Real Estate Blog

How cool is this?

A chart based on the percent change in cpi-adjusted quarterly median sales price from the prior year quarter using the “surface” charting function in Excel. Really!

I don’t know what the chart actually shows, but if I get it printed and matted or made into a quilt…I have an alternative art career if this appraisal gig doesn’t work out (so far so good, thankfully).

Ok, I’ll be on vacation next week, dreaming of defaults, housing prices and inventory.

Yeah right.

See the original post:
[In Search Of Credit] Matrix Taking A Vacation

These photos say it all: captured on Movoto.com, a foreclosure listing somewhere in North Oakland, California. The listing doesn’t appear to be there now but the links to the photos are still here and here.

Sadness and…

Blood?

What was the listing agent thinking?

Go here to see the original:
[Matrix Images] Foreclosure Listings: Sad And Bloody

Back in September 2007, US Senator Dodd from my home state of Connecticut submitted what appears to be hastily conceived legislation to solve the mortgage crisis in response to the prior month’s credit market meltdown. I believe it was created to address subprime lending, but because it was so loosely presented, it casts a wide blanket over the lending process to little effect and likely causes more problems because it embraces conventional wisdom rather than actual practices. As far as appraisals go, it clearly doesn’t recognize the fundamental problems that New York AG Cuomo has already recognized.

The appraisal related language in the bill is sloppy and contains slang, suggesting that someone with little experience drafted it or the the bill was not understood by the Senator. I am very disappointed. It found co-sponsors because it contains buzzwords like “appraiser”, “mortgage” and “meltdown”.

In fact, the language of the bill was so vague and misdirected (the appraisal part) that most appraisers never took it seriously, instead focusing on efforts by Senator Frank and NY AG Cuomo. However, it still has life and is being taken seriously.

The bill is now in the Banking, Housing and Urban Affairs Committee.

I think Senator Dodd’s introduction of the concept of bonding was to incentivize the appraiser to do good by having “skin in the game” but it does nothing to solve the current lending problem. Is this the best that can be done by Congress? It’s damaging to the lending industry and poorly written and thought out, and in my opinion, it allows Congress to say this takes care of the problem, when in fact, it makes it worse.

Here is the appraisal-related content summary provided by Senator Dodd’s web site.

V. Require good faith and fair dealing in appraisals.
- Prohibit pressure from being brought to bear on appraisers.
- Hold lenders liable for appraisals to avoid the appraisal problems created in the current climate.

Here’s the actual language of the appraisal related portion of the bill:

Title IV Good Faith and Fair Dealing In Appraisals

Requirements for Appraisers

• Appraisers owe a duty of good faith and fair dealing to borrowers.

My comment: Generic boilerplate that probably needs to be said. On that note I propose legislation that government officials never abuse their power, the public shouldn’t commit crimes and all school kids show do their homework. In other words, its an ideal, but it has nothing to do with addressing the core systemic problem - remove the possibility of collusion from the process.

• No lender may encourage or influence an appraiser to “hit” a certain
  value in connection with making a home loan. In addition, a lender may not
  seek to influence an appraisers work, nor select an appraiser on the basis
  of an expectation that he or she will appraise a property at a high enough
  value to facilitate a home loan.

My comment: They actually use the word “hit” in the legislation. Who wrote this? How is a lender prevented from attempting to “seek to influence an appraisers work.” These are just words.

• A crucial cause of the current mortgage meltdown has been inflated
  appraisals. Many ethical appraisers complain that lenders will only use
  appraisers who consistently value properties at the levels necessary to
  allow the loan to close. Appraisers who do not cooperate simply do not get
  hired. This is particularly detrimental to the homeowner because it leads
  the homeowner to believe he or she has equity where little or none may
  exist.

Comment: “A crucial cause” implies appraisers initiated the problem. Wrong. They were the enabler of the lenders and the bad ones were rewarded for unethical practice. They actually use the word “meltdown” in this bill? This paragraph also infers that good appraisals are always low. You can say stuff like this all day long but that doesn’t stop it from happening.

• Appraisers must obtain bonds equal to one percent of the value of
  the homes appraised.

