Technology

A couple of events coming up at the end of July:

We'll be at the Inman Connect conference in San Francisco for the week of July 23-25. I'll be speaking in the blogging session on "Content That Hooks Readers" which, if you read this blog, you'll know I'm woefully under-qualified for. The good news is that the session is hosted by Kris Berg, and includes the inimitable Jeff Corbett, Benn Rosales, Ben Martin, and Sarah Hromack. Heavy hitters all. You're bound to learn something.

We've ponied up for a (gasp) sponsorship this time. Make sure you come by and help us pretend it's worth the investment.

The preceding Tuesday July 22 is the Real Estate BarCamp - conveniently also in San Francisco. Which, when shortened to REBarCamp it sounds like a concrete conference, I know, but I assure you it'll be more compelling. At a BarCamp the attendees get to create the conference on the fly - presenting content that you think others care about and interacting with those who know stuff you want to learn. I've been to a few bar-camps including the proto-FOO Camp last year and they're always a super enjoyable experience.

Scott and I thought we'd bring some Altos Research technology goodies to share with our partners and anyone else who wants to learn how to maximize all the Altos products. So if you're on your way to San Francisco for the Inman conference, stretch a day earlier and come for the BarCamp.

I've surprised myself, but I'm diggin' Twitter. As far as Internet communication goes, I love the blog for it's ability to reach our customers/friends/colleagues; I'm not a big Facebook user (I find FB mostly useful as a repository for friends photos); and I lean to email over IM.

In a fit of myopia, I held out against Twitter for a year, but now I've been tweeting (yes, tweeting) for a couple months. I've come to the realization that Twitter is the social network I've been waiting for. Twitter's focus on pure communication elevates it above the colleague/friend/acquaintance/follower asymmetry problem in the Facebooks of the web. With Twitter I can listen to people who interest me-whether or not they are my "friend". I don't creep them out when I listen. Likewise, my Twitter followers are people who are interested in me and/or Altos whether or not I've ever met them.

I'll often publish market data nuggets on Twitter that are too finite for a blog post. I'll post info on new products to Twitter before it goes anywhere else. Why? It's easy, and the listeners have, by definition, said they want to know.

So in the interest of developing this communication channel, if you are interested in what I/Altos say/do/visit/publish, then follow me on Twitter.

Still asking, WTF is Twitter? See Tara Hunt's explanation

Redfin, the discount real estate broker with a bitchin' website and a CEO who goes on 60 Minutes to rail against the industry, has soft-launched an up-sell - and in my opinion business-model-saving - Redfin Select service.

Given Redfin's history, I had to check the date of the Redfin blog post to make sure it wasn't dated April 1. Although Glenn Kelman hinted in a comment here a couple weeks ago that something was coming.

Select is simply a way to let home buyers opt for some hand-holding on as many home tours as they'd like. They pay a little more and get a little more service. Redfin usually refunds two-thirds of the home buyer's commission. For people who opt for Select, they'll get 50% of the commission refunded.

Still a good option for buyers who want to save some cash, but Redfin makes 50% more per transaction. This is huge step towards making Redfin a viable company. Kudos to Glenn and team.

BTW - I mentioned in my December post of 2008 Predictions for the RE.net that Redfin was going to have to make this move. (I've hit two of those so far. We'll see if Rich Barton promotes himself out of Zillow before year's end...) Here's what I said about the Redfin business model at the time:

I've grown less sanguine about the Redfin business model this year. Champion of the discounters, Redfin's gotta scale its revenue. CEO Glenn Kelman posted some of his business metrics on Guy Kawasaki's blog (which took some serious cojones, so kudos to Glenn for stepping up.) In that post, one thing is clear: he needs to marshal Redfin to $100 million in revenue, fast. If you assume that Redfin clears ~$5000 on it's discount home sales transactions, that means they have to scale to 20,000 home sales in the next couple years. In this market.

Glenn also pointed out that they have more people driving around in the field than they originally planned. (i.e. the model scales less efficiently.) But if you introduce premium services and can bring your average-revenue-per-deal closer to $10,000, that's a much more achievable target. Not surprisingly, this was also the path that Zip Realty took several years ago.

In short, it's a smart move. And it's not surprising, because Kelman seems to be no fool. Good for their clients and good for them.

Slightly more critical (natch) coverage at BHB

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

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.

Since we started our company a couple years ago, we've generally frowned on marketing activities that that require cash. Our marketing consists primarily of this blog, personal referrals, and the press generated by the real estate data content that we provide. (No taxi billboards for us.) So it's a big deal for us to announce a sponsorship of Dustin Luther's 4Realz Education seminars!

