Bits Bucket And Craigslist Finds For July 18, 2006
Please post off-topic ideas, links and Craigslist finds here!
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Soaring energy prices boost Houston housing
The national housing boom may be coming to an end, but Houston’s is soaring, thanks to record energy prices.
“Houston is drawing people,” said Judy Thompson, an agent with Michael Berry Properties Inc. who shepherds buyers through some of the city’s toniest neighborhoods. “It’s the energy capital of the world.”
Nationally, it’s “all going in the wrong direction if you’re into real estate,” said Peter Wall, chief investment officer for J.P. Morgan Private Client Services. But not Houston. Consider its prestigious and pricey River Oaks neighborhood.
According to an analysis prepared by Ms. Thompson, the number of sales of homes listed at $1 million-plus is 28 percent higher this year than last year. Properties selling for $2 million sell in an average of nine months, compared with the 12 months it took to sell similarly priced homes in 2005.
In fact, even if rising mortgage rates subdue demand in Texas this year, the state’s housing industry can still look forward to one of its best years on record, reports D’Ann Peterson, an associate economist at the Federal Reserve Bank of Dallas. That forecast holds true for Houston – especially for its high-end properties, real estate agents said.
While it sounds like shades of the 1980s, John Daugherty rejects the word boom to describe today’s Houston. “The Houston economy is very stable, very healthy,” he said.
Full article at
http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-texasview_17bus.ART.State.Edition1.17a6d6f.html
High foreclosures in Harris County.
How will the heat affect the housing market? With record heat (and some prediction of hotter summer), electric bills will be eye popping in the next month or two.
And AC blasting in cars will mean higher gas bills, too.
Will the heat squeeze (squish?) the homeowners or what?
A recent episode of Mythbusters showed that running the air conditioner actually used less fuel when compared to riding with the windows down.
http://kwc.org/mythbusters/2004/11/mythbusters_boom_lift_catapult.html
Only after reaching a certain speed (depending on car’s shape, power, and fuel efficiency), I presume?
I doubt having the windows down uses more fuel in the parking lot!
Does my dog’s head hanging out the window affect my windflow coefficient and thus, MPG? Maybe I can square the corners of his bulbous cranium for better airflow characteristics.
Why would anyone believe those jerks?
The Mythbusters get paid to burn, blow up, shoot, stab, sink, throw, smash, crash, crush and break stuff. They are my heros.
Sounds like Benny Hinn!
To this day, the sound of the cement truck mixer being detonated with a metric ton of high-explosives is the favorite sound I’ve ever heard coming out of my television speakers.
My favorite episode, however, was the chicken gun. Nonstop hilarity for half an hour as they fired raw and frozen chickens into the windshields of a Cessna.
60 minutes just had a segment on this same issue. They claim that having the windows down does not use more fuel but using A/C definetly uses more fuel. Looks like mythbusters must be tied to the oil industry. Miss leading the public as ususal. Take the test your self. Drive for an hour with the A/C on and then an hour with the windows down and you’ll see that the fuel gauge dip when the A/C is on.
But I heard 60 Minutes fabricated the test results!
Actually it depends on the increase in drag when the windows are open vs. closed and the speed the test is done. (It is reasonable to assume that drag increases if the windows are open.) The force created by drag is proportional to the velocity^2, therefore there will always be some velocity that open windows will consume the same amonut of energy as the AC … and above that velocity the drag force only increases (by the square) and will result in even greater energy loss.
The Mythbusters test was at a constant 60 miles per hour, and they figured out that the drag induced on the car from the windows being all the way down caused more fuel loss than the air conditioner running.
You could say it’s an unrealistic test, because they kept up a constant speed, but for freeway driving I think it’s pretty accurate.
Let’s not forget how aerodynamic the car is. More drag with windows down in some vehicles vs. others.
Texas certainly does not have a monopoly on horrific heat but…..if you drive with your windows down here, rather than use the A/C , fuel economy is moot because you’ll likely die of heat stroke in this hell hole (or wish you did).
Hey, I drive an ‘88 Volvo with a broken A/C in Austin, TX! And 2 out of 4 windows do not roll down!
The last 2 days have been very hot but morning commutes aren’t too bad. And, at my current job I park inside a parking structure so things don’t get too hot in the afternoon unless I have to run errands before I get home. And A/C’s been broken for 4 years or so (have lived in Austin for 11 years).
At least the car’s paid for and engine runs just fine.
The relative value of CA coastal housing vrs. the Central Valley becomes apparent during a heat wave. As if Bakersfield did not already have enough problems to contend with in its residential RE market, new prospective buyers have to weigh in the potential for budget-crushing AC and water bills.
Just wait for the rolling blackouts later in the Summer.
Most of the hottest days so far this Summer have landed on weekends. That kind of luck will eventually run out.
Good point Stucco;….I was talking to a friend of mine who lives in Medford a few days ago….He said; Dave, its 102 here right now..I said; Bob, we have that nice breeze off the bay right now and its 71….Not suggesting that justifies our housing costs but it is a fact….
