Archive for March, 2011

As you may know by now, NAR recently rolled out plans for a proposal called “the REALTOR® Party Political Survival Initiative.” In the wake of a recent Supreme Court ruling that will allow corporations to contribute unlimited funds into the political system, the NAR initiative is intended to maintain and cement REALTORS®’ place among the most influential advocacy groups in America.

The initiative is a two-year $80 million campaign through which more than 50% of the NAR budget would be allocated to political advocacy (which members consistently rank as the #1 benefit they receive for their NAR dues); two-thirds of those funds would be returned back to state and local REALTOR® associations to support local and state candidates, issue campaigns, and other local and state political advocacy efforts. The initiative would be funded by a dues increase.

In these difficult economic times, the proposed dues increase is proving to be a controversial funding mechanism for the initiative. At the same time, our profession is clearly confronting monumental issues — from the mortgage interest deduction to Fannie-Freddie reform to mortgage lending processes and credit availability — that clearly have impact on your ability to make a living in real estate.  Vigilance and well-funded political advocacy efforts are NAR’s best tools for defending your business as Congress debates these issues.

That’s why we encourage you to withhold judgment on the initiative until you read and hear about the benefits and rationale for the initiative. You can find more information HERE. In addition, NAR has scheduled an online town hall to explain the Political Survival Initiative. That town hall is scheduled for April 13, with more details soon to come from NAR.

The proposal will be considered by the NAR Board of Directors at the Midyear Legislative Meetings & Trade Expo in mid-May in Washington, DC. In the meantime, if you’d like to offer input about the initiative, you’ll find a feedback tool HERE.

Inman’s Innovator Awards: Nominations open

If you know an innovative real estate pro who hasn’t won an award, now’s the time to change that. Inman News has opened nominations for it’s 2011 Inman News Innovator Awards. The categories are:

  • Most Innovative New Technology
  • Most Innovative Brokerage or Franchise
  • Most Innovative Real Estate Website or Web Service
  • Most Innovative MLS or Real Estate Trade Association*
  • Most Innovative Real Estate Startup*
  • Most Innovative Mobile App*
  • Most Innovative Real Estate Social Site or Social Service*

* New for 2011

Anyone can be nominated (if they fit the category, natch), but repeat nominations will be ignored — so don’t waste time trying to score multiple submissions. (And yes, you can nominate yourself.)

If you aren’t familiar with Inman’s Innovator Awards, here’s the description from the horse’s mouth:

The Inman News Innovator Awards honor those companies that use technology and innovation to enhance the real estate transaction process and improve the experience for consumers and real estate professionals alike.

Click here for more info on the awards, including past winners.

Click here for the nomination form itself.

States: Don’t use distressed sales as comps

Appraisers in four states — Illinois, Maryland, Missouri, and Nevada –- may not be allowed to consider “distressed sales” (e.g., foreclosures or short sales) when using comps as a part of a residential appraisal. If bills being considered pass, it could put appraisers in the position of choosing whether to violate federal law (Uniform Standards of Professional Appraisal Practice, or USPAP) or these new state laws.

According to the Appraisal Institute, which has the full story:

Not following USPAP could subject the appraiser to having action taken against their license. Therefore, appraisers would have to make the decision to commit a USPAP violation — which in the case of federally related transactions would be a violation of state law — or to violate the law prohibiting the consideration of distressed sales as comparables.

Not using distressed sales as comps isn’t an entirely new issue. Based on this thread on the Appraisers Forum, the VA doesn’t allow them to be used when appraising its properties. Writes one participant, discussing a job:

The neighborhood has a mixture of short sales, foreclosures, and normal sales. If I used short sales, the value comes in about $165K. If I used normal sales only, the value is about $210K That’s the difference of whether a buyer wants to deal with the hassles of a short sale. […] Short sales are a marketability issue. Its just like dealing with a property that backs up to a highway.

Appraisers, not surprisingly, aren’t thrilled about these bills.

MRIS licenses its listings to RPR

Back in the March/April 2010 issue of Commonwealth, we told you all about NAR’s potential-game-changing initiative: the Realtors Property Resource. NAR hoped it would become the most comprehensive data source on all the nation’s properties — it included databases giving a huge amount of regional and neighborhood information, plus (thanks to agreements with MLS providers) about individual properties.

The one MLS holdout, though, was MRIS — the major player in Virginia. Here’s what we had to say in the article:

On January 27, MRIS, the largest MLS in the country — and one that serves a significant number of Virginia Realtors® — announced that, for now, it was not going to participate in RPR.

In an open letter, Realtor® Adam Cockey, chairman of the MRIS board of directors, explained that the MRIS board was concerned about two aspects of the proposed contract: How the data it provided would be used, and why there was no provision for sharing potential revenues with the MLSs.

