Last week I entered four apartment units, for five short minutes each, and had to pick one to live in for the next year.  Aside from the great downtown location, here are the “Top 5 Reasons” I chose my 600 square foot one-bedroom apartment…

1. Natural light. I don’t need to turn on the lights until the sun goes down. From the kitchen window, two dining room windows and sliding glass door, in the bulk of the apartment, to the wall-width window in the bedroom and the neutral-white walls, the space feels larger than 600 square feet (I know because I measured!).
2. No dishwasher? No need with a double-wide, undivided sink. I can stick to delaying dish-washing duties until the deep sink fills up and then work up the motivation to wash them. Who couldn’t use a little extra motivation?
3. Peace and quiet. I was lucky to find an apartment that shares no walls, only the ceiling. With the one unit above me, there is virtually no noise.
4. Larger-than-needed parking spots! You could fit a Chevrolet Heavy Duty 2500 truck in my designated underground carport. I don’t own that truck, but if I did, I’d be able to park it there. Wishful thinking…
5. Deep closets to hide the stuff I rarely use. I need all the help I can get when storing surfboards, golf clubs, bikes, skis, a lacrosse bag, etc.  The amount of sporting equipment I have may be a little excessive  but it’s so nice to have storage space.

If you are an investor, consider these things because they matter to regular apartment-renting people like me. Lighten the paint, add a bigger sink, soundproof the walls, provide decent city-parking and add some storage options.

Happy renting!

Dorkbot is a semi-monthly meeting of “people doing strange things with electricity.” They have been chugging along in several cities for a decade-or-so. Back in 2005 I presented at a Dorkbot in London, so I have an enduring soft spot for these quirky gatherings. At this month’s Dorkbot in San Francisco, a meteorologist named Tim Dye presented a brilliant visualization called WeatherDots. It summarizes the weather data he collects near his home in wine country.

Inspired by how much time-series information Dye was able to squeeze onto a few pretty circles, I spent the plane ride to ABS East in Miami throwing together a “dot” visualization of the Altos Research weekly active market data. Here is a visualization of a year’s worth of real estate data:

http://www.altosresearch.com/customer/labs/redots.html

My Redots updates every week, and can be pointed at any of the Altos Research local markets by entering a city, state, and zipcode. Your web browser needs to play nicely with the amazing Raphaël visualization library, or you will just get a blank screen. I recommend using Google Chrome.

The Legend, or What Is It?
Each dot of color represents a week in a local residential real estate market, so each column is a month. The main color of the dot shows the week-on-week change in the median price of single family homes in a particular zipcode. A red dot means house prices have decreased since the previous week (or dot), while green dots are increasing weeks. The summer seasonality effect is pretty clear in our Mountain View, CA example.

The “halo” of a dot is the ratio of new listings to listings in general. If the newest listings coming onto a market are priced higher than the typical listing, then the halo will be green. This suggests a seller’s market, when new listings are asking for a premium. The price of these new listings will be absorbed into the market the following week, so you might imagine a dot’s halo merging with the main color.

A dot’s angle is the year-on-year change in market prices. Aiming northeastward means prices have increased since the year before, while southeast is a decrease. These angles strip away seasonality from the market, and show how secular real estate trends. Our Silicon Valley example is a bit down year-on-year. The thickness of a weekly dot represents the week-on-week change in the number of listings, put more simply, the inventory. Thin dots that are more ellipsoid are a shrinking market, where fewer listings are available for sale at any price.

A Thousand Words
Information visualization is a buzzy field with smart people doing striking work. For me the line between the big data and infovis communities blurs when a pretty picture enables statistical inference without necessarily running the numbers.

I’m hoping that this being the 4th of July holiday that neither Mike, Scott nor Jon will be paying enough attention to the blog to be alarmed by the appearance of a random bit of Postgres hackery.  This came about as the result of my wanting to get a feel for some of the initial rental data that we’ve begun collecting. And before you ask: No, sorry, I don’t have a date when we’ll begin incorporating this new set of data into our product lineup.

