AOL Real Estate - Blog http://realestate.aol.com/blog AOL Real Estate - Blog http://realestate.aol.com/blog/media/feedlogo.gif AOL Real Estate - Blog http://realestate.aol.com/blog en-us Copyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/It's a Great Time to Buy a House....Really?http://realestate.aol.com/blog/2011/03/29/its-a-great-time-to-buy-a-house-really/http://realestate.aol.com/blog/2011/03/29/its-a-great-time-to-buy-a-house-really/http://realestate.aol.com/blog/2011/03/29/its-a-great-time-to-buy-a-house-really/#commentsFiled under: ,,,

buy a homeShawn Tully, the senior editor-at-large over at Fortune, has a post up in which he states that it's a great time to buy a house. That is pure awesome-sauce.

I know my friends and clients in the real estate industry are desperate for Mr. Tully to be right. And so am I, since my business depends in some degree on the industry being able to afford consultants.

Tully argues that the pipeline for new housing is really near empty. He quotes a MetroStudy report that shows that 78,000 homes are vacant and for sale or under construction in 2010, as opposed to 343,000 such units in 2006, at the height of the housing bubble.

I wonder why we wouldn't also want to look at homes that are not vacant and for sale -- as in owner-occupied housing, which is the lion's share of the homes for sale in pretty much any given market. Regardless, Tully goes on to argue that the two fundamentals that govern housing -- cost of ownership versus cost of renting, and the level of new construction -- have gone from pointing toward doooommm to pointing towards nirvana.
On cost of ownership, Tully cites a Deutsche Bank statistic showing that housing affordability is fantabulous. But the metric used -- share of income Americans are paying to own -- is a bit odd. You see, the study shows that in 2007, at the bubble's peak, Americans were paying 17.2 percent of their income in after-tax mortgage, tax, and insurance; in 2010, folks are paying 9.8 percent of their income. That's quite a drop. I wonder what accounts for it?

Note that the metric is that of people paying their mortgages. Homeowners in 2010, who are paying, are at 9.8 percent; homeowners in 2007 were at 17.2 percent. Did all homeowners get
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huge raises between 2007 and 2010? I don't think so. Government stats show that we actually went through a huge recession between 2007 and 2010 -- a recession that is still going on with official unemployment close to 10 percent. So that probably rules out income increases.

Did the mortgage rates plummet so that people are paying less today than they were in 2010? Well, no... especially since most mortgages are 30-year fixed rate instruments where the monthly payment would have been the same in 2007 as it is today.

The only other explanation is that the group we call "homeowners still paying their mortgages" changed. So many people stopped paying their mortgage altogether, through a combination of foreclosures, short sales, deeds in lieu, strategic default, and straight up extend-and-pretend games so that the ones who are still paying their mortgages are the ones who (a) are in better financial health, and (b) have significant amount of equity in their homes. Yay for affordability?

Curse my lack of Ph.D. in economics, but I just don't see how the fact that remaining homeowners are financially well-off is a measure of housing affordability for people who don't currently own a home.

The second metric, cost to own versus cost to rent, is a truly interesting stat. And it is true that in some markets -- such as Miami -- you are far better off buying than renting. That is, if you can make it safely through the financial proctology exam that the banks call the mortgage application process, and have the 20 to 30 percent down payment required for a bank to even talk to you.

And if we're talking about affordability, we probably should take a look at the fact that in 2010, nearly half of all residential mortgages were FHA loans, with their 3.5 percent down payment requirement.

So when Tully writes that rising rents will "encourage buyers to cross the street from an apartment to a home of their own," he's making enormous assumptions about the continued availability of mortgage financing.

Even with all of those questions, however, Tully is surely correct that as the economy slowly, ever so slowly, recovers despite high gas prices -- not being helped by all of the wars, oops, I mean time-limited, scope-limited kinetic military actions, going on in the Middle East -- and a Japan in shambles and record deficits at local, state, and Federal levels of government... housing should recover. At which point the shortage that he's pointing to will surely come into effect!

Except that the federal government has pretty much stated that the new housing policy going forward is one of "sustainable housing," and has been taking steps to make sure that we don't ever go back to the way things were. So, we have the FHA raising fees, and tightening standards (remember, FHA was almost half of all mortgages last year). We have the Treasury and HUD wanting to wind down Fannie Mae and Freddie Mac. We have the FDIC, OCC, and the Fed pushing for 20 percent down payments as the definition of a "qualified residential mortgage." We have serious people talking about limiting or eliminating the mortgage interest deduction.

