… just by bringing bagged lunch and brewing your own coffee. Ignore your raises to save the rest. Also, lots of calculators including a balloon calculator.
Author Archives: Galen
Time Travel Transportation Maps
Not like Back To The Future, but pretty cool nonetheless. These transportation maps from the UK are super-sweet – they show the travel time by bus or rail from a few cities in the UK. I imagine we’ll be able to generate maps like this on the fly to show travel time from wherever you are someday. [photopress:transporttion_maps.jpg,thumb,alignright]
Until then, you can always pick two spots and get the travel time via Bus Monster (Seattle) or Google Transit (Portland). I suspect other cities will get Google Transit service soon- a little bird told me that Google transit is getting data from King County Metro.
(via boingboing.net )
MLB defending copyrights for the MLS
The New York Times has a story about Major League Baseball’s lawsuit aledging that use of MLB’s statistics and player names in fantasy leagues is infringing on major league baseball’s mojo (look and feel?):
“What a company like CBC is selling is not nearly a repackaging of statistics,” said Lee Goldsmith, a lawyer for Major League Baseball Advanced Media. “They’re selling and they’re marketing the ability to buy, sell, draft and cut Derek Jeter, Alex Rodriguez, Albert Pujols. And part and parcel of the reason that people are willing to pay for that ability is the persona of Jeter, of Rodriguez, of Pujols.”
The Washington DC MLS (MRIS) recently issued a couple of reports urging agents to consider statistics like list price to be copyrightable (Russ doesn’t agree with this analysis, follow the link to see why), but in the world of baseball, the decision has already been handed down:
Major League Baseball Advanced Media is not making a copyright claim to the statistics themselves; a 1997 decision in the United States Court of Appeals involving the National Basketball Association ruled sports statistics to be public-domain facts that do not belong to the leagues.
Perhaps the MRIS should look into hiring the MLB lawyers when they’re through with the case. By that time they’ll be experienced at explaining the difference between statistics and “right of publicity”:
Rather, the central issue concerns celebrities’ ability to control use of their names in commercial ventures, and how this “right of publicity,” which has developed under state common law and statute over the last half-century, may commingle with Constitutional press protections under the First Amendment.
Am I better off renting?
The last bubble discussion got me thinking – is it really so bad to rent? Well, here is a cold and calculated answer: The Motley Fool has a great calculator to determine whether you are better off renting or owning (financials only, you supply the emotional). Even the bubble hand-wringers amongst us might find some buy-friendly scenarios. Unfortunately, if owning is better for you, the calculator does not help you save up a downpayment.
They also have a how much house you can afford calculator, although it seems to have low-balled my estimate.
-Galen
Bubble blog roundup
Good news for people who like bad news:
- The Housing Bubble Blog (formerly housingbubble2)
- Bubble Track (blog)
- Bubble Meter (blog)
- Housing Bubble (blog) – Apparently Housing Bubble’s last entry in September was so exhausting that they gave up or they declared victory – you decide.
- Seattle bubble (blog) – a much longer list of bubble sites here
And a couple of articles:
- Speaking Truth or Crying Wolf? (article)
- The bubble bellwether index (article)
And if those aren’t enough, I suggest the tongue-in-cheek There is no Housing bubble!
It sure is easy to be a hater, isn’t it?
I think both sides are taking a foolish black-and-white approach to the bubble question; clearly there are some indicators that there is a real estate bubble, but the consensus seems to be that the risk of home prices plummeting is low. Home prices will probably be flat until inflation brings prices back to “normal” levels. My concern is that if house prices do pop precipitously, there are going to be serious consequences for home owners and non-homeowners alike.
A similar scenario, different context: A few years ago, the Fed found itself with a small risk of Very Bad Thing happening. That Very Bad Thing was deflation (remember that?). Few economists were convinced that actual Japan-style deflation would occur, but because of the potentially devastating effect of deflation on the economy, the Fed moved aggressively to combat it (giving us the cheap money we used to buy expensive homes) even though the solution could cause other problems. Why? Here is the economist (login required) in 2002 (slightly out of context):
… however small the risk of deflation, the economic cost would be so high that policymakers should respond as if it were a central risk.
Someone who is looking at a home today or who has a sizeable mortgage on their home today should look at all this bubble talk in the same way; the risk is low that your property value will decline 25% or even 10%, but the risk is certainly there. Specifically:
- Do you have enough savings or equity to stay above water if your house loses 10% in value?
- Is the risk of falling property values worth the potential upside?
- If it isn’t a bubble now, what metrics or signs will you use to tell you if or when it is a bubble? (A corollary: Will those metrics tell you when it is a bubble or when the bubble is popping?)
Perhaps house valuations have fundamentally changed over the last 5-10 years and we there is no risk of house price declines. The one argument I do not buy is that our land use laws are making property more expensive; builders are cranking out hundreds units and making loads of money on each unit, meaning they could continue profiting even at lower price levels.
Galen
Clever marketing
I’m back from a crazy contract job in New Orleans and a great vacation in the Copper Canyon, Mexico, where the real estate agents must walk eight hours up a steep arroyo just to talk to their rural clients. I’m guessing there aen’t a lot of buyers for precariously perched tiny houses serviced only by burros. I recommend the trip and I am a big proponent of a trip to a hot sunny place every Seattle March.
