Notorious R.O.B.

A mere six days ago, NAR’s Chief Economist (and my doppelganger) Lawrence Yun released this cheery video forecast on housing for the remainder of the year:

Lawrence is predicting a slight pickup for 2011 over 2010; he thinks the second half of this year will be better than the second half of last year. New home sales will still be hurting, he thinks, but existing home sales should improve.

He based this forecast on the idea that the employment picture was slowly improving, as seen in this video:

Lawrence says he thinks we’ll see 1.5 million new jobs in 2011, maybe a little less. But “at least we’re not losing jobs, and losing potential for housing demand”. He thinks we’re on the right track, albeit slowly.

So he’s thinking 1.5M new jobs this year, 2M next year.

Well, the latest job report is dismal, even grim.  The official government report was that only 18,000 jobs were created in June, way, way below the expectations of economists of around 150,000. Furthermore, the news is even worse than it seems.

Ah, but there is a glimmer of hope, it seems… read on for more.

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It's high time we brought back these classes...

Apparently, some legislators in South Dakota are pulling a political stunt by introducing a bill to require that all adults buy a gun upon turning 21. I say it’s a political stunt because the whole point of the exercise apparently is to say that Obamacare is unconstitutional, just like a an individual mandate to buy a gun would be:

Rep. Hal Wick, R-Sioux Falls, is sponsoring the bill and knows it will be killed. But he said he is introducing it to prove a point that the federal health care reform mandate passed last year is unconstitutional.

“Do I or the other cosponsors believe that the State of South Dakota can require citizens to buy firearms? Of course not. But at the same time, we do not believe the federal government can order every citizen to buy health insurance,” he said.

Well, what I find really disturbing about this is that a frikkin’ state legislator is so ignorant of the Constitution that he can make statements like this. We need to bring back civics education and do some sort of teaching on basic, fundamental constitutional law. Our nation is starting to suffer because of the low level of knowledge and education on the part of the citizenry on the most fundamental document that governs our political lives: the U.S. Constitution.

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Since not everyone who reads Notorious checks out my blogging on 7DS… I’d really like your thoughts on my last two posts. They’re scaring the crap out of me, and I’d love to get any counter-arguments or counter-evidence.

Here they are:

Title Issues in Foreclosuregate

Foreclosuregate and Systemic Risk

Thanks,

-rsh

Ted Williams: .406 batting average in 1941. Me: .600 in 2009. Sorta...

Coming off of an awesome, Hall-of-Fame type of year in which I batted .600 in predictions (or, alternatively, a year in which I only got 6 out of 10 predictions even remotely close to right, and hence am a big #FAIL), I thought I would don the Nostradamus hat once again and make foolish predictions for 2011. I know I should make 10 predictions, but… y’know, I’m sort of stuck on that number Seven.

Here are seven predictions for 2011. Many are guaranteed to be wrong, or your money back! But as a bonus, each prediction comes with a music video for your entertainment.

[Warning: don’t read this is you’re feeling happy and optimistic, and you want to stay that way. I’m personally feeling happy and optimistic, but as I put this together, I can’t help but want to reach for strong drink for the industry as a whole. I know I tend towards bearishness, and some might suggest, alarmism, so… I’d suggest you go read some other 2011 predictions posts as well. Here are a few I’ve seen myself: Lani on Agent Genius, Greg Robertson on VendorAlley, and this whole series over at Inman.com.

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A couple of weeks ago, I wrote that if you have a REO or short sale practice, you want to pay attention to some legal cases going on around the country:

Trouble is, MERS might lack legal standing to bring a foreclosure action. At least, that’s what the attorneys for the homeowners who are getting foreclosed are claiming.

Given that so many mortgages were packaged into securitization pools (RMBS), sliced and diced, with different investors taking a different piece of a few hundred thousand pooled mortgages… it really isn’t clear who actually owns the mortgage, and has the right to enforce its terms by foreclosure (or have its duly authorized agent/servicer do it).