Despite our, ahem, frugality, the decision to sponsor 4Realz was an easy one for us. Dustin, of Rain City Guide and late of Move.com, has proven himself to be not only one of the most savvy internet marketers in the real estate world, but also a gifted teacher of those lessons.

Further, Dustin's been a fan of our products and technology for a while. He gets our vision. When he was at Move, subscribers would call to tell me that they'd attended a Top Producer seminar and Dustin Luther was on stage recommending the Altos products! Let me tell you, those kind of unsolicited, un-sponsored endorsements mean so much to an entrepreneur. They also speak volumes for Dustin, in that he's an independent voice that will guide his audience to the best options available no matter who's footing the bill.

Conclusion: Dustin will be hosting a valuable day for real estate professionals - the kind of activity that we want to be associated with. See you there!

Details: 4Realz Internet Marketing for Realtors

March 6, 2008

Skirball Center, Los Angeles

A quick reminder for our Wall Street friends. I'll be presenting at the Money:Tech conference in New York this week.

Money and technology are inseparable. Massive new tradable data sets are being exposed by the Web; new bottoms-up social networks are creating alternative ways of discovering investing ideas; a rising percentage of newswire content is being written and consumed by machines; new classes of monitoring services are revealing deep data that might otherwise go unnoticed and untraded for weeks; and real-time itself is being redefined.

"The conference is, of course, all about the confluence of Wall Street and Web 2.0. And what does that mean? Well, new ways of Web-2.0-style collaborating are changing money and investing, with the zero-sum game of Wall Street changing in the process. At the same time market mashups with new sources of web-based data -- auctions! real estate! pricing! weather! -- are transforming the never-ending hunt for a money-making edge."

I'll be presenting some data and observations on the Housing Futures markets, Case Shiller and Radar Logic RPX. Some cool stuff. If you're thinking about getting into the real estate derivatives trades, this is a session for you. Do try to stop by. Make sure you contact me if you do.

I generally try not to stray too far from the real estate topic at hand on this blog, but I want to call your attention this morning to an article by Kevin Kelly (founding editor of Wired Magazine among other literary accomplishments). Kelly's the rare "futurist" who deserves the title.

This week he published Better Than Free. The article captures succinctly, why in a world of free and freely copyable information, Altos Research just had another record month in sales.

In fact, Kelly's concepts also capture why our most successful real estate agent clients, in a world of commoditizers and discounters, command a premium, even in this crazy market.

When everything is free on the interwebs, what is it that people really want to pay for? Kelly identifies 8 generatives: uncopyable values generated or cultivated from within. Here's a snippet, do yourself a favor and read the whole article.

Immediacy: Sooner or later you can find a free copy of whatever you want, but getting a copy delivered to your inbox the moment it is released -- or even better, produced -- by its creators is a generative asset.

Personalization: A generic version of a concert recording may be free, but if you want a copy that has been tweaked to sound perfect in your particular living room -- as if it were preformed in your room -- you may be willing to pay a lot.

Interpretation: As the old joke goes: software, free. The manual, $10,000. [The listings? Free. The right neighborhood and home for you? ...]

It turns out while we weren't nearly so articulate about the process, these generatives have been the Altos DNA from day 1. How do we get you great information in real-time, and not just data, but analysis, personalized for you, and leverage-able into your business?

Anyway, to all our clients, readers, subscribers, partners: thanks for being with us. Rock on.

As you know, Altos Research specializes in real-time market analytics in the housing market. What's less obvious are some of the cool ways people use our stuff. As any successful startup, I suppose, we have lots of customers using our real estate data in ways totally unexpected initially.

Recently, people have been asking us for a more complete list of the Altos Research services and a little about who uses them. I thought I'd assemble a list here for easy consumption, organized by the types of folks on our customer list. (Apologies in advance that this post is a little more salesy than usual. Just looking to provide a little insight into our company. Do check out some of the sites I link to below. There's a lot of great work out there.)

Real Estate Agents and Teams

Product: Our Professional Subscription. Personalized reports + AltosCharts and lead generation forms for web sites.

Usage: Home Buyer and Seller information, lead generation, blogging

Reference Customers: We have hundreds of professional subscribers, but a really great usage of the system for driving web leads is done by the Harper Team in San Ramon, CA. Our friend Chris Iverson with the Ventoux Group at Keller Williams in Palo Alto is highly effective at integrating market analytics into his listing presentations and working with buyers. He teaches a class on the topic. Chris Schweiger in Scottsdale is one of many Altos-bloggers. [A more complete list of Altos-bloggers coming soon.]