Comment: “How do the costs of the bonding enter into this? I am not familiar with getting bonded I assume that means appraisers would file for a bond with a predetermined amount so we get enough coverage. That violates federal licensing law (USPAP). This does nothing to fix systemic fraud and burdens the appraisers that do the right thing with additional costs. How does it keep a bad appraiser from doing bad work? They charge the bond costs to their unwitting (or not) clients and it’s no skin off their back. Good grief.

• Remedies available to borrowers

– Lenders must adjust outstanding mortgages where appraisals exceeded
true market value by 10 percent or more.

Comment: Can you imagine the litigation costs that would result if this passes? Who determines whether the value is off by more than 10%? Another appraiser who is hired by the homeowner? An AMC? A real estate broker? Zillow? A lender using an Automated Valuation Model? What is “True” market value? Is this a new definition of market value and all other forms like “Fair” used by GAAP are “False”? I find it hard not to say the word “true” in this application without sounding sarcastic.

– When an appraisal exceeds market value by 10 percent (plus or minus
2 percent) or more, a borrower has a cause of action against the lender. A
consumer who is awarded remedies under this section shall collect from the
appraiser’s bond.

Comment: Can you imagine the the costs that will be endured by the consumer? I understand that bonding costs for the typical appraiser would be $10,000 to $40,000 per year (per appraiser). For what? Appraising is already a razor thin margin business. Two things are going to happen: appraisal services are going to probably double, and many good appraisers will be forced out of business.

– Actual and statutory damages up to $5,000.

Comment:The further destabilization of the lending industry is worth $5k?

Here are the Senators who think this is a good idea:

Sponsored by Christopher Dodd(D-Ct), with co-sponsors:
Sen. Daniel Akaka [D-HI]
Sen. Barbara Boxer [D-CA]
Sen. Sherrod Brown [D-OH]
Sen. Robert Casey [D-PA]
Sen. Hillary Clinton [D-NY]
Sen. Richard Durbin [D-IL]
Sen. Dianne Feinstein [D-CA]
Sen. Thomas Harkin [D-IA]
Sen. Edward Kennedy [D-MA]
Sen. John Kerry [D-MA]
Sen. Amy Klobuchar [D-MN]
Sen. Frank Lautenberg [D-NJ]
Sen. Claire McCaskill [D-MO]
Sen. Robert Menéndez [D-NJ]
Sen. Barbara Mikulski [D-MD]
Sen. Barack Obama [D-IL]
Sen. John Reed [D-RI]
Sen. Charles Schumer [D-NY]
Sen. Sheldon Whitehouse [D-RI]

I’ll bet if the situation was explained to the Senators with clarity, they would have issues with the bill as written. Time is of the essence, but the solution needs to solve the problem. The problem is about self-dealing and allaying investor’s concerns with the products they are purchasing.

View post:
[The Homeownership Preservation and Protection Act] Dodd Bill Places A “Hit” On Good Appraisers With Bondage

Back in September 2007, US Senator Dodd from my home state of Connecticut submitted what appears to be hastily conceived legislation to solve the mortgage crisis in response to the prior month’s credit market meltdown. I believe it was created to address subprime lending, but because it was so loosely presented, it casts a wide blanket over the lending process to little effect and likely causes more problems because it embraces conventional wisdom rather than actual practices. As far as appraisals go, it clearly doesn’t recognize the fundamental problems that New York AG Cuomo has already recognized.

The appraisal related language in the bill is sloppy and contains slang, suggesting that someone with little experience drafted it or the the bill was not understood by the Senator. I am very disappointed. It found co-sponsors because it contains buzzwords like “appraiser”, “mortgage” and “meltdown”.

In fact, the language of the bill was so vague and misdirected (the appraisal part) that most appraisers never took it seriously, instead focusing on efforts by Senator Frank and NY AG Cuomo. However, it still has life and is being taken seriously.

The bill is now in the Banking, Housing and Urban Affairs Committee.

I think Senator Dodd’s introduction of the concept of bonding was to incentivize the appraiser to do good by having “skin in the game” but it does nothing to solve the current lending problem. Is this the best that can be done by Congress? It’s damaging to the lending industry and poorly written and thought out, and in my opinion, it allows Congress to say this takes care of the problem, when in fact, it makes it worse.

Here is the appraisal-related content summary provided by Senator Dodd’s web site.

