Counter Intelligence: The Real Estate Cafe Weblog

Consumers track the housing bubble: From Wikipedia to local "Bubble Hours"

Following up on the recent post about The Real Estate Cafe's yet to be released "Menu of Wikis," here are two powerful examples of wiki collaboration documenting the real estate bubble in the US and worldwide:

http://en.wikipedia.org/wiki/US_property_bubble

http://en.wikipedia.org/wiki/Real_estate_bubble

Don’t know who contributed to either wiki or how our bubble blog was included in the source list, but The Real Estate Cafe is most grateful.  Local residents know that making sense of contradictory statements about the housing market in Massachusetts is an ongoing challenge, which is why a number of leading bloggers in Boston are collaborating on an ongoing series of "Bubble Hours" (see posts for January & February 2006).  If you'd like to participate in the next Bubble Hour, online or in person, or would like to receive a transcript of past chats, please email us at [email protected].  As always, your comments are welcome below or on our reader line at 617-876-2117.

Using wikis to empower "do-it-yourself" homebuyers & sellers

"When it becomes time to make ideas real, wiki lets us keep playing while we work. Wiki is how we turn discussion into documentation, rap-session into planning-session, and meeting into collaboration--online."
James Carlson Director, Bucketworks

Exciting to read that the innovative folks at RainCityGuide in Seattle, one of the best real estate blogs in the nation, are also experimenting with wikis; but it appears we may be approaching the collaborative power of wikis from different starting points.  While RainCityGuide will be looking to fellow real estate professionals to collaborate on content, The Real Estate Cafe is looking to real estate consumers, both homebuyers and sellers.

On and off over six months, The Real Estate Cafe has been quietly building a "menu of wikis" with four to five main areas.  A snapshot of the current version of our main page, which is still password-protected, is shown above (click on image for larger view) or read text on the link below.  If you'd like in see where we're headed or explore collaborations, or just selling your own home "for sale by owner" in Massachusetts and want to learn more about the steps in the process -- wiki-style, email [email protected].

If you're wildly excited about wikis, maybe we'll see you here in Cambridge, Massachusetts for WikiMania 2006.  Today (March 30, 2006) is the deadline for submitting a proposal to host a workshop or tutorial at this year's Wikimania.

Maybe RainCityGuide and The Real Estate Cafe (and potentially others?) can collaborate on a workshop comparing how real estate professionals and consumers on both coasts use wikis to meet their real estate needs.  Should be interesting to watch if this particular opportunity is really ahead of it's time as Dustin at RainCityGuide speculates:

"Another idea I have is almost definitely ahead-of-its-time, but could be interesting, is that anyone selling a home is free to create a webpage that describes their home on the.raincityguide.com. It will cost you nothing but time, and if you are creative enough, it might get you some interesting publicity."

MENU OF WIKIS (preview of http://www.realestatecafe.com/wiki/, currently password protected)

1. FSBOWIKI
FSBOSupportGroup.com members, let's create a FSBO resource center and coauthor a step-by-step knowledge-base and so thousands of people selling their own homes "for sale by owner" in Massachusetts can save money and save lives.

Steps in the "For Sale by Owner" process

2. REAL ESTATE CONSUMER BILL OF RIGHTS
Use this forum to continue drafting Real Estate Consumer Bill of Rights;

3. INTELLIGENT REDESIGN
Invite participants in the yearlong Intelligent REdesign series to to use these resources or to add to them as they prepare their own proposals;

4. REAL ESTATE CONSUMER COMPLAINTS
Develop a comprehensive knowledge-base documenting anti-competitive policies and business practices in Massachusetts and across the country;

ARCHIVE

COLLABORATING ON TESTIMONY FOR DOJ / FTC HEARING
The goal of this Wiki section of the wiki was originally to collaborate on testimony for the DOJ / FTC hearing in October 2006. Now, it's ongoing goal is to invite real estate consumer to join real estate consumer advocates and real estate change agents from around the country to inform the government's ongoing legal proceeding against DOJ / FTC the real estate industry.

