May 2006 Archives

Recent Housing Data

Barry Ritholtz:

It has long been our view that Real Estate is the prime driver of this economy, and its eventual cooling will be a major crimp in GDP, durable goods, and consumer spending.

4 Charts from Northern Trust are worth looking at to show how far along that process actually is:

Redfin goes VC

Rebecca Buckman:

Redfin Corp., a company that helps people buy homes online without a typical real-estate agent, is expected to announce that it has raised $8 million from venture-capital investors and is expanding its services from its home base of Seattle into California.

The company's backers include Vulcan Capital, the Seattle private-investment group of Paul Allen's Vulcan Inc., as well as BEV Capital of Stamford, Conn. and Hillman Co., a Pittsburgh investment company. Seattle's Madrona Venture Group, which invested $750,000 in Redfin last year, also took part in the financing.

James Hagerty:

The president of Cendant Corp.'s real-estate business, newly renamed Realogy Corp., began a three-week trip yesterday to introduce investors to his operation, scheduled to be spun off from Cendant in late June as part of a planned breakup of Cendant, a New York-based conglomerate.

Just as he was heading on the road, Cendant announced that it has revised downward its estimates for earnings at Realogy this year in light of slowing U.S. home sales. Cendant now forecasts that earnings before interest, taxes, depreciation and amortization will decline about 11% to $985 million. Earlier, it was projecting ebitda would be about flat this year.

Realogy aims to grow partly through acquisitions, particularly in the Midwest, Southeast and Southwest. Mr. Smith says many owners of local brokerages are nearing retirement age. "They're looking for an exit strategy," he says.

Links:

Top Brokers Hire Coaches to Climb Higher

Nadine Brozan:

Even brokers who are at the top of their game hire coaches to try to reach higher.

Buffett on The Real Estate Market

Jason Zweig:

Buffett: "What we see in our residential brokerage business [HomeServices of America, the nation's second-largest realtor] is a slowdown everyplace, most dramatically in the formerly hottest markets. [Buffett singled out Dade and Broward counties in Florida as an area that has experienced a rise in unsold inventory and a stagnation in price.] The day traders of the Internet moved into trading condos, and that kind a speculation can produce a market that can move in a big way. You can get real discontinuities. We've had a real bubble to some degree. I would be surprised if there aren't some significant downward adjustments, especially in the higher end of the housing market."
He also discussed the mortgage business.

Google's Opaque Transparency

I recently listened to a talk by Google's Justin McCarthy (formerly with doubleclick). He discussed a number of Google's real estate related initiatives, including the use of adwords on their maps and Google Base. He did not discuss the items (an everlasting user cookie, gmail vis a vis mining email data and their data policies) referenced in Poulsen's article below:

Kevin Poulsen:

It's a good policy for dealing with censorship. But, sadly, Google takes the opposite approach on the equally-important issue of user privacy.

The company collects and retains forever an enormous amount of information from the public, including a record of every search query a Google user has ever run. If the user is also signed up with Gmail, the company can pull those search results by name. If not, Google can still get them by IP address, or look them up through the everlasting cookie it installs on every user's PC.

And now the company is even offering to store users' word processing documents and spreadsheets.

That's an obvious and tempting target for lawyers in civil litigation, and for law enforcement agencies on fishing expeditions, who might easily subpoena Google for a list of everyone who searched on, for example, "Iraqi war protest," then issue a demand for all of the other searches those users ran.

We don't know whether that's happening or not, because Google has an official policy of not commenting on subpoenas or other legal processes. When the Justice Department sought an extensive list of anonymized search queries from the company, we only learned about it because Google fought the request in open court, out of reluctance to part with a trove of valuable data for free.

Housing Futures

James Surowiecki:

At a new online site called HedgeStreet, investors can bet on changes in home prices in certain cities. And later this month the Chicago Mercantile Exchange is going to start trading futures contracts pegged to housing-price indexes in ten major metropolitan areas. The Chicago plan, which is the brainchild of two economists, Karl Case, of Wellesley, and Robert Shiller, of Yale, is straightforward: if you just spent, say, $1.5 million on a two-bedroom apartment in Manhattan, and you want to hedge against the risk that it might be worth $1.2 million three years from now, you can sell contracts that will reap you a profit if local prices fall, allowing you to lock in the current value of your home.

LA Times 125th Anniversary Home Section

LA Times:

125 Years of Southern California real estate.

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