Real Estate Brokerages, Title Company Offices

Product: Professional Subscription, site licenses, occasional customization

Usage: We frequently set up office-level subscriptions for brokers who sponsor for their whole team.

Reference Customers: Paragon Real Estate Group in San Francisco. Fortune International in Miami is another. Oakville Properties is a client with offices in the Bay Area, Las Vegas, and Orlando.

Home Buyers and Sellers, Independent Investors, Appraisers, some Agents

Product: Market Analysis Details Reports, per city. Our Basic subscription.

Usage: People want to know more about the market than their competition and don't need the personal marketing/branding benefits of our Pro subscription level. When we started this company, we naively thought this group would be our bread and butter. In truth, our local market free research pages drives a lot of our web traffic and is only indirectly responsible for driving our major sources of revenue. Note that we're now available in over 20 metros around the country (Here's Portland!) We open up more each week.

Some of these folks will add the AltosCharts to their subscription so they can build their own reports, query different stats on the fly and learn about any zip code in their region.

Reference Customers: We have tons of basic subscribers all around the country now, even some international (folks who tend to be researching the condo markets in Las Vegas and Miami. Surprise, surprise). My favorite quote was from a real estate investor, Dan, who said, "I LOVE your reports! I'd have had to spend a YEAR compiling this kind of information for myself!" [his caps, not mine.]

Financial Firms, Banks, Hedge Funds, Lenders

Product:AltosCharts and AltosStats Data. Bulk data subscriptions.

Usage: Trading and fundamental analysis. We have a growing stable of Wall Street players that feed on our data pipe--from the bulge-bracket banks to long/short hedge funds. The most obvious application for our real-time market data is the housing futures markets. I write occasionally about how our data leads the Case Shiller Index by three months in basically all the markets we cover. The Radar Logic RPX is actually getting more attention on Wall Street these days and we'll be publishing some latest analysis there very soon too. Our trading clients tend to use our market data as an input into massive "quant" analytics systems. They suck in CSV files, where ours is one of many input sources, bringing a unique perspective.

In addition to the real estate derivatives markets, some of our Wall Street subscribers use our data for fundamental analysis in their equities trades. For example, if you're a hedge fund thinking of going long a regional bank in the South East, you might want to understand how the trends in the local housing market are going to impact their loan portfolio.

Reference customers: Most of these folks prefer to remain, ahem, anonymous. Though a good example is Tradition Financial Services, one the leading real estate derivatives brokers, who use our data for spot-pricing the housing market and publishing research for their derivatives clients.

Real Estate Web Sites and Consumer/Investor Portals

Product: AltosCharts - local market data

Usage: We're seeing a number of really innovative startups working on providing great decision making tools for consumers and particularly investors in real estate. These folks turn to Altos to easily answer for their site visitors/members, "Hows the market?" They integrate AltosCharts into the user

Reference Partners: DeedQuest is doing some cool real estate investor products. CondoDomain is building a national condominium site for consumers.

Agent Marketing and Technology Providers

Product: AltosCharts and Partner Program

Usage: These partners provide web sites, marketing, blogging, lead generation tools to real estate agents. We love our partners. We find great symbiotic relationships, because we're all helping real estate pros market more efficiently in an internet world.

Reference partners: Kevin and Pat at Domus, RealBird, BringTheBlog are all great examples.

Who knew the real estate ecosystem was so complex? And we've only just scratched the surface. 2008 is rocking already. We'll have some big announcements, new partners, and new products coming this year. Stick around!

Last week at the Inman Connect conference in NYC, one of the most-talked-about sessions was Brian Boero's "50 Tools and Technologies to Help You Win in a Slow Housing Market."

Brian is a partner at 1000Watt Consulting and a sophisticated marketer. The slides from Brian's rapid-fire presentation are now available at Inman. In it, he gave a nice (and totally unsolicited) plug for Altos Research (p49). Quite simply, "Know more about the market than your competition."

Inman's a marvelous confab for real estate professionals. The great thing about this message is that it applies to all our clients: Realtors, Wall Street traders, home buyers and sellers, investors, lenders, et al., captured in one pithy phrase. This from I guy I'd never met till I thanked him for the mention. Rock on.

This guy Brian has some mad skillz. For more, tune in to his blog on real estate marketing and technology.

We've had some really nice attention in the press and blogosphere the past week or so. Here's a quick summary so you can see what people are saying about Altos.