If the only deciding factor as to whether or not to buy a home in Bakersfield is the cost of water and electricity, one deserves to live there. Bakersfield: The third rung from hell.
Heat, what heat? Only 106 for Tucson today! I’m sure tons of people will out shopping for over-priced inner city dumps. BTW, our most expensive house on the market has been sitting for 3 years without a buyer. Got an extra $22 million, its yours:
http://www.campbellcliffs.com/main.html
http://www.campbellcliffs.com/main.html
106 in Dallas as well.
Are you kidding? I’ve been coveting that house for years. Not sure what I’d do with it but it’s the coolest . . .
That home is STUNNING…I did freak a bit when I got to the description of the cooling system “twin 25 TON A.C. units”. Holy checkbook!
The only problem is that it’s in Tucson. Your entertainment choices on the weekends are defined by which movie theater you want to go to.
And how many lights?
Yes, but yours is that proverbial “dry heat”. (So they always so.) Over here in Philly it’s not just the heat, but that hateful humidity that’s killing us!
HA! You Nor-easterners don’t know “hateful humidity.” We here in South FL clearly corner the market on that from June through October!
Although, to be honest, in this recent heat wave, it seems like we here on the coast are actually LESS hot than you guys up north and in the Midwest. Gotta love those sea breezes.
That house is AWESOME… as long as you never leave it. Imagine the rattle snakes and scorpians and turantulas living in that yard.
A very nice home utilizing great architecture, materials, and style. Unfortunately, it is located in the middle of hell. I am not surprised it has languished on the market for 3 years. Cut the price down to 10 mil and you might start getting some serious lookers. Otherwise, keep dreaming…
I was wondering if anyone could comment on the merit of a state-financed first-time homebuyer program such as SONYMA - are there any hidden negatives, risks, etc. or is it a good program? Please see the link for more info. Just curious, not buying anytime soon…
http://tinyurl.com/kwdkg
“The State of New York Mortgage Agency (SONYMA) offers four mortgage programs to assist you with the purchase of a home in New York State. Each program features a below-market interest rate, low downpayment requirements, no points, no prepayment penalties, and offers closing cost assistance. Each of these features are designed to make your home purchase more affordable. All SONYMA loans are financed through the sale of tax exempt bonds.”
Thanks.
Hey there’s an idea. Get the government more involved, raise taxes to pay for it, get people into houses they cannot afford and force everyone who can afford to bear the costs. That’s a formula for less and less affordable housing.
Whoever came up with these demand-side affordable housing programs should be taken out and shot. They sound great at an individual level (free money!), but as Robert suggests, they have the combined effect of pushing prices farther out of reach and tempting low income buyers to get into a much larger mortgage than they will ever be able to pay off. I cannot wait for the fallout from these programs to play out over the next decade or so. I hope any financial reporters who might be reading here will feel free to break the story first.
Man, don’t even get me started on the other evil twin; Location Efficient Mortgages.
Links:
http://www.locationefficiency.com/
http://www.nrdc.org/cities/smartGrowth/qlem.asp
Oooh. Here’s some Cote Bait
http://www.scag.ca.gov/lem/transmyth.htm
These guys are really full of it.
And one of my shorter replies is up on my blog. I busted SCAG sumptin fierce on this issue. And don’t even get me started on the other other evil twin; mixed-use development.
Don’t rattle Cote’s cage guys……..
But it’s a very nice gilded exurban cage w/vu.
Well, the impact of record heat and record gas prices are probably going to be slowing the consumer even more.
Simmsssays…7 Inventive Ways to Sleep
http://www.americaninventorspot.com/inventive_ways_to_sleep
I take back everything good I said about the L.A. Times; today’s edition has a front page article lauding ‘affordable mansions’ in northern L.A. County’s Antelope Valley, Lancaster and Palmdale - are they kidding? http://tinyurl.com/zewcp
This is just crazy. That guy who works for the city of Los Angeles could rent and have the following:
A couple more hours sleep each night
More family time
Less road time
Probably a few fun family getaways each year
Why do people treat homeownership like some kind of religious sacrament?
Yeah, one guy’s commute described in the article is 4 hours and 30 minutes per day.
As for the climate: But it’s a dry heat!!
And: “About 65,000 of the region’s residents commute to jobs in other parts of the county — slightly more than half of the working adults.”
You really have to question the sanity of this.
People have been doing it for 40 years. I had an uncle that lived in Palmdale in the 60’s and drove to Burbank every work day for 20 years. My brother did the same thing. “Affordable housing” indeed
“Why do people treat homeownership like some kind of religious sacrament?”
Nothing surprising here. It has always been a goal, especially for families. Fundamentals used to be in line, therefore, buying rather than renting made sense. The mind-set was in place. Enter the ever changing society….families, plus lots of single people who still want to buy (the notion has been ingrained from childhood)….but the economy does a flip, stock boom, stock bust, housing boom/bust, fundamentals turned upside down, and on and on. Unfortunately, not all people step outside the box and educate themselves, or use common sense to re-evaluate the situation. It’s like they are on autopilot and can’t be stopped. Kinda like zombies in Night of the Living Dead…they’re on a mission and won’t stop UNTIL they are destroyed (foreclosure,bankruptcy, ruined credit…you name it, it’s happening).
