexandria

22204 - Between Rosslyn and 22206, including Glencarlyn Park.

No surprise to us to hear that Arlington, VA is a strong market!

Can Economic Stimulus Save The Housing Market?

Mike Simonsen — Mon, 28 Jan 2008 06:32:55 -0800

Been getting a few requests about our opinion on the various proposes economic stimulus packages in the works - including sharply reduced short term rates, and some kind of tax relief. How will they impact the housing market? Are we seeing any psychological impact already?

First things first: Are we in recession already? Is a recession inevitable?

From where we sit, the current-recession answer is, No, it doesn't appear so. Slowdown, yes. But exports are strong with the weak dollar, and there other signs of okay-ness out there. Gonna be hard to avoid one before the end of the year though.

Here's my favorite way to look at recession probability. The folks at ECRI publish a weekly leading economic indicator (WLI). In several decades they've not missed a recession call and have had no false-positives. This data is good.

Weekly Leading Indicators. Recession Watch from ECRI

What's this chart tell us? This data leads the economy by 6-9 months. ECRI looks for the Three P's of drop in its economic statistics before it calls a recession. Pronounced (check), persistent (check), pervasive (allllmost).

We're in the danger zone here, which is why immediate monetary (interest rates) and fiscal (taxes, etc) stimulus might just work.

Where does the housing market fall into all this?

We know that the real estate market is generally lousy. But really, really low mortgage rates mean that you can lock in affordability, if you have the credit. From Bloomberg:

The yield curve as of January 27 2008. Low rates are good. source: Bloomberg. [whose New York offices I visited last week, incidentally. Very cool. Googlesque. Maybe nicer.]

For a long time, our worst case scenario here at Altos has been recession plus high interest rates. We've avoided that so far. As a result the pain in the housing market is most pronounced at the margins: Overstretched, with weak credit. New home construction. Here's what I mean.

Seattle, Kirkland, and Redmond home prices as of January 25, 2008. Not the persistent weakness at the low-end of the market. This scenario is similar to what we're seeing in most economically strong parts of the country.

So the weakness, while felt across the spectrum, is most acutely painful at the low-end of the market. That implies that a deep recession with it's job loss and income uncertainty is what it'll take to knock the final leg of the stool out from under the the rest of the market.

Conclusion: stimulate away, Uncle Sam, and do it quick.

January 2008 Real-Time National Housing Report

Mike Simonsen — Fri, 11 Jan 2008 14:43:35 -0800

Last month we started publishing the Real-Time National Housing Market Report with Steve at Real IQ. The January 2008 edition was published yesterday. You can download the full report here.

The report was picked up today morning by the Dallas Morning News. Dallas is notable because we've watched demand stay at less-bad-than-most.

Here's the press release that accompanied this months report.

HOUSING PRICES CONTINUED TO DECLINE IN DECEMBER

Time-on-Market Increased as Housing Market Demand Falls Faster than Supply

MOUNTAIN VIEW, CA â January 9, 2008 â Prices of properties listed for-sale fell in 16 of 20 major markets according to the Real-Time Housing Market Report, jointly published by Altos Research, the premier source for real-time real-estate market research, and market analysis consultancy Real IQâ¢.

Prices fell at the fastest rate in San Francisco, down 4.6% during the 4th quarter. Prices also fell by more than three percent in the Las Vegas, San Diego, Los Angeles and Detroit markets during the most recent three month period.

Data in the Real-Time National Housing Market Report is based on analysis of over one million properties currently listed for-sale in 20 metropolitan markets across the country. The report is the most timelysource of housing market data on current market activity.

The report also found that the time-on-market increased in virtually all markets. Miami experienced the longest time-on-market span with an average days-on-market of 143 in December. Minneapolis and Detroit both had the second highest average days-on-market at 136.

âSellers continue to adjust their price expectations downward but not quickly enough to keep pace with declining demand,â said Stephen Bedikian, partner and research director for Real IQ. âUntil we see
declines in both inventory levels and days-on-market, we wonât have any confidence that supply and demand are balancing out.â

For-sale listed property inventories declined in most markets during the past three months except in the Florida markets of Tampa and Miami which posted inventory increases of 10.5% and 4.0% respectively.

Inventories declined dramatically in Boston with a decrease of 21.7%. Inventory also fell more than 15% in Minneapolis, Denver and Seattle. âDeclining inventory levels are essential to a recovery in the housing market,â said Michael Simonsen CEO and co-founder of Altos Research. âHowever, if the economy continues to slow or enters a recession, we may see inventories balloon again in the Spring and downward pricing pressure on sellers will intensify.â

The report examines housing pricing, inventory levels and market conditions in 20 major U.S. metropolitan statistical areas (MSAs): Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, Las Vegas, Los Angeles, Miami, Minneapolis, New York, Phoenix, Portland, San Diego, San Francisco, Seattle, Tampa, and Washington, DC. The first report was published December 7, 2007 and will be released every month.

