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The Folly of Simplistic Measures
Economics
Written by Jonathan Smoke   
03.14.2008

The Wall Street Journal’s “The Numbers Guy,” Carl Bialik, had an interesting column in today’s paper regarding the misleading nature of the reading level scores provided by Microsoft Word.

The column explains how that written English is so complex, that simplistic calculations made by programs like Word have their limitations in measuring and assessing the readability or reading levels of text.
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The Winners in This Difficult Market Understand Demand—Do You?
Market Research
Written by Jonathan Smoke   
03.13.2008

Last week the Greater Atlanta Home Builder Association and the Urban Land Institute held a joint meeting called “Survival of the Fittest,” featuring a panel including a local builder, a respected economist, a local market researcher, a lender, a legal foreclosure specialist, and a real estate attorney. Given the title, the organizers and the quality of the panel, I willingly invested my hard earned money to attend. A ballroom full of builders, developers, brokers, and numerous others connected to housing did as well.
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More on HUD’s Questionable Median Home Price Data
Economics
Written by Jonathan Smoke   
03.10.2008
On Friday I reported that we found troubling data that served as the basis for the new conforming loan limits set by HUD for FHA and Fannie Mae and Freddie Mac loans.

A few of our readers have commented to me that they don’t quite understand what this means and why it is of concern, so I thought it would be worthwhile to walk through another example.
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HUD Gave a Questionable Gift to the Rich
Economics
Written by Jonathan Smoke   
03.07.2008
Before I began reviewing the new conforming loan limits from HUD and FHA, I didn’t expect to find anything interesting. After all, the legislation passed in February clearly stated that the new limits would be based on median home prices in each county. That seemed simple enough. I previously reviewed the likely changes using NAR’s median home prices at the end of 2007. We concluded that only 31 markets would be impacted.
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Atlanta Housing Demand Remains Sidelined
Economics
Written by Jonathan Smoke   
03.06.2008
As I reported from Orlando during the builder show, a theme I heard oft repeated by attendees and presenters was that the media was a major source of the fear apparently sidelining home buyers at the end of 2007. I could easily jump on the bandwagon and blame the current lack of demand on the media, but to be fair, the media are simply reporting what few metrics they can easily get their hands on.
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A Tale of 939 Cities
Market Research
Written by Jonathan Smoke   
03.03.2008
Despite what may happen year to year, quarter to quarter or month to month, an accepted truism in housing is that “all real estate is local.” Local supply and demand, driven by trends in jobs, incomes, household growth, permits, and home prices determine the conditions for local markets.

I’ve heard from many housing professionals—from realtors to lenders to developers to builders—that they are having a tough time getting the public to understand that markets are different. Topeka doesn’t like being described like Miami. Little Rock isn’t like Detroit. Oklahoma City isn’t quite like Los Angeles. Albemarle shouldn’t be compared to Phoenix.
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Scale Can Be Good and Bad for Big Builders
Builders
Written by Jonathan Smoke   
02.29.2008
Yesterday at the Wachovia Homebuilding and Building Products Conference, several big builders presented their current performance and strategies. As I listened in on several presentations, an ironic theme jumped out at me regarding the benefits and downsides of scale.

In Centex’s presentation, Tim Eller, Centex’s Chairman, President and CEO stated that a key part of their strategy is to concentrate investment in markets with greatest long-term profit potential that reward high relative market share. He later walked through internal analysis of how Centex’s operating margins and returns on assets were positively correlated with strong relative market share.
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