I do understand what you are saying, though, but you are preaching to the choir.
BayQT~
Interesting comments SF;…and the point is well taken…Its seems that it is ingrained from childhood…Ultimate goal is the dog, cat & lawnmower…Its also been mentined many times here before but I believe the tax subsidy plays a significant role in the motivation also…
Because leverage on an appreciating asset has a huge impact on returns. Most people don’t understand that, but they do know that over the long run most folks did really well on their home ownership bet (even if they bought at a prior peak).
I must have been scarred as a child. The idea of owning a home is even more petrifyng to me than motherhood.
ditto. LOL. I could pay cash for 3 pretty nice houses but I won’t make the commitment. No kids either.
I’ll speak from my own personal experience. One reason I want a home of my own is so I can control my environment. I rent and have no control over what tenants the landlord brings in and out (and it really is a crapshoot - have had great neighbors, and have had horribly rude, awful ones as well).
Having disruptive tenants around me really affects my living environment. Having a home of my own (preferably a detached SFH) would get me away from the revolving door of neighbors that is my current existence.
How about being surrounded by annoying, rude, clutter loving, and loud neighbours without having the option to move because everything you have today and what you might get tomorrow belongs to your house.
Or surrounded by nosy old geezer neighbors who notice when you’re home and gone, and come by all the time offering advice on everthing that is not their business. But you don’t dare be rude lest you have a standoff with the neighbors.
My suburban friends has less than stellar neighbors. One couple lives across from a cheating husband who leaves his garage door open and stereo up all the time. The other couple is next door to a ghetto group who throw trash everywhere.
Both couples are sweating because their property values go down. If you’re a renter, you walk and let someone else deal with the problem.
Suburban paradise is only in the movies.
“One reason I want a home of my own is so I can control my environment. ”
Tell that to someone who bought in a condo with an overzealous condo association.
I COMPLETELY disagree. I am, what landlords would deem, a “dream tenant”. I’m a long-term renter. I pay my rent on time. I do a lot of simple repairs and maintenance myself. I don’t disturb the neighbors with loud parties or broken down cars on my lawn or tossing live fireworks into other neighbors’ backyards or letting my kids run around unsupervised, setting up booby traps for unsuspecting motorists. But, guess what… my neighbors do! And guess what else… The are OWNERS!!!! The homes in this neighborhood were selling in the low $900’s, (when they were selling at all). If I bought at the peak and then, after living in the house for a few months, realized the trash that surrounded me on a daily basis, I’d be PI$$ED!!!! But, I just rent. I can move whenever I want! And this is actually an improvement! At the last place I rented for 7 years, my neighbor was a Meth addict. He threw a hammer and a pumpkin through our mutual neighbor’s window. That was just the beginning… I left before it got too bad but he’s in prison now, or so I heard, for vandalizing a Jaguar and a few petty burglaries. Guess what… he was a homeowner, too!
Where do you live? I’d be super pissed, too, in those situations.
However, when I look at all my friends around here (border of Bucks/Montgomery County, PA) who own and I see their fantastic neighborhoods and meet their nice neighbors, I can’t help but want that for myself and my son.
A few comments:
Tax subsidy? Sure…some people understand how that works, and some don’t. Some can’t really use the write off as they would like because they don’t have enough to itemize for it to make a difference, so you are back at square one, only you have all of the maintenance, property taxes, etc that goes along with “ownership”. People are just programmed to want to buy a house because it’s part of the “perfect picture”.
Better neighbors? As Wittbelle pointed out, neighbors from hell can be the homeowners themselves so ownership does not put a force field around you to protect you from the “bad people”. And if one has nice neighbors, nothing is stopping that from changing either. You can’t freeze frame it….Nice people move out, not so nice people can move in. And it doesn’t matter what price range the houses fall into…disruptive people come in all shapes, sizes, colors and financial standing. It’s all a crapshoot.
And, eastcoaster, couldn’t you still have some “control” over your environment by renting a detached SFH? Many people on the blog are renting detached SFH. Some say they are treated as pariahs because they are “renters” …that is very, very sad. I wouldn’t even want to know those people (owner neighbors) who had their noses in the air like that.
All I was saying was that there is nothing wrong with the dream, but it only works well when the fundamentals are in line. I think we can agree on that.
BayQT~
Eastcoaster: I’m in Huntington Beach, white trash capitol of the O.C.!
I was at a wedding out in Lancaster a few weeks back. The weather is out of control awful — I believe yesterday it was about 108 degrees. You can rent a three bedroom house out there for about $1500 a month. I also work with people who commute to UCLA from Palmdale — the up at 4:30am to hop the shuttle crowd. Ugh. While I was out there I didn’t see one supermarket, or non-chain restaurant, or movie theater, either. A lot of dead lizards, though.
