If you haven’t noticed, Los Angeles returned to its previous median record price of $550,000 last month. Before you scratch your head in dismay, let us take a look at what is really happening. As you know, higher priced homes are still moving while lower priced homes are stagnant thus skewing the numbers. If a home doesn’t sell, it doesn’t show up in the data. Similar to taking an immensely hard mathematics course where half the class drops out, but those that remain push grades higher. When calculating the final overall class performance the statistics show the best of the best and those that stuck the course out, but what of the students that dropped out? Well as you can see from the Real Homes of Genius examples, prices are coming down. So what do we make of this seemingly contradictory information?

The Sales Cycle

This chart shows sales for Los Angeles County over the past 7 years. As I point out in the above chart, each January and February we hit a trough because of the slower selling brought on by fall and winter. This has been the case for each consecutive year since 2000 and is actually part of the normal housing cycle. But what do we have here appearing in summer of 2007? It appears that we have hit a trough 5 months early. In fact, summer sales numbers are looking more like seasonal sales numbers of winter. This chart is also telling because it shows a consistent pattern over time. Those that don’t believe in housing cycles are spinning in their chair wondering what happened this summer. Normally a strong spring and summer selling season allows for the lower numbers in the fall and winter. This will not happen this year. Unless of course we see a radical jump in sales in the next few months. This data is also a good indicator of where we are heading. Keep in mind the data reported is from sales that close after escrow. This data can lag 1 to 2 months. So what we are currently seeing in the actual finalized recorded sales is probably from July to early August. Well of course the mortgage blow out just occurred and credit standards are much tighter since then. So guess what this will do for sales at the slowest time of the year? Either way, this is a much necessary correction and that is why any housing pundits thinking we are going to have some bounce back in the next few months is simply hallucinating and not following the trend.

I’ve been getting some e-mails about timing the market. There are many ways to valuate housing prices. As we previously discussed with 3 housing valuation methods, every city in Southern California is overpriced. If you haven’t noticed the media is now using the terms “housing slump” and “credit crunch” as if they’ve been talking about it for years. Too bad even as late as January and February of this year, they were still carrying the housing banner. Using rhetoric such as “booming” and “amazing” when talking about housing. I’ve seen a few articles pointing out that housing bears have unfairly criticized the media as this New Yorker online piece. Since they link up to a few places including our site, I feel it is important to state why I have been critical of the mainstream media in the past. Clearly, they are now carrying the housing bear flag and there is no problem finding populist information outlets dissecting the housing market. My main issue was during the boom, they kept giving air time to raging housing bulls that have led us into this current market. Dean Baker’s recent study does a great job researching the entire housing bubble and also pointing out that media airtime in the past few years has not been fair and balanced. I recommend you read the entire paper as a primer to this housing bubble. But here is some of the data found regarding media citations:

Media Citations (New York Times and Washington Post) on the Housing Market, 2005-2006

*source: Dean Baker, Midsummer Meltdown August 2007

And regarding the New Yorker, I do agree with the author that many journalists are now scrambling to be first in line to disseminate housing information to the public. In fairness, the media reports what is happening yesterday, today, and tomorrow. Historian and prognosticators they are not.

Case and Point: High Priced Area and Low Priced Area

Back to the median housing price analysis, clearly housing sales have fallen off a cliff. In fact, Los Angeles County saw a 50 percent year-over-year drop in sales last month. Not exactly stellar numbers. Multiple converging factors combined to create a perfect stew of housing stagnation. For one, the credit markets are now tighter and sub-prime is now a thing of the past. Also, appreciation is now gone. So folks are deciding on holding off on buying homes especially with a sudden onslaught of negative media coverage. And something specific to California, August of 2005 saw the largest origination of adjustable rate mortgages at a whopping 70+ percent of all mortgages originated. Guess what was hot? 2/28 mortgages. And what was last month? That’s right, 2 years and now these people are facing larger payments with mortgages amortizing on different schedules. In addition, they no longer have the option of refinancing because this will push payments higher and the reason they took out these exotic loans is to squeeze into an overpriced home. Now why would they go for a higher payment even if they could? As I discussed back in July housing has hit its Minsky Moment.

Let us take at a few case examples for last month to show how higher priced areas are moving up while lower priced areas are getting hit.

