East End’s four largest Real Estate agencies (Corcoran, Prudential, Brown Harris Stevens, and Town & Country) have published their 2nd Quarter 2011 Market Reports. All four of the reports are terrible — useless for obtaining any meaningful and truthful information.
The market reports prepared by Corcoran, Town & Country, Prudential, and Brown Harris Stevens are prepared by rank amateurs. It is scandalous that these terrible reports, having the same problems, keep getting published quarter after quarter.
You Should Not Trust Any of these Market Reports:
A good technical statistical report — of any nature — should be written, explained, and defined, so that the reader can re-create and check all the data. This is particularity true if the report is written by someone (or company) with a biased agenda. These four agencies can hardly be called neutral or objective.
None of the four reports even comes close to meeting that criteria. The property transfer data used by all four real estate agencies is supplied by Long Island Real Estate Report (LIRER). LIRER data is not reliable, and this LIRER data, like all other data and conclusions in the reports prepared by these four agencies, cannot be checked by the reader.
The Suffolk Research Service, Inc. (SRS) market reports meet that criteria by providing a free searchable database containing all the properties, which are the basis of SRS data reports. See:www.EastEndComps.com [HERE]
The four largest real estate agencies use the same source of their transfer data, and that source is wrong. See the following table which compares the unit sales for the 2nd quarter of 2011 for Suffolk Research Service and for Long Island Real Estate Report (LIRER). Notice that the sales reported by LIRER on their website [HERE] have 112 fewer transfers than reported by Suffolk Research Service. We report record dates from the County, and publish each transfer so it can be checked by anyone. [HERE]
And if you check the LIRER website now [HERE]. the number of sales in the 2nd quarter is likely to be different than those numbers shown in the table. LIRER keeps adding deed transfers to their count, revising their numbers weekly as more deeds are recorded. But the deeds which were not yet recorded (over 100 listed below), when real estate agency market reports were written, never get counted by them, EVER. You see, LIRER reports the date the property was closed, not the date of the recording of the Deed, as is the case for Suffolk Research Service, Inc. The use of “deed dates” results in substantial under-counting, since properties take anywhere from one week to two years to be recorded. The records which don’t get recorded by the time real estate agencies write their quarterly reports don’t get counted. The LIRER data is used by the four market report writing agencies shortly after the end of each quarter, a time when many deeds for that period have not yet been recorded.
See our blog post on this subject [HERE] “Why Long Island Real Estate Report market cannot be used for market research”.
The 614 single family homes that were recorded in the 2nd Qtr of 2011 can be found [HERE]. See that the last records (over 100 of them) on the list would not have been counted by the users of LIRER data — EVER!.
Here are over 100 records — lost forever as far as being counted by 4 Real Estate agencies — Corcoran, Prudential, Brown Harris Stevens, and Town & Country.
Examples Taken from the Four Agencies’ Error Ridden Market Reports!
Why would anyone blindly trust any of these four agencies? These are the four agencies that are in violation of their covenants with LIBOR’s MLS. Although the four agencies belong to LIBOR MLS. Each of them refuse to follow LIBOR MLS rules, which they are under contract to follow. Each agency puts their North Fork listings on the system, but they refuse to comply with MLS rules and put South Fork listings on the MLS site.
These are the same agencies that are under an investigation by the US Justice Department.
Those who run these agencies are continuing to publish and distribute reports that are wrong. These managers are chronically dishonest, knowingly misrepresenting and misleading their prospects and customers with garbage on the Market.
The Town & Country Market Report for 2nd Quarter 2011:
Town & Country under-counts the real estate sales in the “Hamptons” (towns of East Hampton and Southampton) by 21% for 2nd Qtr 2011 (475 units actual vs 375 they report). These mistakes result in a major under reporting on the condition of the Hamptons market.
Town & Country reports a unit sales drop of 2% (2nd Qtr compared to 1st Qtr, 2011) when, actually, there was a healthy rise in unit sales in the 2nd Qtr of 2011 of 12% over the 1st Qtr 2011 — for the combined Towns of Southampton and East Hampton.
Town & Company is wrong in all of the market segments. Look at the following table:
Part of the problem with the T & C numbers is their use of data which is inaccurate (Long Island Real Estate Report [See HERE], but the person doing the Town & Country math must be a 10 year old — no offense ten years old.
(Although, I believe it is Owner/President Judi Desiderio who prepares the terrible reports.)
Prudential and Corcoran Errors Other than LIRER Under-Counting:
Both Prudential and Corcoran report on what they say are the changing “inventory” figures for the market. Neither report tells the reader where these “inventory” figures come from. One can only conclude that the “inventory” reported by Prudential is from their own agency listing data and the Corcoran “inventory” comes from the Corcoran listing data — neither is the whole “Market Inventory”, as is inferred by Corcoran and by Prudential.
