November 18, 2012

NAR survey says their website gets more traffic than anyone else

121117-survey-searchInman News has a fairly long piece about a new National Association of Realtards survey.  There’s plenty of self-serving results to this 120 item questionnaire that was sent to 93,000 homebuyers and gave them a whopping 8% response rate.

One eyebrow raiser is the net gain on sale of a home held 11 to 15 years.  Now, if you live in the Real Bay Area, you already know the answer to that because your money would have doubled in ten years.  But the survey says the typical seller gains 31 percent, or $54,000.  So the gains aren’t anywhere near enough, and this says the typical house is worth $174K. Since you can’t even buy a playhouse for $174K in the RBA, we know this survey was sent to the wrong kind of people.

And that explains some of the other curious results.

54% of buyers who used the internet used their local MLS site.  Can you even name your local MLS site?

More popular than “other” websites (such as Redfin, Zillow, Trulia, etc.) are local real estate agent sites and then realtor.com.  Followed by broker company sites. Uh-huhhhh.  And that doesn’t include mobile apps.

Nine out of ten buyers who used the internet to find their new home used a realtard in the transaction, compared to seven out of ten of those who live in 1950 and used the newspaper.  The discrepancy is explained by the fuddy-duddies either buying from a builder direct or buying a house from someone they already knew.  Not mentioned was the non-internet users also not familiar with another realtard tool: the telephone.

121117-survey-agentsMost important factor in choosing a neighborhood was its quality, followed by commute time, affordability, and closeness to family and friends.  Not mentioned at all was the #1 driver of home sales in the RBA: school quality.  Who gives a crap about the neighborhood if the kids get into a school with APIs over 900?

Buyers chose a realtard based first and foremost on their reputation, which is like saying people decide who to vote for in an election based on a politician’s honesty.  Whoops, that’s the second most important thing buyers look for.

And what did buyers expect the realtard to do for them?  The most popular answer was “Help me find the right home.”

You can see some highlights from the NAR report on their website.  Want the full report?  It will run you $150.

Comments (5) -- Posted by: madhaus @ 5:12 am






June 27, 2010

Urban Sprawl Leads to Burning Summers… and Falls

Here’s a news story from yesterday that has some impact on the Bay Area – maybe even the Real Bay Area (RBA).  After all, anyone who lives here knows the hottest time of year in the Bay Area isn’t July and August.  It’s September and October.

Sprawling Cities Getting Hotter Faster

livescience.com Sat Jun 26, 12:20 pm ET

The number of extreme hot summer days is increasing around the world with global warming, but sprawling cities are racking up these sweltering days faster than more compact cities are, a new study finds.

This finding could be important to city planners, particularly because heat waves are a killer worldwide (heat waves kill more U.S. residents than any other natural disaster) and the number of hot days is expected to increase as climate change ramps up.

Researchers at Georgia Tech examined the number of very hot days in 53 U.S. metropolitan regions between 1956 and 2005 to see if there were any differences in the number of hot days between both kinds of cities. (By the U.S. Census Bureau definition, a metropolitan region includes some counties surrounding a city proper.)

The article was clearly written by someone in flyoverland, because unimportant cities such as Atlanta, Tampa, and Grand Rapids (Michigan) were presented as examples of sprawling cities, as contrasted with “compact”  ones. Named as the cooler cousins were Boston, Chicago, and Baltimore, where two out of three of them are near a real ocean, and the third near a convincing analogue.

Brian Stone of Georgia Tech (told ya!), an urban planner who authored the study, noted that severe heat waves are responsible for more deaths than any other type of dangerous weather.  “Residents of sprawling cities may be more vulnerable to this significant health threat posed by climate change," said Stone.

One could even wonder if the “compact” cities cited are keeping cooler due to ocean breezes rather than tree removal on a large scale.  Deforestation in sprawling cities occurred at twice the rate of that in more densely populated areas from 1992 to 2001.  This leads to the “urban heat island effect,” where asphalt, roofs, and other artificial surfaces absorb more heat than in rural areas with greater amounts of vegetation.  The urban heat island effect shows a temperature increase of 2 to 5 degrees Fahrenheit higher than a nearby rural region.

The actual data showed the sprawlers had 14.8 more “very hot days” on average while the chunkers only had 5.6 of them.  These outlying days were identified from the National Climactic Data Center’s “heat stress index” from 187 cities.  Heat data were used from 1956 to 2005, but based on city definition in 2000.