“RPR … would not place limitations on the uses of the information collected and the types of products that would be developed,” Cockey pointed out, and while MRIS could simply “yank the feed and not renew the contract,” the MRIS board was not comfortable with that.

“RPR says ‘give us your data, we’ll tell you what we’re going to do with it’,” said Jonathan Hill, MRIS’s vice president of business development. “That kind of leaves the brokers out in the cold.” He gave the example of RPR’s telling lenders whether a particular property was being sold by its owner: “That tells them there may be trouble, it certainly tells them that [the owner] is moving, and it gives them a marketing opportunity. And brokers are concerned that their customers may not be aware that his information is being shared this way.”

But today RPR announced it had reached an agreement with MRIS and would now be integrating its data — a boon to Realtors in MRIS’s service area, which includes almost 50 counties in Maryland and Virginia, plus Washington, D.C., and Baltimore.

Why is it a boon? Go forth and read the article.

NAR Call for Action: Preserve, protect, and defend the MID

You can shape legislation by being heard early and with strong conviction. This is one of those times. Congress needs to hear from you.

Warning signs have appeared on Capitol Hill about mortgage interest deductibility. Homeowners have taken big hits the past few years. We cannot have Congress adding to the injury.

What’s at stake: House and Senate committees are already holding hearings to gather the perspective they need to craft a new tax system for the 21st century. These hearings will take most of this year.

Congressional leaders from both parties, as well as the Administration, continue to insist that “Everything is on the table,” including MID. Changes to the MID in any form would have an adverse effect on the entire housing market, potentially lowering home values and slowing sales. Each change to the mortgage interest deduction opens the door for full elimination later on, and could have an even broader effect on local economies and jobs, such as in markets reliant on second homes.

Watch NAR President Ron Phipps’s video Call for Action explaining why our action is so urgent. Then send your letter asking your representative to cosponsor H.R. 25, a bipartisan House resolution that affirms the value and importance of the mortgage interest deduction. Realtors need to direct Congress to preserve, protect, and defend the MID.

No economic recovery is possible without a vibrant housing market. Please take action today.

NAR makes it easy. From its site you can create and send a letter to your representative. Here’s a sample:

Subject: Co-Sponsor H.Res 25. Preserve, Protect, & Defend the Mortgage Interest Deduction

Dear [Decision Maker], As both your constituent and as one of more than one million members of the National Association of REALTORS, I remain steadfast in my belief that economic recovery depends in large measure on recovery in the housing market. That recovery is by no means complete and, in fact, the market is still quite weak.

I understand that throughout the spring and summer, Congress is likely to take many votes on huge bills that will affect economic, fiscal and tax policy. I urge you in the strongest possible terms to assure that each one of them will contribute to stabilizing housing markets and, just as important, do no harm. The simplest way for Congress to provide certainty to the housing market is to preserve the MID and oppose any legislation that would undermine it. Please show your support of stable housing policy by cosponsoring H.Res.25, a bipartisan resolution offered by Rep. Gary Miller. Realtors believe that wide cosponsorship of this resolution will send a strong signal that Congress remains committed to a housing recovery.

H. Res.25 expresses the sense of Congress that the current law governing the MID must be retained. To restrict current law in any way would undermine progress in the still-fragile housing recovery.

Please join Mr. Miller and your colleagues in sending a strong signal that you support a stable housing market and that you support the current MID rules. Please co-sponsor H.Res. 25.

Click here. Watch the video. Take action.

Click here. Tell your friends and colleagues to take action, too.

According to the AP, Virginia’s unemployment rate fell to 6.4% in February and remains below the national average of 8.9%. The Virginia Employment Commission has been trending down since March 2010. Another good sign for the Virginia economy…

Realtor Honor Society deadline approaches

imageIf you or someone you know should be a member of the Virginia Association of Realtors’ Honor Society, you only have till April 1 to file the nomination form.

This isn’t a "tell us why this person is an exemplary Realtor" form. Nominees get points for a variety of activities — attending meetings, earning designations and awards, serving as a state or local association volunteer, and more. So you’ll need to know, for example, whether your nominee is a member of IREM, or served as an NAR committee chair (among many other things).

Honor Society membership is more than a feather in your cap. It shows a dedication to the real estate profession in Virginia, and it marks you as a leader in the Realtor community.

You can view and download the nomination form here: www.varealtor.com/sites/default/files/Honor_Society_2010_0.pdf, and submit applications by e-mail to awards@VARealtor.com. (You can also fax them to (804) 262-0497.)

Remember: The nomination deadline is Friday, April 1, 2011.

Two reasons the future is looking brighter

I’ve been accused of being too negative about the market, and of spinning stories to be overly positive. I consider this a good sign that I’m being a realist. Still, at the risk of being labeled a shill, here’s some potential good news from the future.