I’ll take urban life in an 1100 sf condo, with a 20 minute commute to work, any day over this.
That said, I didn’t exactly read the article as being a promotional piece for McMansions in the high desert. More of a profile of a lot of desperate, misguided people. Just this weekend they profiled a guy who was going broke from paying $650 a month on gas to commute to his job from Apple Valley. To me, this is the companion piece.
” I also work with people who commute to UCLA from Palmdale — the up at 4:30am to hop the shuttle crowd.”
Do these people not realize that they are literally throwing their lives away? Hell, my wife and I carpool and leave for our respective workplaces at 8am, and get home at 7pm, and I feel like we spend too much time on the road. I couldn’t imagine tacking on another two hours each way.
“I’ll take urban life in an 1100 sf condo, with a 20 minute commute to work, any day over this.”
^5 bubblewatcher! I was a 45 minute commute to work, but when my youngest daughter when away to school in 2002 (she graduated last month) I moved closer to my job….10 minutes, city streets; about 6 miles. Gotta love it. Sometimes I ride my bike to work. And if push came to shove, I could walk it…no problem.
“Just this weekend they profiled a guy who was going broke from paying $650 a month on gas to commute to his job from Apple Valley.”
That’s just ridiculous. $7,800 a year. ..just so he can “own” a house in Apple Valley? My bill is around $1,000 a year to gas my car. That $6,800 can do a lot of other things.
BayQT~
I did a similar thing. My fiance and I moved from Sacramento to Davis. $1000 per month rent vs $2100 piti and we only have to fill our gas tank once a month - every 3 months if we bike which we do when then weather isn’t 100+.
if we bike which we do when then weather isn’t 100+.
Davis;…Clarify please….you can’t bike from Davis to Sac ?
Well you can if you really want to. My fiance and I both work for UCD which is why we moved. Our commute around 2 miles each way >; )
That is the rationale for the location efficient mortgage which Robert Cote hates so much. He doesn’t think you should have that choice in the market.
I enjoy much of Robert’s post but some of them are truly loony, like shoehorning everyone into exurban lifestyles.
Granting preferable terms based on location is called redlining and is illegal except when it is govt subsidized LEMs. LEMs are anti-choice.
Robert
LEMs are not even close to redlining. That is a huge red herring on your part.
Essentially, LEMs allow a slightly higher DTI ratio to offset the reduced transportation costs associated with the highly subsidized exurbarn (not to mention intellectually dishonest) exurban dream.
I am all for free markets, we should try it sometime.
No. The rationale for the location-efficient mortgage is that prices have gotten so high that the government is stepping in to subsidize housing for the middle class in order to discourage people from making the drastic mistake of moving out to nowhere-land where there are no services, overcrowded schools and the freeways are basically parking lots. If housing prices were in line with historical averages in Southern California, condos and houses in West Los Angeles would be reasonably affordable to people making the median income, like they were seven years ago, when we bought our condo in WeHo for about $210K, which was the average price for any home in California at the time. People would have real choices about where to live, including the choice of owning rather than renting, which I happen to prefer.
Balanced reporting at its worst
I bet there was a nearly identical article in the Times dated on or about July 18, 1989, just before Palmdale and Landcaster were decimated.
Actually there was….I remember them like yesterday. Almost word for word this is playing out the same.
Wonder what it costs to air-condition 25,000 square feet?
One of the first things I wondered, too. I guess, as the saying goes, if you have to ask how much, probably can’t afford it. I wonder who will eventually buy it? Someone who WANTS to live in the high desert, away from everyone and everything. If it was bigger (M-U-C-H bigger), it would remind me of the Hearst Castle in San Simeon…w-a-a-y-y-y up on a hill, f-a-r away from everyone. But William R. Hearst had money coming out of his ears.
BayQT~
Wonder who owns it. Mc Cain?
Portland Or and Boise ID:
Echo bubble areas with creeping inventory - only been keepign track since last month. Numbers from newspaper web pages and not official MLS sites:
DATE PDX BOI
6/12/06 3473 2793
6/13/06 3454 2793
6/14/06 3472 2833
6/15/06 3489 2858
6/16/06 3494 2875
6/19/06 3129 2886
6/26/06 3778 2886
6/27/06 3753 2886
6/28/06 3754 2886
6/29/06 3837 2886
7/5/06 3259 3105
7/6/06 3245 3102
7/7/06 3283 3111
7/10/06 3568 3131
7/11/06 3601 3184
7/13/06 3613 3177
7/14/06 3645 3260
7/17/06 4068 3286
7/18/06 3983 3351
I found some maps generated from Zillow data. They show the price per square foot (zestimate) laid over regional maps. Check it out:
Los Angeles
San Francisco
Seattle
That is interesting. Thanks for the links!
Greater SD ziprealty percent reduced = 38%+, and steadily climbing. How high will this number get by the time everyone realizes the market has crashed?
Q: What did the Realtor® who fell (or was pushed) out of the 20th floor say as he passed the 2nd floor?
Ans: “So far, so good!”
Ans2: “I’ll have a soft landing!”
