Busting Real Estate Data Myths with Mike Simonsen, President of Altos Research

Nate Smoyer (00:01.292)
Mike, welcome to the show.

Mike Simonsen (00:03.694)
Great to be here, Nate.

Nate Smoyer (00:05.036)
I feel like this has been a long time coming. For me, this is long time listener, first time having you call me. I got really tuned into your content. I don't even call it content marketing. I'll call it content reporting, if you will. Every Monday, the Altos research.

residential home sales tracking report on Twitter and on YouTube, totally peripherated, like had a really big tailwind through the pandemic as people were trying to get their real estate questions answered. So anyway, this is, you know, it just feels like a long time coming. You're also a podcaster. So excited to have you here to talk to us some real estate data topics today.

Mike Simonsen (01:00.654)
Yes, for sure. Nice to be here.

Nate Smoyer (01:02.444)
And for everyone listening, this is Mike Simonson here, joining me on the show. He's president at a company called Altos Research. They were started in 2006 and were actually acquired by HousingWire 2022. Altos, they provide national and local real estate data to financial institutions, real estate professionals, and investors across the country. They've been doing this for a long time and Mike's work in that content,

data reporting and recaps also been featured in New York Times, Atlantic, Fortune, Bloomberg, and of course, none other than HousingWire on a regular basis. I'll start with this. I do want to cover just a little bit of the backstory and then we'll jump into some of the stuff that you guys have been doing. But 2006, phenomenally interesting time to have as the backdrop to starting a real estate

tech and data business. What gives here? Why did you decide to track real estate data?

Mike Simonsen (02:02.926)
Yeah.

Mike Simonsen (02:07.246)
So I've always done data software, and had done like network security stuff and, you know, like there's a billion packets on the network, which are the bad ones. And like those kinds of, like data visualization data software. And I'd done that for a bunch of my career. And, you know, and I had been, like, I bought a house, a little old piece of shit, Silicon Valley house in 2001.

You know, two bubbles ago and, and, as the NASDAQ bubble was bursting at that time, you know, I needed to understand what was happening. And so a bunch of things were happening, like for the first time at about 2001, it was the first time listings were online before that you had to like talk to the guy with the, you know, the dot matrix printout of it, you know, and, and then, and nobody knew. So,

Nate Smoyer (03:00.364)
Mm -hmm.

Mike Simonsen (03:04.238)
I was able to start building models of like, what is the local market doing? Just like downloading and building data for myself. And I did that for several years in my, in Silicon Valley before I realized that I knew more than anybody else in the world about what was happening in the housing market. And, you know, like at the time, the only thing that was published would be like sales data.

and homes sold and you know that sold in March and it's now May and you know the April data is not out yet and like it's months and months old and it's you know there's in this zip code well this month you know two houses sold and you know there's 60 houses on the market like there's so much signal here that nobody had and of course especially at the time you know

Brokerages didn't know how to do any data MLS is didn't know how to do like nobody do anything and so

Nate Smoyer (04:05.772)
And ironic, the MLSs didn't know how to do the data, yet they were the ones with it all.

Mike Simonsen (04:10.222)
Yeah, they didn't know anything and how to pronounce, and it's understandable in that most of those are real estate folks and there was no data like standards and they had their listing data, but they didn't have like, what does it mean for the market? And they would say, you could get like, here's the 10 homes that sold and the prices and the median price of those homes that sold. But like, I can tell you,

Nate Smoyer (04:29.804)
Yes.

Nate Smoyer (04:37.484)
Mm -hmm.

Mike Simonsen (04:40.558)
What was the average days on market in Phoenix on the day that Lehman Brothers broke? Right? And like the day that subprime broke and what happened to the day? Like, you know, I, and nobody kept any of that, you know, they could go back and say, this is the median price, but they couldn't even tell you what was the inventory, you know, in life. So that was all that stuff. So it was like, you know, the internet was,

Nate Smoyer (04:55.02)
Huh.

Mike Simonsen (05:05.038)
changing and making it available and the software like before we started or right about the time we started, we could use open source databases. If we'd started the company two years earlier, you'd have to pay Oracle a million bucks a year. Right? So all of these things were new and made it possible for us to build what we did. And then of course, you know, I quit my job, my day job, January 1st of 2006 and Zillow launched with 90 million bucks of venture capital 10 days later, like,

They were like, you know, it was in the zeitgeist and like, they're like, we can do all these things too. And so, you know, that was a little scary at the time, but they, but, you know, they, but that was exactly what was happening in that moment because suddenly these things were possible to do.

Nate Smoyer (05:51.404)
Mm -hmm, yeah. Yeah, and since then, I mean, obviously, we've come a long way to the point of now there's lots of different places I can go to for all different types of data. And I think one of the most common for most people is social media. And I've seen a lot of the headlines that come out. I'm sure you, I know you've seen a lot of different headlines and stories. It still seems like some people are picking a narrative.

