Stalemate?Perhaps Jonathan Clements, a personal finance columnist at The Wall Street Journal, is also a chess grandmaster!? In a recent NPR interview, he spoke of a possible real estate stalemate . . .

In the interview, Jonathan ponders “…are we going to see prices drop, which will encourage buyers to step up to the plate and purchase, or are we going to continue with the standoff, where sellers are reluctant to cut prices and buyers are reluctant to commit?” He then makes some other great observations about selling in today’s market:

  • Some sellers look at pricing psychologically — they want to sell their home for what they paid for it plus improvements, or at the price the neighbors sold their house, etc.
  • Real estate is an expensive asset to hold, given mortgage principal, interest, taxes, insurance, maintenance, etc.

The interview (here) is brief, but offers some interesting perspectives on selling in today’s market, as well as on the strange standoff in which buyers and sellers are currently engaged.

Shiller, Yun, and Public Perception of the Housing Market

Lawrence YunThree reasonable facts . . .

  1. These days (and perhaps always) consumer confidence plays a large role in the state of the housing market. Many buyers and sellers are fearful that home values are dropping precipitously, or will be soon.
  2. Consumer confidence, in many ways, is shaped by the mainstream media — as this is where many Americas get information about the housing market.
  3. One of the highly regarded sources of information on the housing market is the Case-Shiller Index, which tracks 20 major markets.

Robert Shiller. . . that may be having unreasonable effects . . .

  • The markets featured by the Case-Shiller index tend to be in California, Florida and other down markets. This makes the index show price declines, which the media highlight, which scares consumers. As Lawrence Yun states, “This is total distortion of market conditions based on a small selection of falling local metro coverage.”
  • A second source of information on the housing market, the Office of Federal Housing Enterprise Oversight (OFHEO), shows 70% of 287 local markets having price increases. Again from Yun, “the OFHEO survey gets far less coverage than the Case-Shiller index. Perhaps the media is intent on looking for sensationalized headlines. After all, the media is in the business of selling news, and more sales can be made with sensationalism. (I have been told by few reporters off-the-record that they are interested in increasing their viewership even if it means putting things out of context.) “
  • And perhaps the most unreasonable of all, “Another factor that rarely gets attention is that Dr. Shiller, a Yale professor, has a side business in Chicago. His index is used at the Chicago Mercantile Exchange for hedging housing futures values. The more hedging of bets that occur, the more profits go into Dr. Shiller’s bank account. And more hedging of the bets will take place if people believe there will be a crash in housing values. So naturally he has a financial incentive to “scare” the market.”

The entire article from Lawrence Yun is definitely worth reading — and it is great to see NAR bringing these facts to light.

H/T – Jim Duncan,

The Future of MLS . . . A Perfect Storm

Michael WurzerAt today’s MLS Forum, Michael Wurzer, of FBS (FlexML) characterizes the future of MLS as a “Perfect Storm” — with three storm fronts that are potentially shaping this future: Broker Consolidation, Web 2.0, and NAR vs DOJ.

(1) Broker Consolidation: Brokers are growing and consolidating, which is causing MLS’s to grow. Some MLS’s are consolidating, some are sharing data.

(2) Web 2.0: Key components of this movement include:

  • universal accessibility of information
  • open access to technology
  • consumer choice and particpation
  • independence, freedom and respect

Some companies that are involved (in varying degrees) in the Web 2.0 world are zillow, redfin, craigslist, google, point2, trulia, yahoo, and roost.

(3) NAR vs. DOJ: The basic accusation is that NAR is anti-consumer. Since NAR is Realtors, the syllogism is that Realtors are anti-consumer (fees are too high). Lawsuits create a status quo — no changes are made to make sure that the lawsuit isn’t complicated. This vacuum of innovation is being filled by many of Web 2.0 companies.

The Perfect Storm Is It Too Late?

Will the web run over the MLS? According to Michael, no. We define the web . . . and yet, at the same time, the web defines us. So . . . as Michael says, “The Future Is Now. ” We are defining our future today, by our decisions and actions — and the foundations are just being built. Some of the current trends include . . .

  • Standards: Standards are being defined (in real estate and other areas) to provide broad and deep definitions. The Real Estate Transaction Standard (RETS) is defining a listing in these ways, to allow for data portability. Data portability provides power and choice.
  • Syndication: Entering the data (listings) into one location, which then sends out out to many different web sites. RETS has created a syndication work group to try to standardize syndication. This standard will ideally be used by MLS vendors

Thinking Points . . .

Licensing Our Syndicated Data

What happens to the real estate content we provide to third parties via syndication? From Google’s terms of use, when content is submitted to Google, the submitting party is granting Google a “…worldwide, non-exclusive, royalty-free license to reproduce, modify, adapt, publish, and otherwise use, with or without attribution such Content on Google services.” However, it goes on to state that the “…license terminates when such Content is deleted from the Google service to which you originally submitted.” We need to consider developing standard ways to license our data. (ex. Creative Commons) Standards are just now being developed for all that matters. We have the opportunity to participate in that process.

MLS is More Than Technology

The MLS is essentially a social network, with (strangely), competitors cooperating. It is, to some extent, a representative democracy. This cooperation allows an aggregation of data. Without this cooperation, listings will not all be in one place. Thus, the question (again) is who is serving consumers? The aggregation of listings (via the MLS) is a service to consumers.

Moving Forward

  • IDX is a fantastic tool, but it lacks the standardization and full features necessary for moving forward. Perhaps IDX needs to be revisited, within the Web 2.0 context.
  • How should we cooperate on the web?
  • Which parts of the listing we want to share?
  • Are listings are advertising, or information?
  • Who are the members of the MLS?
  • Should the consumer be a “member” of the MLS? What if they agreed to our terms of use?

As leaders in the industry, we need to determine whether these trends, questions and ideas are just noise, or whether they are an indication of a major industry change on the horizon. The future is being formed right now . . . the question is who will determine this future.

Some of Michael’s recommended readings:

Looking for more insights from Michael Wurzer? Check out his blog: