Brooklyn Mirror Blog

10 Social Media Tools That Make Me A Better Realtor

Well, it’s here.  Social Media isn’t just a buzz word anymore. I use social media applications every day to enhance my communication with clients and to make sure the largest number of potential buyers know about homes that I am marketing. 

  

I can send messages that arrive almost instantly, and route them through multiple pathways. Gathering information about market conditions and events is just as fast.   Connections are so much much more easily and varied than in the past.

Another useful aspect of this evolution is the fact that social media are about conversation, not one-way communication.  This can help to answer one of the main complaints I've heard about realtors in general, which is that they
don't listen. In fact, many of my clients are starting to stay in touch with me this way.

Facebook just passed 140 million users. Twitter was in the news because, during the Mumbai terror attacks last month, frightened people trapped in buildings used it to let the outside world know what was going on at a time when the traditional media did not have a clue. In fact, Twitter was so effective that the Indian government had it shut down when it became clear that the terrorists were monitoring it a well.

You may already be immersed in the web 2.0 world. If so, great! If not, here is my end of year list of useful social media apps you may want to learn more about.

1. Facebook  - great way to connect with friends old and new.  You can also join groups or make your own. Very flexible.
2. Twitter - A microblog. You can only send 140 character per “tweet” answering the question “what are you doing?”  It’s real time capabilities make it perfect for listening to a conversation among people you are interested in, or getting the word out to a community.
3. There is a cottage industry creating helper apps for Twitter. Don’t like the interface? Try TweetDeck or Twhirl   
4. Want to see how your Twitter account stacks up?  Try TwitterGrader  or TWinfluence  
5. Del.icio.us - This is a website where you can easily save, share  and categorize your bookmarks. Save your bookmarks here and give them tags of your own choosing. You can also see what other people are tagging.  Delicious uses a non-hierarchical classification system in which users can tag each of their bookmarks with freely chosen index terms (generating a kind of folksonomy). A combined view of everyone's bookmarks with a given tag is available; for instance, the URL "http://delicious.com/tag/wiki" displays all of the most recent links tagged "wiki". Its collective nature makes it possible to view bookmarks added by similar-minded users.
6. FriendFeed - This is a way to route all of your online musings - from your blog, twitter, Facebook, etc - to one stream.  Interested parties can “subscribe” to it, and you can add the streams of online friends to yours.
7. Google Reader  - This is really just an efficient way to keep track of your web subscriptions, but I think it is a necessary part of a web 2.0 life.
    You will need to create a (free) Google account for this, but then you can use it for other things, like Google alerts.
8. BlogTalkRadio - A place where you can create your own radio shows, broadcast them live to the web and have them saved as podcasts for later listening.  You can do phone interviews with up to five call in lines, or just play a pre-recorded piece of audio. The service has both free and subscription tiers. It has been around for about 2 years, and has been used by thousands of people, including quite a few celebrities.  This is going to become even more mainstream in the near future.
9. Feedburner - Still using mainly email?  This tool is for you. You can have email updates sent to you when something new happens on a site whose content you want to follow - say my blog ;-)  Just click on the Feedburner icon, provide your email address and you're home free.
10. Blogging - This is a more general category. My blog, Brookyn Mirror,
is a place where I can comment upon events and trends in the Brooklyn real estate market. I used Typepad, but many others swear by Wordpress,  Blogspot or MovableType. You may not want to blog, but the Blogosphere is filled smart people who are writing on a universe of topics, some of which you will want to read.

If there are any Brooklyn real estate issues that you would like to see more of, please let me know. Email me.

Capital Gains on home sales. Did the 500k exclusion fuel the bubble?

There is some talk that that the 500k Capital Gains exclusion for married couples helped to fuel the housing bubble by inflating the number of home sales over time.

The exclusion was first suggested during the 1996 Presidential campaign  by Bill Clinton and went into law in 1997.

A Federal Reserve economist is quoted in the NY Times this week as saying that the

"number of homes sold was almost 17 percent higher over the last decade than it would have been without the law."

Is this a manifestation of finger-pointing?

The length of time that home owners are staying in a particular home has been decreasing over the years. But how much?  As an experiment, I dove into the public records to see how long home owners were staying in their homes in my zip code here in Brooklyn.

