Real Estate Blog

Dear Mr. Stein,

I came across your oh-so-enlightening article on Yahoo! Finance today, “Why I’m Still Buying”, and wanted to share an important lesson with my readers, using you as a perfect example.

Thanks in advance.

Fellow Americans:

Mr. Stein wrote a post October 17, ”Why I’m Still Buying”, in which he gave his oh-so-narrow-sighted views on why our great nation is experiencing financial turmoil and what a glimpse into the future might look like.

Mr. Stein’s bent on the source of the weakened economy goes like this:

“Groups involved with civil rights issues and activities for poor people began to complain that poor people and especially non-white poor people got mortgages much less often than white well to do people.”

And foolishly continued …

” … the advocates for poor and black people had immense political clout. Under President Bill Clinton, they passed legislation that called on banks to be required to lend to non credit worthy borrowers.”

Stop - I need go no further. Stein continue to wax inanely, blaming the uprising minority homeowners for the subprime mortgage debacle and the shakedown of the American Economy.

On the housing front:

• There certainly weren’t any middle- to upper-middle-class trying to buy up on interest-only, adjustable rate mortgages and 110% financing products.
• There weren’t any homeowners using their home equity like ATMs.
• There weren’t any investors left holding houses, unable to flip them.

Did you, Mr. Stein, not profit from the subprime? Did you, Mr. Stein, complain about these loan products way back when? Did you, Mr. Stein, not enourage your audience to invest as you do today?

Thou doth protest too much, me thinks, Mr. Stein.

Let alone the problems with credit, the auto industry, healthcare and others that have remained near stagnant, needy for real solutions.

Mr. Stein: You could have used your platform wisely - but took the road adjacent to the gutter.

Thanks for showing my readers yet another example of a person in a glass house who threw one hell of a stone.

Get past the blame and get on with the solution.

Posted by Rebecca D. Levinson

More here:

I write this post as I sit on a Sunday evening enjoying time with my family, each of us engaged in separate activities, but all of us together and united.

I am reflecting on a blog post I just read, “Beneath the financial crisis waits a nastier beast”, which explores the last domino of the financial crisis. The blogger, Waleed Aly, discusses what might happen with social politics as a result of the economy. Aly’s belief is that government intervention and the new marketplace cannot help but alter social politics.

Aly’s words are sobering:

“This is what happens in times of great insecurity. As the foundations of our lives erode, we search for an anchor, and social politics very often provides it. When all else fails, we may still rally around old certainties: nation, culture, religion, race. We crave strong authority figures that can imbue us with certainty and articulate for us a sense of self. That often involves fabricating a scapegoat who becomes a mortal enemy.”

I have great hopes that the lessons of the past have taught us that fear-controlled decisions are usually led by sheep in wolves’ clothing.

Realize this:

• If your property values decline, understand that in most cases they appreciated unrealistically and were overvalued.
• If your company starts layoffs or downsizing and outsources overseas or hires cheaper labor, that is the decision of the company, not the end laborer.
• If you look to blame the subprime mortgage crisis on a race or ethnicity, you are blinding yourself to the source.

In the end, the blame does nothing to improve your situation. Empowerment lies in finding a solution by working together and looking inside ourselves. People in glass houses shouldn’t throw stones. We all live in glass houses.

We can flip the switch from the age of entitlement to the age of enlightenment.

Get past the blame and get on with the solution.

Posted by Rebecca D. Levinson

More here:
Get past the blame and get on with the solution

Open Houses still remain on my list of top things agents should be doing right now. The market is ripe for buyers that you can educate on the current state of the market. And there is no better place to find them than at an Open House.

Go here to read the rest:
Hot Open House Tips for the Summertime

Without question, the vast majority of new leads come from the Internet. And given today’s challenging market conditions, you want to treat these inquiries like they were precious new-born babes. Here are the online communication “Best Practices” you can easily implement to make sure each has the highest possibility of turning into a full-grown transaction.

Originally posted here:
Online Communication: Best Practices

Depending on the location, whether you’re shopping for a new home or trying to sell your current residence, one of the biggest challenges is trying to reduce street noise.

Love The House, Hate The Traffic Noise — There Is Hope!

One of the remarkable things about the Fed’s recent monetary policy was that they opted to deal with the housing market first, and then inflation. Prior to the credit crunch summer of 2007, the fed was concerned about the economy overheating. And then it realized too late that the housing market was likely to be the proverbial straw that broke the economy’s back.