San Jose Housing Market starts 2008 with twice the inventory of 2007

Mike Simonsen — Wed, 02 Jan 2008 08:36:44 -0800

Some posts just write themselves.

Inventory of homes on the market in San Jose California as of January 2008

Single Family Home Prices in San Jose California as of January 1, 2008

Can't. Help. It. Must. Write. More.

Ugly? You betcha. Do these tell the whole story? Not a chance. In Silicon Valley, San Jose is the dominant market, of course. San Jose is a diverse community, with lots of sub-prime and other crazy loans in the past few years. But also some really great neighborhoods with prosperous, fully employed folks. Lots of big, but not-risky loans too. Here's how the market in a desirable part of town, Willow Glen, is holding up. I've done the price chart in Quartiles so you can see the trends at each price point in the market.

Homes in the Willow Glen neighborhood in San Jose, CA zip 95125. Prices holding up much better than the broader market in San Jose.

Available homes in Willow Glen neighborhood of San Jose CA as of January 1 2008. Inventory is up, but much less than the rest of the city.

Link: San Jose Housing Market.

Denver Housing Market Turning the Corner?

Mike Simonsen — Thu, 06 Dec 2007 08:28:37 -0800

If you've watched the Case Shiller Index numbers this year, you might have noticed that Denver, Colorado is the lone market still registering positive housing price gains for 2007. (BTW: if you prefer Uncle Sam's OFHEO numbers, you'll have just this week discovered that the US housing market is under pressure.)

We've been watching Denver too, because that a market that's been bucking the trend. We recently opened our subscription service for real estate professionals in Denver, as well as home buyers and sellers there.

Here's what the median price looks like for the Denver MSA, in a rolling average over the past several months.

Denver Real Estate Market as of December 2007. Median Home Price rolling average. Single Family Homes.

You can see from the chart, home prices in the Denver area have so far missed the bursting that's hitting most of the rest of the country. Up just fractionally, but steadily this year.

Why the resilience? A couple reasons probably: 1) Colorado real estate didn't have as much upside in the last few years to begin with. 2) The economy and investment levels are still strong. 3) Denver is just a little bit of a laggard economically behind the coastal cities. That implies the burst simply hasn't hit Denver yet.

Looking at the rolling average smooths out weekly noise, so the trend is easier to see. But using a three month rolling average, it'll lag the real-time market a bit. The next chart is the weekly sample.

Denver Median Home Price thru December 2007. Real-time sample. Single Family Homes

In this image we're just starting to see the weeklies break below the 90-day rolling average. Too early to make a big bet, perhaps, but a noticeable change nonetheless.

Plus, if you look at the city of Denver the change is much more pronounced. Zowie! That's quite a drop. (caveat: don't discount the seasonal impact that's surely happening in some capacity here.)

City of Denver median single family home prices.

Keep an eye on Denver. I'll be fascinated to see if that town is able to demonstrate real staying power, or if it's just a few months behind.

Links:

Free research for the Denver housing market

Free research for the Aurora housing market

etc.

On The Sub Prime Tidal Wave

Mike Simonsen — Thu, 11 Oct 2007 08:14:50 -0700

The Journal today shows off its peerless graphic design team with a fantastic illustration of the past three years of subprime mortgage lending.

Wall Street Journal charts the sub-prime tidal wave

The accompanying article reveals little that the bubblistas haven't been crowing about for years, but a few bits bear repeating here. The first reiterates my view that the housing market correction has many years before recovery.

The data also show that some of the worst excesses of the subprime binge continued well into 2006, suggesting that the pain could last through next year and beyond, especially if housing prices remain sluggish. Some borrowers may not run into trouble for years.

[As an aside, am I the only one who noticed how many of this year's Inc. Magazine 500 fastest growing companies were mortgage lenders?]

The second gets to a less commonly asked question about the whole subprime blowup--who really is the "victim" here? Does anyone really deserved to be bailed out by the feds?

Last September, Darla Ball, a printer and copier saleswoman, purchased a $460,000 home in Las Vegas using an adjustable-rate subprime loan with an initial rate of 8.2%. At the time, she says, she expected to refinance before her interest rate resets to 14% next year, which will raise her monthly payments to $8,000 from $3,700. But in the past year, she says, prices of comparable homes in her subdivision have fallen to $310,000, which means she would not qualify for a new $460,000 mortgage, unless home values go back up to that level, an unlikely scenario. She says she has stopped paying her mortgage and is trying to negotiate with her lender. "I'm going to lose my home anyway," she says, "so why pay?"

