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By Robert Freedman, Senior Editor, REALTOR® Magazine
President Barack Obama has a lot on his plate but if you could spend a few minutes with him, what idea would you put in his ear to help improve housing markets?
Trulia CEO Pete Flint recently posed that question to readers of the Trulia blog. The closest thing to a consensus opinion among the 28 readers who responded: Get the U.S. Treasury to do what it originally said it would do when it lobbied for the $700 billion in Wall Street rescue funds back in October 2008. As one reader says, "Get the mortgage companies that were given bailout monies to loan that money out to people to start buying."
The fact is, REALTORS® were concerned with banks' intentions from the very beginning. When lawmakers were debating the rescue package, two leaders of our industry—Gary Keller of Keller Williams Realty in Austin, Texas, and Ken Riggs of Real Estate Research Corp. in Chicago—told me and other REALTOR® Magazine editors in a conference call we hosted that bank actions needed to be monitored carefully because banks were under no obligation to pass their money through to borrowers. "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," Keller said at the time. "So no one knows what will actually happen once a bank has its capital freed up."
Here we are several months later, with half of the funds spent, and real estate professionals are still waiting for the banks to plow assistance into credit markets.
Other responses to Flint's blog post fell into three broad categories:
1) Help households become homeowners
2) Help home owners at risk of default stabilize their position
3) Help the industry help itself.
Top among the suggestions for helping households become owners is allowing people to save for a downpayment using tax-free dollars, what one person called a home savings account. Other actions recommended are in line with what NAR has been advocating for months: Increase conforming and FHA high-cost area loan limits, bring down interest rates, and make the homebuyer tax credit a real credit rather than a loan in disguise.
One person said getting interest rates down to 4 percent would make a real difference in getting people off the fence. NAR doesn't advocate aiming for a certain rate—that would encourage prospective buyers to stay on the fence waiting for the target rate—but it did applaud the Federal Reserve's actions last month to begin buying mortgage-backed securities. The move helped bring down rates to just under 5 percent for a time without the Fed having to lower its short-term target rate, which is already just barely above zero.
There were all sorts of suggestions for helping troubled home owners, but a recurring theme throughout was the need for the federal government to get lenders to rethink overly tight underwriting standards and take whatever steps are necessary to get lenders to take loan modifications seriously. Replacement loans with 40- and even 50-year maturities should be an option as well.
Suggestions for the industry to improve itself really don't fall into President Obama's portfolio. Many commenters said the industry must make it harder for practitioners and mortgage brokers to get licensed, but that's a state issue. All the federal government can do is encourage, recommend, or cajole states to take action. Stricter enforcement mechanisms for violations are needed, too, some readers said.
A few people weighed in on the stimulus bill now making its way through Congress. Here the focus needs to be on long-term investment that will produce a real payoff in future increases in economic activity and new jobs. One person pointed to the ideas being generated at a think take called the Davinci Institute, which is touting investment in future-oriented technologies like a national wireless Internet grid, massive data storage libraries, self-navigating on-demand automobile systems, a "whole earth" genealogy project, digital upgrading of community libraries, a space elevator, a transcontinental freeway, and space-based power stations. Few of these ideas have anything to do with real estate but they could conceivably pave the way for the kind of economic expansion that really does growth the pie, making home ownership possible for more people.
By Melissa Dittmann Tracey, REALTOR Magazine
LAS VEGAS - About 3 million jobs have been lost in residential construction since its peak in 2006, said David Crowe, chief economist of the National Association of Home Builders, at a press conference on the Housing Economic Outlook this week.
As the real estate market softens around the nation, the number of builders is shrinking. Crowe estimated that NAHB has lost about 15-20 percent of its membership this year. The NAHB currently reports 200,000 members in the building and remodeling industry.
Housing starts have slowed to record lows and have been nearly at a standstill this past year, due to a glut of unsold or foreclosed homes already on the market, Crowe said. Housing starts will likely fall another 20 percent this year. Read more about the Builders' housing outlook.
"Seventy-five percent of housing production has gone down so you can't have that without losing some business," Crowe said. Lots of subcontractors have lost their jobs and builders have closed their businesses or left the industry until the market recovers.
That could be worrisome for when the market does recover, said Greg Miedem, president of Dakota Builders in Tucson, Ariz., who spoke at a press conference Wednesday about the remodeling industry. He said many have left the remodeling industry, too, as more people hold off on making any improvements to their home because of declining property values. "Where are we going to get the contractors when we need them?" Miedem said. "They're working in another industry now and it will be hard to get them back."
You may be wondering what impact the economy will have on the National Association of Realtors' membership. So far, membership has remained fairly stable at about 1.17 million, 14 percent below its peak in 2006.
By Melissa Dittmann Tracey, REALTOR Magazine
It's time to get those listings styled, staged and sold!
REALTOR Magazine launched its fourth blog this week that sets out to help you do exactly that. Styled, Staged & Sold will offer the latest design trends and ideas for getting your listings in showing-selling shape.
This week the blog will feature coverage from the 2009 International Builders' Show in Las Vegas, including design forecasts, new home product innovations, and inside looks at the home of the future.
The blog will also regularly feature expert bloggers on "green" trends, remodeling, staging, and design psychology. If you have something to say about home & design in real estate, be sure to check out the blog and find out how you can become a guest blogger.
Visit Styled, Staged & Sold >
Also, don't forget to visit REALTOR Magazine's other blogs, too: The Weekly Book Scan (real estate book reviews and author chats), YPN Lounge (sales & marketing ideas, technology news, business challenges from Young Professionals Network bloggers), and, of course,
Speaking of Real Estate (behind the headlines with the editors of REALTOR Magazine).
By Robert Freedman, Senior Editor, REALTOR® magazine
An astute reader pointed out a detail we didn't characterize effectively in our "Doing Business in 2009" guide (January 2009, page 29). We talked about FHA as a good alternative for borrowers who are having trouble coming up with the downpayment for some conventional home loan products. With FHA, you can get federally backed financing for 3.5 percent down along with the 1.5 percent insurance fee up-front. FHA also requires borrowers to pay a half-percent insurance premium, with payments due monthly. In our coverage readers might construe that the monthly payment is the entire half-percent but that's not how the fee works; the half-percent is annualized and the fee is prorated over 12 months, so borrowers just pay one-twelfth of the fee each month. That's an important distinction. A half percent fee on a $150,000 mortgage would be $750, a tidy sum, but prorated over 12 months it adds just $62.50 to the monthly payment.
By Katherine Tarbox, Senior Editor, REALTOR® Magazine
Gary Vaynerchuk — best-known for his viral videos on wine tasting, in which he encourages viewers to "spread the thunder" — took the stage yesterday as the keynote speaker of Real Estate Connect NYC ’09. The self-made millionaire detailed how he was able to transform his family liquor store from a $4 million business into a $50 million national industry leader.
Vaynerchuk takes a no-holds-barred approach to reviewing wine — an approach that has won him more than 100,000 fans on YouTube — and says the real estate business could use the same candor and passion he displays at Wine Library TV. He urged practitioners to redirect their ad dollars and efforts toward social media. “Twitter is the new fax machine,” said Vaynerchuk. He told the audience he receives more than 20 times the response from a Twitter promotion than he gets from a traditional billboard.
Vaynercuk said practitioners trying to overcome a slow market should think about other revenue streams by carving out a niche and exploiting their expertise. He’s used his online platform, for example, to garner high speaking fees, book deals, and even a potential television show. You can see Vaynerchuk’s unique brand of online pitchmanship at Wine Library TV or at http://garyvaynerchuk.com .
By Katherine Tarbox, Senior Editor, REALTOR® Magazine
More than 1,200 hungry real estate professionals gathered for Real Estate Connect NYC, Jan. 5–8, at New York City’s Marriott Marquis to talk about the future of the business.
Real Estate Connect was more or less my formal introduction to the real estate business—I’ve been with REALTOR® magazine for just one month—and it was both a sobering and an exhilarating three days.