V. Require good faith and fair dealing in appraisals.
- Prohibit pressure from being brought to bear on appraisers.
- Hold lenders liable for appraisals to avoid the appraisal problems created in the current climate.

Here’s the actual language of the appraisal related portion of the bill:

Title IV Good Faith and Fair Dealing In Appraisals

Requirements for Appraisers

• Appraisers owe a duty of good faith and fair dealing to borrowers.

My comment: Generic boilerplate that probably needs to be said. On that note I propose legislation that government officials never abuse their power, the public shouldn’t commit crimes and all school kids show do their homework. In other words, its an ideal, but it has nothing to do with addressing the core systemic problem - remove the possibility of collusion from the process.

• No lender may encourage or influence an appraiser to “hit” a certain
  value in connection with making a home loan. In addition, a lender may not
  seek to influence an appraisers work, nor select an appraiser on the basis
  of an expectation that he or she will appraise a property at a high enough
  value to facilitate a home loan.

My comment: They actually use the word “hit” in the legislation. Who wrote this? How is a lender prevented from attempting to “seek to influence an appraisers work.” These are just words.

• A crucial cause of the current mortgage meltdown has been inflated
  appraisals. Many ethical appraisers complain that lenders will only use
  appraisers who consistently value properties at the levels necessary to
  allow the loan to close. Appraisers who do not cooperate simply do not get
  hired. This is particularly detrimental to the homeowner because it leads
  the homeowner to believe he or she has equity where little or none may
  exist.

Comment: “A crucial cause” implies appraisers initiated the problem. Wrong. They were the enabler of the lenders and the bad ones were rewarded for unethical practice. They actually use the word “meltdown” in this bill? This paragraph also infers that good appraisals are always low. You can say stuff like this all day long but that doesn’t stop it from happening.

• Appraisers must obtain bonds equal to one percent of the value of
  the homes appraised.

Comment: “How do the costs of the bonding enter into this? I am not familiar with getting bonded I assume that means appraisers would file for a bond with a predetermined amount so we get enough coverage. That violates federal licensing law (USPAP). This does nothing to fix systemic fraud and burdens the appraisers that do the right thing with additional costs. How does it keep a bad appraiser from doing bad work? They charge the bond costs to their unwitting (or not) clients and it’s no skin off their back. Good grief.

• Remedies available to borrowers

– Lenders must adjust outstanding mortgages where appraisals exceeded
true market value by 10 percent or more.

Comment: Can you imagine the litigation costs that would result if this passes? Who determines whether the value is off by more than 10%? Another appraiser who is hired by the homeowner? An AMC? A real estate broker? Zillow? A lender using an Automated Valuation Model? What is “True” market value? Is this a new definition of market value and all other forms like “Fair” used by GAAP are “False”? I find it hard not to say the word “true” in this application without sounding sarcastic.

– When an appraisal exceeds market value by 10 percent (plus or minus
2 percent) or more, a borrower has a cause of action against the lender. A
consumer who is awarded remedies under this section shall collect from the
appraiser’s bond.

Comment: Can you imagine the the costs that will be endured by the consumer? I understand that bonding costs for the typical appraiser would be $10,000 to $40,000 per year (per appraiser). For what? Appraising is already a razor thin margin business. Two things are going to happen: appraisal services are going to probably double, and many good appraisers will be forced out of business.

– Actual and statutory damages up to $5,000.

Comment:The further destabilization of the lending industry is worth $5k?

Here are the Senators who think this is a good idea:

Sponsored by Christopher Dodd(D-Ct), with co-sponsors:
Sen. Daniel Akaka [D-HI]
Sen. Barbara Boxer [D-CA]
Sen. Sherrod Brown [D-OH]
Sen. Robert Casey [D-PA]
Sen. Hillary Clinton [D-NY]
Sen. Richard Durbin [D-IL]
Sen. Dianne Feinstein [D-CA]
Sen. Thomas Harkin [D-IA]
Sen. Edward Kennedy [D-MA]
Sen. John Kerry [D-MA]
Sen. Amy Klobuchar [D-MN]
Sen. Frank Lautenberg [D-NJ]
Sen. Claire McCaskill [D-MO]
Sen. Robert Menéndez [D-NJ]
Sen. Barbara Mikulski [D-MD]
Sen. Barack Obama [D-IL]
Sen. John Reed [D-RI]
Sen. Charles Schumer [D-NY]
Sen. Sheldon Whitehouse [D-RI]

I’ll bet if the situation was explained to the Senators with clarity, they would have issues with the bill as written. Time is of the essence, but the solution needs to solve the problem. The problem is about self-dealing and allaying investor’s concerns with the products they are purchasing.

