By Robert Freedman, Senior Editor, REALTOR® Magazine
Take out the pocket calculator again?
Paul Starobin in his piece “Should Owning a Home Still Define the American Dream?” in the Spring 2011 issue of The Next Economy (a special supplement of the National Journal) asks us to consider whether it’s time to remove home ownership from the pedestal it’s occupied since the 1920s.
His piece is part of a growing genre of articles and TV stories questioning home ownership in the wake of the housing meltdown, probably the most well-known of which is a September 2010 piece in Time magazine called “The Case Against Homeownership” by Barbara Kiviat. These pieces have done much to encourage action by members of Congress who are predisposed to remove the federal government from anything having to do with home ownership. For these members of Congress, taking such action is their right and indeed their responsibility. But these anti-home ownership pieces occasionally rely on arguments that have long been picked apart by critics and shown to be misleading if not outright incorrect.
In Starobin’s piece, he uses two such flawed arguments. In the first, he compares the return on equity of home ownership unfavorably to the return we would get if we bought a basket of stocks that track the Standard & Poor’s 500 index. Drawing on an analysis from an economist at the University of Pennsylvania’s Wharton School, Starobin says the S&P 500 has averaged an 8 percent average return since 1976, adjusted for inflation. Home prices, by contrast, he says, have gone up just 1 percent a year since 1975, when adjusted for bubbles and dips. Starobin then asks us to compare the return one might get on a $20,000 investment. Although Starobin doesn’t do the math, his point is that a $20,000 down payment on a house would generate a return of 1 percent a year while that same $20,000, invested in the S&P 500 basket, would generate an 8 percent return. “The financial gain from owning [a home] is likely to be modest,” Starobin quotes the Wharton economist as saying. “There are lots better ways to accumulate the same amount of expected wealth that do not start off with [paying] a 6 percent fee to the broker.” Continue reading »
By Stacey Moncrieff, Editor in Chief, REALTOR® Magazine
I was just reviewing proofs of our April/May issue — in which forecasters have predicted a steady rise in home appreciation through 2015 — when our publisher e-mailed me a link to “Real estate: It’s time to buy again” by veteran Fortune magazine writer Shawn Tully. Tully makes a convincing case that the moribund new-construction market, combined with rising rents and an improving job market, will result in increased demand for homes and begin to drive prices up. Even in many high-foreclosure areas, he says, the outlook is getting better.
All good news comes with caveats. Tully says consumer confidence and job growth still need to gain ground — and he allows that some markets won’t rebound quickly. But he provides a solidly positive report for real estate pros dealing with nervous and discouraged sellers and buyers. He writes:
“During the last decade’s historic run-up in prices, Fortune repeatedly warned that things were moving too fast. In a cover story titled “Is the Housing Boom Over?” [published in 2004], this writer’s analysis found that the basic forces that govern the market — the cost of owning vs. renting and the level of new construction — were in bubble territory. Eventually reality set in, and prices plummeted. Our current view focuses on those same fundamentals — only now they’re pointing in the opposite direction.
“So let’s state it simply and forcibly: Housing is back.”
By Katherine Tarbox, Senior Editor, REALTOR® Magazine
A few of us from NAR have been travelling the country to follow the Home Ownership Matters Bus Tour as it visited in Chicago, Denver, and Portland and made stops along the way. I’ve documenting some of these events with video that we post on the Home Ownership Matters Web site.
The truth is, I wasn’t exactly sure what to expect. Would consumers understand the mortgage interest deduction (MID) is being threatened? Would they care about how Fannie and Freddie will be reformed? Do they understand how vital housing is to the U.S. and the economy? At REALTOR® Magazine, we don’t usually interview consumers, and so I wasn’t sure what I would hear. Continue reading »
By Katherine Tarbox, Senior Editor, REALTOR® Magazine
As the debate in Washington continues over tax reform, a noticeably concerned group of real estate professionals and association members attended the REALTORS® Town Hall at the Doubletree Hotel in Portland, Ore., to discuss the current real estate climate with 2011 NAR President Ron Phipps and NAR Vice President and Liaison to Government Affairs Vince Malta.
