In part 1, I laid out some hints of what the Obama Administration has in mind for a new federal housing policy that would “reset the rules of the market” and engage in a “fundamental rethink” not just of the mechanics of housing finance, but of the objectives of housing policy themselves. The Treasury now has all of the comments that it requested from the public and we can expect to see a proposal from the Administration sometime this fall or early next year.
In this post, I’d like to engage in the purest conjectures about what such a policy might look like. I know that assumptions are dangerous, and any conjecture at this early stage is more likely to be wrong than right, but… hey, this is fun. (If you’re a real estate and politics geek like me anyhow.) So here we go.
1906 San Francisco earthquake
There was, apparently, an earthquake in Washington DC not too long ago. Thankfully, no one was hurt, and no serious property damage occurred as the 3.6 magnitude tremor rolled through. Mere days later, however, I learned that another tremor — this one not registered on any geological survey — centered around Washington DC occurred. From the Washington Post:
Responding to the collapse in home prices and the huge number of foreclosures, the Obama administration is pursuing an overhaul of government policy that could diverge from the emphasis on homeownership embraced by former administrations.
“In previous eras, we haven’t seen people question whether homeownership was the right decision. It was just assumed that’s where you want to go,” said Raphael Bostic, a senior official in the Department of Housing and Urban Development. “You’re not going to hear us say that.”
While this particular tremor hasn’t developed yet into anything earth-shattering just yet, and there are absolutely no details available just yet, for anyone even remotely connected to the real estate industry, these statements amount to a tectonic shift of realignment.
What rough beast, its hour come around at last, slouches towards DC to be born?
Conjectures follow.
Read the rest of this entry »
Joel Burslem over at 1000watt has proclaimed July 9, 2010 as the day that the real estate blog died, and given the thoughtfulness and intelligence of the author, it’s difficult to disagree with his conclusion. Given how Joel defines “real estate blog”, the conclusions he draws are somewhat difficult to escape:
For every Phoenix Real Estate Guy, there are likely umpteen dozen soulless me-too real estate blogs in any given metro these days. Many are filled with meaningless “market reports,” meandering “community updates” – and most were last updated many moons ago.
These blogs float like drift nets on the web, hoping to snare the clueless web visitor who stumbles in through some long tail Google search.
I, however, don’t necessarily agree with his premise. In order for something to die, it had to have been alive at some point. Since I don’t believe that the “real estate blog” as defined above was ever graced with the spark of life, I don’t know that I would mourn its death.
Instead, I would like to recommend some tools that are critical to the aspiring real estate blogger in the hopes that we might change the definition of a ‘real estate blog’ from “soulless me-too” Google-farming wanna-be blogs to an actual blog: a weblog, a series of thoughts.
These are not free tools, unfortunately, but for someone interested in blogging — whether in real estate or hyperlocal or something else — these tools are absolutely essential.
Read the rest of this entry »
If you’re feeling optimistic right now, thinking that the real estate market will be rebounding soon based on the past couple of months of strong performance, well, I urge you to skip this post. No need to spoil a perfectly good mood with gloom, especially on such a beautiful summer day as today.
As I’m not an economist, despite looking very much like one, I’m just going to share a few things I’ve read in the past couple of days that make me a wee bit jittery. Back in May, I wrote that there were some worrisome signs for the housing market. These signs don’t make me any more hopeful.
Image: AgentHarvest. Used with permission.
Recently, I ran across a hilarious little parody website called ReallyRottenRealty.com. The site exposes some of the more compellingly awful business practices of some brokers and agents out there. Check it out, and be prepared to laugh while grimacing.
Turns out, the website is a marketing vehicle for a company called AgentHarvest, based in Dallas, TX. It’s basically a lead referral business, the likes of which we’ve seen before. But there are some interesting, unique things about AgentHarvest that make it worth discussing a bit.
If you’re responsible for real estate brokerage operations, you owe it to yourself and to your company to read this post by Glenn Kelman at Redfin. I have said for a while now that I believe Redfin to be one of few viable models for real estate brokerage of the future, and this post helps confirm that belief. It’s a long post, and worth reading in full, but here’s the money graf:
But outside of calling one agent after another, the CB CEO has no way of knowing what his agents are doing; most work as contractors, for franchises, recording their deals in spreadsheets and notepads. Redfin on the other hand has a system for scheduling home tours and writing offers, which means we also have a system for storing data about every tour & offer. Months before the numbers are recorded at county courthouses or by federal agencies, we know when bidding wars are back, or when tire-kickers have taken over the market. We can see the whole elephant, and we’re minutely sensitive to when he’s about to roll on top of us or stampede through the jungle. [Emphasis added]
Fact is, far too many real estate brokerages pay lip service to the importance of technology. Even the ones who do invest are putting money and resources towards marketing technology rather than information technology. In the long run, I think the companies that survive the Great Recession will be ones who invested in information technology, rather than just another pretty website. Read the rest of this entry »
The incredibly smart, sometimes bearded, Gahlord Dewald has a post up on Inman (will go behind paywall in 24 hours) in which he counsels brokers and agents to “break free from cookie-cutter real estate” by paying more attention to categories of information and data:
Think your brand is different from your competition? Go look at the categories for real estate on your site then go look at the categories for real estate on your competition’s sites. See any difference?