Higher Priced Areas Moving Up:

Agoura Hills with a median of $975,000 is up 18.9 percent year-over-year.

Arcadia with a median of $752,000 is up 19.3 percent year-over-year.

Hermosa Beach with a median of $1,255,000 is up 15.6 percent year-over-year.

La Canada Flintridge with a median of $1,455,000 is up 7.4 percent year-over-year

Wow! The housing party is still going strong. Why look at data when all 10,000,000 folks in Los Angeles live in these areas. Let us take a look at some lower to middle priced areas:

Artesia with a median of $370,000 is down 26 percent year-over-year.

Baldwin Park with a median of $400,000 is down 11.1 percent year-over-year.

El Monte (South) - with a median of $381,00 is down 20.3 percent year-over-year.

Montebello – with a median of $535,000 is down 10,8 percent year-over-year

You clearly see the pattern and why the median price is skewed higher. For one, more sales are happening in the higher priced areas so they have a larger subset. Sales in lower areas are facing intense drops in sales and downward pricing action. Could this be because many of the past buyers bought with sub-prime loans that are no longer available? I doubt anyone in Palos Verdes would avoid buying their dream home because of a lack of sub-prime loans. An interesting thing to note is middle class neighborhoods are facing a stagnant market with prices trending down slowly but sales having a sudden stop. I expect that we will see the lower end get hammered first as it currently is and then have the middle areas tip over as well. The higher priced areas will be the last to adjust.

How low will we go?

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Filed under: Google (GOOG), Interviews, ValueClick Inc (VCLK), Small business

Chase Norlin has spent over a decade in the online space. For example, he was a senior business development executive at ValueClick (NASDAQ: VCLK). He also served as an executive at InfoSpace (NASDAQ: INSP). Oh, and he also helped to create Sony’s (NYSE: SNE) first online photo sharing service.

His latest gig: Pixsy. It’s a fast-growing company in the online video space.

Well, this week, I had a chance to catch up with Chase.

Q: How are things at Pixsy?

A: Image and Video Search are the fastest growing consumer search verticals on the web. In fact, Image Search is 10% of Google’s (NASDAQ: GOOG) traffic and grows 100% every year. We said early on, “if image and video search are so popular, why doesn’t every website have it?” And that’s the driving growth behind our business. Pixsy is unique in that we can provide image and video search to a website, under their brand, with content tailored to that specific vertical, and enable that site to have their media searched or combined with the Pixsy index. All of this provides great value to publishers: new search traffic, users stay on the site longer, new content tailored to that site, and new ad inventory is created. Additionally, the service provides great value to content providers as they receive free, targeted traffic from users performing image and video search queries. We now have a backlog of 8,000 providers trying to get content into the Pixsy index as a result.

Q: What are some of the big things you are seeing in the video world?

A: The biggest trend we’re seeing in the space is that more and more publishers are waking up to the realization that they need to have multimedia content on their site. Our philosophy is, “if Google is so successful, everyone should be in the Google business.” We believe every site should have deep vertical multimedia search as a tool to retain and grow an audience. If the site doesn’t have this functionality, typically the user leaves to perform that search somewhere else.

Q: You have a new offering? What makes it different?

A: Pixsy is launching a series of multimedia search widgets that can be targeted to any site based on keywords. For example, a Facebook user that’s interested in “Britney Spears” could have a multimedia widget that updates with all the latest multimedia content for their site, updating to the minute. The service is called PixsyPower. It can be targeted to any keyword that a user is interested in.

Q: Widgets are getting a lot of buzz. What’s your take on it?

A: Widgets are getting a lot of buzz for their ability to be easily created and spread among users quickly. This is why we’re launching our new PixsyPower widget platform that makes getting targeted multimedia content quick and easy.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: General Motors (GM), Motorola (MOT), American Express (AXP), NIKE, Inc’B’ (NKE), Electronic Arts (ERTS)

This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.

Celebrities — they’re more than superior human beings, they’re money-making machines. If these celebrities were stocks, which would be the shrewd buy?

Tiger Woods, unarguably the world’s greatest golfer, or David Beckham, the world’s best-know soccer player — in which would you invest?