As I was browsing the data we collected last week, I began thinking about what the general distribution of rental prices looked like. Of course, a histogram is the obvious visualization for answering questions like that. But I dreaded having to jump through all of the hoops necessary to get the data into a charting tool like Excel – export, transfer, import, format, fiddle, tweak, fiddle, tweak, rinse repeat. I just wanted a quick snapshot, not a publication quality rendering.

I began by looking through the Postgres documentation on string manipulation functions, and came across the SQL ‘lpad’ function. With a bit of clever grouping, counting and scaling, I was able to quickly generate the following histogram of rental prices, grouped into $100 buckets:

 rent |                         frequency
------+------------------------------------------------------------
    0 |
    1 |
    2 |
    3 |
    4 | ###
    5 | ##################
    6 | ######################################
    7 | ######################################################
    8 | ##########################################################
    9 | ####################################################
   10 | ###########################################
   11 | ################################
   12 | ###########################
   13 | ########################
   14 | ###################
   15 | ################
   16 | ############
   17 | ##########
   18 | ########
   19 | #######
   20 | #####
   21 | ####
   22 | ###
   23 | ###
   24 | ##
   25 | ##
   26 | #
   27 | #
   28 | #
   29 |
   30 | 

This particular histogram uses a bucket size of 100 and a unit size of 500 (you’ll see those numbers appear a few times in the query). Here is the exact SQL used:

select (re.highprice/100)::int as "rent",
    lpad('', (count(re.*)/500)::int, '#') as "frequency"
    from rental_entry re
    group by ( re.highprice/100)::int
    order by ( re.highprice/100)::int ;

The unit size of 500 was an arbitrary choice, based on the total number of entries in our sample data set and my desire to fit the output in my terminal screen. The key is to adjust the bucket and unit size constants based on the data to fit the output to a reasonably sized monitor.

Happy 4th of July!

Okay, not really roar, but I am a panelist on the “Distressed Residential Overview” session on Thursday afternoon.  Click for the full conference agenda .

Here are last year’s presentation slides in which I showed how our active marketing housing indicators lead home price indices such as the S&P/Case-Shiller.

Predicting US Housing Prices: Opal Real Estate Deal Makers Summit (April 2010)

In particular, check out Slide #7:

Turns out that our data and projections back in April 2010 for this year were exactly correct – showing both inflection points and magnitude of housing price movements through early 2011.  More simply – we nailed it.  [patting oneself happily on the back].

Want to know what 2012 will bring?  Guess you’ll have to attend. Register here.

(Note: Neither Altos Research nor I receive any compensation for promoting this conference.)

Altos Research Launches Altos Lens, A Crystal Ball iPhone App That Predicts The Future Condition Of A House

March 31, 2011 (Mountain View, CA) – Altos Research has launched a revolutionary iPhone app that is destined to change the distressed real estate landscape forever. The Altos Lens app allows anyone with an iPhone to point the camera at a distressed house and see the condition of the house up to one year in the future. It’s a crystal ball for property conditions and will help buyers, lenders, municipalities, and real estate professionals properly assess a property’s future condition.

A member of the development team said, “When you’re dealing with distressed housing, it’s important to know what a house is going to look like after the residents trash it during the eviction process. Our future-looking augmented reality app solves that problem. You can see the future condition of the house through the lens of your iPhone without ever going inside. It’s brilliant.”

CEO and co-founder Mike Simonsen said, “We have grown to a point where we needed to provide something more than just the data. An iPhone app that could predict the future condition of a house seemed like a logical progression.”

San Francisco People’s Bank President Toby Chadwick loves the idea. “How are we supposed to lend money for a person to buy a house if we can see that the roof will be caving-in nine months from now? It’s ludicrous to think a bank would take such a risk. This app will save us millions.”

App features include:

• Condition of the house up to 12 months in the future.
• X-ray photos of the interior of the house instantly downloaded to your iPhone.
• What the paint will look like as it ages and peels.
• In heavy foreclosure areas, it shows which appliances and fixtures will be removed once the residents are forcibly evicted.