And running with that versus looking at the data. I'm curious from your perspective, and I know you're in it, you're studying now with Logan at HousingWire. I feel like the two of you guys are just literally like, this is like an A -Team situation. Did you ever watch wrestling, like the WWF?

Mike Simonsen (06:43.698)
Not in 45 years.

Nate Smoyer (06:48.524)
So if I can, you guys are like the legion of doom. Like that's how I look at this. All right. Like, yeah, I think of like Logan is going to be animal in your Hulk. You know, it's just how I see the pairing here when we're looking at data, but there's so many wild storylines out there of like investors, for instance, investors own all of the housing units in the U S relatively easily debunked, you know, or.

Mike Simonsen (06:54.958)
Logan would love that comparison.

Mike Simonsen (07:02.062)
Yeah

Nate Smoyer (07:17.292)
You'll see something like home prices are crashing and it's literally like a slight decline month over month. What do we gotta do to get the right data in front of the right people so we can understand what's actually happening now that here we are? How many years, let's do the math here, 18 years since you've been doing this, 18 years since it's been possible and yet still there's so much inaccuracies floating around as to what's happening.

Mike Simonsen (07:24.846)
Yeah.

Mike Simonsen (07:42.158)
Yeah. And, and you know, that, that of course is the, the world we live in is the way I like to say it is like at any, on any controversial topic, there is always enough data to support exactly both sides of the topic. Like you can go find data to, to create a hypothesis and go support it on the other side. And so really, you know, and, and most of us, in most of our time, we operate in a world where we like to, we want to confirm our hypothesis, but of course.

And so we look for the data to confirm our views of the world and like that is the that's the natural human state but but of course the the discipline state is when we go look for data that rejects our view of the world and like tells us differently and so But that's really hard to maintain It's especially hard if you're not If you are like a casuals observer, so like if you're on Twitter and you're like like, you know, I

Well, I follow four guys on Twitter, you know, a couple of YouTube accounts and, and, and, and they're saying this and that's, you know, like, I assume that how home prices are crashing and, and I found four guys who say so. so like those, those things happen, and, and like some of that's human nature. And so when I do like my work with the data, I, I mean, I, I have some hypothesis about what.

Nate Smoyer (08:55.308)
Yeah.

Mike Simonsen (09:07.566)
is happening and what will happen. And then what I like to do is I like to look for like, is that happening? And I try to be that way. And you know, it's funny because if I am, if I'm sharing data about, it doesn't matter what data I share, if I'm sharing data that like home prices are increasing and sales are increasing, people will tell me I'm a liar. If I, like, if I, if I'm sharing like data that's showing that home prices are declining, you know, that people in the industry will be like,

That's not true here. And you know, like, like, so it's, it's really like, and so what I have to, I work really hard at doing is saying, here's what I'm seeing. Here's what I think it means right now. if you have a hypothesis that the house housing market is crashing, here's what you should be looking for. And, you know, and look here and just watch and follow. and, so it's, it's a, like, I work hard at that. It's funny because that's useful. Like.

My job is to be as, as like accurate and as insightful about housing as I can. but it turns out if, if I have a, if, if you have a really strong opinion in one direction, that is, it gets dramatically more attention. and, and, you know, it gets, and so it's, it's like, if your job is to build your audience,

And, and like, and to help your audience like feel good, like it's could be a noble pursuit to go build that. like then, then having a single, a single point of view is really useful. and, and, so like in many ways, when you do the data, the way I do it, it's, it is, you know, it's like, well, there's this thing and then there's this other thing to continue concern over here and consider this. And, and, and as a result, it's like,

Nate Smoyer (10:50.38)
Mm -hmm.

Mike Simonsen (11:05.582)
less compelling to watch than, you know, than the single view. I did, I read a book recently called Super Forecasting and it was an analysis of people who could forecast, you know, the major events in the world and they have a model. They call it hedgehog forecasters versus the fox forecasters. And the hedgehogs are people who have one point of view and they sing it and it's strong and it's, and.

Nate Smoyer (11:16.204)
yeah.

Mike Simonsen (11:35.278)
It's useful and that is used. So the hedgehogs like it build the audience, reach people. if you want to be right, the Fox is considering multiple angles. And, and so, you know, if you want to be accurate and forecast the future, you're going to be the Fox. If you want to build your audience, you got to be the hedgehog. So, you know, like, I'm, I gotta be the Fox.

Nate Smoyer (11:40.204)
Mm -hmm.

Nate Smoyer (11:56.94)
That's a very interesting, like I have the book Super Forecasting and it's literally been on my list to read for like, I don't even know how many years. So now I have to actually put it back on the list. It's sitting behind me, but obviously that's blurred out. But the hedgehog concept, like that's from Good to Great with Jim Collins. And so it sounds like they just kind of took that and applied that as to like how you are going to look at and interpret data.