Top of mind for many in the audience was the new REALTOR® Party Political Survival Initiative. If approved at the Midyear Legislative Meetings in Washington, D.C., in May, a $40 NAR dues increase would be implemented to fund political advocacy across the country, with two-thirds of the money being directed to local and state associations.
Phipps reminded the audience that these policy funds were used to support six Democrat and five Republican candidates in the last election who strongly supported pro-home ownership policies, as well as lobbying efforts for the home buyer tax credit.
“Home ownership supports government, and we need to work with the government, both national and local, so that it continues to support home ownership,” Phipps said. He noted that 65 percent of those who take advantage of the MID credit earn less than $100,000 a year, and that this was not a benefit for the wealthy. He also stated that they would stand firm to not allow “carve-aways” at the credit, such as eliminating this deduction for second homes. Continue reading »
By Katherine Tarbox, Senior Editor, REALTOR® Magazine
2011 NAR President Ron Phipps (left) with 2011 Colorado Association of REALTORS® President Randy Reynolds, who stopped in for the Denver leg of the Home Ownership Matters Bus Tour
REALTORS® need to be proactive about lobbying on the local and state level, 2011 NAR President Ron Phipps told a packed audience in Denver today. Phipps spoke a town-hall meeting in the city, which was part of NAR’s cross-country Home Ownership Matters Bus Tour.
“All real estate is local, and it’s time we get more involved in policy on a local level,” he said.
Phipps addressed questions and comments from members on everything from GSE reform to the Realtors Property Resource™. “It’s frustrating when deals fall through because of financing,” said Sally Blinn, broker/associate with AJAX Real Estate in Thornton, Colo. Phipps advised that real estate professionals need to get strategic about their deals. “If your buyer can’t find a loan with one of the big four banks, find a local one. It’s your job to help them to get into the house.” Continue reading »
By Robert Freedman, senior editor, REALTOR® Magazine
Cato Institute analyst Mark Calabria in his piece, Housing Market Will Be Fine Without 30-Year Fixed Loans (Investor’s Business Daily, March 17), argues that the stability provided to households from the 30-year, fixed-rate mortgage comes with a big contingent liability: the bailout of Fannie Mae and Freddie Mac.
As Calabria puts it, although the 30-year fixed-rate mortgage has given borrowers some stability in their monthly mortgage payment, “it has done so by exposing households, as taxpayers, to massive, hard-to-predict contingent liabilities. There’s been no bigger ‘hidden fees’ or ‘payment shock’ in the mortgage market than the cost of the bailout of Fannie Mae and Freddie Mac.”
But surely Calabria knows that it wasn’t the 30-year, fixed-rate mortgage that forced the two secondary mortgage market companies to need a bailout; it was their dabbling in subprime, stated-income, Alt-A, and other exotic loans while they were playing catch-up to Wall Street players in the private-label mortgage securities market. The Obama administration, in its white paper on reforming Fannie and Freddie, makes this clear:
“Fannie Mae and Freddie Mac were largely on the sidelines while private markets generated increasingly risky mortgages. Between 2001 and 2005, private-label securitizations of Alt-A and subprime mortgages grew fivefold, yet Fannie Mae and Freddie Mac continued to primarily guarantee fully documented, high-quality mortgages. But as their combined market share declined—from nearly 70 percent of new originations in 2003 to 40 percent in 2006—Fannie Mae and Freddie Mac pursued riskier business to raise their market share and increase profits. Not only did they expand their guarantees to new and riskier products, but they also increased their holdings of some of these riskier mortgages on their own balance sheets.”
Calabria says that as long as the federal government guarantees the 30-year, fixed rate mortgage, someone will have to pay for that subsidy. But it wasn’t until the two government-sponsored enterprises strayed from their role backing the 30-year, fixed rate mortgage that taxpayers got hit with a bill to pay for the subsidy to those two companies. On that basis, if the concern is over reducing taxpayer exposure to bad loans that cost taxpayers money, then ensuring the government retains a role supporting the 30-year, fixed rate mortgage is arguably what we should be encouraging.
And to be clear: consumers—i.e., taxpayers—have been unambiguous in their preference for long-term, fixed-rate mortgage financing. About 90 percent of those that finance their purchase choose that type of loan.