First, Fortune says “Real estate: It’s time to buy again.” The reasons? Not only the fact that prices have dropped so much; the big reason for Fortune’s enthusiasm is what it describes as a historic drop in new construction.

Two basic factors are laying the foundation for dramatic recovery in residential real estate. The first is the historic drop in new construction …. The second is a steep decline in prices, on the order of 30% nationwide since 2006, and as much as 55% in the hardest-hit markets.

The piece goes on in much details, including this excerpt:

[I]n the nondistressed cities, the existing home inventory is lower, closer to seven months on average. So a modest increase in demand will translate into strong gains in both prices and new construction. That should happen quickly, because most of those markets — including Silicon Valley, Northern Virginia, and Texas — are now showing good job growth.

But wait, you say, why should you possibly believe Fortune or anyone else predicting the future of the housing market? Pundits and oracles are a dime a dozen. True, but perhaps this piece should be read with a slightly smaller grain of salt. The writer is the same one who, in 2004, wrote this:

The housing market is rapidly losing touch with reality. Fueled by interest rates that have remained near record lows, prices have continued to soar, and the gap between home values and the underlying fundamentals such as personal income and job growth is greater than ever.… Increasingly Americans view houses not primarily as places to live but as foolproof, can’t-lose investments. The passionate faith that money poured into real estate will magically multiply is creating a self-fulfilling speculative frenzy that’s bound to end badly.

(That story was called “Is the Housing Boom Over,” and it ran in September 2004.) Granted, author Shawn Tully got the trigger wrong — he suggested it would start with a rise in interest rates and property taxes — but otherwise he was spot on. “The end of the boom won’t look like a stock market crash, but it could still get pretty ugly,” he wrote, in part because “Americans have used their homes like ATMs, taking out $662 billion in home-equity loans and refinancings since 2001.”

So when Tully says the market is set to rebound soon, he at least deserves an ear. But who’s going to buy? Glad you asked.

The next wave

Wells Fargo has one possible answer: Millennials — aka “Generation Y,” or those folks born between about 1974 and the early 2000s. The company conducted a survey on home buying that found, according to the Des Moines Register , that

people still feel a strong obligation to pay their mortgages, and that “millennials” — people born between 1979 and 2001 — are generally excited about buying homes, said Lisa Zakrajsek, another vice president for Wells Fargo Home Mortgage. There are 6 million more millennials in the prime homebuying age group than there were baby boomers in that age group in 1977.

To clarify that last sentence: Today, there are six million more millennials in their early 30s than there were Boomers in 1977 (when the first of them turned 30).

Housing Wire’s take on it is similar:

More than 70% of those surveyed by Wells Fargo still want to own a home. Millennials even responded to more rigorous credit requirements favorably, describing them as beneficial to their goal of remaining in the home once they make the purchase.

(The HW piece is a bit odd. The first four and last five paragraphs are the story; the middle is an odd tangent about mortgage fraud, NAR membership, Realtor earnings, and other stuff. And HW considers millennials to be born between “1979 and 1991,” which is a decade off from the typical definition. But still.)

The down side

To avoid sounding too optimistic, here’s some not-as-cheerful news: NAR’s Pending Home Sales Index for February (released today) dropped 8.2% from February 2010, although here in the south it only dropped 5.8%. Further, the January-to-February rise in the PHSI was much smaller this year than last — it was up 2.1% in 2011 vs +9.5% in 2010. (Click here to watch NAR chief economist Lawrence Yun explain.) So be optimistic, but not irrationally exuberant.

 

[Edited 3/29 to remove an unsubstantiated comment about housing-price levels and to correct typos.]

Spring must be in the air…according to Housing Wire, mortgage applications rose 2.7% this week after a large drop earlier in the month. Refinancing remains steady, and 30-year, fixed mortgage interest rates, on average, rose slightly to 4.8%. Read the full story here…

February Virginia housing numbers — single-family homes

The February numbers are in, so let’s take a quick look at single-family-home sales in Virginia.

In February, sales of single-family homes were almost identical to 2010: 4,178 units in 2011 vs. 4,188 the year before, or down about a quarter of a percent. A bit of good news: The change from February 2009 to 2010? Down almost 8%. So this year was a lot better than last.

Volume — the total dollar figure of single-family-home sales — was also almost unchanged from 2010 to 2011 (down 0.8%); it had dropped 4.2% from Feb. 2009 to 2010, so again good news.

That’s statewide. Locally, home sales in the Blacksburg, Danville, Lynchburg, Northern Virginia, and Winchester areas were down compared to 2010, while those in the Charlottesville, Richmond, Roanoke, and Virginia Beach-Norfolk-Newport News regions were up. (In NoVA, though, sales dollars were up slightly in February.)

So, looking only at single-family homes gives a slightly different picture than looking at the entire market, but the same message is there: Mixed and unpredictable, but appears to be improving.