Fix housing by lowering rates hoping mortgage rates would follow. Deal with inflation later.

The end result? The sharp drop in the federal funds rate since last summer has done nothing for the housing market. It’s all about credit or lack thereof.

Now the concern going forward is inflation, which is sure to occupy the conversation for the next several years.

Inflation is a rise in general level of prices of goods and services over time. Although “inflation” is sometimes used to refer to a rise in the prices of a specific set of goods or services, a rise in prices of one set (such as food) without a rise in others (such as wages) is not included in the original meaning of the word. Inflation can be thought of as a decrease in the value of the unit of currency.

Today’s “Producer Price Index numbers show a sharp increase overall, but mild increase on core (excluding food and energy - which is a mystery to me in its relevance beyond academia since consumers eat and buy gas.)

The Producer Price Index advanced 1.4 percent in May, its fastest pace in six months and another troubling sign that inflation is worsening, the government said Tuesday.

Many economists, however, prefer to measure price increases in products other than energy and food. While this gauge, called the “core” index, does not measure the full effect of inflation on Americans, it does offer a guide to how long inflation might linger. For May, core producer prices rose at a tepid pace, 0.2 percent, in line with economists’ expectations.

What does an inflation threat mean to housing? It likely means higher mortgage rates (they are rising now) which will slow down the recovery.

Here’s a few inflation articles burning a hole in my pocket…

The Fed Chairman ascribes to “inflation targeting” which basically says that if inflation rises above a set level, the rate is raised, no matter what the source. Here’s an interesting paper on why inflation targeting doesn’t work, called, oddly enough: The Failure of Inflation Targeting. Quite often the source of inflation, such as food or oil, is imported and beyond the control of a country’s government.

Elizabeth Spiers of Fortune Magazine wrote an interesting piece called The great inflation cover-up which examines the disconnect between reality and CPI. Many of us are seeing rising prices first hand (I paid $4.99/gal at the pump last weekend) and yet the CPI stats reported seem very mundane. This theme seems to go along with many “national” housing stats like housing starts (released today) and existing home sales. There is a real disconnect between how information is reported and what the consumers “on the ground” experience is. Possible explanations:

Paranoia - absolutely real and I am guilty as charged. Bring on the “red light” theory. You only remember how many red lights you hit while driving your car.

Reliance on core inflation - eliminates short time volatile components like food and energy. Inflation is inflation in my book. When we say core inflation is tame and I am paying $4.99 for gas, its simply a misleading indicator for consumers.

CPI simply isn’t accurate - There are some schools of thought that CPI overstates inflation. ergo the 1996 Boskin Commission and some feel its significantly understated (saves the Feds on social security increases and the conversion to “rental equivalent” for housing in 1983 makes me, well, paranoid.)

Pollyanna Creep Economy
And while we are talking about accuracy, inflation could very well be much higher. Here’s an interesting Harper’s article from last month’s issue called Numbers racket: Why the economy is worse than we know (Free version). The article pokes holes in the alphabet soup of indicators such as CPI, GDP, unemployment, etc. and references a web site called ShadowStats.com

So what’s the point to all this (besides using up my collection of inflation articles I was saving for a rainy day and it’s sunny out right now)?

If we are trying to restore investor confidence in the credit markets, it is tough not to be disillusioned by the growing awareness of the lack of statistical accuracy available to consumers (and the assumption that these figures are also relied on by fiscal policy makers). I relate this first hand to my appraisal profession where I am struck by the fact that banks actually read the appraisals that are submitted to them now versus a few years ago, when nobody cared about the reliability of valuation.

Paranoia strikes deep (for what it’s worth)…

Speaking of paranoia, we now know that using IM is more efficient than email.

More:
[Inflation] Be Paranoid, Or Deal With It

I’m a huge proponent of blogging and subscribe to several blogs in addition to real estate news resources. As a real estate coach, I find that perusing blogs is a great way to get in tune with the mindset of today’s agents.

Original post:
Fear: The Ultimate Career Killer

I’ve been AWOL since Monday. Got out of the hospital. Ouch! In for the same reason I went in 1997 and 2003, which coincidentally were the same years the Marlins won the World Series. I got the opportunity to mention this to the current owner a few years ago for a chuckle. The Marlins are in first place right now and then I go to the hospital. Coincidence? Don’t bet on it. They’re a lock.