Let me get this straight, Darla. You knowingly took a deal from a lender willing to front you the cash, despite your already bad credit, with super low payments to get yourself into your dream home. Now you're living there and NOT EVEN PAYING? Bad luck, sure. A risky investment that didn't pay off, that happens. I'm sure you didn't at the time have a deep appreciation for the highly leveraged scenario you put yourself in. God knows we've all made risky investment decisions that in retrospect were crazy-stupid. (As they say, experience is not something we get until just after we need it.)

What riles me is that this is a perfectly legal deal with two parties taking risk in exchange for an enticing return. Is this really a situation that deserves to be bailed out? So-called predatory lending gets a lot of headlines. No doubt fraud has been comitted in many cases. It's just a bit hard to must a ton of sympathy for any of the participants. [Another aside: Make sure you read Michael Lewis' hilarious satire of this position on Bloomberg.]

Damned Lies and Median Home Prices

Mike Simonsen — Mon, 24 Sep 2007 07:39:17 -0700

The bubble is bursting all around us and the National Association of Realtors comes out with a report that San Francisco Bay Area median home prices increased by 13% in the second quarter. Nooooo, can it be? If you can't trust NAR, who can you trust?

Stephen Bedikian of RealIQ has a nice piece today over at Inman News sorting through the confusion. He cites some Altos numbers to help make sense of the turmoil. Stephen concludes:

So what actually happened? Sales transactions increased with a greater proportion on the high end versus the previous quarter. There appears to have been little actual appreciation as evidenced by the Case Shiller and OFHEO numbers, while inventory increased and prices of many listed properties were reduced. So next time you read that median house prices have increased in your area, don't celebrate prematurely. Conduct more research before you reach a conclusion about market conditions in your area.

In addition to Stephen's suggestion of diversifying your stats, I'll add that if you're not looking local, you're not looking anywhere. The Bay Area market? Are you kidding? This spring, you could indeed watch a few key markets, like Palo Alto and up the Peninsula stay strong. But look even a few miles inland, say Antioch, and the carnage was everywhere.

To be fair to NAR, we reported the same trends for some of those parts of the Bay Area in February, March, and April. We also noted that by May, the Spring price growth had already begun to recede. (Notably correlated, by the way, with the widening spreads on jumbo mortgages that started at that time. Surprise! The high-end starts to fade when fat mortgages get more expensive.) So here we are five months later and NAR is telling you that San Francisco had a strong spring. Thanks guys.

[ps. sorry about the long hiatus from the blogosphere. Hope you've been enjoying Scott's posts on real estate e-marketing tactics. Our plan is to intersperse both topics together. Thanks to Stephen for getting me off my ass and posting. I like his work, we'll have to do more together in the future.]

Yahoo! Article - "Home Sales Hit Slump"

Scott Sambucci — Mon, 27 Aug 2007 08:12:48 -0700

http://biz.yahoo.com/ap/070827/economy.html?.v=13

Is the market doing badly?Â Well, I guess the correct answer is:

It depends. . .

Here's the Altos 90-day rolling average for Median Home Prices by Price QUARTILE for various cities across the US since the Spring.

Miami, FL

Phoenix, AZ:

Scottsdale, AZ

Portland, OR

Austin, TX

Â
Palo Alto, CA

Washington DC:

Super Cool Bay Area Real Estate Market Mashup

Mike Simonsen — Tue, 31 Jul 2007 08:50:56 -0700

Client, friend, and indefatigable blogger Kevin Boer has a really slick map mashup of our AltosCharts housing price charts for the Bay Area, using our price quartile data. Kevin uses Zeesource and the result is prettier than our own map mashup (though ours covers all our markets and has a zoom-in-to-the-zip-codes feature.)

AltosCharts map mashup by Kevin Boer at 3OceansRealEstate.com

Our AltosCharts service is up for the Most Innovative Technology award at the Inman Connect conference this week. It's partners like Kevin that really illustrate the power of using market analytics to inform. We're proud to count him as a client. I'm not sure how the winners are selected for these awards, but maybe fans of Kevin's work will stuff the ballot box for us.

And while I'm patting myself on the back, here are a couple of other Altos clients that use AltosCharts really well to bring value to their readers, and boost their own marketing return:

The Harper Team in the East Bay

Pat Kapowich in Sunnyvale

SeattleHome.com

(BTW - I don't mean to exclude any other clients and your sites. There are too many to mention. Feel free to add your site to the comments of this blog if you want to show off your AltosCharts work. I'll work up a post highlighting other sites soon.)