Cities were defined as compact or sprawling using the sprawl index, where only the top and bottom 25%were included in the study.  This metric uses population density, building proximity (both commercial and residential), also known as neighborhood mix, strength of downtowns and other activity centers, and street network patterns, based on 2000 UC Census data.  Stone notes that sprawl is also a factor of the historic development of a city.  For example, Boston grew around streetcars, while Atlanta developed during the age of the automobile.

The only Bay Area metropolitan area included in the study was San Francisco.  Classified as very compact (big surprise), San Francisco also reported a large increase in very hot days, as did more spread-out Fresno.  Los Angeles showed a much smaller increase in hot days, as did San Diego.  But take a look at Stone’s map of cities included in the study.  Notice something a little odd?

image

Just in case it doesn’t jump right out at you, here’s another view:

image              image

See it now?

How is Atlanta considered more sprawling than Los Angeles?  Sure San Francisco is compact (the city is only 49 square miles!), but see how Fresno, LA, and San Diego are all in the same classification of the second most compact group?  Los Angeles wrote the book on sprawl, as LA county is tremendous (4061 square miles).  It may have millions of people, but most of it is suburban.  And yet, Stone relies on Reid Ewing’s measure of the sprawl index, which cites a measure showing Los Angeles, San Diego and San Francisco as being some of the most compact cities in how they handled population growth (see page 9).  And then on page 27 is this fascinating note:

The highest ratings on the density factor go mostly to the central PMSAs of large CMSAs. The
New York PMSA is in a class by itself, having a factor score more than five standard deviations
above the mean. While the smaller Jersey City PMSA ranks second, this is followed by other
large PMSAs: San Francisco, Los Angeles, Chicago, and Miami PMSAs. Also high on the
density factor are secondary PMSAs of these same CMSAs: Anaheim, San Jose, Newark,
Oakland, and Ft. Lauderdale. Their large housing and labor markets drive up the bid rent curves
of these CMSAs, making accessible central locations particularly valuable. Valuable land is
naturally developed at higher densities, as housing producers and consumers both seek to
minimize expensive land inputs. The simple correlation of the density factor for 2000 with the
population of the MSA or PMSA is high (r = .614).28 The simple correlation with the population
of the MSA or CMSA is even higher (r =
.653).

Wow, looks like we’re back to higher rents, higher density, and higher smarts.  Location, location, location!  Low on the density scale are the Southeastern cities, and they have the lower rents to match.  While we in the Bay Area think of Los Angeles as sprawling, that’s only compared to San Francisco.  When it’s stacked up against Atlanta, Los Angeles is downright concentrated.

At the bottom of density rankings are medium-size metros in the Southeast, in ascending order:
Knoxville, TN; Greenville–Spartanburg, SC; Greensboro–Winston-Salem–High Point, NC;
Columbia, SC; Raleigh–Durham, NC; and Birmingham, AL. These are places whose growth
has mostly occurred during the automobile era, and has been without topographic or water-related
constraints that restrict development elsewhere in the Sunbelt. Still, the clustering of low
densities in this particular region is striking and requires further investigation.

And what does Los Angeles have to do with the Bay Area?  Simple.  Los Angeles is San Jose writ large.  And that’s where the Bay Area take on this study comes in.  Compared to San Francisco, San Jose also sprawls, despite its attempts to have an urban core with the fake city of Santana Row, and the out of place luxury high-rise of 360 Residences.  So if we in the RBA need to take anything from Stone’s study, it’s this.  Sprawl means more extreme heat waves.  Heat waves mean more deaths.  And old people dying of heatstroke in their RBA homes is the only way those places this Special will ever come up for sale.

Comments (12) -- Posted by: madhaus @ 5:01 am

June 13, 2010

San Francisco: America’s Smartest City? At These Prices?

Blogger Economist Rob Pitingolo measured which metro area was the “smartest,” and used the density of higher education degrees as his metric.  His essay has gotten recent notice from USA Today, the San Francisco Chronicle, and my good buddy Greg Fielding.  Fielding asks if San Franciscans are so smart, then “why do they accept such painfully-high price-to-rent ratios?”  That’s pretty much the old “If you’re so smart, why ain’t you rich,” saw isn’t it?  I’m going to demonstrate that Fielding asked the wrong question.