Source: Wikipedia

So this emoticon thing, we think we’re pretty clever and original. It’s a language created in a growing world of Instant Message, Twitter, Text Message, etc. The emoticons in this post header are from 1881.

Abbreviations have a way of expanding (remember when MacDonald’s only served hamburgers?), creating the need for something simpler to replace it. I have talked lot about abbreviations used in property listings in newspaper advertising, where a language of real estate abbreviations evolved incentivised by pay per word pricing which is becoming more diluted as classified listings move online.

There is an awesome article in William Saffire’s column On Language in NYT Magazine last weekend called Emoticons: The seamy side of semiotics where he makes the case that language is in the third stage of compression.

1. Three centuries ago, we were fed the short’nin’ bread of contraction; won’t, don’t, I’m, you’re made the apostrophe the king of cant, which caused a 19th-century lexicographer to denounce writers “carrying contraction to such an excess as to make their writings unintelligible to all but the initiated.”

2. Then came the period of portmanteau terms, named after the French suitcase with hinged compartments: chuckle and snort blended into chortle; breakfast and lunch fused into brunch; and, in our time, broadcast and the World Wide Web morphed into webcast (still capitalized as “Webcast” by the New York Times copy czar).

3. Electronic communication has whisked us into a third phase of compression: the Age of Shortspeak. As we listen and watch replays of multicasts to suit our scheduling convenience, those above-mentioned interminable, bor-r-ing four-second pauses are edited out. Humanizing uh, er, ah, um moments of meaningless vamping are pitilessly erased; even the dramatist’s “pregnant pause” has been digitally aborted.

In other words, intro a new “short” way to communicate. It evolves. Repeat.

I know people who use IM who are not good at communicating emotional nuance and some that are. This all boils down to the constant change and evolution of language. Some people are good at adapting and some aren’t.

Arrrgh

P^{)

Excerpted from:
LOL becomes ROTFLOL becomes :-@EIK becomes Eat In Kitchen

Here’s a common question: “Denise, do I need a website?” DEFINITELY!

Read more:
Website Tips for Real Estate Professionals

I have had the pleasure of providing a monthly chart for the Economic Spotlight section of Crain’s New York Business magazine since September 2003. Here is the latest, which appears in the current issue of Crain’s New York Business.

Source: Crain’s New York Business

Go here for a complete archive of my Crains’s New York Economic Spotlight charts that have been published. They are organized by year.

View original post here:
Crains New York Business Economic Spotlight Chart - May 2008

Once the domain of home buying and home equity rip-offs during the boom market, mortgage fraud is muscling in on subprime loans, foreclosures, reverses mortgages and insider trading related to mortgage securities in housing’s down market.

Read more from the original source:
Avoiding Mortgage Fraud

It’s About Soccer, Not Football

Chalking this up to weird timing, but Treasury Secretary Paulson announced plans a few weeks ago to fix the financial markets. It would take a long time to legislate and would not likely be completed before President Bush finishes up his term. What the housing market really needed back then, was leadership on solutions covering the immediate problems such as the lack of credit availability or liquidity and a US economy teetering towards a recession.

In James Surowiecki’s excellent Parsing Paulson piece in the New Yorker, he notes:

As the press has noted, the plan would consolidate our myriad and overlapping regulators into fewer, bigger ones. But the most interesting thing about it is something subtler: a push to move from our current system of regulation—often known as “rules-based”—toward a “principles-based” approach. In a rules-based system, lawmakers and regulators try to prescribe in great detail exactly what companies must and must not do to meet their obligations to shareholders and clients. In principles-based systems, which are more common in the U.K. and elsewhere in Europe, regulators worry less about dotted “i”s and crossed “t”s, and instead evaluate companies’ behavior according to broad principles; the U.K.’s Financial Services Authority has eleven such principles, which are often deliberately vague (“A firm must observe proper standards of market conduct”). This approach gives companies more leeway in dealing with investors and customers—not every company needs to follow the same rules on, say, financial reporting—but it also gives regulators more leeway in judging whether a company is really acting in the best interests of shareholders and consumers.

Football (Rules-based)
In a rules-based environment like Wall Street has now, there a lot of rules that the financial institutions must follow and the regulators enforce the rules. Football, like most American sports, is heavily rule-bound. There’s an elaborate rulebook that sharply limits what players can and can’t do (down to where they have to stand on the field), and its dictates are followed with great care.