The industry that is Tiger has shown consistent growth in earnings, with PGA winnings in his first 13 years as a pro exceeding $70 million. His presence in a golf tournament boosts television ratings by 50% or more. He almost single-handedly established Nike in the golf equipment world. He holds the #5 place in Forbes’ Celebrity 100 and was #2 in press clippings in 2005. Nike (NYSE: NKE), Buick (NYSE: GM), American Express (NYSE: AXP), Accenture, Electronic Arts (NASDAQ: ERTS) and Tag Heuer are among the companies that shovel buckets of cash his way in return for his endorsement.

David Beckham is no slouch in the cash category, either. The Times estimates the soccer star brings in a cool $40+ million for endorsements, including Adidas, ESPN, and Motorola (NYSE: MOT). Even in soccer-lite America, he has 51.9% recognition, more than twice that of NBA MVP Tim Duncan of the San Antonio Spurs.

Continue reading Money Face-Off: Tiger Woods vs. David Beckham

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Filed under: Television, General Electric (GE), Marketing and advertising, Employees, News Corp’B’ (NWS), Media World

This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.

Who needs to worry about the subprime mortgage meltdown or the Iraq War when we can debate whether CNBC’s Maria Bartiromo still is the “Money Honey” or if her crown has been taken by upstart Erin “Street Sweetie” Burnett.

Bartiromo’s image has been tarnished by the Todd Thomson fiasco, the trademarking of “Money Honey,” and her countless appearances at corporate events, while Burnett’s star is on the rise thanks in part to hugely flattering articles by the likes of Howard Kurtz of the Washington Post. He recently wrote of Burnett, “Under the lights, in a smoky blue dress that matches her eyes as well as her shoes, her flowing dark hair perfectly teased, she is not exactly hard on the eyes.” No word on whether he feels the same way about Mark Haines.

Yes, television is a superficial medium. Yes, discussions of the attractiveness of Bartiromo and Burnett are sexist, to say the least. I personally couldn’t care less whether the anchors are best of friends or are constantly trying to stab each other in the back, as has been reported by the tabloids.

Continue reading Money Face-Off: Maria Bartiromo versus Erin Burnett

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Filed under: Columns, Trump Entertainment Resorts (TRMP), Hilton Hotels (HLT), Entrepreneurs

This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.

How does one go about drawing a comparison between Paris Hilton and Ivanka Trump? In my estimation, although there a some mildly reasonable parallels between the two ladies, they are two significantly different people. It’s difficult in this format to strip the comparison down to bare facts and then to build a picture of each woman’s character and experience from there. So, what I shall try to do is give you just the basics to help you and then I’ll leave you to determine which of these women you’d prefer to spend some time with. I’d be pleased if you would comment about which woman you would choose as a business associate, an employee, a national leader, or a life partner.

Continue reading Money Face-Off: Ivanka Trump vs. Paris Hilton

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Filed under: Management, Economic data, Federal Reserve

This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.

You could make the argument that the Chairman of the Federal Reserve is the second most important man in the world. It is true, that when the Fed Chief talks, the WHOLE world listens — and reacts — so everyone was a bit apprehensive when long-running Fed Chairman Alan Greenspan finally stepped down last year to be replaced by Ben Bernanke.

While it is still way to early to try to compare the old with the new, there have been some signs that the “new kid on the block” is going to be taking a different route in his role as Fed Chief. Greenspan, aka the “Maestro,” was viewed as a genius while in office, but as time has passed, week by week the Greenspan legacy seems to be eroding little by little. The general impression of the “Great Inflator” Greenspan has definitely shifted to where most people recognize that he was an instigator for inflation who was afraid to let the markets correct themselves to avoid forming bubbles.

It is also true that Greenspan managed to remain in control of the Federal Reserve for 18 long years (a record for the position), but the question really is how? How did Greenspan manage to remain in the seat of one of the most powerful positions in the country for such a long period? The answer to that question is that he pleases every president that he serves. How did Greenspan manage to do this? By dropping interest rates whenever any hint of trouble hit the market. Think back to 1998 when Greenspan cut rates three times after the collapse of Long Term Capital Management LP.

Continue reading Money Face-Off: Alan Greenspan vs. Ben Bernanke

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Filed under: Products and services, Entrepreneurs, Film

This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out other Money Face-Off posts.