Mike Simonsen (12:04.654)
It's great.

Mike Simonsen (12:22.83)
Yeah, and then you could think about, you know, Jim Collins in that book is he's a hedgehog. He's like, this is how you build great companies and and like, and he's wrong. Right. And then you look at the. Yeah, that's exactly right. Right. So the hedgehog is like, but as a he sold a zillion of those books. Right. So like the. Yeah. But so it's a really fascinating thing, right? Because.

Nate Smoyer (12:29.58)
Which he was wrong, by the way. The whole book proved itself wrong, over time.

Nate Smoyer (12:41.612)
and still sells the damn book!

They need to do an updated cover of like good to great, except this is wrong. Or the theories outlined in this book prove that the companies I highlighted actually weren't great companies. Well,

Mike Simonsen (12:51.086)
Yeah.

Mike Simonsen (12:59.054)
Yeah. Or they were, they were great until the moment I covered them and then inevitably they're not. Yeah.

Nate Smoyer (13:04.524)
which was his whole point of Lea Iacocca and why Chrysler wasn't a great company because it didn't sustain post Iacocca. So, well, I feel like we could go down a whole tangent on the books. I do want to shift a little bit here because speaking of like making a stand or taking a stand on some data, there was a recent report you guys published and a white paper, what everyone needs to know about mortgage rate lock -in.

Mike Simonsen (13:11.79)
Right.

Nate Smoyer (13:32.588)
And I think this has actually been talked about quite a bit. Actually, I think a lot of people recognize this is definitely a thing. You know, right now we're seeing there is a significant lack of inventory on the market. We've been seeing that for years. It's been a declining trend for close to 10 years now of inventory, except now we have this new factor, which is if I sell, then I lose my extremely low.

mortgage rate, but I love one of the things, the very first bits of the report or insights of the report, which you, you, is written is that the lock -in didn't start in 2022. Yeah. So talk to me a little bit about that.

Mike Simonsen (14:11.086)
Right, right. And we yeah, so you know the mortgage rate lock in we can see that you know, home sales are way down and and and they're down like it's it's expensive to buy a home right now your mortgage payments are much higher. If you have a if you have a 3 % mortgage or a two and a half percent mortgage, you never want to sell that house. And when we've been talking about lock in one of the assumptions.

that the conventional wisdom I'd say that, you know, people assume that we are locked into our mortgage because rates are high now. And therefore, once rates started climbing, we started getting locked in. And the conclusion that that leads you to is therefore once rates fall again, everything's gonna be better. Right? Once rates.

Nate Smoyer (15:08.268)
And I've seen that articulated, right? The Fed's gonna have no choice, they have to cut rates, and once rates hit 5%, there's gonna be a deluge of people who've been waiting to sell.

Mike Simonsen (15:11.63)
Yeah.

Mike Simonsen (15:20.014)
What we're gonna sell right but the data shows that that's like sort of actually opposite is true and and what I wanted to we wanted to point out in this paper is that Lock -in didn't start in 22 lock -in started in 2014 when rates started coming into the fours and the low fours and and and the reason that is is because that's when we started giving the

When we started getting a really, really good deal on owning real estate, financing real estate was really, really cheap. And so the way we know that is each year we have fewer and fewer people selling homes. And we've had over the last decade, fewer sellers, fewer new listings each week, if you compare them to the year prior. And the time that that changes, the time that that increases is in the...

the periods when mortgage rates rose so like 2018 to 2019 During 2018 rates were rising and as rates were rising We then saw inventory rise so Like there were more sellers at that time in the last two years rates have been rising for basically two years now and Inventory has been rising for two years now. So the the point to us is

that is important here is that if rates fall from here that doesn't save us, that actually creates more lock -in for a new round of people. And that's like the important insight here is that it's the low rate. And so the chart you're showing here is over time, how many people have, where are we locked in on our mortgages? And the blue ones are 4 % under four and under 3%. And you can see in this period,

Nate Smoyer (17:04.748)
Mm -hmm.

Nate Smoyer (17:10.604)
So what are we sitting at like 27, 29 % are sub 3 % here.

Mike Simonsen (17:16.974)
Sub 3 % and 65 % of folks in 2021 had mortgages under 4%. Right? And that's the deal of a lifetime. That's the deal of mankind. It's like the best locked in interest rate that humanity's ever seen. And so what we've been seeing now is we've now got eight quarters, 10 quarters of rising interest rates. And so the...

Nate Smoyer (17:25.26)
This is so crazy.

Mike Simonsen (17:44.462)
the red parts of that chart are starting to grow at the right end of the chart there. And like there are more people with slightly higher mortgage rates and those folks aren't locked in. And so that means new inventory gets listed, they relist faster, they sell that house to finance the next one, all these different things happen. And so that higher rates is what gets us out of the lock -in effect over time.

Nate Smoyer (17:48.428)
Mm -hmm.