[photopress:Fortunes.JPG,thumb,alignright] On to real estate: Normally I’m not into cutesy marketing, but these fortunes cracked me up. Bonnie’s dedicated client served her fortune cookies after a great dinner and noted that they really matched Bonnie’s style, which got me to thinking about the basics of any kind of marketing; your marketing (including your blog) should match your style. If you’re outgoing and funny, your marketing should be outgoing and funny. If you’re a brain, it should be more like the puzzle a friend of mine got from his money manager last year. Which just happens to bring me to a new real estate blog that sings to the bean counter in me: Altos Research. Charts and graphs, oh my!
Disclaimer: Mike is the relative of a friend of my relative.
Futures and property values: you can bet on the bubble
Last November, Slate magazine posted a piece on the housing market futures. The gist: you can hedge a drop in your house’s property values by buying derivatives that pay if the region’s property values drop a specific amount over a specific time period or even if predicted growth doesn’t materialize:
Next spring, however, investors might finally have a better hedging product. Just in time for the apparent top of the housing market, the Chicago Mercantile Exchange is introducing futures and options on housing prices in 10 cities for the second quarter of 2006.
It’s pitched to big institutions, but it would probably benefit individual investors immensely. That is, if they used it. Unfortunately, the individual home owners it would benefit the most didn’t have enough cash on hand to put money down on their house and are currently just paying interest, so they probably don’t have extra money to invest in hedges.
Also, as Ardell eloquently pointed out a while back, different sectors of the market can “pop” at different times and at different rates. Unfortunately, this could only protect against region-wide shifts:
These options will cover large markets—it will be tough to hedge the value of your own house, which depends so much on your particular neighborhood.
I liken it to buying an index fund (or mutual fund) instead of a single stock, although maybe insurance against extreme price swings is a better analogy; the effect is to reduce the upside and the downside of your investment. It doesn’t seem very exciting in the least so I’m putting this one in the “popular after the crash” basket, as it’s hard to plan for hard times when the good times have lasted so long.
So who’s buying on opening day? And can the market correctly predict housing prices over the next few years, or are investors so oriented toward a bubble popping that they can’t see the inherent strength of the market (or vice versa)?
Galen
ShackPrices.com
Zillow MLS membership – done
Zillow gossip of the day (already reported by Dustin in the comments): Rumor has it that Zillow is now a member of the NWMLS and they’re aiming to get a license in every state.
You could spin this as the story of a company that promised an MLS-free “revolution” settling on improving the current system, but business-wise, I think it makes sense; going it alone is a much higher risk strategy that could lead to spectacular failure and would definitely be an uphill battle. This means they can have all the listings of brokerage sites, a way better interface, and sell leads and maybe make more of the process.
In my mind, consumer-centric web design is Zillow’s true innovation in the real estate industry. Even the biggest sites still view the internet as a way to snag customers into using their “real” business. No broker or agent site approximates the consumer-centric feel of Amazon.com circa 2000 or Google and Yahoo today, although I think the race is on to get there. I give Zillow a good shot as it looks like they’re first to market with a trully consumer-oriented, national real estate search site.
-Galen
ShackPrices.com
UPDATE: John Cook of the Seattle PI picked up this story and has some interesting quotes from Zillow vice president Jorrit Van der Meulen, NWMLS Chief Executive Jack Johnson and Redfin Chief Executive Glenn Kelman. Well worth a read.
Updates – NAR and Zillovania
I suggested a while back that the National Association of Realtors start a PR campaign because they were looking so bad. Well, the $25 million campaign has begun.
As for Zillow (a company with $25 million in investment thus far), my take is this: predicting real estate values is a clever and successful (and expensive!) starting point for them. When they say that their model will be entirely based on advertisements (zads?), I predict a very broad interpretation of advertisement. You could say that homevalues is all advertisements, right? What if Zillow charged $10 (initially) to list a home and $200 to make it a “featured home” – those would be advertisements, right? Same goes for advertising agents (a la this very promising site). All they’re saying is, for now, they aren’t going to take on RedFin for the 0.5% of the market that wants to buy a house entirely unaided.
It’s a clever model because consumers will go to the site to check the value of their home before they sell and to check the estimated value of a home when they buy (even for a laugh if it’s wrong) – this was money very well spent and is worth 10 times more than advertising. If (when) Zillow starts showing listings on their site, that seller will go to an agent to list it (until they find one through Zillow) and they’ll say “lets list it on Zillow for $10,” or, “I’ll list it on Zillow for $10 if you don’t want to.” Zillow will not make it in the long run without houses that are for sale on the site. According to Rich Barton, CEO and founder, working with the approximately 900 MLS in the United States would be “a Herculean task” that they’re not willing to take on. So they get the eyeballs that every MLS-alternative has been clamoring for now, and they get the revenues in the future. See? Clever.
I think Keith Castonguay (perhaps melodramatically) hit the nail on the head, but he was wrong about the eyeballs: they will come from features and word of mouth, not primarily advertising. He’s also wrong about the absolute nature of Zillow; just as there are competitors for online travel booking, there will be competitors for this. Don’t think Zillow’s undertaking is without risk; they have to get a lot of listings (and features) on there before someone with an alternate model gets computer generated house values next to MLS listings. It’s a pain to search for property when only half of what’s available shows up. If Zillow prices listings too high or people just don’t sign up fast enough, other giants will stomp on it.
I also expect Zillow to make money from other ventures too – mortgage ads, home staging recommendations, what-have-you.
Galen
ShackPrices.com
The Seattle area was sunny for a split second
… in January. It’s raining again.