The June PPI (Producer Price Index) is in with a 0.5% increase (6%/year). What is an inflation-targetting central banker to do other than turn the rate increase crank some more?
http://tinyurl.com/n7wdq
Oh, but the Core CPI was only up 0.2%. Pay no attention to the rampant inflation behind the revisions, exclusions, and hedonics. Nothing to see here
At least two more hikesat the Aug & Sept meetings
The combination of a shutdown of the home-equity ATM with high inflation
is starting to have repurcussions in the retail sector.
————————————————————————————————
Target raises worries of spending slowdown
Discounter lowers its July sales outlook but gives no explanation
By Jennifer Waters, MarketWatch
Last Update: 10:43 AM ET Jul 18, 2006
CHICAGO (MarketWatch) — Consumer spending concerns took center stage Tuesday, a day after Target Corp. substantially trimmed its monthly sales forecast with no explanation. Target dived 6% to a 22-month low of $44.90 in early trading. The stock recovered a bit to trade at $45.05, with more than 7.2 million shares changing hands.
http://tinyurl.com/pkd56
“But Target, whose main customers tend to have higher incomes and span a broader range of demographics than Wal-Mart’s, was largely considered immune to much of that. Families with higher incomes tend not to alter their shopping habits because it costs more to get to the shopping centers and malls.”
I’ve read the second sentence above about 10 times and I still can’t understand it.
I think if you add “just” in front of “because” the sentence says what they intended.
Same reason NY gets better oranges than Florida (or Georgia). If it costs you $100 bucks in time, gas, and depreciation of your vehicle vs say $5 simply to show up start shopping the costs of buying $50 worth of crap are less meaningful.
Interestingly I think both ideas are incorrect. Wal-Mart has a subset of stores that is fundamentally identical to Target (in terms size, sales, and of demographics of the surrounding area) but has a second large subset of stores (in heavily rural areas) that are very, very different and throws off the overall average. Wealthy and poor definitely have differing trends, but I think most of the differences between TGT and WMT’s performance over the last five years has been TGT’s stores out merchandising for the same customers as WMT’s potential stores. Wal-Mart has been more focused on merchandising and has done a slightly better job of competing for the marginal customer.
You need to get the pronunciation right in order to understand the second sentence:
tar-sjhay’
OT For those who follow the Plunge Protection Team, this was posted today in the MIDAS Report at lemetropolecafe.com:
“The PPT waited until late in the day, as usual, to implement their patented HAIL MARY play to prop up the US stock market.
The DOW was plus or minus, yet roared up 52 late to 10,779. There may not be anything more obvious in the history of mankind than the existence of a Plunge Protection Team.”
Now this is truly pathetic. Pandering to the basest instinct to sell overpriced property. The realtor in Frisco who got stabbed last week learned that the hard way.
July 16, 2006
Playing the Sex Card
By STEPHANIE ROSENBLOOM
A WOMAN with tousled hair straddles a grinning, shirtless man on a bed alongside the words: “Try This at Home.” This was not an advertisement for beer, perfume or instructional Kama Sutra DVD’s. It was an advertisement for the Herald Towers condominiums in Midtown Manhattan.
In a print advertisement for the Link condominiums, also in Midtown, a red-lipped topless woman (only a sliver of one breast was visible) is shown sitting in an apartment while a tattoo is applied to her exposed back.
A glossy advertisement for the Altair 20 in Chelsea has lush greenery framing a shower stall and a svelte, wet, naked woman with a strategically positioned banner that reads “To the Altair 20 Rainforest.”
Some of the advertisements for new condominiums this year look more like ads for condoms, and that has caused more than a few eyes to linger on traditionally staid real estate listings. These provocative advertisements have also raised eyebrows among real estate and advertising professionals who say sex has never been germane to real estate marketing the way it is, say, to music and underwear.
Titillating advertisements are a nearly fail-safe way to capture consumer attention in a slower, more competitive market. But their existence also raises the question of how to sell real estate — whether salacious advertising is a smart strategy that can win buyers or a lazy tactic that lacks creativity and alienates viewers. It is an ideological tug-of-war between the stately and the cheeky, between white gloves and bare skin.
“It used to be very much oriented toward elegance,” said Neil Binder, a principal in Bellmarc Realty, “the guy wearing white gloves opening up the brass door, or the couple at a social gathering with effective violin and concert music behind it. That’s the old-school way of how you sold New York prestige.”
“Now,” he said, “it’s bare backs.”
Selling real estate these days means selling a lifestyle, according to industry professionals. People are “looking for a narrative in terms of how they’re going to live,” said Jasmine Mir, the senior vice president of the Corcoran Sunshine Marketing Group. The aim, she said, is to match buyers’ “lifestyle expectations by showing them imagery that will allow them to imagine an exciting and appealing lifestyle living in the building.”
“I think the advertising is, at its heart, emotional,” she added. “I think people need to be reached in an emotionally compelling way more and more in this market.”