Nate Smoyer (18:12.652)
Yeah, it's really fascinating, but I think that was actually a good distinction because I think that there's all, like, it's very easy to think that at this point, everything in real estate was pre or post pandemic. So we have this like, before the pandemic hit, this was normal. 2019 still wasn't normal. We, I mean, we weren't quite, yeah, we were, we were already beyond what was normal. I don't know if Savage was being used.

Mike Simonsen (18:31.918)
Right, so 2019 was already record few listings.

Nate Smoyer (18:42.156)
as the description of the market at that point yet, right? So 2020 was just this like, you know, we had that momentary pause and then just an accelerant, like, I mean, we've never experienced of changes here. But I think the point about the low interest rate actually, so if we saw low interest rates come back, yeah, it might spur activity, but it would just actually,

Mike Simonsen (18:56.75)
Yeah.

Nate Smoyer (19:10.188)
It would introduce more people to a new lock -in rate.

Mike Simonsen (19:13.23)
to a new lock -in. So we would see if rates fall, like rates fall into the mid fives, we'll see more transactions happen. We'll see people buy more houses. But what happens is rates are at say seven now. And if we see they go down to six and a half or six or five and a half, that spurs demand more than supply. So you get more competition, you get bidding wars, you get actually inventory shrinking.

because we start to gobble up the available inventory. And so, there are people who are on the sidelines right now who are like, I'm just gonna wait until rates fall and then it'll be better. It'll be more supply and then, you know, like, but in fact there'll be more competition. And so like that's, those are the elements that we're trying to point out in this paper about like, how do we think and how do we communicate with people about what's really happening out there?

Nate Smoyer (19:58.7)
Right.

Nate Smoyer (20:10.892)
Yeah, I think waiting for rates to fall, which we started this year with, there was a relatively bullish vibe. I'm going to say vibe. That's what the kids on TikTok. Yeah. TikTok kids say that. So there was a good vibe. We were going to see some cuts this year and, and basically we're like marginally down, but like kind of flat on for, for mortgage interest rates.

Mike Simonsen (20:22.574)
Yeah, I think Vibe is right. Vibe is the right thing.

Mike Simonsen (20:37.198)
Yeah, or rates, rates climbed mortgage rates climbed starts January one, and they're down the last they're down from like early April a little bit. But, you know, the latest of most real recent, you know, inflation data is coming in cooler, like it's like, but it's it's like a it's like a trend of one point, right? It's like, it's, it's better than the other way. But but it's not really, you know, moving yet. And so and you know, I think there was

I don't know anybody who in the middle of when we rolled over into January, I don't remember anybody not a soul saying that by June will still be at 7 % or will be up over 7 % in mortgage rates. Nobody was saying.

Nate Smoyer (21:19.788)
It was talked like, yeah, we'll see six and a half. We'll get this six and a quarter.

Mike Simonsen (21:22.19)
Yeah, six and a half people were saying five and a half by the end of the year You know where they were saying the fed's going to be cutting by now like they're all of those things and and so one of my observations there is like I Don't have any capacity to predict mortgage rates. No, and i'm not convinced anyone does but

Nate Smoyer (21:42.54)
Because the people who are supposed to are still being wrong.

Mike Simonsen (21:45.838)
Right. Well, and I'm not sure anybody like that does. So, but what I can do is I can say, I can tell you exactly what's going to happen in the housing market if rates fall from here. And I can tell you what's going to happen if rates climb from here. You can tell you what's going to happen to supply to transaction volumes to price too. Like we can see all these things.

Nate Smoyer (22:05.356)
What about, obviously from a government and regulation perspective, like this is an election year. Housing has been a topic for many different discussions. There's the Biden proposal of, hey, we should basically subsidize people's home payments. Doesn't do anything to address pricing, doesn't do anything to address supply. And you can probably take a guess as to where I'm at on policy decisions like this.

But they want to subsidize, you know, there's the proposal of, hey, we should subsidize first time buyers. Then we have the NAR commissions settlements. There's the talk of Wall Street, supposedly having bought everything in America will own nothing and will be happy. From your perspective in looking at the data, what are the likely policy changes or outcomes, or what are the real, you know, potential?

policy changes or outcomes that whether you're a broker, a tech company, or even you own a few rentals, what do you need to be aware of and considering with the potential policy changes?

Mike Simonsen (23:16.566)
So, you know, one of the sort of truisms about American housing policy is that all of the laws, policy, taxes, everything is designed to favor the homeowner. You know, it is like you deduct your mortgage interest, you, you know, you like,

We have foreclosure laws, like all of the things are designed to favor the person who owns the home and financially favor, right? We go into the pandemic and you know, we put in foreclosure, forbearance because we don't want people to lose their homes, right? And it's like, it's not like it makes sense. And so what happens though is because we favor the people who own the homes that like puts a floor on pricing that makes it hard.