And we have the Treasury/HUD defining housing policy as "rental options near good schools and good jobs."

This is what is meant by Renter Nation. We can't expect the market to behave as it once did in an era where Federal housing policy was firmly on the side of homeownership, when the government says the things it says and acts the way it acts. The market will adapt; we will still have housing; people will still buy and sell homes. But relying on stats about vacant and for sale homes? On percentage of income? Suggesting now is the time to buy because housing shortage will raise prices three, four years from now, despite all evidence that rentals will be the official answer to any housing demand question going forward?

Maybe.

Here's my overly pessimistic but perhaps absolutely on-target take. Now is a great time to buy if the cost to own is lower than the cost to rent in your area, and you have the cash or can get a 30-year fixed rate mortgage. Then I'd act now. Because the feds are doing pretty much everything they can to raise inflation, making your cash worth less, and to make houses harder to buy. Who knows how long that 30-year fixed-rate product will be available? Get it while you still can.

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]]>CNNMoneyFortune Magazinegreat time to buy a househousing marketRenter NationShawn TullyRob Hahn2011-03-29T16:51:00 00:00Why Home Buyers Can't Evaluate Real Estate Agentshttp://realestate.aol.com/blog/2011/03/22/why-home-buyers-cant-evaluate-real-estate-agents/http://realestate.aol.com/blog/2011/03/22/why-home-buyers-cant-evaluate-real-estate-agents/http://realestate.aol.com/blog/2011/03/22/why-home-buyers-cant-evaluate-real-estate-agents/#commentsFiled under: ,,

real estate agentsWhat do home buyers expect from a real estate agent? The answers might surprise you, and go a long way to explain the reasons why buyers are ultimately disappointed with the one they pick.

An interesting result from the good people at the National Association of Realtors from their survey of home buyers on what it is that consumers value in a Realtor: Honesty and integrity. Knowledge of purchase process. Responsiveness. And so on.

These all sound like wonderful things to want in the professional you're hiring to help you spend the most you've ever spent on anything, if you're in the 99.999 percent of the population who doesn't own a private jet.


But there are some odd things about this survey and its results.


Of the nine skills/qualities listed, over 79 percent rated eight of them as "Very Important," while only 40 percent rated tech skills as "Very Important." I find that bizarre. What's more bizarre, though, is that only 85 percent of respondents rated communication skills as Very Important.
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Judging by these results, it seems to me that the survey question probably asked, "Rate the following skills and qualities of a real estate agent from Not Important to Very Important." Clearly, people weren't asked to rank these qualities in order of importance, as that would not result in four of the qualities scoring above 90 percent. So... who the hell are the 15 percent of
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people who thought communication skills were not very important? Are there that many people walking around saying, "Hey, it's okay if my agent mumbles on the phone and writes nonsensical emails"? According to the results above, one out of four single male buyers couldn't care less if their real estate agent has no people skills and has the manners of a Taliban enforcer attending a Women's Rights Rally. Really?

But there is a more fundamental problem, and one that actually impacts the consumer experience.

Assuming you do think things like honesty and integrity are Very Important to you... how exactly would you know if your agent has them?

It isn't as if people -- even if they're Realtors -- walk around with signs around their necks saying, "I'm not really honest all the time, and my integrity is somewhat shaky." Until you work with someone for a while, go through some ups and downs, and have reason to verify that the person is in fact honest and has integrity, how could you tell?

Professional services are full of these problems, which I call the "Great Lover" problem after an illustration by Marty Neumeier. Someone comes up to you and claims, "I'm a great lover." Is there some way of knowing whether he or she is right or wrong, short of going to bed and experiencing it for yourself? Lawyers say they're competent -- but short of having them handle a case for you, how could you tell? Doctors might tell you they have great judgment under pressure of a crisis in the operating room, but how would you know? References from past clients (or lovers) help, as does diplomas, degrees, credentials ("Black Belt Lover, Third Degree"), but all of those are substitutes for personal knowledge, which only comes from working with that professional.

For real estate transactions, the problem is compounded by lack of experience of the consumer. Most people buy or sell a house once every seven years on average. If you buy your first home at 30 (which is sort of on the early side), you're ready for retirement by the time you've had your fifth transaction. During that same period, you may have dealt with a doctor hundreds of times.

