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By Wendy Cole, Senior Editor
 Tomorrow, Halloween, presents a spook-tacular marketing opportunity. One Oak Park, Ill. real estate pro is using chocolate to assuage economic anxieties and fears about the housing market in the way that only cocoa-laden goodies can. Roz Byrne of Gloor Realty, using the moniker The Wizard of Roz, will be "reverse trick-or-treating" to deliver Hershey bars to local businesses, along with the message, "Don't be AFRAID of the real estate market. It's a WICKED good time to be a buyer."
Between the witch costume and the 800 treats she's distributing, the outreach is costing her about $300.
Anyone else using the Halloween spirit to get the word out?
By the way, for those interested in haunted opportunities all year round, the folks at hauntedrealestate.com are your go-to source.
By Stacey Moncrieff, Editor in Chief
When Senate Banking Committee Chair Christopher Dodd (D-Conn.) conducted a hearing last week on the credit crisis, he took aim at banks' intention to use funds from the massive $700 billion federal rescue to shore up their financial position rather than tackle the liquidity problem in the mortgage market that was so core to the government's goal in passing its bill.
"It's beyond troubling," said Dodd, "that those lenders who will be receiving billions of dollars from U.S. taxpayers are considering using those dollars not to make loans, but rather to pursue 'some acquisition opportunities' and to create a capital 'cushion' on which they will comfortably sit while the American consumer and small business person struggles."
That concern over banks' inward-looking use of the funds is one of the driving forces behind NAR's call for Congress to meet after the national elections in a lame-duck session to reinvigorate housing markets. One of the proposals NAR is touting in a four-point plan that it would like to see incorporated into legislation before the end of the year is a provision to hold banks to the purpose of the rescue by pushing them to use funds for lending.
NAR also wants to urge banks to stop dragging their feet on short sales and REO sales. "Qualified buyers must be able to get safe and affordable mortgage loans," NAR President Richard Gaylord said.
Since the introduction of its four-point plan, NAR has been in communication with members of Congress and their staff on the details. In addition to the bank provisions, the plan calls for expanding the $7,500 first-time home buyer tax credit to all buyers and eliminating that program's repayment requirement; making permanent the prohibition against banks entering real estate brokerage and management; and making permanent the high-cost conforming loan limit of $729,750, which has been in effect for less than a year.
Time is of the essence on the high-cost loan limits because the $729,750 drops to a permanent high-cost limit of $625,500 on Jan. 1.
NAR analysts say the $729,750 limit, to be effective, needs more time to work, so making it permanent before its expiration is crucial for stabilizing housing markets in high-cost areas like parts of California and Massachusetts.
To help push its four-point plan in Congress, NAR is planning a major communications push at the 2009 REALTORS Conference & Expo in Orlando Nov. 7-10 with a Call for Action to all members of Congress. To help publicize the campaign, NAR will invite REALTORS to sign their names to the exterior of a giant model house on the Expo floor emblazoned with the slogan, "We support the NAR housing stimulus plan."
The house symbolizes what the federal government's rescue package is all about: helping homeowners, buyers, and sellers on Main Street. That's something NAR hopes lawmakers, and banks, keep that in mind as hundreds of billions of federal dollars in rescue money goes to banks on Wall Street.
By Kitty B. Stockton, ABR, CRS
Editor's Note: I received this poem back in June from Kitty, a member living in Chapel Hill. I hoped to put it in the magazine, but we too have been belt tightening. Pages have never been lower. Kitty, even though gas prices have come down, your poem is more timely than ever. I feel your pain!
Momma's got the blues in Real Estate
In the year 2008,
It ain't like the old days--it's inconceivable
The only way to describe it is unbelievable.
So much time is being spent
My kids are wondering where Mommy went.
All her efforts to sell a house
Leave little time for them or the spouse.
So many listings which don't seem to sell,
So many features and not one to tell.
Brochure boxes which keep eating the flyer,
Sometimes it feels the situation is dire.
Open houses where I'm home alone,
Just me, REALTOR mag and my cell phone.
Sellers with unrealistic expectations,
Giving my poor heart palpitations.
I try to tell them about the pink and blue tile.
They won't believe me--I have to smile.