That this favors the people who don't own the homes yet and therefore we have an affordability crisis and and so It seems unlikely to me that our big the big overarching policy that says We want you to own your home and we want to make sure that that's good for you to own your home is gonna change right? so that seems like it's it's like we want the housing market we want your homes to hold their value all of those things seem likely to

Nate Smoyer (24:40.908)
That goes all the way back to success with Clinton and his presidential bid, and no one's gonna change.

Mike Simonsen (24:41.678)
Continue.

Mike Simonsen (24:46.478)
Yeah, or even the GIs in 1950, right? Like helping GIs coming out of World War II buying houses. Like, you know, for 70 years, we've been saying, buy your houses and then support it. And then we create, you know, the GSEs for the mortgage markets, because we want to we want mortgage financing to be cheaper. All of these things are designed to help the homeowner. And so that makes sense. We also see then, you know, from a Biden administration, like, now the payments are high, it makes sense to like,

Nate Smoyer (24:52.78)
Right, right, right.

Mike Simonsen (25:16.143)
help people make payments. Like it's nice if you're on the receiving end of that to help make a payment or a down payment or whatever. So you can understand why those policies happen, even though I'm with you in this particular case when those are demand side policies for affordability and what we really need are supply side policies for affordability. But supply side policies are significantly harder, a knob for Biden to...

Nate Smoyer (25:23.404)
Mm -hmm.

Nate Smoyer (25:36.364)
Mm -hmm. Mm -hmm.

Mike Simonsen (25:45.902)
turn, but the good news is I think we are in a shift, a zeitgeist shift of policy, housing policy in the US where communities, states, people are starting to understand that building more homes is what makes homes affordable and that we've been restricting homes in a lot of cases and so.

Nate Smoyer (26:09.228)
Mm -hmm.

Mike Simonsen (26:13.614)
Even if you're in california like I am and you know people have been in california for a long time and don't want You know, they want to restrict other buildings that they want to keep the thing But now they realize like wow, my kids can't afford to live here. My kids have to live in texas Right because that's the place where they build houses now And and so I think there is a shift starting to happen there where over the next decade or two

We maybe move into a building phase where we, where we start really allowing density and allowing, you know, construction and, and some of those things to happen. And so, you know, you can look at like there's ADU laws that are coming up in California or density things where they're, where they're saying, you know, you have to, or the state is requiring density plans from every city. Like all of those kinds of things are, that are starting to.

to really emerge because we've gotten over that, like the policy makers are starting to say like, we need to do something dramatically different on how we've done housing policy for the last few decades. So that's encouraging, that's optimistic at least that that's starting to change.

Nate Smoyer (27:25.388)
Yeah, I want to get to one other topic here before we jump down to the bottom of the show. You know, you guys have been working on some new data to track and I'll preface with it, you know, I'm familiar from my own experience having been on, you know, actually been an agent and also working with burglaries is some of the problem with a lot of real estate data is, is it's, it's retroactive or it's reactive. You know, you're, you're looking at.

Mike Simonsen (27:55.214)
looking.

Nate Smoyer (27:55.276)
something that's telling you what happened in the past. And it's very difficult to say what's happening exactly right now and where things are moving forward. And a great example is like when you see a whole bunch of homes go under contract, you have no clue. You do not know until that deal closes. Well, first off, you may not always know the terms, the terms you may never actually get to on the deal. But the price, you won't know the price until that home closes.

to know that. So you guys have started a, you have a new way of tracking pendings. Talk to me a little about why build this out, you know, what that'll actually practically look like. And then what do you think that's actually gonna provide as a service to those that you guys are already working with with your data?

Mike Simonsen (28:42.574)
Yeah. So at Altos, the thing we've always done is track the active market. We track the homes that are on the market now. Here's all the prices. Here's the changes in prices. Here's the new listings. Here's like all of the things that are happening. And there's so much signal in that, like that looking at, you know, these 10 houses sold in March doesn't tell you, right?

Like are there, you know, as inventory changes or price reductions are kicking up, like all of those things are so rich with signal. And so, you know, if I'm an agent or, you know, a broker or loan officer, an investor, whoever, and I'm like, you know, I need to be able to communicate to people about what's happening in the market. There's all this signal that's in this active market. And that's what Altos has focused on. We publish every week. So, you know, it's not, you know, it's like, if you walk into the market right now, there are f****g

578 ,000 single family homes on the market around the US right now. And that's what you can buy. And there's another 75 ,000 that'll get listed this week. and about that many that will go into contract. And so, like that's all the active market and, and we can see that, and, and so we've been really good at that where the traditional housing data was like these sold months ago and like, these comps for this household.

Nate Smoyer (29:58.956)
Mm -hmm.

Mike Simonsen (30:00.942)
the closest comp sold six months ago. You know, like that kind of stuff is, you know, you got to use it for evaluation, but like what's happened in the market, how's the market? Is it accelerating? Is it tanking? Are there, you know, all these things. so that's the active market and that's what Altos has always been really good at. but, but as you mentioned, you know, when they go into contract, what we can do now is see the pending. So we can go like, these 14 houses went.