Read the original post:
[The Homeownership Preservation and Protection Act] Dodd Bill Places A “Hit” On Good Appraisers, With Bondage

The upcoming Inman Real Estate Connect San Francisco conference is a must see event for real estate professionals, plus it is in San Francisco, one of my favorite places. Check out the deal for bloggers.

Inman News has been touting the wide swath of speakers as:

• The Best and the brightest;
• Real estate industry’s champions; and
• Industry heavyweights

Ok, ok. I get the hint. I need to lose a few pounds….

Inman Real Estate Connect is great because it attracts decision makers and innovators. I always learn something a lot and meet many great people.

Brad, Joel, Jessica and company know how to run an event.

On Friday in the main conference venue, I’ll be participating in the last panel discussion of the conference:

When Will the Housing Market Turn?

• Alex Perriello, CEO, Realogy
• Joel Singer, EVP, CAR
• Jonathan Miller, Co-Founder, Miller Samuel
• Patrick F. Stone, Chairman, The Stone Group

Should be a great time.

View post:
[Gettin’ Heavy] Real Estate Connect San Francisco 2008

This report is provided by Jeffrey Otteau of the Otteau Appraisal Group who also authors a series of widely followed quarterly market reports on the New Jersey real estate market. This information is collected from various sources including Boards of Realtors and Multiple Listing Systems in New Jersey.

I have known Jeff for many years and consider him one of the leaders in the real estate appraisal profession. He has taught me a lot about quantitative real estate market analysis.
…Jonathan Miller

HOUSING MARKET SHOWS EARLY SIGNS OF STABILIZATION

April home sales increased from the March pace for the first time since 2005 in what may be a sign that market stabilization has begun. In April, New Jersey contract-sales activity increased for the 4th consecutive month and recorded a 9.3% increase above the March level. By comparison, sales activity declined during April in both 2006 and 2007.

Also significant is that number of homes for sale rose modestly as Unsold Inventory increased by only 4.5%, less than normal for the month of April. As a result of these trends the Projected Absorption of homes offered for sale now stands at it’s lowest level of the year reflecting a 10.0 month supply. By comparison, absorption stood at 12.7 months in January, 11.0 in February and 10.5 in March.

Any determination as to whether these trends actually signal the beginning of a market recovery hinges on the momentum carrying through for the remainder of the 2008. There are ,however, a growing list of positive factors for the housing market which include increased housing affordability due to lower home prices, favorably low mortgage interest rates and massive pent-up demand due to reduced purchase activity.

To keep things in the proper perspective however, it is clear that the housing market remains in the grip of a dramatic correction and will not see rising prices until Unsold Inventory levels have been reduced significantly. Until then home prices will likely drift slightly lower, although at a slower pace than the past 2 years. But a bottom to the housing downturn may be forming which would be a first step towards recovery. Potential home buyers who have been delaying their purchase in an attempt to ‘time the market’ should consider whether that time has now come. This is because the greater risk in delaying is the likelihood of higher mortgage rates in the future due to the inflationary pressures of high oil and food prices which will erase any potential savings from future price declines. Supporting this view is recent remarks by Federal Reserve Chairman Ben Bernanke indicating that future interest rate cuts are not likely due to a need to guard against inflation. Our analysis of the cost-benefit relationship of delaying a home purchase indicates that the added monthly cost attributable to rising interest rates is likely to be greater than the savings generated by any further price declines. Thus, the next 6 months will present a rare combination of low interest rates, low home pricing and a wide selection of homes being offered by motivated sellers. We’re all likely to look back five years from now and conclude that 2008 was a time when Smart Buyers took advantage of this unique opportunity by locking in both low prices and low interest rates. I’m reminded of the axiom that the right time to sell is when everyone else is buying, and the right time to buy is when everyone else is selling.

