Absolute Lunacy!!!
This is the fifth review that I have written on Phelan Wolf’s quarterly “Market Analysis” reports based on the market reports published by the four largest East End real estate agencies. Each of Wolf’s reports is more terrible than the previous one. His 2nd Quarter “Market Analysis” of the East End for 2011 is the worst one of all. [HERE]
Virtually every sentence in Esquire Phalen’s “analysis” is wrong, without specific source reference, just plain crazy facts and conclusions just made up.
Wolf has to take responsibility for this useless and harmful “reporting”, but more responsible are those at the Southampton Press, who continue to publish this trash — SH Press Section Editor, Dawn Watson, Editor Joe Shaw, and Publisher Joe Louchheim, prep school buddy of Phelan Wolf.
How can Dawn Watson, an aspiring young writer, not check Wolf’s work, after all the criticism his work has received in previous quarters? Why doesn’t she at least check his facts — see if he quoted the 4 market reports correctly? How can she sleep at night knowing that she and Wolf do such terrible work?
Why does Southampton Press/27east.com owner and publisher, Joe Louchheim continue dishonest and moronic activities? [HERE] and [HERE]
Wolf gives no sources for any of his data — except his chart (titled simply “Second Quarter 2011″), which compares stats for all five East End towns provided by Corcoran and Prudential, and stats for South Fork only provided by Town & County and Brown Harris Stevens. Of course, the stats from the four agencies are on the same chart, and Wolf apparently doesn’t know he made the mistake, comparing apples with oranges.
And worse, he goes on to “average” the “apples and oranges”, making his “work” even more pathetic.
The first sentence of the “Analysis” starts:
“According to second-quarter reports issued by Briown Harris Stevens, Corcoran Group, Prudential Douglas Elliman and Town & Country Real Estate, brokerages in the Hamptons are reporting a significant increase in high-end sales. Less apparent, but also contained within the reports, are signs of continuing weakness in the low-end market.”
Wolf’s statement is not true. Hia mis- statement is not even reported in all the four market reports, as Wolf says it is. I couldn’t find clear support for his statement in any of the four real estate agency reports, that they “are reporting a significant increase in high-end sales. Less apparent, but also contained within the reports — weakness in the low-end market“. Wolf wants it to be true, he simply made it up. The real numbers on the market are just the opposite of what he says. There is no report of “high-end” increase of activity. There is no report of “low end” market weakness. The high-end is not increasing in activity, and the low end is not getting less activity.
Wolf’s statements are just those of a high end real estate agent trying to puff up the high end to deceive the buying/selling public.
Wolf Says:
“The reports summarize the statement of the market based upon closings that took place between April 1 and June 30 of 2011.”
This statement is not true. The four agency reports are based upon deed closing dates between April 1 and June 30, 2011, which had been recorded at the County by the end of the quarter. Over one hundred deeds that closed between April 1 and June 30, 2011 weren’t recorded at the County by the time these 4 agencies wrote their reports. and therefore weren’t counted by the time the reports were published — and will never be counted by those four agencies. See them [HERE].
Not to report this important fact is a major act of dishonesty on the part of Wolf, Watson, Shaw, and Louchheim. See my post on this subject: [HERE]
Wolf Says:
“As always, the major brokerages issuing reports define the geography of the Hamptons differently, which accounts for some of the variation in reported data, which has been averaged for this analysis.”
There is no evidence contained in the four market reports that the agencies (Corcoran, Prudential, Brown Harris Stevens, and Town & Country) use different “geography” in defining the Hamptons. All four reports report on the “geography” of the Hamptons as the entire towns of Southampton and East Hamptons, but Wolf, in his table, posts numbers by two agencies for all five Towns, including Riverhead, Southold, and Shelter Island.
You don’t average apples with oranges to get the number of apples (or oranges). Averaging apples and oranges is ridiculous, harmful, and WRONG!!
There is no justification for “averaging” the values, any way. Such averages produce no useful information. Since all the numbers published by the four agencies are different, at least three out of four are wrong — they all use the same source of data, the County deed database. Since all four companies use Long Island Real Estate Report for providing data, which they gather from the County — all the four reports are wrong. See: [HERE] There is no excuse for Esquire Wolf and the Southampton Press not discovering and alerting readers to major flaws in all four market reports.
The following is a reproduction of the table attached to the “Market Analysis” article by Phelan Wolf:
Wolf’s table contains data on 2 Towns only combined with data on all 5 Towns, and he does not even know it!!