These days some people feel compelled to stop and stare. As Mr. Binder of Bellmarc joked, “My wife says to me, ‘Neil, how come you take so long to read the real estate ads now?’ ”
Eye-candy advertisements are not the norm, though more can probably be expected, partly as a way to generate excitement in a quieter market and partly because some young bloods are enjoying shaking things up.
The Developers Group, a sales and marketing firm, first departed from the tried and tame in January with an advertisement for the Hudson Condominiums near the Time Warner Center, which showed an image of the 20-story building accompanied by the statement: “You Know Where You Can Stick Your Bonus.”
The firm’s partners, who are all younger than 35, were bored by cookie-cutter real estate advertisements featuring building facades and logos.
“A lot of the ads were looking identical,” said Highlyann Krasnow, the chief operating officer and executive vice president of the Developers Group. “To be a young company, it was getting to be painful for us,” she said. “They all seemed the same. They just weren’t fun.”
The “stick it” advertisement, as Ms. Krasnow calls it, created buzz for the condominium and got the firm noticed by developers who had never heard of it. “It became a conversation piece,” she said.
The Developers Group’s new campaign to promote itself, which began showing up around town last month, has a photograph of a man and a woman in a clench on top of a washer and dryer, sandwiched between the phrases “Developing Passion” and “W/D Hook-Up.”
So far, the company’s advertisements have not included scantily clad women, and Ms. Krasnow said she had no interest in being an “overtly sexy women-in-bikinis-on-the-beach kind of company.”
“There’s kind of a humor behind it,” she said of her advertising. “It makes it seem a little bit more intelligent. At the same time we are alluding to sex because sex does sell.”
Risqué advertisements are generally the handmaidens of new construction, not of prewar buildings. And classic New York residences, like those on Park Avenue and Central Park West, need no marketing campaigns.
“There are certain prestige addresses in the city,” said Sam Craig, a professor of advertising and marketing management at the Leonard N. Stern School of Business at New York University. “But it’s not because of sex.”
Of course, sexy advertisements are hardly startling these days, especially with the proliferation of Internet pornography, but when women are pictured alone and in various states of undress in real estate advertisements (as opposed to beer advertisements), it raises larger issues.
Linda Kaplan Thaler, chief executive and chief creative officer of the Kaplan Thaler Group, an advertising agency, said marketing a property with well-endowed women was a throwback to the days when men were the only income earners.
“It’s very limiting,” she said. “I don’t think it’s necessarily the best way to sell anything anymore.”
As Professor Craig put it, “They’re potentially alienating half their audience.”
He added that pinup-girl advertising, particularly if done for shock value, also had the potential to inspire a backlash. Ms. Krasnow said such advertisements, which are more common in cities like Las Vegas and Miami, give the message that single men are the sole buyers of real estate.
“There are a lot of single women,” Ms. Krasnow said. “There are a lot of women in couples, whether a straight couple or a gay couple. Those ads to me are completely missing the target audience.”
Sometimes, however, the target audience is single heterosexual men, as was the case for 255 Hudson, a condominium near Broome Street. Earlier this year, Lizzie Grubman Public Relations (a firm best known for its celebrity clients, including Russell Simmons, Tommy Mottola and Britney Spears) worked with the Corcoran Group on a promotional event that was part of a larger marketing campaign for 255 Hudson, at the Classic Car Club Manhattan across the street.
(Those who buy apartments in the building receive a membership to the club, a lending library of sorts where members can borrow from an array of status cars, including a 1957 Porsche Speedster and a 1977 Aston Martin.)
Models hired for the event circulated among potential buyers, the cars and an open bar wearing panties, pasties and body paint. The paint was applied to evoke skintight race car driver suits, but the effect was more Jessica Rabbit than Danica Patrick. The words: “Condo included. Girl Not Included,” were written on the women’s backs.
Lizzie Grubman Public Relations has increasingly been sought by real estate companies in the last year, including Corcoran, which calls itself the city’s largest residential real estate company. “Companies have come to our agency because they want to go beyond the tradition,” said Sabrina Levine, Ms. Grubman’s partner. “Now it’s all about making their building buzz-worthy.”
Ms. Thaler was not so much surprised as unimpressed.
“I think the whole idea of using sex to sell apartments is passé,” she said. “In the 1980’s and 90’s, sex was very disruptive and naughty and taboo so we wanted to take a peek.”
Now, it is ubiquitous. “It’s not the new taboo anymore,” Ms. Thaler said.
And unlike most clichés, “sex sells” is not necessarily true.
Deborah Morrison, an associate professor specializing in advertising at the University of Oregon in Eugene, said research shows that while people gawk at sexually charged advertisements, companies do not often get what they pay for.
“The laughable part is that someone might remember the image,” Professor Morrison said, “but I bet they will not remember who ran it and where it was at.”
Mr. Binder of Bellmarc and Professor Craig suggested that when marketers play the sex card, it is an indication of trouble, though no marketing executive would admit to such a thing.
Still, Mr. Binder said, “I can’t deny the legitimacy of the strategy.”