View post:
State Of New Jersey: Otteau April 2008 Contracts

Note: ignore the icky duplicate column to the far right - Matrix is being tweaked slowly as time permits!

In the recent edition of PMI’s Housing and Mortgage Market Review (which is now a better read since chief economist David Berson came over from FNMA), focus was on affordability this month. Mortgage lending has gotten back to basics since last summer. Thats a positive long term view and will hopefully promote better overall financial stability of the banking system. It will be interesting to see how long this new found religion lasts after lenders post substandard profit performance over the next several years.

Underwriting standards remain tight, but there is a general feeling that affordability is better now that mortgage rates are relatively stable and prices have fallen in many markets.

NAR publishes a housing affordability index which the PMI analyzes. Affordability has jumped substantially over the past 6 months. The index bases its index on three factors:

• Mortgage rates (modest gains)
• House prices (NAR existing home sale stats are skewed by mix)
• Family income (slower growth)

Prices are the real wild card here since the other two factors aren’t improving affordability. The PMI report spends a lot of time analyzing the OFHEO and S&P indexes which use the repeat sales methodology.

However, the problem with the NAR Affordability Index is not which price index is selected. The problem is that it does not consider availability of credit. Underwriting standards are the highest they have been in years. Its not an apples to apples index because the formula doesn’t consider this major variable (it wasn’t necessary to consider this 10 years ago because underwriting standards were relatively stable) to affordability. Availability of credit is now the key driver of affordability.

To say affordability is “way up”, while technically true, has no real world application. The word “affordability” in this application is simply the name of a metric, not a correct word to describe whether borrowers are more able to purchase a home.

If affordability is “way up”, why are home sales declining and foreclosures rising?

Logic says that if affordability is up significantly, we would have seen a surge of home purchases since the beginning of the year. That hasn’t happened. Why? Because many who would have qualified for a mortgage in 2005, doesn’t qualify today even if there was no change in their financial condition.

Reality. Can’t live with it, can’t live without it.

Looking At Housing Affordability In The Real World

Like he did for the relationship between mortgage brokers and appraisers, the three major bond-rating firms reached an agreement with Cuomo, the New York Attorney General that creates more independence for ratings agencies. Cuomo has been one of the only public official currently in office that hasn’t simply tried to slap more regulations on all parties, pointing the finger and saying don’t do bad things.

Give me a break.

Like him or not, Cuomo has done is to fix systemic flaws within the financial system by following the mortgage.

Rating agencies were one of the weakest links in the integrity of the lending system.

Today’s WSJ article Bond-Rating Fee Overhaul Looms in Settlement, discusses the potential agreement.

many critics claim has been a chronic problem with bond ratings: They are paid for by the entities being rated. That financial dependence has been blamed for the industry’s failure to predict that risky subprime mortgages would crumble, resulting in losses and shaken confidence.

If the firm gave too low a rating, it wouldn’t get hired by the investment bank who would simply go to the next agency to get the rating they needed:

Under the Cuomo settlement, which would cover the hardest-hit portions of the mortgage market, the firms would get paid for their review, even if they didn’t end up getting hired to rate the deal. This would mean the firms would get paid even if they were tough. The plan, which requires final agreement by Mr. Cuomo’s office and the rating firms, wouldn’t dictate the exact fees rating firms could charge. But the firms would be required to charge more than a nominal fee for their preliminary work.

It still doesn’t fully separate the rating agencies for preferential treatment from bond issuers but it sure is a good start.

Cuomo seems to be less abrasive that Spitzer, his predecessor was. At the very least, the bond agencies were guilty of gross negligence for using the wrong data to understand the potential default rates for the securitization of subprime, alt-a and for that matter prime loans. Last summer they suddenly downgraded highly rated mortgage bonds claiming the models they had didn’t work.

Cuomo seems to be more interested in fixing investor confidence than playing hard ball with the agencies. It’s refreshing to think there is a light at the end of the securitization tunnel.

