Archive for January, 2016


By Ralph McLaughlin

Typically, the housing market sees minimal activity during the week between Christmas and New Year’s. Why were existing home sales still able to rebound in December from the November slowdown?

The big jump in December was an anomaly because of the new “Know Before You Owe” lending disclosures went into effect in October, and in November we saw one of the biggest drops we’ve ever seen. Sales that normally would have closed in November were pushed into December, and December’s numbers really supported that thought. We think December’s numbers are an anomaly and the result of November’s sales spilling over into December. We don’t think it’s representative of any long-term trend of a large increase in inventory.

That said, 2015 was the best year for existing-home sales since 2006. There were about 5.3 million homes sold last year, and that was a 6.5 jump from 2014. So we are optimistic that existing-home sales will continue to increase in 2016. There was a little bit of somber news from today’s numbers, and that is that December’s inventory was down quite a bit from the same month in the previous year. So we think homebuyers going into 2016 will see continued tight inventory, at least coming into the spring buying season. But the fact that prices are up year-over-year would hopefully lead to more households putting their home on the market, because more homes will be out from being underwater—which is still plaguing some cities.

What are the biggest challenges facing the housing market in the year ahead?

We talked about inventory, and that’s on the supply side. We think there are going to be some demand-side challenges going into 2016. The demand-side challenges are two-fold. The first is that homebuyers, especially first-time homebuyers, are having a difficult time saving up for a downpayment. We conducted a survey at Trulia last year asking homebuyers what their biggest obstacle was to buying a home, and more of them said downpayment than any other answer. Going into 2016, what we’re hoping to see is that wage growth will continue—we saw some glimmers of hope of wage increases in 2015—and that will help buyers save up for that all-important downpayment.

Related to that, which also affects the ability to save for a downpayment, is rent growth. We’ve seen rents charge ahead very strongly in many markets in 2014 and 2015. That’s a double whammy for homebuyers, especially those who are renting. Rising rents actually make it a better deal to buy—relatively speaking, it makes homeownership look more attractive—but at the same time, increasing rents make it more difficult to save for a downpayment. On the demand side, that’s one of the biggest challenges that we’re going to see heading into 2016.

The third thing that we’re going to keep a close eye on is affordability. We’ve seen prices charge ahead just as strongly as rent growth in the last couple of years. In many markets, especially for first-time homebuyers, affordability is a challenge. In many markets, especially on the costly costs—metros in California and in the Northeast—homebuyers would have to spend 30, 40, or even 50 percent of their income to buy the median-priced home.

Those three aspects—inventory, saving up for a downpayment, and affordability, are going to be the three big challenges coming into the years ahead.

How will future rate increases by the Fed affect those three challenges, or will they affect housing at all?

On the demand side, we don’t think that the Fed increasing the interest rates will have much of an effect on homebuying. And that’s because mortgage rates tend to move somewhat independently from the Fed rate, which primarily impacts short-term credit. Even though the Fed raised rates in December, mortgage rates are down.

Going ahead, even if mortgage rates were to rise—if the Fed were to be very aggressive with increasing interest rates—we also don’t think that will have much of an effect on demand, because in many markets, mortgage rates would have to be 7, 8, 9, even 10 percent for the cost of owning to roughly equate to the cost of renting. So the financial advantage for homeownership will still persist even if mortgage rates rise. So on the demand side, there won’t be much of an effect if the Fed decides to act aggressively.

On the supply side, however, we do think that if the Fed were to rapidly increase interest rates, we might see a temper on new housing starts. That’s primarily because the Fed rate impacts short-term credit, and many homebuilders use short-term credit construction loans to finance homebuilding. So if the Fed were to quickly increase interest rates, that may start to have an effect on homebuilding because it increases the cost of construction.

All that said, the Fed is going to have an increasingly difficult time when making the decision about whether to raise rates. That’s primarily because even though we’re near full employment, or close to it, inflation is well below target. The large drop in oil prices in the last month, or really in the last year, has led to very low inflation. In fact, we may enter into a period of slight deflation in the year ahead. So the Fed is certainly going to have its challenges in trying to make the decision about whether to raise rates.