The x-ray vision feature is ideal for drive-by BPOs, agents on the go, and creepy stalkers. Additionally, an updated version of the app is in the works with enhancements such as check-ins, badges, and tagging, so real estate professionals can earn points and impress their peers with their achievements.

“It’s like a Klout score for distressed housing. The ‘Cash-For-Keys’ badge is easy to earn, but the ‘Sherriff’s Eviction’ badge is a tough one. It takes dedication to get there,” says Simonsen.

In addition to the public-facing app features, Altos has hundreds of people overseas who manually process any x-ray photos of the houses which are not immediately recognizable. It’s all done in the Amazon cloud so it scales well on the weekends when mobile traffic spikes.

To stay current with new versions of the app and , “Like” Altos Research on Facebook and follow them on Twitter @altosresearch.

Quick tips for your NCAA tournament brackets, grounded in academic research and economic theory of course:

1. Look at no more than six cues or factors for each decision, and three should do the trick.  Lamenting and pouring over more information and factors doesn’t lead to any increased accuracy in predictions. In fact, using only three factors can work just as well because using six or more leads to overconfidence.  That’s probably why the guy down the hall who’s watched every college game since November thinks he’s going to win your office pool – “I love my bracket!!”  You know that guy… He usually comes in last.  Isn’t is wonderful?

[Source:  "Effects of amount of information on judgment accuracy and confidence." by Claire I. Tsai, Joshua Klayman, and Reid Hastie.]

2. Look for similar characteristics on each team, not differences. Turns out that people disregard components that the alternatives share and focus on the components that distinguish them.  “This team has a great offense or that team has a big center!”

3. Be conservative. People tend to prefer a small chance at a big gain, which is why you’ll see lots of brackets crash and burn with too many #12 and #13 seed picks.  “I’ve got Belmont in the Elite 8!”

[Source: "Prospect Theory." Daniel Kahneman and Amos Tversky.]

3.  Just do the opposite of me.  I’m already preparing the menu for my sixth year running of losing to my wife in our head-t0-head bracket challenge.  We bet a nicely prepared home-cooked dinner.  I’m thinking Italian this year…

[Source: My miserable gambling history]

Just a quick post about this event to let everyone that we’ll be attending this week - The Real Deal 5th Annual Forum: Distressed Opportunities.   Looks like a good show.  Hoping for some fireworks on stage.

Wednesday, October 14, 2009
3PM (Networking/Exhibition) 6:30 PM (Main Event)
Alice Tully Hall, Lincoln Center

FEATURED PANELISTS INCLUDE:

Joseph J. Sitt, Chief Executive Officer, Thor Equities
Miki Naftali, President and CEO of EI AD Us Holding, Inc.
Nouriel Roubini is the co-founder and chairman of RGE Monitor
Mark Zandi is chief economist and cofounder of Moody’s Economy.com
Brian Sullivan, Anchor, FOX Business Network
Pam Liebman, President & Chief Executive Officer, The Corcoran Group Inc.
Dolly Lenz, Real Estate, Vice Chairman Prudential Douglas Elliman

The Five-Star Default Servicing Conference featured Steve Forbes as the keynote speaker yesterday. I was fortunate to attend his presentation and wanted to share some of the key points that he covered during his address.

Forbes began by stating that we’re “at an extraordinary place in economic history.” However, while the global economy has taken its lumps over the past two years, the period of economic growth from the early 1980′s-2007 saw the rise of India, China, Latin American, and many African countries.

The Federal Reserve & Monetary Policy:

• The Fed printed too much money from 2003-2006
• Commodity prices (gold, copper, oil, etc.) rose in 2004 because of increased money supply

The Rise of the Housing Market

• Money moved from commodities to the housing market because of the historical positive growth trend of the housing market.
• The 1998 tax policy changes to the capital gains on home ownership further inflated the housing bubble.  Simple economics shows that lowering the tax on an asset results in an increased price for that asset.
• Looking back on this tax policy, others agree with this viewpoint including studies cited by the Tax Policy Center at the Urban Institute and Brookings Institute.
• Lower lending standards (ARMs, negative amortization loans, stated/no income loans) pured gasoline on the fire.