I live in Park Slope, where there has been a lot of activity in the last ten or fifteen years.   Just out of curiosity I took a look at a sample of around 650 sales of 1 and 2 family homes as well as  approximately 725 condos that have sold since 1986.

What I found from this random sample was this:  the majority of the owners of 1 and 2 family homes have lived in them more than 10 years, whereas the huge majority (72.3%) of condo owners purchased their homes in the last five years. That condo owners are recent purchasers should come as no surprise since condo development did not get going in earnest until the late to mid 90's.

What I didn't find was a wholesale quick re-selling of 1 and 2 family homes in Park Slope. If the Capital Gains Exclusion had been a prime factor in the resale of this category of homes, we should have seen shorter length of ownership overall.

Maybe this was a geographic issue as well.  Other parts of the country have a history of boom and bust housing that we do not have in New York. Mark Zandi, Head Economist for Moodys.com, mentioned this in a Forbes.com article earlier in the month.

In it, he says that because there is less room to build in NYC, we have been insulated somewhat from the wild overbuilding that now afflicts other parts of the country.  He points out that "New York, for example, has the lowest level of construction relative to its population, which constrains supply and vacancy, allowing the market to correct more quickly."

I think at the very least that in Brooklyn, the desire for a home, and not an investment strategy, was the driving force in most of these transactions.  What do you think? 

The desire to figure out how we got here is strong, but there is more than enough blame to go around, in my opinion.

Buyer Seller Balance. Is it Overboard?

For some time, the common wisdom has been that we are in a buyer's market.  In the initial stages, sellers did not agree, optimistically believing that everything would turn around "in the next few months" or "in the Spring".

As Spring turned into Summer and Summer turned into the financial bloodletting that we call Fall, that optimism waned.  Finally sellers in my market were becoming reluctantly realistic about where the market was.  In fact many, were eagerly reducing prices in the hope of getting ahead of the market.

And what happened? According to an article in The Real Deal, the volume of signed contracts was down 75% in September and October of this year compared to 2007.

Beyond the skittishness that everyone was feeling in those months, was another dynamic.
Buyers, sensing further price declines, are unwilling to pull the trigger. No asking price is taken at face value.  I have seen buyers make an offer that is clearly hundreds of thousands of dollars lower than what the seller would accept simply because that is what the buyer could afford.

The assumption was that any offer should be accepted, no matter how low.  This perceived imbalance between buyer and seller is one of the main causes of the severe decline in transactions.

As I have noted in my post on housing sales in Brooklyn, transactions have been down 40-50% year over year even as sales prices remained relatively stable. That was the result of the first standoff bedtween buyers and sellers, the one where sellers were holding onto unrealistically high asking prices.

What is happening now is different. Rather than take the seller's willingness to take less, buyers are stubbornly holding onto the idea the lowest price is the objective.  It is, in a way.

Let me get on my soapbox for a minute here. I tell my buyers to remember that at whatever price they buy (assuming that they can afford the home), they will actually have to live in it. Finding a home you want to actually live in and can afford is more important than paying the absolutely lowest price for it. Particularly since timing the market is a low probability endeavor. You won't know that it has hit bottom until it starts moving up. By that time, it will be too late.  If you are seriously in the market for
a new home, by all means negotiate with the seller. But keep in mind that this home will be where you life your life for many years, regardless of what you paid.

Sales prices may not tell the whole story

At the end of October, I wrote a piece based upon the writing of Dan Green of The Mortgage Report Blog in which I noted that there was confluence of good housing news over the last few months that had gone largely un-reported. In that spirit, I looked to see what was really happening in two Brooklyn neighbrhoods that sit adjacent to one another. Neither is particularly trendy, but both have been popular.

Often we judge what is going in the housing market mainly by where prices are going, up or down.
While this is an important indicator, there are some other variables that may add nuance to the story.

For example, I just finished looking at sales prices in two adjacent zip codes here in Brooklyn. By the way, Brooklyn is large enough that there are in excess of 30 zips in the borough.

One was Sunset Park, which is the further South of the two.

It sits between Bay Ridge, Borough Park and Greenwood Heights, which sits basically in the second zipcode I chose.

Greenwood sits around and below Greenwood Cemetery, within whose boundaries lie numerous well known Americans

The neighborhood is not currently as active in terms of sales as Sunset Park, but still desirable.

I looked at total sales, average sales price and average price per square in each zipcode. Additionally I broke the year down into the first six months compared to July through this week.