Ralph McLaughlin was named Chief Economist at Trulia in January 2016. He joined Trulia in August 2014 as the Housing Economist. In his role as Chief Economist, McLaughlin leads housing economics research for Trulia and provides key insights about economic and housing trends as well as public policy for house hunters.


By Jenna Goudreau

People size you up in seconds, but what exactly are they evaluating?

Harvard Business School professor Amy Cuddy has been studying first impressions alongside fellow psychologists Susan Fiske and Peter Glick for more than 15 years, and has discovered patterns in these interactions.

In her new book, “Presence,” Cuddy says people quickly answer two questions when they first meet you:

Can I trust this person?
Can I respect this person?

Psychologists refer to these dimensions as warmth and competence respectively, and ideally you want to be perceived as having both.

Interestingly, Cuddy says that most people, especially in a professional context, believe that competence is the more important factor. After all, they want to prove that they are smart and talented enough to handle your business.

But in fact warmth, or trustworthiness, is the most important factor in how people evaluate you. “From an evolutionary perspective,” Cuddy says, “it is more crucial to our survival to know whether a person deserves our trust.” It makes sense when you consider that in cavemen days it was more important to figure out if your fellow man was going to kill you and steal all your possessions than if he was competent enough to build a good fire.

Cuddy’s new book explores how to feel more confident.

While competence is highly valued, Cuddy says it is evaluated only after trust is established. And focusing too much on displaying your strength can backfire.

Cuddy says MBA interns are often so concerned about coming across as smart and competent that it can lead them to skip social events, not ask for help, and generally come off as unapproachable.

These overachievers are in for a rude awakening when they don’t get the job offer because nobody got to know and trust them as people.

“If someone you’re trying to influence doesn’t trust you, you’re not going to get very far; in fact, you might even elicit suspicion because you come across as manipulative,” Cuddy says.

“A warm, trustworthy person who is also strong elicits admiration, but only after you’ve established trust does your strength become a gift rather than a threat.”

Reading a room is a skill that can be learned; a guide to nonverbal cues like how people stand or hold their hands.
WSJ’s Sue Shellenbarger offers tips to better networking across busy rooms.

Some people enter a room of strangers and glide along from one lively conversation to another, uncovering golden new business contacts.

How do they do it?

These people know how to read a room—a capacity that can be partly inborn, but also learned. From the barrage of sights, sounds and behavioral details, they extract clues about which people have the most to offer and which to avoid.

That energetic guy with the 1,000-watt smile, booming voice, ready handshake and a fistful of other people’s business cards might seem like fun, for example. But he’s moving too fast to connect with people in a meaningful way and is probably just trying to bag clients.

“You meet somebody at a business function, and five minutes later they’re slapping you on the back and calling you by a nickname, ‘Yo, Vic!’ Only my close friends call me Vic,” says Vickie J. Gray, chief marketing officer at Ober Kaler, a Baltimore law firm. Such glad-handers “give networking a bad name,” she says.

Body Language at Cocktail Hour


The cues to finding allies in a crowded room aren’t obvious. Those in groups talking all at once and laughing might look like great people to know. Often, however, they’re sharing a private joke or memories of past experiences, and “they’re having way too much fun” to welcome an outsider, says Anne Baber, co-owner of Contacts Count, a networking consultant from Newtown, Pa., that provides training for attorneys at Ober Kaler.

A tight circle of three to five people standing face-to-face in a closed O, maintaining eye contact and talking intently, might look intriguing, but they may be solving a pressing problem, making them too busy to greet someone new.

The most promising group may be lined up loosely, with gaps between participants, “just sort of muddling along, trying to have a conversation,” Ms. Baber says. They’re likely to welcome a newcomer, especially someone who can loosen them up.

Luiz Vieira networks often in his role as president of a Philadelphia technology and consumer-product materials company and a member of an association of CEOs. He looks for a group that isn’t clicking. “They look like they’re bored, and they need someone to jump-start their conversation,” he says.

Consultant Liz Sears Smith met a new work contact after exhibiting welcoming body language at a museum gala. PHOTO: RALPH ALSWANG

Working with Philadelphia impression-management coach Karen Kaufman, he learned to come prepared to talk about a few interesting topics, such as the World Cup or the stock market, and to feel at ease approaching others, asking questions and starting a new discussion. “If you’re able to shift the mood of a group in a positive way, it’s very powerful” in forming bonds with others, he says.