I noted then that this seemingly esoteric legal issue is a thermonuclear landmine for the entire foreclosure and short sale industry, including real estate agents who represent buyers and lenders.

Well, Congress has been holding hearings on problems in the foreclosure industry. I haven’t seen too many media coverage of the hearings. This blogpost on Washington Post is one of the few I could find. I just spent valuable two hours of my life watching CSPAN video of the hearing on December 15, 2010, which is embedded above.

This topic is just too big, even for my lengthy posts. But if you have anything to do with foreclosures, REO’s, and short sales… I would suggest you spend some time looking at this issue.

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Men, they're coming for the mortgage interest deduction! This means war!

NAR has finally gone to the mattresses over Federal policy. Some time ago, I wrote that the mortgage interest deduction may be phased out or limited as part of Obama Administration’s new “sustainable housing” policy. At the time, I’ve heard quite a few people say, “It’ll never happen”. The thought was that the public loves the MID so much, they feel entitled to it, just like Social Security and Medicare. Plus, NAR is such a powerful political operation that no politician would ever dare touch the MID.

Well, the White House Deficit Commission unveiled its recommendation today, and guess what? The MID is most definitely on the table for outright elimination or significant limitation. From Housingwire:

Of the many proposals inside the document, the most contested one for the housing industry will be the mortgage-interest tax deduction. The commission proposes for the deduction to be limited to principal residences only and that eligible mortgages be capped at $500,000 instead of the $1 million current cap. The commission also proposed a 12% nonrefundable mortgage-interest tax credit for all taxpayers.

As expected, NAR criticized that part of the report, suggesting that eliminating or limiting the MID would cripple the housing market, drag values down another 15% or so, and so on. Investors who have been coming back into the market, at least for foreclosures and short sales, might need to redo all of their financial models based on the tax subsidy for mortgage interest not being there anymore. Buyers will need to redo their rent-vs-buy calculations. All sorts of bad things for housing, at least in the short-term, will come about.

Then earlier today, I see that NAR has put out a Call to Action to its members to call their Congresscritters to defend the MID. This is merely the opening battle, so how this issue gets resolved should signal how the rest of the Housing War of 2010-2012 will go.

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legal standing anyone?

From the dusty files of the excruciating minutiae of bankruptcy court proceedings (courtesy of the NY Times) comes this story:

But while banks may have booted a few robo-signers and tightened up some lax procedures, one question at the heart of the foreclosure mess refuses to go away: whether institutions trying to take back a property can prove they even have the right to foreclose at all.

Some in the industry believe that questions about this issue — known as “legal standing” — are trivial. They say it’s just a gambit by borrowers’ lawyers to throw sand in the foreclosure machine. Nine times out of 10, bankers say, the right institutions are foreclosing on the right borrowers.

Maybe so. But the United States Trustee Program, the unit of the Justice Department charged with overseeing the integrity of the nation’s bankruptcy courts, is taking a different view. The unit is stepping up its scrutiny of the veracity of banks’ claims against borrowers, and its approach is evident in two cases in federal bankruptcy court in Atlanta.

This, to put it mildly, could be a thermonuclear land mine. There’s no reason to panic yet, since no court has ruled on the standing issue, but the action by the U.S. Trustee hints at the possibility that this issue will become larger and larger, and likely require significant litigation to resolve. And looming in the background? MERS… which is not tech-speak for merde, but the entrance of the DOJ (the parent department of the U.S. Trustee) could result in a major merde-storm.

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My friend Matt Dollinger recently commented on a post by the longtime real estate expert Steve Harney. Both were commenting on the doom & gloom article from Time Magazine on how homeownership is overrated. Steve Harney rightfully takes Time to task:

Again, they are simply arguing a miniscule point of an extensive research paper that proves the benefits of homeownership. Where is their research, their study, their expert testimony disproving this study’s results? They gave none because there is none. (Emphasis in original.)

