A look at the NAR issues most frequently covered in the news media
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Last week over 10,000 REALTORS® attended the Midyear Legislative Meetings & Trade Expo in Washington, a record attendance. NAR has also officially reached the 1.3 million member mark. Today's WSJ mentioned NAR's Public Awareness Campaign, which focuses on the obstacles of selling a home on your own and the benefits of using a REALTOR®. Saturday, NAR's board voted to raise funding for the campaign in 2007 to $30 million. During the meetings, NAR released a new study of Baby Boomers revealing that they overwhelmingly channel their concerns over finances into real estate. Almost eight out of 10 own their home and one-quarter own one or more other kinds of real estate in addition to their primary residence. While in town, thousands of REALTORS® visited Capitol Hill to help Sen. Michael Enzi (R-Wyo.) get small business health care plan legislation passed during this session of Congress and to press for congressional oversight of regulators trying to expand bank powers into the real estate arena.
According to today’s Wall Street Journal (subscription required), there’s a marketing war underway among business models for home buyers and home sellers. That’s nothing new, but it reminds us that the most important message consumers need to hear is: Buying or selling your home will probably be the largest transaction of your lifetime. Do your homework!
Are consumers getting the message? First time home buyers, for example would be wise to talk to more than one professional before selecting an agent. How else can you feel confident in your selection?
Yet, most first time home buyers don’t. Fifty-eight percent talk to only one agent before deciding to use them. All buyers talk to only 64 percent. Sellers are worse: Only 26 percent of sellers talk to more than one agent before deciding who will market their property.
Check out the excellent column in the South Florida Sun-Sentinel by Daniel Vasquez on how to do your homework.
NAR has a wealth of information for consumers, including tips on buying and selling, and we urge consumers to interview at least three REALTORS® before making a decision.
Before David Lereah took the podium at the Wardman Park Hotel at 2 PM Thursday to announce the findings of the largest study ever conducted of baby boomers’ housing habits, some 17 national media outlets already were eager for the story. Surely dozens more will pick it up and give it play once they read the headlines.
What story?
Simply this. A major factor underlying five years of record real estate markets and a bubble-proof real estate economy that’s baffled the experts has been ignored by many. Interest rates and population growth alone don’t explain the unprecedented national passion to own property.
It’s the Boomers. The comprehensive study of nearly 2,000 Americans born between 1946 and 1964, conducted for NAR by Harris Interactive found that:
More Boomers own their own homes than the national average. More Boomers own second homes than the national average. Moreover, Lereah discerns a strategy behind the Boomers' real estate dealings shaped in part by the tax code.
Four out of ten who own a vacation home or seasonal property intend to eventually make that property a primary residence. Historically, other NAR survey data shows only one in five vacation-home buyers had such intentions when they first purchased the property. Lereah believes this has emerged as an investment strategy.
“Some boomers will take advantage of generous capital gains exclusions from their taxes when they sell their primary residence, and then place themselves in the position of being able to convert a vacation home into their new primary residence which would later become eligible for the same tax treatment,” he said. “Then, if their needs change in the future, they’ll be able to take the capital gains tax break after they have lived in that home as their primary residence for two out the five previous years. It becomes a great way to build and protect a nest egg.”
For five years, the nation's news media has covered the issue of whether federally chartered banks should be allowed to enter the business of real estate brokerage. Rarely have they reached to the heart of the matter as clearly as a handful of REALTORS® at the Regulatory Issues Forum at NAR's Midyear Legislative Meetings in Washington.
After NAR President Tom Stevens spoke about the success three megabanks have had in circumventing the prohibition against developing and owning real estate -- the very thing at the heart of the savings and loan crisis of the 1980s -- Todd Harper of the House Financial Services Committee raised the issue of "Chinese Walls" that the banks and their regulator propose to build between their mortgage and prospective brokerage operations in order to keep banks from gaining an immense competitive advantage.
But how are they going to keep the Chinese walls from becoming Japanese screens made of paper where voices can be heard back and forth, Harper wondered.
REALTOR® after REALTOR® rose from the audience and recounted examples from their personal experience of banks using information gathered in commercial financing deals to compete against the very party that brought them the deals.
After listening to them and witnessing the hypocrisy inherent in the way the Office of the Comptroller of the Currency has not only approved but defended banks owning Ritz Carlton hotels, condos, and even a windmill farm, one can only wonder how--and whether--they will enforce separation between mortgage and brokerage divisions.
"If you want the home, you have to take my loan," the saying goes. It's a scary thought, and technically it's illegal to tie mortgages to brokerage. The federal authorities would never it let happen. Or would they?
Ah, if only more reporters had been present. Maybe they would get it.
American Banker ran a letter to editor by Tom Stevens on recent OCC opinions where Stevens urges that "real estate brokerage, property management, and development are commercial activities that (should be) off limits to banking organizations. We will continue to work towards that end." Another American Banker article mentioned NAR's opposition to Home Depot's deal to buy an industrial loan company.
Tom Stevens was quoted in News Orleans City Business on the upcoming NAR convention in New Orleans. Stevens stated, “Once we realized the devastation was not really in the city center, we knew our people would be fine. We said there was no reason to pull out our dollars. We wanted to put them there and help rebuild the city.” NAR is raising money for relief efforts and will team with Habitat for Humanity to help build 54 homes in the area.