Inflation-adjusted price declines since Sept 2005 in MA

BostonBubble.com has done an extraordinary analysis of single family home sales in Massachusetts that ought to be mandatory reading for any homebuyer making an offer this Spring.  Thanks for their permission to reprint the graph above and pull quotes below from their full post, "Boston Bubble Report: What's Really Going on in MA- Feb 2006":

"It turns out that Massachusetts real estate has seen year over year price declines every single month between September 2005 and February 2006 inclusive. While the Massachusetts Association of Realtors officially states that February 2006 was the first time in several years that there have been year over year declines, that is only true in nominal terms. Seasonally adjusted values have been declining for half a year now in real terms."

The MIT graduate behind BostonBubble.com is one of the bloggers who participates in our monthly Bubble Hour to review housing statistics as soon as they are released by the Massachusetts Association of Realtors.  Please let us know if you would like to participate in those Bubble Hours, online or in-person by emailing [email protected]. In the meantime, your comments are welcome below or on the BostonBubble forum where you'll find another remarkable graph and more insights into why "real prices are down 11.44% from their peak. This is in contrast with the 9.48% that the MAR is reporting."

BostonBubble's analysis seems to confirm this pull quote from an article which appeared yesterday in the Lowell Sun:

Home salesboom now grows quiet
Prices also drop; experts  say buyer's market looms

Gus Faucher, director of macroeconomics at Moody's Economy.com, said he has been predicting for some time that the local market would come back to Earth. In the second quarter of 2005, Economy.com determined that the Middlesex County housing market was overpriced by 19 percent.   

Pay no attention to that 9.5% decline in median prices

The Massachusetts Association of Realtors (MAR) released their official February housing statistics yesterday; and once again, a number of leading bubble bloggers in Boston hosted an online chat to make sense of the Realtor-speak.

Help me with this puzzler from MAR's housing report:

"Predictions of steep price declines in home values made this past fall remain largely unfounded. While the current median price is 9.5 percent below the record high monthly median of $375,000 set in July and August 2005, today’s prices largely reflect healthier inventory levels, which has eased upward pressure on prices, rather than plunging property values."

Median prices dropping nearly 10% in six months?  Sounds like a pretty steep decline to me, how about you?  As always, comments are welcome below, or on own blog readers line 617-876-2117 for possible use in a future podcast.

Boston "Bubble Hour" to discuss February housing statistics

The Massachusetts Association of Realtors (MAR) will announce their official February housing statistics tomorrow, Thursday March 23, 2006; and once again, a number of leading bubble bloggers in Boston invite you chat about them as soon as they are released and press coverage unfolds.

Would you believe the first "Bubble Hour" generated 36 pages of content including over a dozen graphs submitted by a number of bloggers and savvy consumers?   If you missed that chat, the transcript and graphs of January 2006 housing statistics are accessible online but comments or questions should be posted below. 

Better yet, why not participate in our second Bubble Hour?  (WILL REOPEN CHAT BETWEEN 9PM AND 10PM THIS EVENING.)  Please let us know if you'd prefer to chat online or meet offline by emailing [email protected].  Either way, you can enrich the discussion by posting your question below, or submitting them privately beforehand.  Graphs are our specialty so let us know if there is any data you'd like to see presently visually.  As before, chat participants with different perspectives --- both geographically and with respect to their opinion about the housing bubble -- are earnestly sought.  Homebuyers, sellers, professionals, and press are all welcome.

We'd be particularly delighted if someone from MAR joined us to answer questions directly, too.  After (1) single family home sales fell to their lowest volume in ten years during January and (2) year-over-year prices fell for the first time in 115 months, my guess is that MAR will say that housing rebounded in February 2006.  More evidence of a "soft landing," industry spin, or a mild winter?  We want to hear your opinion.