Six cats I say, makes buyers allergic;
They don't get it--making me liturgic.
Dear God, could you please bring me a buyer with money:
My two little cubs need some honey.
Preferably one willing, ready and able
To meet me at the closing table.
Oh they can't sell their house, you say.
They'll buy later, but not today
Please could you help us find a rental?
Sure, I say, slowing going mental.
Finally a buyer--but she has an alpaca.
(That's about as popular as smoking tobacco.)
Didn't sit well with the covenants,
Much less the local government.
No deal to day, but I'll keep trying.
It's all I can do to keep from crying.
Keep the faith; a better day is coming.
Better be soon or I might start rumming.
No you won't--you're a pro
Who understands how the cycles go.
Remember back in '82,
19% made us even more blue.
Short sales, credit crunch, mold and mildew,
Disclosure issues you mustn't eschew.
Subprime, foreclosures and gas oh so steep,
Altogether the climate could just make you weep.
NAR says the bottom is near
So we should go forward without any fear.
I'll do it I will-- I can take this and more.
That's what I do. I'm a REALTOR.
Respectfully and with tongue in cheek,
Kitty B. Stockton, ABR, CRS
By Melissa Dittmann Tracey
NEWPORT, R.I. – Can old and new construction live in harmony? Industry experts at the Sustainable and Restoration Summit blamed poor construction and bad city planning for jeopardizing the future of many U.S. cities.
Conference director and founder Robert Bailey encouraged attendees to form teams consisting of real estate professionals, architects, attorneys, finance experts, and city planners to band together to ensure cities don’t lose their heritage as new construction moves in, as well as encourage better design and city planning.
“The goal is not to keep in a time capsule,” added Keith Stoke, director of the Newport Chamber of Commerce. “But the goal is that new development today can become architecture that can be looked at 100 years from now as some of the finest design of the 21st century.” That goes for homes, roads, and commercial properties.
Here’s what conference speakers said they are doing to help preserve their communities:
Protect historic properties. The Historic Charleston Foundation in Charleston, S.C., is protecting its historical homes from developers who are drawn to the homes’ big lot size in prime downtown areas. When these properties are for-sale and are at risk of being redeveloped into big condominiums, the foundation buys the home with a funding initiative it started to protect historic properties. The foundation holds onto the property until it can resell it to a preservation-minded buyer.
Sustainable retrofits. Protecting historical properties further, 400 properties—including office buildings and residential homes—in Charleston are under easement with the foundation. That means property owners of these structures must get the foundation’s permission for such changes to the windows or exterior color so that the foundation can recommend ways to retrofit the houses that stays true to its heritage.
Use old homes as a model for designing new. Think beyond the McMansion, conference speakers said. Older homes often were built smarter and more energy efficient, such as side windows that offered cross-ventilation for cooling a home instead of relying on an air conditioner, said urban designer and author Marianne Cusato, a featured speaker during the conference. Newer homes often make the machines do all the work to heat and cool a home. But with escalating costs, older homes can serve as a model of smarter design, said Cusato, who gave several tips on how to add value of homes (see “5 Ways to Give Your Home Character”).
Enhance design throughout the city. Ron Fleming, author of “The Art of Placemaking,” said that public art can be used to remind a city of its heritage by incorporating distinctive features into new and old city structures—from the city benches to highways. For example, towns can have art that replicates the city’s skyline on highway overpasses, murals in public transportation that showcases its ethnic identity, and extra detailing that reflects nature or the city’s history on benches around town that make it more than just a cement block. Or, placemakers of what’s no longer there from the city’s heritage can also serve as reminders, such as corn statues along a road in Delaware, Ohio, where cornfields used to be.
Take a long view of city planning. A long view plan for preservation can help the city know where it’s going and what it wants to protect as new construction moves in. Charleston has a plan all the way to 2030 that also accounts for a projected 128,000 new households during that time. In Florida, the Preservation Foundation of Palm Beach partnered with University of Miami School of Architecture and Preservation to evaluate the best case for preservation, in which students and faculty completed drawings of historic structures and presented ideas for preserving the city.