Nate Smoyer (30:13.068)
Mm -hmm.

Mike Simonsen (30:31.022)
Went into contract this week. We don't know the closed price yet because it isn't closed. But we know we know the the last list price. And so what we're doing is it is the fastest proxy for what selling what is the price point they're selling how quickly are they selling like are they falling out of contract all of these things like watching these and and like you know we can see how long did they take in contract before the deal closes all of those things.

Nate Smoyer (30:36.716)
Right.

Mike Simonsen (30:59.758)
is insight that then we can use for, you know, helping people make decisions about the housing market. And so for us, adding the pending data to the Alto set allows us to do things like, like get the earliest proxy for what's actually sold. So you have another layer of insight about the active market before it's sold, right? Cause it might sit there in contract for 45 or 60 days.

Nate Smoyer (31:07.948)
Yeah.

Nate Smoyer (31:24.684)
Mm -hmm.

Mike Simonsen (31:27.854)
And then it takes some reporting time. So that's like three months from now But like you can you can know pretty much exactly right now what's sold and what it's so sold for and and if the median price of those solds is You know those pendings is climbing then Then like that's says a lot if the median price is falling of the the houses like we know that people are buying in a lower price point and so it is

You know, it's really an insightful, it's a next level of insight. And so we're starting, as of this month, launching. Pending's data available to our Alto subscribers. We have an advanced analytics, a data visualization platform where you can go build it. And so we're starting to publish the, the pending's data in advanced analytics so that you can say, you know, is our sales picking up? Like we know if sales are picking up because we can see, we can count all the ones that houses that are going into contract this week.

Is it finally growing from last year? We assumed sales were gonna grow in 2024, but then mortgage rates went up. Did sales tick down? Like, when I'm thinking about planning my business, am I gonna hire this year or do I have to cut back again? Those are the kinds of things that we can see in the pending data that you could never really see before.

Nate Smoyer (32:44.396)
Right.

Nate Smoyer (32:50.668)
Do I get a preview of that? Like, cause I know you guys have a nice freemium set of tools, which I have like, I'm on the drip for my local area. I like to see.

Mike Simonsen (33:01.262)
Yeah. So you have, yeah, we, we, we're making it available in a, for the advanced users that the, the, the premium level subscribers of Altos in this first launch over time, we'll move it into the reports and the freemium stuff that you get. so you'd have to, you can absolutely dive in and we'll just set up an account for you to go do that. So you can, you know, explore it and play around with it.

Nate Smoyer (33:19.468)
Yeah.

Nate Smoyer (33:26.284)
I mean, who's not nosy? I wouldn't know it's sold in my neighborhood. I mean, every single house that comes online in my neighborhood, like we were driving past one, we were leaving the neighborhood and I seen the sign and I was like, I said to my wife, I was like, what's that up? I wanna know what are they selling for? What's that price? You know, cause I remember your interview with Clayton. I don't remember the three, there was three questions you said that people are always trying to get answered.

with real estate data. And so I'm not going to try and butcher it. What are those three questions?

Mike Simonsen (33:55.214)
Yeah, there's only three questions in real estate. The three questions are what's for sale? How much is the house worth? And how's the market? Right? So, and if you think about, you know, the tech, the real estate technology, the, the universe of real estate technology, what's for sale is, you know, it's IDX, it's the listing search, it's the, you know, new listing alerts. That's the what's for sale question.

How much is my house worth? I mean, you know, Zillow launched with the front page of the New York Times answering the question, how much is my house worth? Right? Like that is, and that's Lee Jen, like that's a brilliant Lee Jen, like, you know, type in your address, we'll find out, I'll tell you how much your house is worth, that kind of stuff, right? That's that question. All the other things are like, is it a good time? Is it going up? From now, do I have to act quickly? Like these are all how's the market questions.

Nate Smoyer (34:39.148)
Mm -hmm.

Mike Simonsen (34:50.062)
And that's what Altos has done very well over the years. And so, you know, tracking the active market is like, you know, do I have like a lot of choice? Yeah, we looked at a house. Okay. It's worth this much. Do I need to, do I need an offer now? Or can I low ball? You know, all of these things are how's the market questions. And, and, so now we build in the, the new pending set and we go like, look, you know, yes, we know that sales are down in the, in the neighborhood, but.

Nate Smoyer (35:10.124)
Yeah.

Mike Simonsen (35:19.022)
In your price point your price range we can see that's where all the sales are happening So if you want this house, we need to take an action now. We need to buy now like those kind of things are really Those kind of things are really the insights that and if you think about like what as a realtor What am I answering on my website? You know, I got I got home search. I've got a valuation and I've got market reports. How's the market because?

that those are the things that people wanna know.