Myth: The news media are only interested in negativity and sensationalism. That’s what sells newspapers.
Fact: Every outlet researches its audience carefully and creates an editorial product to fit.
News is several things. First, it’s something new that has just occurred. Second, it is important or interesting to a large segment of a news medium’s audience. Third, news is what an editor or news director says it is.
A news outlet’s greatest influence may not be the stories it covers but the stories it chooses not to cover. Deciding what makes news and what doesn’t begins with what the news staff knows and understands about its audience.
To understand the editorial decisions a newspaper or television station makes, understand its audience. Media are defined by two kinds of audiences. Local media, like local newspapers or broadcast news outlets, are largely defined by geography. They target everyone in a certain community or broadcast market. These are called “horizontal” media. National media, ranging from special interest magazines to cable channels, target the audiences by demographic factors, ethnicity or special interests. These are called “vertical” media. Some media—such as a local Spanish-language newspaper or a local real estate guide—combine elements of vertical and horizontal media.
The medium’s audience shapes what spokespersons say when being interviewed. If you’re talking to a real estate trade publication read largely by real estate professionals, for example, you are probably going to shape your message differently that if you were talking to a local newspaper read largely by consumers.
Coverage of the latest housing market forecast dominated this week's news. David Lereah stated that the housing market is taking a breather but home sales will remain healthy. The Chicago Board Options Exchange, which has contracted with NAR, will unveil housing futures and options based on NAR's median existing-home sale prices . The Senate voted 55-43 against ending debate on the Small Business Health Plan bill but NAR announced it will continue to push for legislation this year. NAR's second home survey found that the market is dominated by the baby boomer generation.
News summaries will be posted every Tuesday and Friday.
The St. Petersburg Times quoted David Lereah as saying it's "wise to wait until 2007 to reinvest in housing and land." In an article in the Modesto Bee on the trend in second homes sales, Lereah stated that vacation home sales will remain strong for the foreseeable future. Tom Stevens, when asked about the post-Katrina real estate boom, stated, "disasters tend to spark an energy that people have to respond to." Stevens also applauded the Junk Fax Prevention Act of 2005 in an article by National Mortgage News.
The best-selling book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner argues that REALTOR®-owned homes sell at a higher price than others because they stay on the market longer, and the authors suggest that somehow REALTORS® do a better job of selling their own properties than they do for their customers.
The fact is that a large percentage of the REALTOR®-owned properties the Freakonomics authors studied were investment properties, not primary residences. With investor properties, the seller can wait out a bad market and wait for the prices, not worrying about the timing of a job transfer or the start of school year. In the Freakonomics study, the data sample consisted of 3,300 REALTOR®-owned sales out of 98,000 total sales. That is, REALTORS® engaged in 3.4% of all home sales. Yet REALTORS® represent only 0.8% of the general population. That percentage is much larger than would be expected out of the general working population. Clearly, the high percentage of REALTOR®-owned homes can only be attributed to investment properties.
Freakonomics assumes that the longer a property is on the market, the higher the price at which it will sell. In fact, the opposite usually occurs; price concessions become deeper the longer a home stays on the market. For sellers needing to move, they have to concede lower price with each passing week. Investors, on the other hand, have less incentive to concede. So the fact that REALTORS® are selling a client's home with fewer days on the market is a value-added contribution.
In a Newsday article on the cost of title insurance, Tom Stevens stated that the real estate industry is concerned about allegations of questionable dealings between title agents and realty brokers. TheStreet.com quoted Stevens on the housing forecast, which NAR predicts to be the third-best year in the history of real estate. Dow Jones quoted Jerry Giovaniello on the potential negative impact to "tenant-in-common" investments in Senate tax bill. Giovaniello stated, "We believe that even rumors about impending limitations to TIC investments could cause a loss of value for existing assets."
The Hill ran an Op-ed by Tom Stevens which stressed the importance of Congress passing legislation to make small business health plans a reality. Mortgage Servicing News quoted Tom Stevens on the pending launch of the NAR EHS sales median prices futures. David Lereah was quoted in Fortune Magazine on the softening housing market forecast. He stated, "It's a good sign to see home sales holding close to the level of a strong rebound in the month before. This is additional evidence that we're experiencing a soft landing."
Tom Stevens is quoted on FSBOs and title insurance. Stevens pointed to statistics from the 2005 Homebuyer and Seller Profile which found that sellers with agents netted 16 percent more than those without. Move.com, formerly Homestore, Inc., launched the new move.com site today. The site allows home shoppers to view a broad range of homes for sale, free of charge. In a break from its typical treatment of NAR, the New York Times quoted us credibly on four issues over the last few days: Small Business Health Plans, commercial real estate, Realtor.com, and vacation homes.
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News coverage shapes perceptions of people, organizations and entire industries.
Yet few of us understand what goes into the making of a news story. “NAR in the News” will give its readers a peek behind the scenes into how journalists cover the nation’s largest trade association and the 1.2 million REALTORS® it represents.
This blog is also a place for REALTORS® and others to express their opinions and ask questions that we will try to answer. “NAR in the News” is produced by NAR’s Public Affairs Division.
This blog is provided by the National Association of REALTORS to provide visitors/members with information about NAR's news coverage and the opportunity to comment on real estate issues in the news.
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