For pretentious film students and pop-culture-savvy hipsters alike, it’s a debate as old as the hills of Tatooine … who is the greatest movie mogul of all time? Is it George Lucas, mastermind behind the Indiana Jones and Star Wars series, or Steven Spielberg, director of such Oscar-nominated fare as E.T., Schindler’s List, and Saving Private Ryan. The pair always come up in conversation next to one another, and they will be forever linked through Raiders of the Lost Ark — the first Indiana Jones movie — which Lucas scripted and executive produced, and Spielberg directed.

Let’s take a look at the resumes. Lucas assumed the director’s chair for four of the six Star Wars movies (the original 1977 film and the three prequels), and American Graffiti, all of which he wrote. His name appears in the production credits of 47 past and upcoming projects (according to IMDB.com), including multiple video-game titles. He’s been nominated four times for an Academy Award — for the direction and the writing of Star Wars (the original) and American Graffiti. Other than a 1992 memorial award, he has never won.

Continue reading Money Face-Off: George Lucas vs. Steven Spielberg

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Filed under: Competitive strategy, Microsoft (MSFT), Apple Inc (AAPL), Entrepreneurs

This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.

The technology stories of the 1980s have a lot to do with the dawn of the PC era. IBM was about to license its personal computer technology to the open market (leading to the rising popularity of Microsoft) and Apple’s computers were a hit-or-miss proposition with consumers as el-cheapo PCs made their entrance and became the dominant force in many homes and offices. Remember 1,200-bps modems and bulletin boards, folks?

Microsoft’s arguably illegal tactics made it flourish in the 1990s under CEO and company cofounder William H. Gates, and the debate continues to this day whether the Windows 3.0 and Windows 95 operating systems were in part copies of Apple’s MacIntosh operating system. Suggested viewing: Pirates of Silicon Valley.

Apple seemed dead in the water in the mid ’90s, and Microsoft was growing by leaps and bounds. Bill Gates became the richest person in the world on paper (which would last more than a decade), and Steve Jobs came back in 1997 to try and resurrect a floundering Apple that had not done much in terms of innovation or growth under then-CEO Gil Amelio. Gates seemed on top of the world; Jobs, not so much.

Continue reading Money Face-Off: Steve Jobs vs. Bill Gates

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Filed under: Getting started, Columns, Sun Microsystems (JAVA), Comfort Zone Investing

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he’ll offer advice to investors who are just getting started.

Investors do their best to increase their wealth. They buy a stock or a bond with the best of intentions, but many of their picks don’t work out. Here are some of the most common mistakes investors make and how to avoid them.

Mistake: Buying a stock on a recommendation from a friend. The assumption here is that the friend did the research and knows about the stock. The richer the friend is, the more weight the tip has. What you don’t know is whether the friend has bought 100 shares or 10,000 shares and how much of his or her wealth is tied up in the stock. The more stock he or she owns, the more they must believe in the stock. You also don’t know how much, if any, research the friend did. Maybe he or she got the tip from another friend, and you’re only one of many in a “tip” chain. Maybe you’re the last one to get the tip.

Continue reading Comfort Zone Investing: Common investing mistakes

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Filed under: Time Warner (TWX), General Motors (GM), Motorola (MOT), Private equity, Entrepreneurs

This post is part of our Money Face-Offs feature. Let us know who you think comes out ahead in this head-to-head match-up, and check out our other Money Face-Off posts.

In this corner, hailing from Beverly Hills and Las Vegas, is 91-year old billionaire investor Kirk Kerkorian, one-time amateur boxer know as “Rifle Right Kerkorian.” And in the other corner, hailing from New York, is 71-year-old corporate raider and activist private equity investor, Carl Icahn, who is never afraid to go toe to toe with an opponent.

Let’s get ready to rumble.

Round One begins: Kerkorian drops out of school and becomes a pilot. He gets his start in business buying surplus planes after World War II, as well as Las Vegas properties, becoming the landlord of Caesar’s Palace. Icahn, meanwhile, establishes his reputation as a corporate raider during his hostile takeover of TWA in 1985, and becomes one of the inspirations for the character of Gordon “Greed Is Good” Gekko, the antagonist of the 1987 film Wall Street.

Continue reading Money Face-Off: Kirk Kerkorian vs. Carl Icahn

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