What I found was both expected and unexpected.

What I expected:

    That sales volume would go down. That has been the pattern here in Brooklyn, and in NYC in general for the last several years.

    That average sale prices would hold relatively steady.  This, too, has been a pattern in our area.

What I didn't expect:

The reality was little different.  Prices in both zip codes edged upwards, with Greenwood Heights gaining about 2.6% and Sunset Park gaining about 2.5%. This was somewhat surprising, since we have seen decreases in average sales price recently across other neighborhoods in Brooklyn.

The bigger surprise might have been that average price per square foot rose almost 3% from the first half of the year until this week.  This is not the trend citiwide, but may have been influenced by the size of the sample.

Not as surprising was the fact that in Greenwood Heights  recorded a 12% reduction in price per square foot.

This chart may make what has happened a little clearer. What we are seeing in Brooklyn is that the way housing is going is a nuanced, geographically-driven thing. Just looking at sales prices will not give us enough granularity to follow what is going on. I will continue to look at Brooklyn neighborhoods from a different perspective. It's always interesting to see what lies beneath the surface of the main real estate news.

Moving to the Coast: Neighborhood Growth in New York City

I read today a piece in  Crains New York   which reports that many of the fastest growing NYC neighborhoods in the next 15 years will be those on the water. That got me to thinking about how demographic shifts may have an impact on the the current real estate market going forward.

According to some estimates, the number of people living within 60 miles of the ocean will double within the next 20 years. This trend is accelerated in the US, where by 2006, more than half the population lived on the coasts.

While this increased density has already caused problems - see the evacuation of South Texas before hurricane Rita - from a real estate perspective, it is very good news (at least if you work on a coast). Looking forward, the increased pressure on housing inventory in these areas should tend to keep  demand high over time because there will be more people who want to live there than there is housing to buy.

In New York City, where I work, we are surrounded by water. But over the years access to the water around us has been curtailed by the construction of highways and by the presence of waterside manufacturing and warehousing districts which took advantage of New York's harbor for transportation. Now all that is changing.

Brooklyn particular has been, and continues to be,  a destination for buyers moving to NYC or from Manhattan,   and the problem in many neighborhoods has been the lack of inventory, which has held prices (until the last few months)  relatively steady even as sales totals went down significantly.

Now, amplified by aggressive re-zoning to replace manufacturing with housing, neighborhoods in many formerly down-trodden areas like Mott Haven in the Bronx, but also upscale enclaves like DUMBO in Brooklyn and the West Side of Manhattan may see substantial growth in the next few years, which will both accommodate anticipated growth in demand, and provide opportunities for buyers and sellers.

Some encouraging signs in the housing market

This month, we have seen a cluster of indicators which taken individually may not suggest that something is stirring in the housing market. Taken as a whole, they may be be a signal of some life in the housing market. These indicators are all national, but even the regional breakdowns are on the uptick.

First, the National Association of Realtors' Pending Home Sales Index unexpectedly jumped 7.4 in August according to a report on msnbc.com.  This is meaningful because it is a leading indicator which gives us a hint of what may be in the future. Of course, we don't know how many of those contracts will fail - some always do - but for the moment, this indicator is telling us that sales activity in the future is likely to rise.

Second, sales of previously owned homes rose 5.5% last month " the biggest gain since 2003, and the inventory of unsold homes fell, a hopeful sign for a housing market mired in a long slump" according to Reuters this week. Total sales transactions doesn't tell us much about where prices are, or even much about the quality of the housing stock. However, it speaks to the fact that more people were at the closing table than the month before, which again is good news.

Third,Realty Trac reported that foreclosures nationally had fallen by a solid 12% in September compared with August. California, where a new law (SB 1137) requires lenders to make contact with a borrower at least 30 days before filing a Notice of Default, led the way with a 51% drop from the previous month. 

Finally, new home sales rose unexpected, probably as a result of continuing price cuts by builders.

``Builders are seeing the light,'' Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania, said in a Bloomberg Television interview. ``They are cutting prices more aggressively. They're very nervous about all the foreclosures.''

I don't pretend to know where all this is leading. There will probably be other shoes s drop relative to the economy (think credit cards, bank consolidations, the election). But in the 24 hour news cycle, scary headlines seem to trump everything else. Good news is sometimes boring, I guess.