To make a comedy even more tragic, Esquire Wolf mixes South Fork ONLY (two towns) figures with East End figures (all 5 towns). The figures he posted for Town & Country (375 unit sales) and Brown Harris Stevens (361 unit sales) are for the South Fork only. The other two agencies’ numbers Wolf used in his chart, Prudential (619 unit sales) and Corcoran (492 unit sales) cover all five East End towns.
Then Phelan computes the averages! Phelan Wolf has done this many times before on other “Market Analysis” articles, and I have criticized him for it, and he still does it — and the Press still publishes his junk — absolute LUNACY. Children, at a very young age, are taught that you don’t count apples and oranges to get the number of oranges (or apples).
Wolf’s table gives no indication as to whether the table includes only homes, single family homes, homes and land. Without reading the various reports, you don’t know if the Wolf supplied table covers the Hamptons (Southampton and East Hampton) or the entire East End. But, I have read all four reports and show above which of Wolf’s numbers pertain only to the South Fork (towns of Southampton and East Hampton) and which cover all five East End Towns. Then he “averages” the apples and oranges! No thinking is going on with this Esquire guy.
Wolf’s own chart shows a variance of unit sales per quarter from 361 (Brown Harris Stevens) to 619 units for Prudential, and sales unit volume changes from -2% (for Town & Country) to +8 percent (Corcoran). Why didn’t Wolf and Dawn Watson (his editor) not question the huge difference?
And the variance between Median Price and Avg Price is incredible — Wolf mixes South Fork only and the whole East End, and comes out with Median Prices from $766,000 to $1,095,000. almost 30% difference.
To compute the Median Price, you simply put all the properties in price order and pick the middle one [HERE]. The median for the East End is $760,000 for the 2nd quarter of 2011 (Source: Suffolk Research Service, Inc.) [LOOK HERE]
Anyone would expect that this apparent wide variation in unit sales and median prices would be the story for Wolf and the Press to cover. But Wolf and the Press don’t even mention the extraordinary variations. (If what he had reported was true — and it is not true.)
Computing market figures for the East End isn’t rocket science. You go to the County Clerk’s office and copy the deed closing information. Then, you use a computer to calculate certain market stats. Perhaps it is possible, due to clerical error to have a difference of a few records, but not a difference in 258 records (619 – 361).
Phelan Wolf has proven that he is virtually brain dead — those who allow him to continue this awful performance — at the Press and at Brown Harris Stevens, must also be brain dead. Look at two of our previous reviews of his quarterly “Market Analysis”. [HERE] and [HERE]
Quintile Conclusions WRONG
All of his numbers are without basis. The Quintile price numbers he reports aren’t sourced, but Prudential is the only agency of the four which provided quintile prices.
Wolf Says:
For the last two quarters, I have concluded by predicting that the market throughout 2011 would be generally healthy and balanced, with lots of low end inventory (and perhaps declining low-end priced) and increasing high-end activity (and perhaps increasing high-end priced. A close look at the market, divided into quintiles, clearly illustrates these trends.
His statement is simply WRONG!
The Prudential “quintile” data doesn’t show increasing high-end activity. There was a small increase in median price for 2nd Qtr 2010 to 2nd Qtr 2011, certainly not enough data to clearly show a trend, much less “clearly indicate a trend” as Wolf says it does. If you look at the 2006 – 2011 data I publish (Suffolk Research Service, Inc. data) [HERE], the high end quintile shows a “roller-coaster” pattern of number of houses sold, up and down for the last five years, and there is no clear up trend. But there is a clear downward trend in prices 2006 to 2011 at the high end.
At the low end (quintile), Prudential data showed a 6% decrease (2nd Qtr 2010 to 2nd Qtr 2011) in the median price for the lowest priced quintile. This is certainly not enough data to indicate a trend, much less “clearly indicate a trend”. But a decrease in the price of the lowest quintile means there are more low end sales (therefore the median price goes down) — showing that there is increased low end activity, a concept that most real estate professionals could not be expected to understand.
Certainly Esquire Wolf doesn’t understand it, and Prudential’s report writer Jonathan Miller didn’t understand it and should not have included it in his 2nd Qtr market report.
If you look at my Suffolk Research Service, Inc. data for the low end quintiles, [HERE] (covering quintile data 2006 thru 2011 – 2nd Qtr for South Fork Residences) you will see only a slight decrease trend in low end median price.
In summary, there is no quintile data indicating a high end activity increase (as Wolf says), and the low-end activity is increasing, not decreasing, as Wolf says. Wolf simply doesn’t know “what’s what”. What he writes is not true, and his “sage” predictions are not confirmed by the Quintile data.