Mark-to-Market Accounting

• (For those unfamiliar with this term, “mark-to-market accounting” means that companies must value the assets on their balance sheets based on the latest market indicators of the price that those assets could be sold for immediately.)
• Unlike stocks, bonds, and other securities that exchange almost instantly, trades on the housing market (the buying/selling of homes) typically take months to execute.  Additionally, housing market assets (homes for sale) exhibit massive heterogeniety (unlike shares of Microsoft for example that are all the same).  Implementing mark-to-market guidelines for banks holding mortgages is conceptually wrong according Forbes.
• This viewpoint is shared by many others, including Matthew Phillips at Newsweek.

On Credit & Housing Securitization

• Feels that the current system of securitizing debt (credit cards, car loans, mortgages) is not functioning properly.
• Forbes advocates the creation of an open exchange or clearing house for credit default swaps.  While these financial securities play an important role for managing corporate risk, the lack of transparency in the trading and functioning of these securities hinders their public acceptance and understanding on how they work.
• Because banks are over-capitalized right now, these financial instituation are continuing to hold their depreciated housing assets rather than off-load them at discounted prices.  The balance sheet losses banks exhibit with the mark-to-market guidelines are artificial losses, not cash losses.  On average in 2008, banks held $250 billion in cash reserves but are up to $1 trillion in 2009.  With these cash reserves in place due to government intervention (i.e. TARP), banks have more motivation to hold their depreciated housing assets longer to see if they will recover ran than run a fire sale to interested private equity and hedge funds at the ready with cash to spend.

Rule of Law & Property Rights

• Forbes is an ardent defender of enforcing commercial contracts
• He cited that nearly all of the major airlines have experienced Chapter 11 and the government would have been best served to allows General Motors and Chrysler to enter Chapter 11 to enable reorganzation.
• This applies to home owners and lenders.  First mortgage holders should be given precedent on repayments over home equity or second lien holders, however these junior debt holders have rights to access repaid capital without have their contracts and agreements disregarded.
• He sees serious conflict when the same lender owns both the senior mortgage and home equity loans.
• (This point was particularly interesting to me since my masters thesis was based on Douglass North’s work on the importance of economic institutions and the rule of law in economic societies.)

Final Thoughts:

• Forbes continued his explicit support for tax reform (remember his proposal for the flat tax in the 1996 and 2000 Presidential campaigns?)
• He advocates health care reform by opening competition across state lines for health insurance.  He’s also in favor of allowing small businesses to pool together to buy health insurance policies for their employees.
• On Social Security, Forbes advocates enabling individuals to manage their own accounts so that the current Social Security liability becomes an asset for each person.  This process would teach workers at a young age about how to manage and grow their money through diversification.

More to come about the conference sessions and proceedings in later posts here.  Stay tuned.

There’s something like 1.5 million real estate agents out there and at Altos Research we only work with a tiny fraction of them. But the ones we work with are truly remarkable. The best in the business – innovators and achievers all.

So I was beaming like a proud papa when I saw the Spotlight Awards finalists from the National Association of Realtors. On a list of 25 REALTORs that NAR identified as leaders in their field, five of them are clients of Altos Research.

High-fives to good friends:

Brad Nix in Atlanta

Heather Elias in Loudon County VA

Aaron Wheeler in Silicon Valley, CA

Tim White in Boston

Keith Byrd in San Luis Obispo, CA

Congrats to all on the list, lots of great work there.

(spotlight image by Jeremy Hall)

It’s been a few years since we last hosted the Carnival of Real Estate – hope that we can shake off the rust!

I dove into the project planning to offer my opinion on the 1-2 best posts – authors that encapsulated unique content and interesting perspectives.  I can’t say any one post was  a clear cut “winner” so instead I decided to categorize the submissions and provide a short summary for those posts that were more novel that others.  I also infused a few outside links and resources that you may not know about.