Speaking of stirring things up, take a look at these videos of the recent Parkersburg Iowa tornados: [bank security camera] [house] (hat tip to Market Power)

Read more here:
[Cuomo Recipe] Ratings Agencies Take Hand Out Of Cookie Jar

In a recently released paper called The Use of Social Capital in Borrower Decision-Making by a doctoral student at Harvard, Cassi Pittman, with the support of the NeighborWorks America’s Emerging Leaders in Community and Economic Development Fellowship and the Joint Center for Housing Studies of Harvard University. This research focuses exclusively on black borrowers’ search for and obtaining of mortgage
financing.

Because of wide variations on mortgage borrowing patterns based on race, this study looks at mortgage patterns from the demand perspective. In other words: how do individuals decide to go with a particular lender or mortgage product?

The preliminary findings indicate that borrowers’ preferences and subsequent demands for
mortgage products were shaped by the informal and formal advice they received. Those
borrowers who consulted the most diverse sources of information had loans with lower
interest rates. Those borrowers who received advice only from family and friends did not fare
as well as those who received help from credit counselors. Thus, arguably, their loan
outcomes varied not just based on if they consulted others, but especially whom they
consulted. When given the right advice, potential homebuyers make better decisions in
choosing both a lender and a loan.

The report sample size is arguably small and because of the quickly changing environment, feels a little dated (ie 65% of origination is via mortgage brokers - it must be half that market share or less right now), but its well written, presented and even better…it’s interesting, covering such on an abstract subject.

Just sitting through a closing, illustrates the futility of federally mandated mortgage disclosures. Not only are the volumes of documents cumbersome and lack clarity, but it serves to confuse borrowers even more. When borrowers do not understand the terms of
their mortgage and the fees associated with the transaction, they are more likely to be victims
of lending abuses and to be charged “fees that far exceeded what would be expected justified
based on economic grounds”. The mortgage rates charged were as high as 16% in a low mortgage rate environment. 2-28 (2 years fixed, 28 years adjustable) were among the most popular.

Of course, conventional mortgage denial rates played a role in fueling demand for subprime products.

Obtaining a mortgage in today’s mortgage market is a complicated process. When reaching a
decision on a home loan, borrowers might feel compelled to use their social networks for
information and guidance. Loan products have become increasingly complex. Federally
mandated mortgage disclosure forms, instituted to display the cost of the mortgage transac-
tion and to prevent “the uninformed use of credit,” have been found to poorly convey the true
cost of borrowing.

With all the talk about social networks, the social network that influences a mortgage decision is particularly powerful and the financial stakes are high.

Source:
[Social Mortgaging] Using Social Capital To Seek Out Information

The old saying “you get what you pay for” often gets lost in the shuffle when a consumer thinks they are getting a good deal. There was particularly humorous (depending on your occupation I suppose) post on Seeking Alpha about an ad that touted a “buy one, get one free” promotion on homes in Southern California. Someone who I know who used to be in the retail grocery business told me that this type of promotion is referred to as “BOGO“

When I was in college, I remember hanging out with a friend of mine who was going to inherit and run his father’s farm (he did). We went to an International Harvester tractor dealership (ok, so I don’t lead a glamorous life) and he was oogling over the big combines with auto transmission, and glass enclosed, air conditioned, quadraphonic sound system laden cab.

Of course this was in the late 1970s and with stagflation, the economy was very weak and sales were slow. The dealership was running a promotion where if you bought one of the big ones, they’d throw in a Scout for free (so you would be “outstanding in your field” – sorry).

Of course, there is no such thing as a free lunch and with sales in California currently down about 50% from recent peaks, prices down as much as 30% and one of three sales a foreclosure, marketing (ahem…farming for clients) has got to be pretty creative.

• Conventional wisdom;
• Logic; and
• Common sense;

says a taker of this opportunity is paying way (emphasis) over market value. The overall price needs to be enough for the builder to at least break even on development costs for both properties (which probably has nothing to do with property values at the moment).

Note from the appraisal and lending profession: Seller concessions are deducted from the sales price of any of these sales that are used as comparables.

In other words, the buyer is essentially:

• paying cash for the cost of the lower priced home;
• extracting a massive discount from the sales price of the higher priced home = to the price of the lower priced home.

In other words, consider attending a tractor pull instead.

And while we are talking about farming (sort of) and conventional wisdom, the Interstate Highway System is responsible for obesity in America, NOT fast food.

See the original post here:
[BOGO] Of Tractors And Free Lunches

My immediate and extended family seems interested in playing Powerball on a semi-regular basis. I’ve always been against playing the Lottery personally, but am more than happy to share in the winnings. It somehow feels like cheating. Ok, so I am too complex for my own good. Anyway, whats been particularly humorous to me has been the notion that people seem to pile on when the jackbox gets really large. In other words, “it’s not worth my time to play for $100M, but $300M, hey that’s real money” (but more stress).

I read a recently released demographics study by Pew Research called: The Middle Class Blues: Pricey Neighborhoods, High Stress (I get a little queasy by the low sample size, but I’ll go with it).

The survey, conducted January 24 through February 19, 2008, asked respondents to place themselves into one of five socio-economic classes.3 Just over half (53%) of all respondents say they are middle class, and this proportion is consistent across the three cost-of-living tiers — with 52% of those who live in high-cost areas, 54% of those in medium-cost areas and 50% of those in low-cost areas saying they are middle class.

I found it interesting the cost of housing was a primary determinate of middle class status within a particular location (housing is local). So New Yorkers who visit Michigan (ahem…self-included) need to do some adjusting.

Real estate is a larger share of personal wealth in high-cost areas. Among the middle class, 41% of those who live in expensive regions say that their homes account for more than half their financial worth. Only a quarter (24%) of middle class Americans in low-cost metropolitan areas say so. Of course, homes in costly areas also are worth more: 69% of middle class respondents in those regions say the value of their homes is $250,000 or more. That compares with 14% of the middle class in low-cost areas.

That in it self is not eye opening but rather the idea that housing is the primary variable for differences in net worth and self-perception is.

Despite these differences, though, middle class residents of costly and low-cost areas are about equally likely to have lifestyle amenities such as flat-screen TVs, two or more cars, and paid household help.

It’s going to be interesting to see how the downturn and the rise in foreclosures changes the boundaries of the middle class definition.

Give me $100M and I’ll relax by the pool stress free.

More:
[PowerHouse] Middle Class Status Variable Is A Constant

Periodically, I like to round-up some of my favorite recent blog posts or articles that are housing market/credit/economy related. It’s journalism heaven: housing provides an endless supply of stuff to write about and this week was no exception.

Credit:
[Housing On Fire] Blogoshere Hose-Down, Heaven Can Wait Edition

Back in March, I was invited back to do another appearance on Lawline TV. I had the pleasure of appearing with Jacky Teplitsky of Prudential Douglas Elliman. Alan Schnurman has been hosting this show for nearly 30 years I believe. He’s good interviewer and apparently a very successful real estate investor.

This interview was done before I had compiled my Q1 08 stats but it wouldn’t have changed the content of my presentation.

View the clip (There is no direct link to the interview so look for “The Impact of Economic Downturn on the Real Estate Market”)

Excerpt from:
[In The Media] Lawline Clip for 5-22-08

Trulia launches yet another innovation today called Trulia Snapshot that further shows that they are the leaders in capturing and managing listing information for consumers. (disclosure: I am on their industry advisory panel)

Its one of a number of innovations they have released that deals specifically with the visual representation of data.

Trulia Snapshot is a tool that allows you to browse properties listed for sale on Trulia in a very different way. The photos are placed over a map of the local you are interested in and you can view by most to least expensive, oldest to newest, etc.

My favorite feature is being able to see where the specific listing sits within the housing stock available for sale.

Very cool.

See the rest here:
[Trulia Snapshot] Visualizing Listing Shots Are, Well, A Snap

The New York Times business section has some sort of chart mojo going on. They have been creating some interactive charts for a while now that are simply amazing.

In this weekend’s article (sorry, I’ve been out - see previous post), In Housing, the Strong Turn Weak Vikas Bijaj, with contribution by Christine Haughney, layout out the state of housing across the US using the CSI numbers. (I contributed the Manhattan stats) The numbers were striking. In markets that have been doing well are showing weakness.

Click here for the interactive charts for each of the 20 markets covered using actual or cpi-adjusted numbers matched against the aggregate. Please look at Las Vegas and Phoenix.

And some pretty telling charts. Take a look at inventory.

See the rest here:
[CSI Stats] Fun With Charts: Its All About Inventory