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May 2008

A Great Market Report

As you probably know, we are HUGE proponents of market reports. 

We believe that producing a good market report can be the single most important  thing you can do to maximize your success in the luxury market. 

Yes, we feel that strongly about it. 

Success in the luxury market comes not just from who you know, but  WHAT you know.  You must be an expert on your market and you must be able to communicate that expertise to others.  A well, produced market  report is  one of the most effective  prospecting and follow-up marketing tools available. 

Report Given that we're such fanatics about this, we were excited to see @Properties roll out their fantastic new 2007 @properties Market Report.  If you haven't looked at it already, do it now.  It's innovative, it's online, it's interactive, and it's a hugely powerful marketing tool.  They set out to create the BEST market report for their area and they did it.

With that in mind, we spoke with Matthew Dollinger, one of the creative technology geniuses (he made me say that!) behind the @properties Market Report for insight into their thinking and experiences in creating the report.   Here's what he said...

When does Data become Information?  Data…  It’s there.  We use it.  Consumers want it.  But how does a real estate company position itself to bridge the gap and convert this coveted data into information that is both useful and user-friendly?

Data are plain facts. The word "data" is plural for "datum." When data are processed, organized, structured or presented in a given context so as to make them useful, they are called Information.

It is not enough to have data (such as statistics on the economy). Data themselves are fairly useless. But when these data are interpreted and processed to determine its true meaning, they become useful and can be called Information. (source)

Welcome to the crossroad we faced 7 months ago when announcing the creation of a market report that would differentiate from all market reports in our Chicago area.  We had researched competitor reports and others across the U.S., but noticed common shortcomings each time. 

  • Most reports give you overall statistics of a given market
  • The data presented generally doesn’t take into consideration neighborhood parameters
  • Amenities as beds, baths, and price point are not offered as search criteria and result in aggregated data (i.e. all condos = x, all single families = x)
  • Most often, this data is presented in one of two ways:
  • In analytical format with no insight or speculation from the industry, and therefore not useful to the consumer.
  • In a “consumer-friendly” format that is so general and sophomoric that it loses any true meaning or insight.

Some of the common pitfalls of presenting data as information without exploring the smaller things of neighborhoods and amenities have been (mis)represented in reports such as the Standard and Poor’s Case Schiller Report, which was quoted on Inman recently with the headline, "Case-Shiller: Home prices drop in 19 of 20 metros"  When you dig a little deeper, and explore the FAQ on how they calculate their numbers, you find the following:

What types of homes are included in the index calculations?
To be eligible to be included in the indices, a house must be a single-family dwelling. Condominiums and co-ops are specifically excluded. Houses included in the indices must also have two or more recorded arms-length sale transactions. As a result, new construction is excluded.

Is this TRUE information?  Does this really represent what is happening in these major metropolitan marketplaces?  Is this DATA or true, honest, well presented INFORMATION? 

Our goal when developing our report was to create the most informative, useful, and honest report on Chicago Market statistics with INFORMATION for both consumers, and agents.  What we came up with was our fledgling @Report - A Local Look at the Performance of 21 Chicago Neighborhoods. This report, in comparison to others in our area and across the country, was born with the idea in mind that real estate is local… very local.

As quoted in a recent Chicago Magazine article, Chicago real estate guru and reporter Dennis Rodkin states:

“It’s like talking to an agent who works the neighborhood: You will find specifics on how prices have changed in the neighborhood at various price tiers, and what are the hottest-selling sections or developments within the neighborhood.”

Our plan was to integrate neighborhood data compiled over the last few years and present it with a consumer focus, and consumer understanding. Where the report is still in its first release stage our intention is to integrate advanced charting and even geo-coding of neighborhoods down the road.  It seems from the feedback, positive media exposure (say what???), and 35,000 hits to date, that we have hit our mark of appealing to the consumer and delivering it in a format that they want. (How’s that for listening to the masses?)

What we did that made our report special?
(Or… What to include in your own market report)

  • Make sure you use accurate data from your local board or MLS
    • We purposefully didn’t pull our data until a month after the end of the year since transaction closing dates are sometimes contested.
  • Make sure that you’re willing to pull ALL the data
    • This includes (for our market) multiple sets for different amenities including beds, baths, Attached, Detached and Price Point.
  • Make the data searchable to the consumer
    • We found that a simple drop down that aggregated the data was sufficient, but hope to incorporate radio buttons and graphing functions.
  • Give professionally written insight into the information you provide… not just data and numbers
    • We worked with both a professional PR firm as well as local neighborhood experts in our office to develop insight and copy for the consumer.
  • Draw insightful trends and reasons (where available) for why certain numbers have performed the way they have.
    • By analyzing the numbers, we concluded that certain areas underperformed not because of price decline, but simply because of fewer high-end properties coming onto the market.

By taking the time to create a report that not only provides accurate data, honest insight, and presenting it in a way for your consumers to understand, your Market Report becomes not only an informative tool, but a PR piece, company marketing tool, and valuable information for your agents.  Stand out, turn on, and embrace your You Factor.

You can reach Matthew here:

Matthew Dollinger
Performance Coach (a.k.a. "Creative Technology Genius")
212 East Ohio
Chicago, IL 60611
O:  312.506.0236

Here's a video of Thad Wong, Co-owner of @properties in an exclusive TV interview (love the temperature analogy!):

Recession and the Wealthy

20080517_0027 Nightline had a piece on the uber-wealthy this evening.  If you missed it, you can find it on the ABC News website:  Super Rich: 'It's Not About Necessity

The subtitle say it all: Economic Downturn Has Little Impact on Wealthy Americans Who Specialize in Spending.

The article notes that the top 1% of Americans control about 33% of the wealth ($17 trillion), and as the now ubiquitous Robert Frank puts it, ""Even I underestimated the degree to which the wealthy are almost oblivious to the fact that we are in a recession. The super rich are unaffected."

Yesterday the Washington Post ran an article on Luxury Foreclosures  (thanks to Scott at Altos for the head's up on this one) which looks at the other end of the "rich" spectrum, the end that in many cases is over-extended and is feeling the pinch.  According to the article, from 2006-2007 foreclosures of homes worth $500k-$1M were up 88% and foreclosures of homes worth $1M+ were up 50%.

The good news, as we noted in our recent report Understanding Today's Real Estate Market (members only), is that recent research suggests that many of those earning $500k or more a year see the current market conditions as an opportunity and are planning to buy homes (typically second or third homes) in the next 12 months, and the weak dollar is enticing many wealthy, foreign buyers.  Interesting times, these...

Understanding Today’s Real Estate Market

"How could this happen?"

It's a good question.  One we're asked frequently. 

"How did the real estate market end up in this mess?" or "What caused today's market conditions."  Your buyers and sellers may be asking the same question of you.  Since part of our training is to encourage you to become a market expert, we thought you'd appreciate having an answer.  So, we've created a short, three page White Paper "Understanding Today’s Real Estate Market"  for you.  It's our  view of what led to the current real estate slowdown and credit crunch. The good news in the White Paper is that the luxury market continues to outperform the market overall.   

You can quote from this report or use it in your newsletters, Market Update Reports, and other presentations.  Post it on your website if you want.  Just be sure to give The Institute credit as the source.  You can download it here (members only - login required).

If you're a member and haven't yet visited the updated website, remember that your email address is your username and you create your own password.