Trend Charts

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.

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:


Let's look at demand rates also.


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

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.

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

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

Spent much of the day looking up data for press requests. Everybody wants to know if we're at a bottom. Thought I'd drop some in here. Not a lot of time to write today, so here are some comparison charts for homes around the Bay Area. San Francisco, Burlingame, Walnut Creek, and San Jose. All Data as of April 11 2008.

If you've ever needed an illustration of the supply/demand curve, here is one for you, via the real estate market. I grabbed the inventory levels of four cities, each about 30,000 people big, all reasonably prosperous, nice places in their respective regions. Frisco, Texas; Sammamish, Washington; Los Altos, California; and Winnetka, Illinois.

My overblogging tendencies want me to expound on the reasons for these inventory differences: building regulation, NASDAQ exposure, etc. But I won't. I'm just going to give you the price chart that illustrates the inversion, and let you conjecture for yourself.

Altos Links:

Sammamish real estate data

Los Altos real estate data

Winnetka real estate data

Frisco real estate data

AltosChart of the Day: After an intense run-up in inventory levels in the Las Vegas market last fall, we've now seen several month of stabilization. Still all kinds of craziness to shake out there, but are we seeing a the first inkling of the bottom? Prices show no signs of coming out of their swoon yet. So you be the judge.

Altos Links:

This is data for the whole Las Vegas MSA. The latest data will be in our forthcoming National Real Estate Report later this week.

Here's the Las Vegas Real Estate Report for the city.

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.

Back in New York this week for the Real Estate Derivatives World shindig hosted by Terrapinn. I know. Paaartay!

It's actually exciting for us as we're beta testing new data products we've designed especially for the real estate derivatives traders. Here's a quick glimpse of the Altos 25-City Composite Price, which tracks the Radar Logic 25 markets and the Altos 10-City Composite Price, which tracks housing markets covered with the Case Shiller national Index.

Full product launch and details soon. If you're interested in the housing futures markets, we should be talking.

Link: Altos Real Estate Derivatives Data

Today's look inspired by conversations with a subscriber in Charlotte North Carolina. (In case you haven't noticed, we've started publishing the Charlotte Real Estate Reports now.)

Given the sorry state of the national housing market, how is Charlotte faring?

Let's look at some of the towns around Lake Norman: Huntersville, Cornelius, and Davidson.

At around $300,000, Huntersville and Cornelius are nice upscale markets in a pleasant part of the world. Davidson is a little higher-end and is showing some signs of weakening prices off about 5% from last autumn. Davidson also has the highest days-on-market measure for all three towns. At 140 days, these properties are definitely not flying off the shelves.

But as you can see from the price chart, home prices in this part of the country seem to be holding up. Why is that?

We see two common themes of housing markets avoiding the big crush this winter:

1. They're markets that didn't climb spectacularly high during the boom.
2. They're steady growth economies.

What's a steadily growing economy mean? Well for one thing, it means people are moving in to the area. Check this population chart from Ersys.

So the Charlotte area has those two things in it's favor. What's next? Where does the market go from here?

Like most of the country, home buyers are in no hurry in Charlotte. We measure relative demand levels with our Market Action Index. When this index drops below 30, we call it (ever optimistic) a "Buyer's Market". The lower this index goes, the lower the current levels of demand and the more likely you are to see home prices decline in the near future. I'm afraid on this point, our Charlotte area towns aren't faring any better than most of the country.

As we mentioned with Austin, Texas the other day, some markets haven't yet been hit by the big hammer. If we escape a painful recession, maybe home values in these markets don't collapse. Unfortunately there's nothing in the early numbers that indicate home prices will climb significantly from here in the near term.

In the Dallas real estate market? D Magazine's Dallas Dirt blog is a great read. Among the insidery local rumors and excellent house porn, Candy Evans has been tapping our AltosCharts lately for some insightful interpretation of the housing market trends at the local level for all y'all Texans.

[aside: as a snobby Californian, this is what I instinctively think of when I think Dallas homes. But this makes me want to move there.]

Link: Our free Dallas Real Estate Research

Jonathan Miller published the November Radar Logic RPX housing market report over the weekend. It's easy to spot that Sacramento is leading the nation down.

[aside: Radar Logic is cool. They measure Price Per Square Foot and try to do it across all properties, condos and single family homes, new and existing construction. No small task. The price per square foot approach is intended to measure value of the property regardless of the size of the property itself. In the real estate derivatives trading business, Radar is getting all the mindshare. Case Shiller is falling behind. more here.]

In the report just published for November, Sacramento saw a price-per-square-foot decline of 18%. Zowie. For those of you unfamiliar with California's central valley, this is an area dominated by lots of new construction, in huge projects, partly as Bay Area super-exurb. So the underlying economy in the Central Valley isn't nearly as dynamic as San Francisco, San Jose, or Los Angeles. Also much less dominated by the high-end, Sacramento is feeling the subprime fallout harder than most.

So Radar Logic is publishing for November. What are the real-time stats saying? Sacramento is not seeing any relief yet. Here's our price per square foot for Sacramento through February 1 2008.

