Tag Archives: mortgage interest deduction

Seven Predictions for 2013: The AKUS Experience


The Greatest Band in American Music

Once again, it is time for the world famous (in my own mind at least) annual tradition of making predictions for the coming year that are Guaranteed to be Wrong, or Your Money Back! This year, I thought I would pay tribute to the greatest musical act still working today: Alison Krauss and Union Station. If you haven’t experienced AKUS, please click on the embedded videos; you will become a fan. If you are not a fan, you should be. “But I hate country music” is no excuse when it comes to the awesomeness that is the Hall of Fame lineup of Alison Krauss, Jerry Douglas, Dan Tyminski, Ron Block, and Dan Bales.

My 2012 Predictions turned out to be mostly wrong, which is great news, since many of them were dire indeed. Here’s to hoping that my 2013 predictions will perform about the same.

Let’s get into it.

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Real Estate and the Party Platforms: Not a Party, Y’all

We gonna party like it’s 1999

So the Democratic Party’s 2012 Platform is somewhat in the news these days. But that whole kerfuffle reminded me that I hadn’t looked through either party’s platform to see what they said about real estate, the industry in which I work and cover and opine. Since it’s highly unlikely that anyone with a sense of self-preservation, who isn’t paid to read the damn things, would voluntarily subject themselves to going through the two party’s platforms… I sacrifice myself to bring you the truth. Well, we are talking about political parties saying stuff, so let’s not go so far as to say truth. How about, I bring you the words, and do a little analysis/fearmongering on top of it all?

Let’s start with the Donks, since they’re having their party in Charlotte right now.

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Seven Predictions for 2011, With Music Videos!

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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The Opening Salvo of the Housing War: Mortgage Interest Deduction

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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Like It or Not, You’re All Political Analysts Now

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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