By Melissa Dittmann Tracey
NEWPORT, R.I. -- Your 4,500-square-foot listing may be the biggest home on the block, but that's no guarantee buyers will come looking. In fact, size alone could send buyers running in the other direction. Who wants to shell out big money every month just to heat their home?
It’s the smaller listing that's becoming a bigger draw to buyers these days, say industry experts who spoke today at the Sustainable Development & Restoration Summit here.
To say that the speakers aren't very fond of McMansions is an understatement. They note that the average home has grown from 983 square feet in 1950 to 2,349 square feet today. These sprawling homes often lack character, good design, and energy efficiency.
Not to mention, they're a waste of space; 60 percent of households only have 1 or 2 people living in them, said urban designer Marianne Cusato, who delivered the keynote address, “Design Solutions for a Post Meltdown World,” on Thursday.
Now there’s a downward trend, according to recent news reports. The challenging housing market has prompted builders to start shrinking their floor plans, which also shrinks the price of the house. For example, KB Homes shrunk its homes from 3,400 square feet, selling for $450,000, to 2,400 square feet, selling for $300,000. Now, it’s shrinking its homes again –
1,230 square feet for about $200,000 – in trying to attract more buyers. (See “Home Sizes Shrink to Lure Buyers”)
As Cusato reasons: With computers and our other technology gadgets continuing to shrink in size as they become more efficient – why wouldn’t our homes too?
Smart buyers aren't just considering the home's size, but also where it's located. More people are asking for mixed-use developments, as they grow tired of traffic congestion in car-dependent communities. Mixed-communities combine retail, homes, schools, and workplaces in high-density developments. However, restrictive zoning laws continue to remain a hurdle for these types of developments in meeting the high demand, Cusato said.
“Concentrated growth means you can have sustainable growth,” Cusato said. With high density building, you can preserve larger areas in a community. Plus, a small home fits right in.
By Stacey Moncrieff
The RE.net has been buzzing for a week now about a new job the NATIONAL ASSOCIATION OF REALTORS® has created called social media manager. There’s a lot of interest in what it will be, won't be, should be, or shouldn't be. Read on for the official job description and some NAR members' takes on the position.
Here's the job description:
MAJOR DUTIES AND RESPONSIBILITIES:
The Manager of Social Media will ensure that NAR has the knowledge and skills to guide NAR staff and members in creating, facilitating, and participating effectively in key conversations about our organization, our issues, and our members that are conducted on blogs and other online social media channels.
This position requires a high-energy, self-directed, deadline-oriented individual who has exceptional communication skills and is able to:
- Monitor real estate industry and related social media
- Facilitate NAR’s participation in external blogs and social media
- Maintain, evolve, and enforce NAR’s social media policies and guidelines
- Train NAR staff and elected leaders about how to write for blogs and other forms of social media
- Monitor existing NAR blogs and create new ones as needed to foster conversations about relevant topics or issues.
- Measure the effectiveness of NAR’s social media efforts.
QUALIFICATIONS (EDUCATION, EXPERIENCE, SKILLS):
- Bachelor's degree in journalism, communications, or related field
- Experience in using and managing social media including blogs, wikis, social networks, forums, and/or podcasts
- Excellent consulting, writing, editing, and communication skills, including an engaging written voice
- Strong sense of urgency, flexibility, and the ability to multitask
- Demonstrated ability to teach the principles of online communications to nontechnical people
- Proficiency in basic systems administration such as permissions, content publishing, and similar functions
- Functional understanding of Web information architecture and design
Preferred skills include marketing experience, knowledge of HTML and XML, experience with Web content management systems and blog software, knowledge of AP style, experience with large associations or other membership groups, work on large Web sites, and an understanding of U.S. government structure and the general political landscape. Position based in Chicago.
Some bloggers are certain that the association can’t get the position right—that all posts by the SMM will be vetted by NAR management first. Others are putting forth constructive visions for the position. This piece “Shaping NAR’s Social Media Face,” by Benn Rosales is interesting because, having sat in on a few of the discussions, I think it hews closely to what REALTOR.org Managing Director Hilary Marsh and Vice President Pamela Geurds Kabati envision for the role. The one part I don’t understand is his suggestion that the social media manager avoid discussing NAR’s position. With so much talk in the RE.net about every move NAR makes, I believe it’s imperative that the person be able to at least explain the thinking behind NAR’s positions. That’s not the same as defending NAR, which could turn into an online brawl. I agree with Benn that outright arguments should be avoided.