This isn’t a case of tools not existing. Categories are an inherent function in every database-driven content management system out there.
But a quick tour of real estate sites will reveal that most of these systems have been set on autopilot to mimic the same categories that were used for real estate in — you guessed it — newspapers.
His recommendation is to rethink the categories for a real estate search website, perhaps to better “narrowcast” information to a specific segment of the audience. It’s an interesting approach, and one that I’ve recommended to others in a slightly different context via persona-based marketing, but… the post made me wonder about something.
A while back, I wrote on Inman (subscription required) that the single greatest asset of realtors was political power, and got mixed comments about that position. Well, the time to find out is upon us:
The popular tax break for mortgage interest, once considered untouchable, is falling under the scrutiny of policymakers and economic experts seeking ways to close huge deficits.
Although Congress last year rejected the White House’s proposed cut to the amount wealthier taxpayers can deduct for home mortgage interest payments, the administration included it again in its 2010 budget — saying it could save $208 billion over the next decade.
When NAR lauched HouseLogic.com last year, one of the examples it used to talk about how important HouseLogic.com would be was defending the home mortgage interest deduction. With the Obama Administration putting the elimination of the mortgage interest deduction back on the agenda for 2010, it’s time to find out just how powerful NAR is, and whether NAR does in fact add value to the Realtor or not.
Plus, given that the “recovery” of 2009 and spring of 2010 (I have my doubts on how much of the recent market is a recovery vs. simply pulling deals forward in time, but nevertheless…) was widely seen as having been fueled by a $8,000 first time homebuyer tax credit, the elimination of the mortgage interest should have interesting — if devastating — consequences for the market.
About a week ago, the good folks at Trulia released their “Rent vs. Buy Index” of the largest 50 U.S. cities by population. The full list of the 50 cities is available here as a PDF. Given the current economic trends, and the rising interest by consumers for rentals, this is a great time for people in real estate to be talking about renting vs. buying.
Trulia didn’t post their full methodology but it does look like they did a good deal of work. From the blogpost describing the Rent vs. Buy Index:
Total costs of home ownership include mortgage principal and interest, property taxes, hazard insurance, closing costs at time of purchase and ongoing HOA dues and private mortgage insurance, where applicable. Total costs of homeownership include an offset for the tax advantages of homeownership, including mortgage interest, property tax and closing cost deductions.
Total costs of renting include rent and renter’s insurance.
Based on these factors, Trulia concludes:
Price-to-Rent Ratio of 1-15: It is much less expensive to own than to rent a home in this city
Price-to-Rent Ratio of 16-20: It is more expensive to own a home in this city are The total costs of ownership of a home in this city are greater than the costs of renting, but it might still make financial sense depending on the situation.
Price-to-Rent Ratio of 21+: The total costs of owning a home in this city are much greater than the costs of renting.
The analysis was for 2BR apartments, condos, and townhomes — so the rent/buy for single family residences might be different. But the index is a useful tool nonetheless.
Since I’ve written on the rent vs. buy decision before, I thought it would be interesting to look a bit closer at the ratios — although I don’t have the actual numbers that Trulia used — to see what, if anything, might pop out.
"A" in A-Team stands for Agent?
In 2007, Ralph Roberts, then the “official spokesman” of Guthy-Renker Home, published a brief essay on RISMedia called “How to Soar High with Power Agent Teams“. In it, he recommended an approach to teaming that is much more based on division of labor and functions:
I was recently flying home from the National Association of Realtors convention in Las Vegas, and I began thinking what would happen if airlines followed the same approach that most Realtors practice. I would call the airline to book a flight, and the pilot would answer the phone. When I arrived at the airport, the pilot would check me in, check my bags, follow me to the inspection point to make sure I wasn’t trying to carry any prohibited items on the plane, and then escort me to the gate to make sure I boarded the right flight and secured a seat.
He also wrote a book on the topic, which I havent’ read so it may be that many of my questions and thoughts are answered there.
Nonetheless, with more and more brokerage companies enabling agent teams of various kinds, and more and more successful agents creating de facto agent teams by hiring administrative assistants, listing coordinators, transactions managers, and the like, it appears that the ideas of “Power Agent Teams” have taken firm root in the industry.
Those ideas, however, have not been fully developed to their logical conclusions — at least not yet by anyone I’ve read or heard from in the past three years. I’d like to revisit the topic, therefore, to sketch out some consequences of the Power Agent Team idea and pose some questions.
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