On a per-large-city basis, San Francisco blew the rest away with a whopping 7,031 degrees per square mile.  San Jose, the supposed “Capital of Silicon Valley,” lags fifteen places behind with an unimpressive 1,259.

It’s becoming increasingly accepted that there is real economic value to bringing a lot of smart and entrepreneurial people together in the same place. This can be tough to measure, unfortunately.

Yup, Math class is hard.  Pitingolo wondered whether the surrounding areas benefit from a core city’s degree concentration, and repeated the same measurements on a county level.  But many of his comparison cities are either contiguous with their counties, or are strongly linked with unmentioned surrounding counties, resulting in a lovely display of apples and orangutans.  And for some reason, the City and County of San Francisco was merged with contiguous San Mateo in the county section, dropping to fifth place with an anemic 1,105.  San Jose’s results also collapsed when amalgamated with Santa Clara County (413).  Obviously counties with huge swaths of farmland will pull these numbers down no matter how many Ph.Ds are sipping lattes on University Avenue.  What the density metric implies, and whether the county data make anything clearer is still up for discussion in the blog’s comments.

Meanwhile, Research Triangle Park, North Carolina scored first on The Daily Beast’s completely arbitrary measure of Metro IQ.  This alternative intelligence ranking was based on each million plus metro area’s ratio of degrees, colleges in the region, nonfiction book sales, and percent of eligible voters voting.  San Francisco-Oakland-San Jose came in second, scoring first with education but losing out to Raleigh-Durham due to relative voter apathy.  I will leave it as an exercise to the Real Bay Area reader exactly how valuable a measure of regional IQ can be that equates Duke, UCNC, and Chapel Hill with Stanford, Cal, USF, SF, Hayward and SJ States, and (in your face, Tar Heels!) Foothill.

We can argue whether completing a college degree is any indication of intelligence.  We can debate whether Pitingolo’s study erred by emphasizing population density over percentage of degree-holders, thus boosting teeming multistory cities such as San Francisco over low-profile megaburbs such as San Jose.  We can present various ways to measure what is a city, what is a metro area, and what is a region.  We can ask to what degree “human capital sprawl” limits a city’s economic engine (as in Oklahoma City) as opposed to revving it in Silicon Valley.

But there is no escaping real estate.  And here’s a better article that also says we’re #1, by one of my favorite authors, Richard Florida.  Florida noticed Pitingolo’s study too, although he didn’t have much to add to it.

Florida began with the perennial question of whether to rent or buy.  He studied 133 metropolitan regions,  noted the places with high versus low housing price to rent ratios (HPRs), and found that areas with higher HPRs have higher housing prices and lower percentages of people who are homeowners.  As Florida put it, “the costs of owning are relatively lower in places where more people already own their own homes.”  When prices are relatively higher, fewer own because fewer can afford to.

Then Florida looked at economic data for the regions: output, income, and wages.  Those with higher HPRs tend to be more productive, have more wealth, and higher wages.  And he already showed earlier that week that high HPRs are correlated with lower unemployment rates.  Hmm, high housing cost, high wages, high income, high productivity… does that sound like anywhere you know?

Previously, we’ve seen how smart regions have higher levels of income, economic output, and overall well-being. It costs relatively more to own in smarter, more advanced regional economies. We measure smart regions in terms of the level of human capital; the percentage of the workforce in creative, knowledge-based, and professional occupations; and the level of technology-based industry. The HPR ratio is positively related to all three. The correlation between the HPR ratio and human capital (measured as the share of metro population with a bachelor’s degree or higher) is .4.

Ah, there’s that college degree metric again that made all the headlines, measured it in percentage instead of density.  Florida says San Francisco is a smart region, and therefore an expensive one.  So, San Franciscans don’t pay high rent ratios because they aren’t smart.  They pay high rent ratios because they are.  The smarter a region is, the higher those ratios should be.

Florida concludes that the conventional wisdom of buying at a low HPR (15 or even 20) isn’t that wise.  Instead, he suggests you buy where skilled people want to work, where there are good economic prospects, and where homeownership isn’t routine. Buy where there are plenty of people who want to buy but haven’t yet.  When it’s time to sell, you’ll have plenty of potential customers.

It’s counterintuitive, but rent in Pittsburgh, but buy in San Francisco.  That’s the smart thing to do.

Comments (50) -- Posted by: madhaus @ 5:03 am