But how could the Prudential and Corcoran inventory numbers be so different? Both companies are roughly the same size on the East End, yet there is more than a 250% difference in their Quarterly “inventory”.
These differences in inventory numbers destroy both reports.
The report from Prudential contains many pseudo-professional sounding market indices such as “absorption rate”, “listing discount”, “quintiles”. To anyone who knows “what’s what” — the writer of the Prudential report, Jonathan Miller (and President Dottie Herman) just look naive. I can’t imagine anyone using this information, and I don’t believe it is credible.
I don’t trust Prudential and I don’t trust their data.
The Prudential report is full of impressive looking graphs, charts, and tables, proving they know how to use Microsoft Excel — garbage in, garbage out. Prudential’s report writer, Jonathan Miller, simply doesn’t know the first thing about statistical analysis and report writing.
Mr. Miller reports that there were 619 transfers (he doesn’t say if his numbers cover only homes? The Long Island Real Estate Report (LIRER) showed only 512 — yet the Prudential 2Q 2011 report says the source of the data was LIRER. Coincidentally, the Suffolk Research Market Report for 2Q 2011 reported 614 units [HERE].
I believe that Mr. Miller and Prudential realized their errors in using the LIRER data and changed it for Q2 2011 — without admitting it and redoing all previous numbers.
They used Suffolk Research Service data without acknowledging it, and without paying for it.
Because the Prudential report stopped using LIRER data for the 2nd Quarter of 2011, and apparently used LIRER for earlier quarters, the “growth” figures for the 2nd quarter are inflated. Had Prudential used LIRER data, their reported 619 sales for 2nd Qtr is inflated by over 100 sales, and their reported sales increase 1st Qtr to 2nd Quarter would have been 27 % or so increase, not 63% as Prudential says.
As bad as it is to use unreliable data (LIRER) it is worse to mix good data with bad, and try to cover up your errors.
The Prudential 2Qtr Report speaks of “North Fork”, but doesn’t define what that means. Does the “North Fork” include the towns of Southold and Riverhead. Three months ago, Mr. Miller told me that it did not cover Riverhead? But, if the 2nd Qtr 2011 Prudential Report doesn’t include Riverhead transfers, how do they get to over 619 sales for the period?
Does Prudential include in the North Fork figures, the town of Shelter Island?
Although there is no way to check the Prudential data, most of it looks crazy, made up — it can’t be right.
Look at the Prudential graph covering “Absorption Rate” and “Listing Discount”.
It makes absolutely no sense that “absorption rate” would have such wide swings from quarter to quarter. It is more likely that the data shown for absorption rate varies due to error, or cleaning out of sold listings from the listing database. I worked with Prudential’s Hamptons/North Fork operation providing their listing system. Their operation was then, and must still be, a disorganized “rat’s nest”.
Realtor.com defines “Absorption Rate” as follows:
“The absorption rate provides the answer to this question: How many months it would take to sell all the homes for sale in my area at the current rate they are selling? The higher the number, the more aggressive home sellers will have to be to get their home noticed and sold.”
It is impossible for the absorption rate to be 17 months in the 2nd quarter of 2008, and 34 months one quarter later. A seasoned statistical professional would never publish such absurd data.
And the Prudential report reports on “Listing Discount” and “Days on the Market” — each with the modifier — “From Last List Date” and “From last List Price”. These figures are useless, and very misleading. Normally, “Days on the Market” are just that. But, according to the way Prudential records “Days on the Market”, a house could be on the market for 5 years and because the price was changed in the last month — prior to the end of the quarter, it would show up as 1 month “Time on the Market”.
And on the East End, “Days on the Market” for the average property are likely to be over a year. Five or six years ago, I did a study of time on the market — it turned out to be one year per $1M in home price — $3M house took 3 years to sell, $7M house took 7 years to sell. The Prudential figures are confusing, useless, and I believe deliberate attempts to deceive and dazzle the reader.
The Prudential report shows a “Listing Discount (From Last List Price)” of 11.4% for 2nd Qtr 2011. This number makes no sense. Prudential’s own data shows a 1st Qtr 2011 to 2nd Qtr average price rise of 23.2% and a median price rise of 23.1% — how could the “Listing Discount” be 11.4%. The data doesn’t make sense. If there is a reason for the data, that reason should be explained. My guess is the data is wrong due either to the sloppy back room at Prudential or the inept, “I don’t give a damn” reporting by Mr. Miller.
More Corcoran Errors:
Corcoran spends most of their Q2 2011 report reporting on individual hamlets/areas of the East End. Such small sample sizes produce statistically insignificant results. Publishing the fact that “Peconic” grew 200% from 2010 2Q to 2011 2Q with a sample size of 1 (in 2010) to 3 (in 2011) is simply comical.