For another interesting take, read Daniel Rothamel’s “NAR has many Michael Jordans. It needs Phil Jackson.” Daniel moonlights as a basketball official (thus the “zebra” in his blog, Real Estate Zebra), so he knows quite a bit about the Michael Jordans and Phil Jacksons of the world. His comment about the SMM needing to be more coach than player really resonated with me and actually rings true for the entire NAR’s Publications staff, myself included. If we’re doing our jobs well, we’re here to help you, support you, and share what we’ve learned about what works in your business. You’re the players.
Netizens have given a lot of great feedback on the position. The ball’s now in Hilary’s and Pamela’s court.
The immediate impact of the new economic stabilization bill, signed by President George Bush today, will be renewed confidence in the market, two real estate experts said in separate interviews with the editors of REALTOR® Magazine. But don’t expect credit markets to turn around tomorrow. The recovery process will take time, say Kenneth Riggs, head of the commercial real estate analysis firm Real Estate Research Corp. in Chicago and Gary Keller, head of national residential real estate franchisor Keller Williams in Austin, Texas. We asked Keller about the impact of the credit crisis and the stabilization bill on residential real estate, and we asked Riggs for the same analysis from a commercial real estate standpoint.
REALTOR® Magazine: Now that both the House and the Senate have passed the stabilization bill and President Bush is set to sign it, what can we expect the impact to be?
Gary Keller: The market should regain some confidence, and since markets are built mainly on confidence, that’s no small thing. In fact it’s a huge thing and it’s imperative for the market to move forward. But beyond that, we have to wait and see. Although the intent of the legislation is to free up capital for lending on homes, cars, college, and business inventories, the government doesn’t have a mechanism in the bill for making the banks turn around and lend the money back. So no one knows what will actually happen once a bank has its capital freed up.
Kenneth Riggs: Well, it should give calmness to the financial markets by showing that we will in fact work through this crisis. That said, I don’t see the fundamental, or the mechanics, of capital changing right away. That won’t happen until we see how this package will actually operate and how well Treasury can do in buying and then selling the securities. So, the immediate impact would be that the market should at least breathe a sigh of relief. The next step will be to give a foundation for the credit markets to start functioning a little better. We will never get back to the level that we were a year ago; that’s part of the market cleansing itself of a culture in which capital was just too available and too cheap. The bill, too, is raising the FDIC insurance limit for bank deposits to $250,000. Many people will say, “Well, the small person might not have that much.” But it’s really small businesses that are being addressed here, and they’re what run our country. This will allow small companies like a lot of real estate brokerages to start focusing on their business, rather than the credit crunch, and to concentrate on how they can become productive.
RM: What are conditions on the ground now? Is anybody getting a loan, and if so, who and at what terms and costs?
Keller: We’re not seeing any properly qualified buyer being turned down for a loan. But even more important, every foreclosed home automatically has financing on it, from the bank that owns it. From a buyer point of view, this is the market we’ve all been asking for. In most cities it is one of the greatest buyer’s markets we’ve seen in a long time. From a seller’s point of view, it varies. If someone bought a home in the last five to six years and put little to nothing down they might not be in a position to sell without bringing money to the table. But if they want to move up, this is the perfect time to do it. Any loss they take on the sale could very well be made up on their new purchase.
Riggs: Two months ago commercial real estate was actually doing reasonably well. Transactions were happening, though they were slowing down. But today people are pushing away from the table, both on the debt and the equity side. Very well seasoned institutions and investors that up until 30 days ago, before this free fall, were confident they could weather what was happening, now are just walking away. They’re not calling you back. People that committed to transactions are backing away. There used to be this reputational risk element to deals, but even the biggest players are saying, “No, I can’t stomach this” and just walking away.
RM: What other measures could the federal government take to help get real estate moving?