Ms. Mir of Corcoran Sunshine Marketing said that in the case of 255 Hudson, the marketing technique was a risk, but a calculated one.
“Many women responded even more positively to the ads than we expected,” she said. “There weren’t any fewer women who responded than on any other comparable property.”
The strategy is not right for every property, however. Marketing companies become partners with an array of agencies to identify and promote different vibes for different buildings. Corcoran’s marketing plan for 255 Hudson is vastly different from the one for the Stanhope condominium at 995 Fifth Avenue, near the Metropolitan Museum of Art, which has a print advertisement showing the building’s austere and manicured facade.
“If we had a party for the Stanhope,” said Pamela Liebman, the president and chief executive of the Corcoran Group, “it would maybe be at the museum.”
Corcoran’s latest self-promotional advertisements, a series of black and white portraits, are directed at various consumers. The ads feature a glamorous elderly woman, twin girls in matching tennis whites, a couple holding hands, a diapered baby, women in bathing suits and a woman, a boy and two dogs on a stoop. But it is an image of a bare-chested man next to the words, “Triple-Mint, New to the Market,” that has inspired the kind of chatter usually reserved for a Calvin Klein advertisement.
In fact, some consumers are rather pleased to see a hunky man in a real estate advertisement instead of a sexy woman.
“Since the earliest days of Madison Avenue, we’ve been assaulted by scantily clad females, posed suggestively upon automobiles, furniture, lumber and home appliances,” reads a post on Towleroad.com, a Web site where readers discussed a Chelsea billboard showing the “Triple-Mint, New to the Market” man. The writer added that it was about time “we got some hunk-o-licious revenge.”
Another reader simply wondered: “Does he come with the apartment?”
Ms. Mir of Corcoran Sunshine Marketing said: “I don’t think we think in terms of what would be sexy. It’s ‘what do we think would reach our target audience in an engaging way?’ ”
The Corcoran branding campaign can be viewed at Corcoran.com, where clicking on an image of the shirtless man advertisement and then selecting a link called “Fun Fact” leads visitors to the following text: “In the majority of shots of this model he was wearing a sweater. It wasn’t until the end of the shoot that we asked him to take his shirt off and take a few pictures.”
“Then we realized we had the perfect shot.”
Several months ago, there was an ad running for a condo complex in the DC Metro area with a typical picture of the “fun and good times” thing that I guess you expect to buy into when you buy one of these units. Usually, it’s a picture of a yuppies sharing a drink and a laugh (always need some perfect teeth in those photos!), but here was one with what I thought a nearly middle-aged woman having a dance with a young bloke about 20 years old, each having a loving look into the other’s eyes.
I had to wonder, who was the target of this ad? Sure looked to me like they were selling sex and good times instead of a place to live. No idea what the condos themselves were like, though.
There is a gaping disconnect between rosy prognostications of US economic leaders and the gloomy outlook of fund managers. What gives?
http://tinyurl.com/qoaqf
Fund managers see weaker global economy
Higher energy prices, interest rates cited in Merrill survey
By Sarah Turner, MarketWatch
Last Update: 8:46 AM ET Jul 18, 2006
LONDON (MarketWatch) — More fund managers than ever expect the global economy to weaken over the next year, according to a survey of global fund managers conducted by Merrill Lynch.
A net 60% of institutional investors see the global economy weakening, the most negative reading in the survey’s history. This reading marks a sharp decline from April, when only 5% of respondents expected the economy to weaken.
Fund managers blamed rising energy prices and a lagged effect from higher interest rates for the change of heart, the survey of 213 participants said.
“This survey is so grim it could constitute a contrarian signal,” says Merrill Lynch’s David Bowers. He said that high cash levels, high risk aversion and extreme pessimism about growth could produce a stock market rally if there is “the merest pinch of good news.”
—————————————————————————-
Merrill Lynch never saw a gloomy signal that did not suggest the market was ripe for a stock price rally. The only problem with David’s argument is that stocks are still priced for perfection. From my admittedly amateur perspective, the market has a lot of work to do on the downside in order to balance against rising bond yields and oil prices before the hoped-for rally is likely to materialize.
How far down is the ground below the crashing homebuilder stock prices?
http://tinyurl.com/fvjqb
I’d love to see that chart superimposed over the Nasdaq circa 2000 - 2003
my tol puts are working nicely..
GS,
I think we can expect 2001 pricing on the HBs within the year. Sales down, costs up, margins getting thinner by the day…I expect another $10/share down on most.
Still got a lot of people being sucked in. Last night I saw a young couple (20’s) looking at a house with a Realtor(tm). They were excited and joking around and having a great time outside when leaving. We are talking about 1500 sq.ft. for around 650K here folks. Unfortunately they are probably being sucked in by being able to qualify for a ‘low income affordable’ house loan I/O…..
being sucked in by being able to qualify for a ‘low income affordable’ house loan I/O…..
Cote’s favorite loan program….
Yup, still a lot of suckers out there. I am tracking the Newton, MA market and it seems to me a lot of houses have gone under contract in the last few weeks. Snookered by the 5-10 percent price reduction from the outrageous original asking price and the “buy now before interest rates go higher” BS.