Sacramento Housing Market Data Links:

Our free Sacramento Real Estate Research page

Here's a solid Sacramento Area Blog for more local flavor.

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 – January 9, 2008 – 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 IQ™.

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.

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

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. “Declining inventory levels are essential to a recovery in the housing market,” said Michael Simonsen CEO and co-founder of Altos Research. “However, 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.”

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.

Some posts just write themselves.

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.

Link: San Jose Housing Market.

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.

This post is written by our client John Keith a real estate broker in Boston, Massachusetts. We first met John when Scott sat next to him at the opening keynote of the Inman Connect conference in San Francisco this summer. At the time, we were just opening up our coverage in Boston and John jumped at the chance to work with us. We're glad he did.

John's blog is excellent. He's been very effective integrating the Altos market analytics information into his posts. So we asked him to write a post for us about how he uses the Altos Research services in his business, his blog, and with his clients.

John also generously included an endorsement, which I'm more than happy to include here. Note: I've done a tiny little bit of editing, and I added the images. Everythig else comes directly from John. Enjoy:

About John Keith

I am a Boston real estate agent. I have a blog devoted to Boston Real Estate, at bostonreb.com.

My blog has a main page with daily updates of news and information about the Boston real estate market. In addition, on this page, visitors can search through all the condos and single-family homes listed for sale in our local Multiple Listing Service. Also, visitors may click through to pages of information I have written that are of specific interest to buyers, sellers, investors, etc.

I signed-up as an Altos Research client several months ago. I thought it would be a great way to provide another much-needed service to my site's visitors. More importantly, I figured it would make me be seen as an "expert" on the Boston real estate market. Therefore, visitors would be more likely to inquire about using me as their real estate agent, increasing my business (and my revenue).

After being an Altos Research client for several months, I have seen very positive results and can say I'm very happy I have made the investment.

How I Leverage Altos Research in My Blog and Business
Now that I have access to them, I've tried a couple different ways of using the reports and graphs.

Right now, I have it set up so that there is one main graph on my blog's main page, for the city of Boston as a whole. It updates automatically, once each week's reports are finalized at Altos (every Monday evening).

I also have a link on my blog's main page directing visitors to another page where they can download any of the Altos weekly market reports (I subscribe to eleven Boston ZIP codes).

This past week, I added separate neighborhood-specific pages to my blog. [ed: here's The Fenway, for example.] These pages have blog entries devoted to each major Boston neighborhood. The idea is, visitors to my site will start on the main blog page, then click through to read more about specific neighborhoods.

I have an AltosChart on each of these neighborhood- specific pages, set up to show market data just for that neighborhood, by ZIP code. Probably some time in the near future, I'll be adding a link on these pages to each neighborhood's Altos market report (using each neighborhood's ZIP code).

I'm also about to set up an MLS search, preset by neighborhood, showing just listings in that specific neighborhood.

I expect this to have great results. The majority of visitors will continue to begin their visit on my main page, but then they will want to visit the page focused on just their neighborhood(s) of interest. By having the MLS search and AltosCharts on each neighborhood's page, I'm providing visitors with useful information.

How Strong the Call-To-Action?
It's an open question as to how much information and data to provide to everyone - whether or not to have the Altos Research reports available to everyone, or whether I should force visitors to contact me for access to the reports (a "call to action", it's called).

Certainly, by making people contact me, I'm creating a two-way relationship - it encourages communication, which, hopefully, would lead to new business.

However, I also believe in making as much information as possible available to as many people as possible.

Most people visit my website multiple times, over a period of days, weeks, and/or months prior to contacting me to be their real estate agent. They already know me quite well from my blog, before they make an inquiry. So, there may be little to lose by having the reports readily available to the casual visitor.

Each week, I upload all the updated reports (by neighborhood and city-wide) to my servers. I receive reports for eleven ZIP codes, which covers the majority of the "downtown Boston" market.

There are actually 29 ZIP codes in the city of Boston, and I've considered getting reports for each of them. I would like to be "complete", even though I don't handle real estate sales in the other neighborhoods. This would increase traffic to my site, which would increase my exposure to potential clients and make me seen as the expert in ALL of Boston.

Measuring My Return on Investment
I think the cost of the reports is easily justified. First, I enjoy reading the reports, myself. It presents data in ways I don't collect, myself. As well, it provides useful information to my existing clients. And, it provides useful information to potential clients.

Again, it makes me become known as an "expert" in Boston real estate - as the primary source for data and information on the Boston real estate market.

As of now, only a couple of other Boston real estate agents offer the Altos Research reports, which is fine by me, but I expect more agents to begin offering the reports to clients, which will increase competition. I'm glad I'm doing it, first.

No Dilberts on the walls here at Altos Research world headquarters, but there's nothing like a good cartoon to really capture the zeitgeist. Randall at xkcd.com gives us:

click for full size

(Oh yes, I have indeed uttered the phrase, "I did some analysis with the Census Bureau numbers last weekend...")