BYOB this St. Patrick's Day to avoid bloated real estate commissions

Following feature stories about falling real estate commissions in CNNMoney and AOL, hope St. Patrick's Day 2006 is remembered as the year home buyers and sellers began to BYOB -- Bring Your Own Brokers -- and compensate them separately.  Ten mega-trends suggest that the obsolete, two-sided real estate commission may be "uncoupled" or "decoupled" in 2006, fifteen years after the Consumer Federation of America first called for that reform.  The blog post and 90 second video below explain why. 

Why pay a flat-fee listing entry service approximately $500 to list your home in the MLS, and then undermine your potential savings by offering a "traditional" full commissions to buyer agents?  If anyone is interested in experimenting with the moneysaving BYOB plan, please email us and we'll bring the booze.  Watch for more details about our newest menu item:  wine tastings at "for sale by owner" open houses.  As always, your comments are welcome below, or recorded on our reader line for a future podcast:  617-876-2117.

10 Mega-tends push real estate commissions to a tipping point

Speculating about why his recent blog post on real estate commissions "under siege" generated over 200 comments, Bradley Inman, founder of highly respected Inman News, asked readers if the existing commission structure had reached a "tipping point?"

Yes, ten mega-trends, some of which Inman identified, have pushed the obsolete commission structure to a tipping point; but from the real estate consumer's perspective, the commission won't reach a break point until the traditional two-side MLS commission is "decoupled" -- a recommendation the Consumer Federation of America first made fifteen years ago.

What series of actions are needed next to break-up the two-sided commission?  That's the discussion question asked by this 90 second video (which can be paused at any point), originally prepared for federal regulators but never officially submitted at the end of last year.  The answer to that question will unlock billions of dollars in consumer savings annually, so comments from both real estate change agents and consumers are needed below, recorded on our readers' line (617-876-2117), or sent privately to [email protected].

The heated debate on Inman's blog gives us the opportunity to update and expand our tipping point presentation before submitting it to the Federal Trade Commission and Department of Justice.  One typo is worth highlighting:  DirectDirect.com should read DeWolfeDirect.com.  In 2002 (before being acquired by giant NRT), DeWolfeDirect's website read:

Unbundled Pricing brings innovation to the cost of selling or buying a home. Selling a home requires a certain investment, as does finding and buying one: equal tasks with equal expense. Curiously, traditional commission models require the seller to pay for both of them. We believe it would be more logical if each paid for their own part of the transaction, so we treat them separately (emphasis added). We also use a scaled percentage model that reduces the rate for higher priced homes.

It is equitable, straightforward, honest, and revolutionary (emphasis added).

Anyone else agree it's long overdue, and due time federal regulators make it -- uncoupled commissions -- happen?

Regional round tables discuss housing bubbles online & off

This morning, we learned that one of the leading real estate blogs in the country, Curbed.com, has been hosting a series of monthly real estate round tables to discuss the state of the housing market in New York City.  The Real Estate Cafe and other leading bubble bloggers in Boston began a similar series of collaborative chats 12 days ago, and we were thrilled that our first "Bubble Hour" generated 36 pages of content including over a dozen graphs.  Please let us know if you'd like to participate in the next Bubble Hour, and whether you would prefer to participate in an online chat or a offline meeting by emailing [email protected]. The Massachusetts Association of Realtors will announce their official February housing report on March 23, 2006.

Until then, you can help shape the content of the next Bubble Hour by posting your question below, or recording a message on our blog reader line (617-876-2117) for future use in our real estate podcast. We're eager to add more content to our real estate bubble "audio time capsule."  Field reports and market observations from home buyers and sellers in Greater Boston and across Massachusetts are most welcome.

Endangered species protection act?

This Sunday an article by Stephen J. Dubner and economist Steven D. Levitt, controversial authors of Freakonomics, was published in the New York Times and Boston Globe (which is owned by the Times) under separate headlines.  The Times used the hard-hitting headline "Endangered Species" while the Globe used a softer, almost apologetic headline, "If real estate is prospering, chances are your agent isn't:  Most realtors don't make much money in a boom." 