Nate Smoyer (35:52.14)
Yeah, and I'm constantly trying to feel out where things are at. I tend to identify and always claim I'm part of team never sell. If I don't ever have to sell, I just literally, I will never sell and I will hold on to, and it's not an emotional thing. Yeah, I just, I don't ever wanna have to sell. And it kind of works out good that I like real estate.

Mike Simonsen (36:11.022)
By lo, shall never.

Nate Smoyer (36:19.052)
if you're gonna choose to be that way. It's much harder in cars and things like that. But so I'm always trying to figure out the neighbors and everywhere else, because I wanna know where do we sit. The other thing is I'm trying to prove to the mortgage company that they need to get rid of my PMI. They have this like predetermined schedule and they're like, well, you don't qualify for a PMI to be removed until 2030 or something like that. And I called it, I'm like, guys, how do you even know that? Like, where are you even getting that from?

Mike Simonsen (36:22.734)
Yeah.

Mike Simonsen (36:33.998)
ha ha ha.

Mike Simonsen (36:48.846)
Yeah.

Nate Smoyer (36:49.132)
from what I can see in the market. It's reasonable I'm within range here, but they're not, you know, that's a whole nother story for a whole nother day. But now Mike, we're gonna shift over to my favorite segment of the show in which I like to call for the future, which is when I get to ask each guest who comes on a show to give their best predictions based on the following four questions. We do this, I'm now gonna make this part of my shtick, I'm adding this.

Mike Simonsen (36:54.958)
Yeah.

Nate Smoyer (37:18.38)
This is kind of lightning roundish, like 30 to 60 second answers on each of these questions. First one here. What does Altos research look like one year from now?

Mike Simonsen (37:29.71)
One year from now, so Altos is part of HousingWire. And we are, you know, we were acquired by HousingWire about 18 months ago. And one of the things we're doing, like the vision of the combined companies is to the media, the journalism and the data feed each other very well. And so we are doing some really cool product stuff and reporting stuff, the deep research. So we did the lock -in paper.

So you'll see more of the deep research that brings the journalism and the unique data that we have into to help answer questions that other people haven't been able to answer. You'll see new housing where our products that use Altos data, those kinds of things will be really exciting. We got a bunch of stuff in the works.

Nate Smoyer (38:18.764)
I love it. Number two, how will real estate data and reporting change over say the next three to five years or go ahead and take the argument that it's not likely to change.

Mike Simonsen (38:34.99)
You know, there continue to be.

Mike Simonsen (38:42.606)
more good sources of data. When I started Altos, nobody knew anything. People knew sales prices from last month kind of thing, that was it. And so now you can get lots of data. So the next evolution is doing things like, so what? So at HousingWire, for example, we're talking about like,

Can we show, here's the chart of inventory or mortgage rates or anything happening in the market and go, this was the day that Silicon Valley Bank died. Here's the coverage of Silicon Valley Bank. And now we tie the data into the ongoing analysis so that now you're not just like, Googling around for existing home sales and.

Nate Smoyer (39:33.964)
Hmm.

Mike Simonsen (39:40.046)
Was that up? Is that a lot? Is it, you know, now we have that source of, of like really providing the context, the, the understanding all of those things to the data. And for me personally, you know, I've done the data for a bunch of years and for a long time, my clients would say like, okay, what's going to happen? I would say like, that's your job. I'm just handing you the data, but now I get to be in a space where I get to.

to do both of those things. Like I get to say, here's what's happening. I happen to be the expert with the data, so I'm going to tell you that too.

Nate Smoyer (40:22.7)
Sorry about that. I marked that clip there, Mike. I lost the last video there. I'm sure it recorded. It just is the livestream delay.

Mike Simonsen (40:27.438)
Yeah.

Mike Simonsen (40:31.182)
I saw a little, yeah, a little thing, but I, yeah, good.

Nate Smoyer (40:35.18)
Yep, we'll be good. Okay, number three here on For the Future. What's one industry trend you think will continue, but you wish would go away?

Mike Simonsen (40:48.862)
Okay, an industry trend that I think will continue that I wish would go away. Well,

Mike Simonsen (40:58.51)
Let's take it from the, that affordability, standpoint. It, it is, we have real affordability problems in the home buyer, you know, home price affordability for most buyers in this country right now. it seems, unlikely that we're going to get big corrections that fix that.

Nate Smoyer (41:15.596)
Mm -hmm.

Mike Simonsen (41:25.774)
Anytime soon, I think if rates fall that'll help But that'll also spur demand. There's a lot of demand on the sidelines and and you know, like I said the data shows that it will spur demand more than supply and so You know, it would help to it'll help to get affordability. But really We don't it doesn't solve the fundamental problems that we have in this country So I think it is unlikely that we're going to see a scenario where we suddenly get

affordability fixes in the country. I could see us get to long term with higher rates, inventory builds over time and therefore prices don't go up and over time our incomes come up and start to catch up to where prices are now. I could imagine that that gets us out of our affordability challenge, but that's a long term.