Consider some of these "Very Important" skills and qualities. "Knowledge of the purchase process" is one. If you've never bought a house before (as I strongly think would be the case for single men and women), how in the world are you going to be able to evaluate how much your real estate agent knows or doesn't know about the purchase process? Exactly what part of the process will you able to step in and say, "Hey, wait a minute - you're not doing that right"?

What about knowledge of the real estate market? If you, a random consumer, know more about the real estate market than your real estate agent who does this day in and day out, why on earth would you (a) hire her, and (b) not work as a real estate agent yourself? It's like my saying that a heart surgeon's "Knowledge of the cardiopulmonary system" is Very Important to me, except for the fact that I don't know jack about the cardiopulmonary system and would have to take whatever Doctor House has to tell me at face value.

This is the reason why I don't believe various consumer ratings of real estate agents have much value at all, even when it comes from past clients. They simply lack any basis to form judgments about the quality of service they received. Sure, they can tell me things about basic customer service issues, like Responsiveness or Communication Skills. But unless they've been actually ripped off, defrauded, or caught their agents in a baldfaced lie, they're going to assume that the agent was honest and had integrity. And unless they are real estate professionals themselves, there's no basis on which they can evaluate an agent's knowledge, negotiation skills, or transaction management skills.

In fact, something that experienced real estate agents talk about all the time is the fact that the opposite is more likely to be true: that consumers think the agent who put forth heroic efforts on their behalf is awesome, even though that heroic effort was necessary because the agent screwed something up badly, while smooth, trouble-free transactions make them think the agent was lazy or didn't negotiate hard enough, even though the reason why everything went so smoothly was due to the agent being a master at her craft.

So consumer reviews of real estate agents is not particularly meaningful. You know what would be meaningful though? Real estate agent reviews of other real estate agents. I, for one, would like to see what qualities and skills Realtors think are important, ranked in order of importance, and then see them rate each other on it after each transaction.

Of course, I would also like to have Steve Jobs leave his fortune to my favorite charity: The Rob Hahn Foundation for Education (Of Rob Hahn's Children)....

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]]>consumer lack of knowledgeconsumer reviewsNARnational association of realtorsrating professionalsReal estate agentsrealtorsRob Hahn2011-03-22T09:44:00 00:00New Urban Dream Stalled by Employers' Move to the Suburbshttp://realestate.aol.com/blog/2011/03/16/new-urban-dream-stalled-by-employers-move-to-the-suburbs/http://realestate.aol.com/blog/2011/03/16/new-urban-dream-stalled-by-employers-move-to-the-suburbs/http://realestate.aol.com/blog/2011/03/16/new-urban-dream-stalled-by-employers-move-to-the-suburbs/#commentsFiled under:

new urban dreamIn the comments on my earlier post on Gen-Y and the housing market, Travis Robertson makes a number of excellent points. One of them I've heard time and time again when it comes to the Millennials and the new urban dream.

Travis writes, "I think we'll see a rise in smaller, urban-style, walkable communities. Lower-income families will move outward toward the suburbs that once signified the American dream post-war. We'll see many cities shift focus to urban renewal (many already are)."

This is very much in line with the New Urbanism movement sweeping through certain circles of urban planning and architecture communities. The vision of cities of the future, powered by renewable energy, widely available public transportation, and a variety of mixed-use buildings to create smaller, more intimate neighborhoods inside a large metropolis is an attractive one. I should know; I spent ten years in New York City, where walkability, public transportation, and intimate neighborhoods (SoHo, Tribeca, Hell's Kitchen, etc.) all reside inside the largest city in America. It was a great place to live as a young man.

Unfortunately, actual evidence suggests that the New Urbanism vision of the future is not likely to be reality.

Joel Kotkin of New Geography writes in Forbes that "The ongoing Census reveals the continuing evolution of America's cities from small urban cores to dispersed, multi-polar regions that includes the city's surrounding areas and suburbs." (Emphasis mine.)

Turns out, the major failing of New Urbanism is jobs. People might want to live in a nice 2BR
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condo in Tribeca, where they can walk to the cool and hip graphic design job in the East Village, but they move where the jobs are. And the jobs are being created, more and more, in the urban periphery.

Again, Kotkin:

"Sure, being cool is nice, but the obsession with hipness often means missing a bigger story: the gradual diminution of the urban core as engines for job creation. For example, while Chicago's Loop has doubled its population to 20,000, it has also experienced a large drop in private-sector employment, which now constitutes a considerably smaller share of regional employment than a decade ago. The same goes for the new urbanist mecca of Portland as well as the heavily hyped Los Angeles downtown area."