It was sobering because it was hard to find anyone who’d had a particularly good 2008, and many practitioners are uncertain about their prospects for 2009. Speakers said there was room for optimism in terms of the number of transactions expected for 2009. However, they warned that recovery prices would likely take the form of an L shape, not a V shape. Among the speakers were NATIONAL ASSOCIATION OF REALTORS® chief economist Lawrence Yun, Yale Professor Robert Shiller, and New York Times business reporter and columnist Andrew Ross Sorkin.
The exhilarating part was witnessing all the innovation that’s taking place in this business. The conference set a strong tone that it’s time for the real estate industry to embrace social media — such as Twitter, Facebook, and, most important, blogs — as a way to network and establish your expertise. In fact, the conference was teeming with social networkers who were blogging about the sessions and communicating through Facebook, LinkedIn, and other online communities.
Several sessions were geared toward helping practitioners build international business during a time when exchange rates are still favorable for foreign buyers. One tip: Those who want to break into the international arena should list prices in foreign currencies and state dimensions in meters instead of square feet. Learn about NAR’s International programs at REALTOR.org.
By Robert Freedman, Senior Editor, REALTOR® magazine
Consumer confidence is the key to increased home sales, NAR Chief Economist Lawrence Yun told me in a video interview earlier this week. That's something REALTORS® understand intuitively and it's why all of the elements of NAR's four-point legislative agenda are aimed in one fashion or another at giving that confidence a boost. Expanding and improving the home buyer tax credit is a case in point. By opening that program to all buyers and eliminating the repayment requirement, Congress is telling consumers that it's putting its money where its mouth is and investing in the strength of Main Street. Getting high-cost conforming loan limits back up to $729,750 and making that limit permanent is another big confidence booster, and not just for consumers; it would give investors the confidence to buy the securities backed by conforming jumbo loans (those over $417,000) at a lower rate. That means more affordable mortgages for consumers. Confidence is a funny thing because it can be self-reinforcing. Once it starts going up it can trigger a virtuous circle of ever-improving confidence. The trick is getting that virtuous circle started. REALTORS® understand that confidence has overshot downward because of all the negative economic news consumers are hearing. Sometimes it's helpful just to remind people that our homes are more than an economic asset; they're where we live. That's something you can always put your confidence in. Watch the interview with Lawrence Yun now.
By Stacey Moncrieff, Editor in Chief, REALTOR® magazine
Our float made national TV—and won an award to boot! I watched most of the Tournament of Roses Parade yesterday on NBC. That’s when I learned that the NATIONAL ASSOCIATION OF REALTORS® float, “Celebrating the Dream of Homeownership for 100 Years,” was an award winner. We won the Isabella Coleman Trophy for best presentation of color and color harmony through floral use. NBC commentators Nancy O’Dell and Al Roker also mentioned the 10,000 volunteers who helped put on all those flowers. What a job!
I have to say the float was even more beautiful than I expected. This Associated Press story includes one photo of the NAR float—but the photo doesn’t do it justice.
Here, from the L.A. Times, is a list of all the Rose Parade award winners.
Congratulations, REALTORS®!
By Stacey Moncrieff, Editor in Chief, REALTOR Magazine
The Tournament of Roses Parade is just getting underway. Turn on NBC, and watch for the NATIONAL ASSOCIATION OF REALTORS float around the middle of the pack.
Given the state of the economy, it may seem a little frivolous to be put a float in a parade--even the Rose Bowl parade. But I have to say, it's inspiring to see the Association capping off its Centennial year with such a joyous reminder of the value of homeownership. (Aside: The float has a "Swiss Family Robinson" theme. If you haven't seen that movie in a long time -- or ever -- I highly recommend it. It's good for more than a few belly laughs with the kids. )
Check out this Associated Press story on the parade with the NAR float as its centerpiece.
So why is this NAR's second visit to Pasadena? In another tough economic year for our country, 1932, former NAR President William May Garland served as the parade's Grand Marshal. Garland, who was the association's only two-term president (during World War I), had distinguished himself by bringing a highly successful Olympics to Los Angeles in 1931.
Enjoy the parade! And I wish you a wonderful 2009!
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Welcome to Speaking of Real Estate, your opportunity to talk about real estate with the editors of REALTOR® magazine. Read more >
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