Soccer (Principles-based)
The regulators have more authority to interpret and pass judgement on the activities of Wall Street. Soccer is a more principles-based game. There are fewer rules, and the referee is given far more authority than officials in most American sports to interpret them and to shape game play and outcomes. For instance, a soccer referee keeps the game time, and at game’s end has the discretion to add as many or as few minutes of extra time as he deems necessary. There’s also less obsession with precision—players making a free kick or throw-in don’t have to pinpoint exactly where it should be taken from. As long as it’s in the general vicinity of the right spot, it’s O.K.

Not surprisingly, Wall Street favors the principles-based approach rather than rules based (it’s likely to be less complex and less onerous to comply with). Paulson is an ex-Wall Streeter.

Aside

In Newsweek, one of Henry Paulson’s top Treasury Department aides spoke on how United States and world policymakers are responding to the fallout of the global credit crunch.

The short answer is that we are in the midst of a phenomenon painfully familiar to Americans. From the gold rush to the Internet bubble, cycles of innovation, excess, adaptation and recovery to a point of even greater prosperity have defined America’s economic progress. In the present situation, we are seeing the rough edges of the same recent financial innovation that has brought enormous benefits to many investors, businesses and consumers. But these net benefits are of little consolation to the Americans whose lives are being seriously disrupted by the current financial-market turmoil. In response, policymakers in the United States and around the world are taking aggressive and targeted actions to stabilize financial markets, reduce the impact of markets on the U.S. economy and protect against the same mistakes’ being repeated.

blah, blah, blah

But now, focus is shifting to correcting the problems on Wall Street with the adaptation of successful new financial products. Thats where the new solutions to the credit crisis will get interesting.

As the immediate remedies take effect, we have also begun to focus on the weaknesses in business practices of financial institutions that this experience has revealed, and on fragmented U.S. and European regulatory structures that had difficulties guarding against or responding to modern challenges. U.S. and international policymakers are acting in a targeted but comprehensive way to address the causes of current market instability with steps including strengthening the oversight of risk management and reporting practices of global financial institutions; enhancing disclosure of and the process for setting values for complex products; changing and clarifying the role and use of credit ratings; strengthening the process by which national authorities monitor and respond to risk, and reforming the mortgage-origination process. In each of these broad categories, the specific proposals are concrete, widely accepted and, in a number of cases, already being implemented by national or international authorities as well as by the private sector.

Charting the source: Where news happens… or, more accurately, where news is reported from [Reuters]

Read the original:
Paulson Proposes Principles-based Instead Of Rules-based Approach

Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Click here for full sized graphic.

In the It’s Newer Homes That Stand Empty as Vacancies Rise by Floyd Norris the sharp increase in vacant houses are more heavily weighted toward new construction.

The Census Bureau reported that 2.9 percent of homes intended for owner occupancy were vacant at the end of the first quarter. That figure had begun to rise even during the housing boom, a little-noticed byproduct of the aggressive construction of homes encouraged by easy credit. Before 2006, that figure had never exceeded 2 percent.

The ease of credit combined with limited underwriting resulted in an excessive level of new construction to enter the market. That’s why the rental market is as weak as the sales market in those areas that were characterized by new development. The speculation drove development beyond the level of reasonable absorption causing investor units to enter the market as competitors to existing rentals.

Credit:
[Getting Graphic] Empty And New And More Of Them

Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

Click here for full sized graphic.

Floyd Norris of the New York Times in this weekend’s paper had a great summary of the state of new home sales titled New Homes Turning Old as the Inventory Piles Up.

In normal times, the vast majority of new homes being offered for sale have not been completed, and deposits are put down well before houses are finished. But in March, builders were offering 189,000 houses that had been completed, nearly as many as the 201,000 unsold homes that were under construction. Those two figures have never been so close since the government began collecting that data in 1970.

Unlike the figures for existing homes on sale — some of them with owners who may decide not to sell — new homes on the market that have been completed are certainly available, and the financing costs facing the builder are growing with every week that passes while the homes sit unoccupied.

As said many times before, builders, build until they can’t build anymore. I think it is getting pretty close to that point. The natural ebb and flow of supply and demand. What’s wrong with fewer homes coming on the market?

See the rest here:
[Getting Graphic] Something Old, Something New, Something To Borrow Against, Something Sitting