Below the surface: Sales prices in Brooklyn

I saw the other day that Jonathan Miller, the appraisal guru, was reporting that residential sales prices in Brooklyn had fallen 5.6% in the third quarter compared to the year before. Knowing that Brooklyn is really a conglomeration of micro neighborhoods, I decided to do a little research on my own.

I took four zip codes, three grouped close to each other near Prospect Park, and the last out on the South end and looked at a sub category of housing: 1 and 2 family homes sold during the first three quarters of 2007 and 2008.  I focused on total sales, average sale price and average price per square foot.

What I found was surprising in some ways. 

The three clustered zips comprised Park Slope, Windsor Terrace/Kensington and Prospect Heights.  The fourth was in Brighton Beach/Sheepshead Bay.

In the case of the cluster, sales volume was down, but not equally.  While Park Slope and Windsor Terrace had significant sales drop-offs (44% and 31% respectively),  the bottom really feel out of sales in Prospect Heights, with a 48% reduction in transactions and a whopping 19% drop in average sales price.
The sales price drop can partly be attributed to the tumult around Forest City Ratner's development, but 20% seems very high.

As my own experience indicated, prices in Park Slope and Windsor Terrace held pretty steady, with a slight gain in the Slope (1.5%) and a slight reduction of 2% in Windsor Terrace/Kensington.

In the fourth Brighton Beach/Sheepshead Bay. the story was different. Here we have essentially flat total sales from the first quarters of 07 to the same period in 08, 100 in 2007 and 99 in 2008 - (OK, down 1%), but the average sales price rose 7.7%. This is probably beiung driven by sales in Brighton Beach, where there has lately been a lot of condo development.

Still, in no case did the number reflect the 5.6% price reduction that was being reported acrosss the board by Miller Samuels.   This may be an example of the ways in which you can get numbers to say anything you want. Or it may be that it is necessary to look below the surfac of the macro statistics that we get if we want to see what is really going on.

Each of these zip codes are within walking distance of the other, and

More detail on the crisis

I came across this excellent piece from www.bloggingheads.tv in a post that Jonathan Miller wrote for Matrix

The pendulum of regulation is swinging back

Re-regulation of the financial system is upon us. The "free market", which has been free since the New Deal, is about to acquire some more diligent overseers.

According to Bloomberg.com, Ben Bernanke speaking today at the Economic Club of New York said that

_____

    Officials should review how supervision and interest rates can minimize the ``dangerous phenomenon'' of bubbles in housing, stocks and other assets that risk bringing the financial system and economy down with them when they burst..."

    ``There is no doubt that as we emerge from the current crisis that we are all going to look very hard at that issue and what can be done about it,''

_____

This is a clear signal that the swing back towards more regulation of the financial markets is likely to accelerate in the next several years.  Beginning with Enron in 2002, and continuing through the rise of Elliot Spitzer here in NY State, the idea that government needed to keep a closer eye on business in general has been growing in popularity. It remains to be seen how it will play out in the context of the financial and housing crises going forward.  Issues that will probably continue to stay on the front burner:

•     pensions
•     how the Government stake in the Banking industry is sold off
•     the deficit as it affects stimulus spending in a recession

If any of this issues make it harder to get a lender to agree to a mortgage, the effect upon the housing slump may be amplified. 

Reality vs what we read and hear

This morning I read an interview posted on RISMedia about how much scary mis-information is being broadcast and written about the financial condition we are in and how it is affecting the housing market. That has been my impression, as well. Out here on the street, there is still buying and selling going on, a fact  which would surprise many people.

 As a realtor in Brooklyn, the first question I get when I met someone is "Is the market as bad as they say?"   I have to answer no. The reality is more nuanced. 

For example, although it is harder now to get a mortgage, it is not true that it is impossible. Sales volume in Brooklyn and NYC in general is down, but prices in our area are not in a free fall. Buyers are looking for a value proposition, which includes price first, but may also include condition and location. Manhattan prices actually increased slightly in the 3rd quarter of this year, although that may have been a function of the pull of a few extremely expensive apartments (see the Plaza).

Clearly, after the huge infusion of capital into the US Banking system announced yesterday, it would be foolish to claim a crisis does not exist. It just has not yet swamped the need of families to find a home with more space, or to dispose of a parent's home or to divide community property during a divorce.  These are events that occur without regard to market conditions.