Matt, in commenting on what Steve Harney wrote, and on the gloomy headlines from newspapers and magazines, suggests that real estate agents need to start focusing on how to answer questions from confused consumers:

We all understand that this is a difficult time for those in real estate… both consumers and agents alike.  However, your job above all else, is to become the Trusted Advisor of those closest to you and choosing you to represent them.  That means that you are responsible for being able to decipher fact from fiction and opinion from proof.  There are many conflicting headlines out there today published by everyone from trusted sources like Wall Street Journal, CNN and many others.  Your job is to sift through this material and create KNOWLEDGE from the DATA presented.  Only by creating this knowledge and providing it objectively to your clients can you truly assist in their decision to buy, sell or invest in real estate.

I agree wholeheartedly with both Steve and Matt insofar as their trashing of Time’s “reporting” and their recommendations to real estate professionals.  I do, however, think that the implications they draw are not necessarily what we’re going to face.

I believe that every real estate professional today, like it or not, has to become an amateur political analyst because it is well-nigh impossible even to understand what to make of conflicting headlines without understanding the political implications.

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[Note: This is a longer version of the original, which was posted on AOL Housingwatch a few days ago.  I'm crossposting it because Notorious ROB has no space constraints and my readers are used to 2,000 word posts, heh. ]

In Part 1 of this series, where I laid out why I believe the 30-year fixed rate mortgage (among other features of contemporary homeownership) was on its way out, to be replaced by a far greater emphasis on rentals.  So let’s take a brief look at what the future of rentals might look like, since many of you reading this now will be renting for a lot longer than you had ever imagined.

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Welcome to the first Carnival of Real Estate Policy.  It seems impossible that the real estate blogosphere has gone so long without talking more about government policy given that real estate is a heavily regulated industry, and the more important organization in real estate is a industry lobby group (NAR).  But for the most part, we bloggers in real estate have spent most of our time and energy talking about the market, about the homebuying process, and about marketing techniques, including social media.  Hopefully, we will start to talk more and more about the policy issues that will have far-reaching consequences for the industry, for consumers, and for government.

As is often the case, posts about policy often cannot be distinguished from posts about politics. One’s political views will inform one’s policy preferences.  As the editor (and host, and chief cook and bottle washer) of the Carnival, I have chosen not to accept posts that I felt were purely political: interested more in scoring points for or against one party or another, or one politician or another.  But it is often impossible to separate policy debates from political ones, so you will find posts you consider to be political; well, I’ve tried.

Here are the posts for this inaugural edition of the Carnival of Real Estate Policy:

What Comes After the Future of Housing?

Jeff Corbett, Mr. XBroker himself, looks at possible scenarios for Fannie and Freddie based on the comments from the Conference on the Future of Housing Finance.

Recovery Through Policy or Free Markets?

Brian Hickey of Teardowns.com argues that what the government needs to do is free up capital and get out of the real estate transaction.

Will the Homebuyer Tax Credit Return?

Jay Thompson, Phoenix Real Estate Guy, discusses the possibility that the $8,000 Homebuyer Tax Credit may be extended once again.

Recovering from the Real Estate Katrina

Rich Bailey, of The Gopher Files, works the disaster analogy.

Rogue Housing Market Recalibrates to the New Abnormal

David Arbit, of Minneapolis Area Assocation of REALTORS and 10K Research, provides numbers that show the Homebuyer Tax Credit merely pulled demand forward.

A Follow Up to the Hot Issue of Reform for Freddie and Fannie

Mark Brian, a REALTOR and blogger from South Carolina, discusses more Fannie and Freddie and what the government should do about them.

The New Housing Policy – Will It Repair the Housing Market?

Linsey Planeta, the broker-owner of M Realty in Orange County, CA, worries about the new housing policy’s impact on the market.

Fannie and Freddie: Into Commercial Real Estate, Out of Residential

My submission to the Carnival, where I look into why I believe the 30-year fixed rate mortgage is on its way out and how that will occur.

Thanks to everyone who participated in this first edition of Carnival of Real Estate Policy.

-rsh

PS: I just scheduled the next edition for October 3rd; submission deadline is October 1st.  The BlogCarnival link is here: http://blogcarnival.com/bc/eprof_39138.html