The editing didn't end there, though.  Four sentences, the first of which points to the Department of Justice's lawsuit against the industry, were deleted from the Globe article:

"More often than not, agents are portrayed as hustlers or sharks, unimaginative opportunists who, for not all that much effort, pocket a significant chunk of the sale price of your home."

"Most real-estate agents seem to spend 95 percent of their energy chasing clients (for which they are paid nothing) and 5 percent actually serving them (for which they are paid way too much)."

"There will always be some home sellers who prefer full-service, full-fee agents, and a handful of these high-end agents will undoubtedly thrive (just as some full-service travel agents and stockbrokers still thrive, except they are now called "travel counselors" and "financial planning specialists," respectively). But more and more home sellers, armed with data from real-estate Web sites and facing a variety of pricing options, will surely choose another route."

While we prefer the unedited version of the story, we agree with the bottom line in both publications:  fee-for-service brokerage models, like The Real Estate Cafe, are "likely successor[s]" in the future.  Some industry pundits, including the former chief economist of the National Association of Realtors, have been predicting that for a nearly a decade.  So what's the problem?  A variety of anti-competitive trade practices, currently the subject of legal action against the National Association of Realtors by the U.S. Department of Justice, need to be reformed to unleash billions in consumers savings annually in an open, competitive marketplace.

In that context, a cynic might ask who the Globe was protecting by deleting key sentences from their guest column?  Admittedly, traditional real estate agents don't appear on the official list of Threatened and Endangered Animals and Plants but is that grounds for muting the headline and critical content from a consumer-oriented critique of the industry?  Ironically, in an era of citizen journalism, the deleted sentences have the potential to get more visibility via blogs, particularly when the guest columnists are using their blog to recruit alternative brokers to participate in additional research. 

The Real Estate Cafe would like to go several steps beyond that by inviting real estate consumers to participate in our yearlong "Intelligent REdesign" series.  Watch this blog for more details.  We welcome your unedited ideas about how to change the industry to better meet the needs of home buyers and sellers.

If real estate agents are an "Endangered Species" is it time for Intelligent REdesign?

Apparently, a segment on NPR's Morning Edition entitled, Real Estate Commissions Under Pressure, says a major story will appear this Sunday in the New York Times Magazine calling traditional real estate agents an "endangered species." 

The use of the phrase "endangered species" tickles me, because The Real Estate Cafe is planning a series of meetings / online chats with real estate change agents and consumers in New England to celebrate the 10th anniversary of Ralph Nader's appearance at one of our real estate roundtables in 1996.  The title for the series is "Intelligent REdesign," a deliberate pun on the evolution versus intelligent design debate raging across the country.  What better place to host such an event than "Darwin's," a wifi cafe outside Harvard Square?  (Darwin, survival of the fittest, endangered species, Intelligence REdesign, get it?)

The goal of the yearlong series is to:

1.  Help real estate consumers, both buyers and sellers, become more aware of new moneysaving real estate business models, and choose the one that best matches their needs. 

2.  Involve consumers directly in the process of "redesigning" the real estate industry to better meet their needs.  We've ...

seen some client-developed tools that would make real estate programmers and agents envious.

3.  We'd also like to identify issues and mobilize consumers to call for long overdue industry reforms, including the possibility of filing our own legislation here in MA.  Is anyone aware of similar efforts by individual consumers, or organized consumer groups, to introduce pro-consumer legislation in their states? 

If you would like to participate in the Intelligent REdesign series, as a featured guest or online participant, or have an issue you think consumers would find interesting, please let us know.  Our first online chat was a smashing success, generating a 36 page transcript.  Should we host another "Bubble Hour" to discuss the pending sales index the Massachusetts Association of Realtors is releasing on Monday, March 6th?  If we get together in person, maybe we can combine it with a planning session for the Intelligent REdesign series?