O'Reilly Radar: Tim O'Reilly highlights our real-time data products for Wall Street and the housing derivatives markets. I'll be presenting on this topic at the O'Reilly-sponsored Money:Tech conference in New York February 6-8.

In SFGate.com / San Francisco Chronicle Carol Llyod finds her friends in the market for a home in San Francisco - everyone is surprised how hot the market is. I love this kind of analysis. The data reveal so much more than the headlines can capture. Carol - have your friends email me and I'll set them up with the neighborhood level and insights that we do in our detail reporting.

Dustin thinks we're going to get acquired. And Robbie gives us a nice plug on Rain City Guide.

The bloggers at Redfin have been especially prolific lately. I like the approach Redfin uses for their blogging work. They've got a team of bloggers, each with an intelligent voice, tackling the local real estate markets they're in. None of it is too controversial, but it's solid content, targeted well for their customers.

Altos Links:

National Data for the Housing Derivatives and Case Shiller markets

San Francisco housing market

Dustin Luther is on a tear. 4Realz.net has instantly become the insider's go-to guide to the real estate technology market. Recently unbound, Dustin is busy breaking news and publishing lucid insights on the market. Today he cites The Motley Fool speculating on a Zillow IPO in 2008.

“Zillow was the brainchild of Expedia’s founder, so it’s really just a matter of time before the company follows suit and goes public. Even with dot-com realty plays like HouseValues and Realtor.com parent Move trading in the mid-single digits, Zillow has enough Teflon to make it as an IPO.

I'll go on a limb and say, Not a chance Zillow IPOs in 2008. Rather, Dustin has motivated me to organize these predictions for Zillow (and the rest of the RE.net) for 2008:

• Barton moves to chairman-only by mid-year. He's got the venture and hedge funds to keep him busy.
• In addition, I'd bet maybe 5 of the current 11(!) VPs rotate out in 2008. Is this a company that can actually keep it's General Counsel busy full time? Doesn't make any sense to me. Clean house, drop the burn rate, focus on the core business.
  

There's no question they're building that company to take it public and have the right product and team foundation, but think about it in context of the Kayak/sidestep news. That's a combined company of 60 people with $85 million in revenue. There's your IPO. Zillow has 165 employees! That's a big burn rate. Plus how many IPO investors are going to be excited about getting into a residential real estate play in 2008? 2010 is my guess for Zillow - after some wrenching changes, and some smart revenue moves. (David G, what say you? Am I full of it?)

In related re.net developments, here's another prediction to think about:

• Redfin.com will introduce premium-level, full-service, full-price product lines.

I've grown less sanguine about the Redfin business model this year. Champion of the discounters, Redfin's gotta scale its revenue. CEO Glenn Kelman posted some of his business metrics on Guy Kawasaki's blog (which took some serious cojones, so kudos to Glenn for stepping up.) In that post, one thing is clear: he needs to marshal Redfin to $100 million in revenue, fast. If you assume that Redfin clears ~$5000 on it's discount home sales transactions, that means they have to scale to 20,000 home sales in the next couple years. In this market.

Glenn also pointed out that they have more people driving around in the field than they originally planned. (i.e. the model scales less efficiently.) But if you introduce premium services and can bring your average-revenue-per-deal closer to $10,000, that's a much more achievable target. Not surprisingly, this was also the path that Zip Realty took several years ago.

One last one:

• Trulia's traffic overtakes Zillow's.

Paul Kedrosky took some flak the other day for citing a single traffic source highlighting declining web traffic for Zillow.com. Web traffic is a black art, so we can divine only a few things for certain: 1. Zillow's new feature introductions are only marginal page-view increases on top of the core value proposition. None of these create the power curve in traffic growth. 2. They started with the biggest bang you can. It's hard to go up from there. Furthermore, when you're in front of the fire hose, it's hard to discerne which site/product tweaks lead to organic growth. So Zillow's current growth was actually retarded by their early success. 3. Trulia's growth is more organic (and more visible in the monitoring services). It's based on start-small, test often, repeat-what-works. So Trulia's growth seems to be oriented on increasing market penetration, search optimization, and product improvement. As a result, in mid 2008, we'll see the first of the compete/quantcast/alexa charts that illustrate Trulia crossing over Zillow. Mind you, I'm not convinced that Trulia has their revenue proposition nailed yet. I'm sure there's a prediction in there somewhere too. Just haven't found it yet.

At the NAR conference in Las Vegas, I did an interview with Joel Burslem from Inman News. The video is up today on InmanTV.

The video uses a sweet player from WellcomeMat.

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.

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.

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.)

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.