Riggs: There should be a close examination of this mark-to-market accounting. A lot of people say you can’t throw it out—this is the transparency we need—but the problem is, even if you read fair-market rules—and the SEC has sent out a clarification on them—it states that, if you’re in a market that doesn’t have [fair-value observations, then you can be exempted from basing valuation on what comparable assets are selling for]. Or let’s say that for residential the only observation you have are at fire-sale prices, what good is that accounting rule if you’re marking everything down to fire-sale prices? It doesn’t make sense. So I think that should be the next close examination and it wouldn’t surprise me if in fact that [exemption] isn’t extended for certain companies or financial institutions just for an interim period. I think that would be a wise choice because the fulfillment of fair-marketing accounting, while the spirit and appropriateness is exactly on target, [can’t work when you’re] in an environment like this one.
RM: What will be the most reliable sources of financing going forward? Local banks? At what terms and costs?
Keller: So far, it’s business as unusual. Lenders who have money are lending and banks that own houses are lending on those houses. The real estate market has actually shown signs of short-term progress. Beyond that, these are questions no one knows the answer to. In other words, we’ll know it when it happens.
Riggs: There’s still money out there for good product but its high equity, so you have to be prepared for the market only providing capital for those until we get through this period. The private market has to lower its expectations, require more equity, put up better underwriting, provide better disclosures, and price risk better. Even with this rescue, we’re going to go through a slow economic time, with high end unemployment, and it’ll probably last for six months. People will want to see the problem fixed tomorrow, but it won’t be. It could take a year and a half for us to get back to where the market is functioning so that people are comfortable that things have been priced right, the proper credits are available, you’re lending to the right individuals, and the right institutions. But it’ll take until 2010. I would anticipate the residential market will show some rounding out if we can get through this, probably toward the second quarter of 2009.
Find information and resources on the credit crisis at REALTOR.org.
Melissa Dittmann Tracey, Associate Multimedia Editor
In an attempt to revive sagging financial markets, the U.S. House of Representatives voted 263-171 to approve a rescue plan today that would allow the federal government to buy up to $700 billion in failed mortgages from banks and other financial insistutions.
"This legislation is critical to stopping the economic turmoil that millions of Americans are facing," said NAR President Dick Gaylord in a statement. "Today’s action will go a long way toward ending the current economic crisis crippling the housing and financial markets."
The legislation will help to restore liquidity to the mortgage market and stabilize the housing market, Gaylord said. "Mortgages as well as personal and small business loans would become more available and less costly," he said. "Protecting Main Street not only benefits individuals, families and communities, but also supports the larger U.S. economy." (See Why NAR Supports Government Intervention)
The bill now awaits the president's signature.
Robert Freedman, Senior Editor
With Wednesday's Senate vote, 74-25 in favor of the economic stabilization package, the federal rescue legislation moves closer to enactment. The House, after narrowly voting down the package earlier this week, is expected to take a second stab at the bill on Friday. Whatever the outcome, the vote is likely to be close once again, and for good reason.
The hundreds of billions of dollars worth of mortgage-backed securities that are weighing down the balance sheets of Wall Street bankers put the country in unchartered economic territory. There's uncertainty among lawmakers as well as financial industry experts about how the rescue package will ultimately play out in the market.
This uncertainty is felt by real estate professionals, as you can see by taking a look at the spirited discussions taking place at the popular Active Rain network and other online communities. Among those discussing the stabilization bill are practitioners who don't believe the plan is the best way to tackle the credit crunch.
Would a massive infusion of public spending impact real estate in unforseen ways over the long run? NAR has made clear that failure to address the credit freeze immediately could lead to devastating consequences, not just for real estate. As NAR President Richard Gaylord says, a persistent credit freeze could lead to a "sharp rise in unemployment and severe hardship for many ordinary Americans" and far more costly financing for those who could get it.
Given the sheer size of the stabilization bill, it's not surprising we're seeing such a mix of opinion on what is the right course of action, including among real estate professionals. Healthy back-and-forth discussion shows real estate professionals are taking the time to educate themselves about the important issues of the day that can impact their business and their customers.
NAR leaders, in strongly backing the bill, aren't out to bail out Wall Street, bring back the go-go days of 2004, or nationalize our financial system. They're acting on the belief that failure to act today will bring terrible consequences tomorrow ... not just for Wall Street, but for Main Street as well.
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