Anyone notice that the boiler rooms, er, I mean Mortgage companies or rolling out new new exotic loans to sell and keep the house of cards from falling? You should see some of the shady cats that work at the Mortgage company next to me…I’d feel safer hangin with the Corleone family. At least they wouldn’t sell the Mom down the river.
Some interesting Forelcosure numbers for Mass:
For every 3-4 homes sold in Mass, one starts the foreclosure process.
Month, Homes sold, foreclosures, Frclsres/Sold
February 3,422 1200 35.1%
March 5,171 1487 28.8%
April 4,954 1227 24.8%
And finally some bubble-busting news from Philly. (Don’t like the second half of this headline, though…)
“Area home sales dip for the first time in decade; prices hold up”
http://tinyurl.com/zfshn
Interesting numbers from Mass. Comparing foreclosures to sales, for every 3-4 homes sold, one enters some stage of foreclosure. (Source Foreclosuremass and Mass Assoc. Realtors)
Month, Total Sold, Foreclosed, Foreclosed/Sold
February 3,422 1200 35.1%
March 5,171 1487 28.8%
April 4,954 1227 24.8%
Can lenders affort a 6.8% interest rate for loans anymore?
I am in a good mood for some reason this morning…I have not mentioned this for awhile but here is a update on my market (City of Santa Clara 100K pop.) in the heart of Silicon Valley…
2 months ago there were 60+- single family homes for sale…Today there are 120….This is still a relatively low inventory for our city but it continues to creep up….Sales are still very strong for property that is in good condition and is well located ($500+ per sq.Ft.)…Property in poor condition just sits….Summer is almost over…Things typically start to slow down here beginning in September…I will update the Blog again at that time…
100K people and only 120 homes for sale?!
Using census figures and comparing mls returns for Monmouth Counnty, NJ, we’re ranging in inventories from lows of 7x that ratio to over 12x that ratio…. *makes bomb dropping sound…*
Santa Clara has one tight market. We have 1268 on the Gallatin Valley MLS with a total population of 70k.
Has the Plunge Protection Team lost its heft
http://www.marketwatch.com/tools/marketsummary/default.asp
Nope. Lunch ends at 2pm EST.
Interesting tidbit on sliding discretionary spending from the USAToday regarding restaurants.
http://tinyurl.com/rcqaq
Brokeback Fannie?
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=fnm&sid=1899&freq=9&time=1dy&siteid=mktw
Update on Bozeman Real Estate
MLS listings for the Gallatin Valley now up to 1268, and we seem to be adding about 100 per month (with a total housing stock of ~30,000).
I emailed a local realtor with one of those wildly optimistic “realty times” blurbs, and got the following response:
“As you know (being a resident of Bozeman) our world is not affected by the rest of the country. I do believe we are in a snow ball effect and we will just keep growing.”
Yep, Bozeman is special, everyone want to live here. Have we heard that somewhere before? And this snowball thing, doesn’t it sound just a bit like the psychology of a speculative bubble? Or will houses in the valley keep appreciating at double digits indefinately, until it takes 100 years of earnings to by an entry level home and our real estate is more expensive than land in Manhattan?
Manhattan is just down the road from Bozeman. As a matter of fact, it’s a bit less expensive.
Just don’t get lost in Amsterdam on your way
Good times at MSU for me. I still remember the look of shock on all the city folks faces when the bars were all smoke free and beer was $3 a pint.
Who would have guessed there would be so many folks familiar with the Bozeman area on this blog. Bubble watching is getting to be all the rage.
Just got another email from the real estate agent, who did a bit more homework on the MLS for Bozeman residences only (condos, SFR, …):
Listing Status No. Vol. Avg Med Avg DOM
Active 390 $146 $373 $310 85
Under Contract 36 $9 $251 $237 46
Sold 2006 420 $115 $275 $255 52
Volume = x$million, avg and med = average and median prices x$1000
So for Bozeman at least, we probably have 6 months+ of supply on the market (first 6 months normally have substantially more sales than last 6 mo) and it is more expensive homes don’t seem to be selling. Either that, or folks are getting close to asking price. Given the relatively few homes under contract, I’d say the market was probably okay in the spring but has tanked in the summer months (when we normally have our peak sales up here in the cold north).
Anyone else with more experience want to interpret these numbers?
One final note on Bozeman:
Of the 36 listed as “under contract”, 28 actually have contingent offers.
http://atlanta.craigslist.org/rfs/183420958.html
Fix and flip.
Heh.
DO NOT look at this “fix and flip” if you are eating!
Bank of America to slash 200 jobs from local center
http://tinyurl.com/qng22
Is there some sort of statistic that says what type of loans get foreclosed on the most? i.e. the foreclosure rate of 30 year fixed mortgages compared to I/O mortgages, etc? I haven’t been able to turn up anything so far. I’m curious as to the % of ARMs/IOs they are getting foreclosed upon compared to 15/30 year fixed.
Thanks!