The sloppy and unprofessional content of the Corcoran report suggests to me that it was prepared by Rick Hoffman, VP of the East End for Corcoran.
Hoffman is a lawyer who moved here from NYC to practice law as a single practitioner. One day he met Dottie Herman (Prudential CEO), and she hired him as VP of the Hamptons (probably at the first meeting, without checking his background — that is how they do things). But Dottie already had a “VP of the Hamptons”, Paul Brennan. Corcoran then hired Hoffman away as Corcoran’s “VP of the Hamptons”, thinking Prudential knew what they were doing.
The Corcoran report says that it covers “villages and hamlets from Remsenburg to Montauk”, yet the report leaves out the hamlet of Hampton Bays, a large market on the South Fork. Corcoran reports data on a “Hamlet” called “East Hampton”, and one called “Southampton”, without any definition as to what areas are in those “Hamlets”.
The Corcoran report says “median and average home prices remained constant in comparison to the same period last year”, yet the Corcoran report shows an average price increase of 12% — not a constant price. A 12% increase in price would look like a hefty increase to me.
The Corcoran report says:
“…Volume and units both have increased by healthy margins in 2011 as sales activity reflected typically active second quarter that was commonplace prior to the recession.”
This statement is wrong, simply real estate agent folk lore. Second Quarter sales are typically about the same as the other three quarters, certainly not different enough to be statistically significant. Actually, based upon 10 years of sales data on the East End, sales activity is relatively constant from quarter to quarter.
Here are the numbers: as a percent of yearly unit sales — 1Q 23%; 2Q 28%; 3Q 24%; 4Q 25%. See the backup data on these stats [SEE BACKUP DATA HERE]
The Corcoran report says:
“…There has been a return of activity in the commercial market as the East End economy slowly improves”.
Their report shows a rise from 7 to 10 commercial sales on the South Fork, 1 to 7 sales on the North Fork — not enough sales to be statistically significant, or interesting — why say it?
All of the Corcoran market stats are WRONG!
The Corcoran report, like the Prudential report, is so inaccurate and incomplete — it should not be used.
Brown Harris Stevens — the Worst of the Four:
The Brown Harris Stevens 2011 2nd Quarter report [HERE] is six pages long, eight graphs, each with a table.
Each graph/table covers a separate market, but none of the market graphs/tables contains a sample size. A statical analysis is useless without disclosing the sample size.
Each graph/table is accompanied by a dumb (meaningless) statement about that market.
The BHS report starts with a letter, proudly signed by Gregory Heym, “Chief Economist”.
Chief Economist Heym, in his introductory letter, says:
“…For the first time since the third quarter of 2007, sales of at least $1 million accounted for the majority of Hamptons transactions.”
The charts and tables in his Market Report do not provide any support for that statement. Note he says that Q2 2011 is the first year that the majority of the Hampton sales are over $1M. But his own report shows the Hamptons median sales for the Quarter as $925.000 — Half the sales are below the Median, half above. This “Chief Economist” is a rank amateur .
Look at the data by quarter — 2007 through 2011 [HERE as a TABLE]
Note that there is not a trend toward a higher percentage of sales at the “High End”. Never (since 2007) has there been a quarter with a greater number of “High End” sales than sales under $1M. Heym’s statement rings of a real estate company trying to make it look like high end sales are moving to get high end business.
The two most important market stats, “Unit Sales”, and “Dollar Sales” are not reported by Chief Economist Heym. You’d think a “Chief Economist” would know better.
When I read the BHS market report, I was so disgusted that I fired off an email to Gregory Heym (Gregory Heym is Executive Vice President and Chief Economist for Terra Holdings — parent, sister company of Brown Harris Stevens) .
Here is a copy of one of the Graph/Tables shown in the Heym report (Amagansett-Montauk market) and my critique of it:
Chief Economist Gregory Heym makes other senseless statements on other Graph/Tables in the report, like:
For the South Fork:
“South Fork homes sold for an average of $2,028,735 in the second quarter, 30% higher than a year ago. This was helped by a sharp increase in sales of homes priced at $8 million or more. Sales of at least $1 million comprised 51% of the market, up from 44% in the second quarter of 2010.”
There was only 1 home sold in 2Q 2010 of $8M and above. There were 8 homes sold in 2Q 2011 of $8M or more — hardly a sample size large enough to draw conclusions.
Local BHS East End management includes two attorneys and one manager with an MBA. You would think that these executives should be able to evaluate the market research produced by BHS HQ, and get it fixed.
Posted on July 18th, 2011 by admin
Filed under: Brown Harris Stevens, Clowns, Corcoran, Dishonesty, Prudential, The Market, The Press, Town & Country | 1 Comment »