It is hard to imagine a worse job being done on this “Market Analysis” — shame on you Southampton Press, Publisher Louchheim, Editor Shaw, and Section Editor Watson — you have wronged the Real Estate hand that feeds you , AGAIN!
Wolf Says:
“For those who watch Hamptons real estate, the spring and fall are traditionally the busiest quarters of the year for sales.”
This statement is simply not true — the sales are about the same in all quarters — varying only three or four percentages — based upon data for the last three years.
[SEE BACKUP DATA HERE]
Wolf Says:
“Looking back at the 10-year data, prior to the crash in 2007, the average yearly sales volume in the Hamptons was approximately 2,000 closing, or 500 per quarter, on a seasonally unadjusted basis. In 2008 and 2009, during the depths of the recession, volume was cut roughly in half to approximately 1,000.”
Wolf doesn’t say whether he is talking about 1,000 units per year on the South Fork, or in all 5 towns on the East End. In any event, the 1,000 number is WRONG!!
Yearly sales on the East End (5 towns) varied between a high of 4,713 units in 2004 to a low of 1,736 units in 2009. At no time did the volume get below 1,700 units per year. The average over the 10 year period was 3,200, not 2,000 units. The situation is much more irregular than Wolf implies.
See the following bar chart of the East End unit residential sales — 2001 thru 2010.
Wolf’s numbers are wrong — see the real picture 2007 to now.
Wolf says that “… entry level home sales, which in the Hamptons are those that sell for under $1 Million, continue to exhibit weakness. “
This is simply not supported by the data — see the graph below.
The percentage of homes in the Hamptons under $1M has remained relatively constant. When the market went up or down, the houses under $1M pretty much tracked the pattern of the higher priced houses. See Table: [HERE]
And, the median price of single family homes in the 2nd quarter of 2011 is $760,000 (half of the homes are below that number, half are above it) 62% of the homes sold in that quarter were under $1M in price. Why does Wolf call houses which are under $1M “Entry Level”. Many buyers would object to calling their $800,000 home, “Entry Level”.
Inventory Fantasy:
Wolf’s inventory figures are pure fantasy — they are based upon Corcoran and Prudential “inventory” numbers — which vary from each other by 250%. Who knows if either one is right? Both use private internal data that can’t be checked.
Why doesn’t Wolf see that huge discrepancy and report it to the reader?
See my report on Corcoran, Prudential, Brown Harris Stevens, and Town & Country — [HERE].
And Wolf talks about “days on the market”, not saying that his data comes from Prudential, and not saying that “days on the market” doesn’t mean that.
In Prudential’s market research mind, “days on the market” means “days since the last price change”, a number which is totally meaningless and very deceiving.
Future Trends:
Wolf’s discussion of “Future Trends” makes no sense. The high-end buyers did not “flood the market” 2nd Quarter 2011, as he says. See the previous graph — the mix of homes sold over $1M vs the total units sold has remained virtually constant since 2007.
The figures Wolf quotes (but doesn’t identify the source) about “Quintiles” comes from the Prudential report. The Prudential report is the only one of the four agency reports which discusses “Quintiles” The Prudential “Quintile” data can’t be trusted — Prudential used our data (Suffolk Research Service, Inc.) 2nd qtr 2011, and Long Island Real Estate Report — in the 1st quarter of 2011.
There were over 100 transfers omitted in the 1st quarter (Long Island Real Estate Report) database used by Prudential for their “Quintiles” calculations. So their reported % increases in 2nd Qtr 2011 are inflated and wrong.
Wolf makes a silly statement about these quintile numbers proving that the high end is improving and the low end is suffering (covered earlier in this blog post), which is not true.
See the real picture at the links below.
[IN GRAPH FORM HERE] [IN TABLE FORM HERE]
There is no “Tale of two Markets”. The ratio of house prices east of the Shinnecock Canal and south of the highway to other areas is pretty much the same as it has been for over 10 years.
Wolf didn’t invent the most important thing in real estate — “Location, Location, Location“. Wolf is no sage. He is simply a fool.
Summary:
The net-net of this analysis is that some things never change. Brain dead Brown Harris Stevens agent Esquire Phelan Wolf has written another terrible and useless report. Equally guilty of this calamity is the local management of Brown Harris Stevens, and the Editors and Publisher of The Southampton Press.
Posted on August 13th, 2011 by admin
Filed under: Brown Harris Stevens, Clowns, Corcoran, Dishonesty, Joe Louchheim, Joe Shaw, Saunders, Southampton Press/27east.com, The Market, The Press, Town & Country | No Comments »