(Sidenote – See if you can guess the two words in the post that prompted me to open a dictionary – the real paper and ink kind…)

Just Plain Different

• Personally, I’m a big fan of TED.com, so when Margaret Garcia submitted her 100 Incredible Lectures for Architects of the Future, I couldn’t help but notice the first on the list was a TED presentation. Certainly an unexpected submission to receive in this week’s Big Tent.  (I love this one on TED.com by Michael Moschen on juggling rhythm and motion.  Visually phenomenal. If you’re more of a podcast fan, I suggest the Stanford Entrepreneurial Thought Leaders lecture series. This is what data geeks like me listen to while I’m working instead of the Jonas Brothers.)
• Turns out the Anne Liebovitz might lose her home according to Diane Tuman at Zillow.com.  (This reminds of the recent Jon Stewart’s recent piece on Tim Geithner’s home selling troubles. I typically don’t watch the Daily Show, but found this segment from Greg Mankiw’s blog which I do read and suggest it.)
• My wife and I just vacationed in Costa Rica and rented a condo from an American couple who funds orphanages throughout Central America, so this post caught my eye – Connie Green offers some market viewpoints if your interested in Nicaragua Real Estate.

Real Estate Marketing

• Jonathan Dalton in Phoenix looks at some of RE.net 2.0 with some suspicion, even as an early blogger and tech-adopter. You know what?  That’s a good thing.  I see far too many agents diving into technology tools without understanding how (or if) it fits into their business.  Twitter, Facebook, and the rest are great tools – if you know how to work them into your practice.
• But for those going headstrong into social media marketing, here are some basic tips. The author loses points for citing Wikipedia though. (I’m a part-time lecturer in the Economics Department at Cal State – research papers submitted citing Wikipedia are immediately returned to students for revision… I don’t offer extra credit or curve exams either. Yes, yes, I know. I’m a hardass.)

Market Perspectives

• Bob Schwartz suggests a new government foreclosure program – Shared Homeowners Assistance Management (or SHAM for short).  He’s not a big fan of allowing those foreclosed to become renters of their same properties. Cindy Jones offers an alternative – public employees such as firefighters, police officers, and teachers should be offered a lease-to-own option in foreclosed properties in neighborhoods where they are typically priced out.
• Tim Johnson at Relocation.com writes about sellers finally getting the hint about pricing their homes.  If you’re looking for a well-priced condo in Vegas, check out CityCenter project troubles in the desert.
• Condos in Vegas?  Here’s some not-so-shocking news – there LOTS going up for auction according to Jacqulyn Richey on Las Vegas Real Estate News – but check out the specifics she provides in her post.  Great research here.
• But if you want a condo with sand AND water, Larry Walker discusses Cocoa Beach, Florida and his big butt.
• Want to know what homebuyers are really thinking?  The Money Blue Book Blog discusses his changes in net worth each month and outlook for buying a home now.
• If you need a mortgage to go along with these properites, Dan Green offers advice on timing your mortgage rate, even suggesting that perhaps an ARM mortgage might be the way to go. (Gasp! Quick – somebody call the cops!)

Other Submissions

• Building & Renovating Your Home on Digerati Life.
• Tips on finding a good mortgage consultant from Carol Bell.
• Getting Inbound Links by Mark Menzella
• Loan Calculators by Handy Saputra
• How NOT to get Commercial Lending by Lauton Funding
• Finding Wholesale Buyer Leads by Joshua Dorkin

So there you have it – this week’s Carnival of Real Estate.  I’ve cc’ed Kermit the Frog and Judy Collins and asked them to send in clowns now. I was always a fan of the Swedish Chef and the the old men in the box.