Participants in groups that are welcoming often make eye contact as a newcomer approaches, raise their brows in a welcoming way and smile.

Two people facing outward, instead of directly facing each other, also signal a readiness to talk, says Michele Woodward, a Washington, D.C., executive coach.

Ms. Woodward met Liz Sears Smith a few months ago at a museum gathering after spotting her near a standing cocktail table, leaning against the rail shoulder-to-shoulder with a colleague, looking out at the crowd. “It was clear from their body language that they were open,” Ms. Woodward says. Ms. Woodward and Ms. Smith made eye contact and both smiled. Ms. Woodward introduced herself, and they talked for about five minutes and realized their work was similar in some ways, Ms. Woodward says.



Come prepared with topics to discuss or experiences to share.
Observe others’ facial expressions and body language in deciding whom to approach.
Look for opportunities to help others with information or introductions.
Keep at least one hand free of snacks and drinks so you can shake hands.
Look for eye contact or a nod from others as a signal to introduce yourself.


Measure success by the number of business cards you collect.
Look over the shoulder of the person you’re talking to in case someone more interesting shows up.
Try to look smarter and more competent than others so people will be drawn to you.
Assume anyone standing alone is a loser and should be avoided.
Demonstrate your power and influence by talking in a loud voice.

“We decided we wanted to have coffee, and Michele took the first step of sending an email later. We’ve kept that relationship going,” says Ms. Smith, Washington-based reputation-management consultant.

Noticing subtle, nonverbal cues can help. Domineering people tend to talk most of the time and avoid eye contact with listeners, research shows.

People who are genuinely open to new relationships adopt an open stance, shoulders apart and hands at their sides, turning slightly toward newcomers to welcome them, says Kelly Decker, president of Decker Communications, a San Francisco consulting and training firm. Also, their gestures match their words. Saying you’re delighted to meet someone when your arms are crossed in front of you is confusing, suggesting you don’t mean what you say.

Loners who stand in a corner, hunched over their cellphone or a plate of food, are sending a negative signal, Ms. Woodward says. Other singletons, facing the room with an open stance and a smile, however, may be happy to greet you. “For some people, a networking event is the seventh level of hell. If I can reach out and make it a little easier, I’m going to try,” she says.

Influential people often lead the conversation, but good networkers leave plenty of time to show interest in what others say. An influential speaker has listeners who are nodding and leaning forward, raising their eyebrows or murmuring brief responses such as “Really?” or “I see,” research shows. Listeners who stand close signal a desire to please. So do those who mirror a speaker’s gestures, tilting their heads at the same angle or simultaneously shifting their weight onto one foot.

Carl Arnold reads the overall energy level of a room in deciding how to approach people. At a cocktail reception in a restaurant bar three years ago, people were talking loudly, telling stories and laughing boisterously. So he asserted himself by puffing up his chest, standing tall and catching the eye of a man who appeared to be the most influential one there. Mr. Arnold, who chairs leadership groups for Vistage, a San Diego-based executive-coaching organization, introduced himself and made a joke, sparking a lively conversation.
A recent gathering of musicians he attended was quiet and laid-back, with people talking softly in twos and threes and “sipping a little Chardonnay, as opposed to vodka rocks,” Mr. Arnold says. “I kept it more on the down-low” and sought out the host, who introduced him to others. He met a valuable new business contact at the first gathering and made a new friend, a fellow musician, at the second.

People who try to impress strangers by reciting their résumé are missing the mark, Ms. Decker says. Others are more attracted initially to a person’s warmth, as conveyed by eye contact, a warm expression and a smile, rather than to their competence.

Pamela J. Bradley says networking used to be difficult for her as a shy, introverted person. With training from Ms. Baber’s firm, she says she’s learned to enter the room thinking, “I’m here to help people, with resources or introductions.”

Ms. Bradley, a human-resources manager for Keiter, a Glen Allen, Va., accounting and consulting firm, prepares by thinking up a list of things she can offer in a conversation, such as a tip about a new restaurant, and things she wants to learn. Then, she says, she listens closely to others for opportunities.