Nate Smoyer (42:21.708)
If no one's selling and inventory, you know, stays, I, it kills me on the inside, even think about that of like, a relatively, like, a slow progressing, expensive market that waits for wages to be able to have its impact on because

Mike Simonsen (42:38.702)
to catch up. Yeah, and and and you know, you think about like, people worry about the home price crash, right? So should we talk about social media folks? They're like, you know, home price bubble.

Nate Smoyer (42:49.196)
Yeah, last year Airbnb was supposed to give us a ton of inventory, if you remember. Airbnb, they were gonna crash and flood the market.

Mike Simonsen (42:53.454)
That's right, like all of those things right like we worry about and people are worried about this home price crash this crisis is home price bubble and I think you know What if the crisis is they don't crash? Right think about the home price if if they don't crash is like, you know The the easy one to think about that everybody is examined and assumes is like home prices went up a lot and therefore they have to crash So I think what if the crisis is that they don't?

Nate Smoyer (43:21.772)
Yeah. And obviously, probably the single, well, to me, at least to what I know, I'm not the expert here. So you might, you might tell me if I'm wrong here, but the, one of the most significant differences between the challenges we're facing now and the great financial crisis, other than lending under writing criteria is the adjustable rate mortgages. The use of adjustable rate mortgages that

forced people to sell when rates adjusted. In this instance, rates adjusted, nobody's mortgages changed. A vast majority of mortgages stayed the same. So you didn't have that urgency across the country, regardless of job or marriage or death or taxes impacting people's interest rates adjusted, and suddenly everyone's mortgages adjusted. And that was not something that we were not prepared for.

but it's also not today's scenario.

Mike Simonsen (44:23.15)
Yeah. And the way I like to talk about that period is, you know, you think about if we go into a recession this time, we finally, when the recession finally gets here, we've been watching for two years or more. And it finally comes then, you know, the single best asset that we have that American homeowners have is that mortgage. They know it. So they have the, they have the, like,

If I lose my job, the one thing I wanna keep is that fixed, that 30 -year fixed mortgage at 2 .8%. Last time, 2008, the first thing I wanna get rid of is that exploding mortgage. And so it's an entirely different universe when the recession finally hits this time.

Nate Smoyer (45:08.012)
Yes.

Nate Smoyer (45:12.844)
Yeah.

Yep. All right, last one here on for the future. What's one thing you believe will dramatically change or fade away in real estate as a result of tech advances?

Mike Simonsen (45:29.742)
What's dramatically, what'll dramatically change as a result of the technology advances?

Mike Simonsen (45:44.398)
So I think we're underway with much faster underwriting and could be potentially significantly faster time to close. those are be like, you know, some of the, the, you know, we, we still have to do like income verification things, but there's a ton of human data now. And, and some of the AI advances I think will be, could,

could really make the close a significantly easier process than it's ever been. You know, the giant stacks of papers and months to get the deal done kind of thing. I think we could be underway to a real significant change in that. And I think we could see it a little bit now, you know, and we could see time and time in contract, coming down, but, but like it's starting and I could imagine it. What if it falls in half? What if it's, you know,

Nate Smoyer (46:32.716)
Mm -hmm.

Mike Simonsen (46:44.142)
takes 10 days to close, you know, normally could be really fascinating.

Nate Smoyer (46:50.156)
That would be interesting. I have some theories on what I think it would do to the market if you expedited the time to close, but we'll save that for another day, another discussion, and we'll end it on a cliffhanger here. Mike, really greatly appreciate having you on the show. It's an honor. Appreciate the work that you put out. Every Monday is the day to go look at Mike's profile on Twitter, ex Elon's personal social media, or go to YouTube.

because you can find the weekly housing report that they publish. And it's just phenomenal. It's phenomenal data. It's really great. I actually, you know, when I lived in DC, I was advised as an intern, they're like, hey, you should read the newspaper. At the very least know the headlines and you can talk to anybody all day long, because at least you knew the headlines. That's kind of what you can do here. If you know nothing, know the headlines.

Before we close out, Mike, for those who want to get in touch with you and or learn more about Altos, where do they go and how do they do that?

Mike Simonsen (47:50.542)
So altosresearch .com is the website. You can follow me on Twitter, Mike Simonson. The YouTube channel is Altos Research. All three of those places are good. If they go to Altos, to the website, they can get data, they can get some free data, they can get free ebook that we have, like using market data in your business, all those kind of things. Or follow me on Twitter or YouTube for the weekly.

output.

Nate Smoyer (48:21.356)
There you have it. I will see you on Twitter. Hopefully we'll get a chance to actually meet in person, but until then, we'll catch you later.

Mike Simonsen (48:29.166)
Yes, it fits. All right. Thanks, Nate.

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