As some of you may know, we’ve been encouraging the use of the #altos Twitter hash symbol for customers to use in their tweets. If that hash is followed by a city or zip code, the tweet text will be displayed on one of our market research pages. While monitoring the use of the hash, I had begun to notice quite a few Spanish tweets that use it too, but are definitely not related to Altos Research. Well, it turns out Altos Mirandinos is an official region in Venezuela.  Whew – mystery solved.

We’re big fans of Jonathan Miller, co-founder of residential real estate appraisal firm Miller Samuel and author of The Matrix.  That said, we’re delighted that Jonathan featured Mike Simonsen, our fearless leader and Altos Research CEO, in his latest podcast on The Housing Helix.  Their conversation focused on the status of the US Housing market, utilizing real-time real estate data, and a discussion on where the market might be headed in the near future.

On of my favorite bloggers is Paul Kedrosky, author of Infectious Greed. Kedrosky suggested a few articles to read recently, including “The Man Who Crashed the World” by Michael Lewis in the August 2009 edition of Vanity Fair.  (You might recognize Lewis’ name if you read Liar’s Poker about the 1980′s bond market.)

Here’s the summary of the article in a few words – the entire collapse of the mortgage and financial market last year can be pinned on Joseph Cassano, former CEO of AIG.  AIG required the ongoing bailout simply because of a cultural flaw within AIG stemming from Cassano and his “leadership” style.  This corporate culture led to an increasing number of trades and more risk-taking by AIG that ultimately caused the whole system to melt down.

While the popular press and politicians like to blame the “greed of Wall Street” for the meltdown, is it really possible that this could have been diverted with better leadership at the top of AIG?

Read Lewis’ article and decide for yourself.  It’s time well spent.

Join us for a Webinar on July 16

(Anyone can join, but yes, space is limited!)

Reserve your Webinar seat now at:
https://www2.gotomeeting.com/register/842714963

Yep – we know – Facebook, Twitter, LinkedIn, blogging – who has the time for it all!?  But that’s where your clients and contacts find you the most online, so Altos Research developed a number of specific Social Media solutions to help you market yourself on these websites and your blog – with many of these solutions updating automatically to save you time!

Today’s home buyers and sellers want to know “How’s the market?“. During this short webinar, we’ll show you both free and subscription-based products available from Altos Research to use in your Social Media marketing .  Show your Facebook friends, Twitter followers, and blog readers that YOU are the LOCAL MARKET EXPERT!

Title:         Social Media Marketing with Altos Research
Date:        Thursday, July 16, 2009
Time:        9:30 AM – 10:30 AM PDT

Reserve your Webinar seat now at:
https://www2.gotomeeting.com/register/842714963

After registering you will receive a confirmation email containing information about joining the Webinar.

System Requirements
PC-based attendees
Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista
Macintosh®-based attendees
Required: Mac OS® X 10.4 (Tiger®) or newer

Just announced last week in a Reuters press release and on Relocation.com’s blog:

Relocation.com, the leading online consumer resource for moving services, today announced its listing of the “Best Real Estate Agent Blogs” in San Francisco.

Guess what?  4 of the 7 on the list are Altos Research clients!  Woohoo! We’ve long said that they are three (3) fundamental questions that home buyers and sellers care about in real estate:

1. What’s my home worth?
2. What’s for sale?
3. How’s the market?

If you’re a real estate professional and you don’t offer the answers to all three questions, you’re just inviting your website visitors to bounce to someone else who will provide answers to these questions.

Of course here at Altos Research, we specialize in “How’s the market?” and helping our clients provide real-time, transparent information to buyers and sellers out there.  Here’s a list of the top 7 blogs:

- The Front Steps from Alex Clark
- Marin Real Estate Guide from Ginger Wilcox
- Absolutely Foster City from Jim Minkey
- San Mateo Real Estate from Vicki Moore
- Living Well in San Mateo from Raymond Stoklosa, Rebecca Williamson, and Chris Williamson
- Marin Homes from Ken Dara
- The White Oaks from Chuck Gillooley
- Marin County Real Estate from Mark Lomas

Congratulations to all that made the list and a special shout out to our peeps – the Altos Research “Data Geeks!”