By Wendy Cole, Senior Editor, REALTOR® Magazine
The NATIONAL ASSOCIATION of REALTORS® has watched with horror at the events in Japan since a 9.0-magnitude earthquake struck off shore on March 11, triggering a tsunami, unimaginable devastation and a nuclear crisis that is still unfolding.
As in the case of the recent earthquakes in New Zealand, NAR has identified four funds that the association believes are well equipped to provide disaster-relief services. NAR urges members who want to make a donation to consider one of these organizations.
“REALTORS® build communities here in the U.S., but we also have a role to play in the global community, as well. With that in mind, we want to express our heartfelt concern and support for the people of Japan during these trying times,” says NAR President Ron Phipps.
Jason Watabe of Mercer Island, Wash., NAR President’s liaison to Japan’s four real estate associations, has helped to develop additional support programs with the Seattle-King County Association of REALTORS®. “We cherish our business relations in Japan,” he said. “And we have to show our friendship by extending financial support in providing the victims food, water, heat and shelter for tonight and tomorrow.” The association has set up a site for those interested in contributing to both immediate relief efforts and and long-term shelter and rebuilding initiatives.
The Asian Real Estate Association of America (AREAA), based in Carlsbad, Calif., has set up a fund to help address Japan’s long-term needs and support future rebuilding of homes for the people of the hardest hit Tohoku region. Read about the initiative and how you can help.
Here are brief descriptions of the NAR-recommended funds along with helpful giving tips from CharityNavigator.org: Continue reading »
Are you an association executive? Are you heading to the AE Institute event in Dallas next week? Be sure to take advantage of new tech tools to help you before and during AEI.
You can create a customized schedule and download speaker handouts before you go. From the App Store or Android Marketplace, download “AE Institute 2011″ or go to http://aei.boopsie.com from your mobile phone’s 
browser to download the AEI Mobile App. Also, follow the conversation about AEI on Twitter with hash tag #AEI2011. For more info, contact Laurie Oken at loken@realtors.org or 800/874-6500, x8307.
By Stacey Moncrieff, Editor in Chief, REALTOR® Magazine
Ebby Halliday turns 100 years old tomorrow, March 9! Of all the REALTORS® I’ve had the privilege to know in my 23 years with NAR, the one who has most captured my imagination—and I believe the hearts of all who meet her—is Ebby, the spirited Texan whose Dallas real estate company has been operating independently since 1945.
On Feb. 23 the city of Dallas turned out for a “Roast & Toast” to celebrate Ebby’s birthday. The star-studded event was a fundraiser for the Foundation for Fighting Blindness, of which Ebby is a national trustee. Among the guests and entertainers were Dallas’s greatest living legends: Ebby herself, as well as former Dallas Cowboy quarterback turned real estate pro Roger Staubach; businessman and former presidential candidate Ross Perot; oilman and alternative-energy advocate T. Boone Pickens—and the Dallas Cowboy Cheerleaders, among others. Two former NAR presidents were in attendance—Dick Gaylord of Long Beach, Calif., and Charles McMillan, of Dallas/Ft. Worth—as well as Travis Kessler, CEO of the Texas Association of REALTORS®, and U.S. Rep. Pete Sessions. Dwight Hale, 2011 Chairman of TAR, gave presented a Texas Senate Resolution in Ebby’s honor.
Ebby Halliday, escorted here by football-legend-turned-real-estate-executive Roger Staubach, freely offers the secret to her longevity: "I don't smoke, I don't drink, and I don't retire."
Why all the fuss? It’s hard to explain unless you meet Ebby and know something of her history—her pioneering work in real estate sales, her long-time leadership within the REALTOR® organization, and her contributions to the Dallas/Ft. Worth area. “While Ebby Halliday, REALTORS®, has grown to be the largest independent real estate firm in Texas,” said the event co-chairs in a letter published in the evening’s program, “Ebby’s personal commitment to our community has been nothing less than extraordinary. No one gives back like Ebby.”
More than 500 people attended the gala; the event raised $640,000 for FFB-funded research to help find treatments and cures for blindness caused by retinal diseases. That’s a fitting tribute to a woman who has long made community service a centerpiece of her real estate brokerage. Wish I could have been there to raise a toast to the “First Lady of Real Estate”!
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