He goes on to point out that these new suburban communities are not your traditional "bedroom" communities filled with commuters to the Big City. The suburbs of New York and New Jersey (where I grew up and lived for years) are exactly those. But even there, when I moved to Millburn, N.J., I was commuting the other way, away from New York City, to my job in Parsippany, N.J. And guess what? Traffic was awful, suggesting that quite a few of my neighbors were going the same way, away from New York City, to their jobs.

Kotkin isn't making some sort of a "this is what we need to do" argument; he's simply interpreting the actual data from the actual Census.

This is New Suburbanism. Sprawl happening not on the basis of simply some low-income family's inability to live in high-rise apartment buildings in the glittering downtowns of major cities, but happening based on the fact that employers continue to move jobs out to these urban peripheries. And Travis's "smaller, walkable, urban-style" communities are getting built more and more outside the City in these peripheral suburban centers.

I'm sure Travis is right that many cities will reinvent the urban core to be more walkable and neighborhood-like. And the elites who have the money and the jobs in the urban core will of course flock back into cities where entertainment, dining, and lifestyle options are far more numerous.

But for the majority of future homeowners, future households, who need to get to work in the suburban office park where their employers have chosen to setup shop -- away from the enormous expense and hassle of running a major business in most of America's big cities -- the future is not New Urbanism, but New Suburbanism.


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]]>citiesfuture of housingJoel KotkinNew Suburbanismnew urban dreamnew urbanismsuburban sprawlsuburbs versus cityRob Hahn2011-03-16T14:48:00 00:00Foreclosure Settlement Lets Robo-Signing Crooks Go Freehttp://realestate.aol.com/blog/2011/03/11/foreclosure-settlement-lets-robo-signing-crooks-go-free/http://realestate.aol.com/blog/2011/03/11/foreclosure-settlement-lets-robo-signing-crooks-go-free/http://realestate.aol.com/blog/2011/03/11/foreclosure-settlement-lets-robo-signing-crooks-go-free/#commentsFiled under: ,

foreclosure crisisLast week, the attorneys general of all 50 states, together with federal regulators, proposed a 27-page settlement to the robo-signing scandal that triggered the foreclosure crisis. Predictably, the lending community responded with a distinct lack of enthusiasm to the terms. On top of that, on Wednesday, congressional Republicans sent a letter to Treasury Secretary Timothy Geithner raising "numerous objections" to the proposed settlement.

It appears that what congressional Republicans dislike about the settlement is that the settlement essentially amounts to a gigantic set of regulations for the mortgage-servicing industry. In the letter, the Congress-critters write, "The settlement would transform the mortgage-servicing industry and fundamentally change the rules that have historically governed relationships among borrowers, servicers and investors... The breadth and scope of the draft settlement proposal raise significant concerns about its effect on the financial system."

Speaking as a conservative Republican myself (it was obvious from my previous posts, right?), I can agree to these reservations. As it happens, I like quite a few of the reforms contained in the settlement, such as elimination of the "dual-track" problem. But if we want such reforms, they should be proposed, debated, passed by a frickin' vote of the legislators (what the heck do we elect you and pay you for?), signed into law by the President, and be the law of the land.

This back-door regulation-by-voluntary-settlement smells unto the high heavens.


But that isn't what has me outraged. No, what has me outraged is that the settlement does not deal with the criminal actions of those involved in the robo-signing scandal.

Let's be perfectly plain about what happened here. A bunch of people signed tens of thousands
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of affidavits alleging knowledge they did not have, could not have had, and never intended to get. Affidavits are not just some little email you send to a buddy. It is the equivalent of sworn testimony before a court of law. Knowingly filing a false affidavit is perjury, a serious felony, punishable by up to five years in prison.

Suborning perjury, getting someone else to commit perjury, is also a felony, also punishable by up to five years in prison. Some of these fake affiants, the robo-signers, had full-time jobs in which they blindly signed tens of thousands of false affidavits. Indeed, in some cases, companies had entire departments with multiple people who would sign off on false affidavits, even signing other people's names to them. You're telling me the bosses who hired these people and managed these departments were not suborning perjury?

And not one person is going to be prosecuted for these tens of thousands of felony crimes?

Republicans make an enormous stink about enforcing the nation's immigration laws, and claim they're not motivated by some sort of ethnic bias, but because they are about law and order. Lack of enforcement leads to disrespect for our laws and loss of sovereignty. Fine, I buy all that. So dear congressional Republicans, if you're going to oppose the settlement, let's see some consistency. Let's have it be because of the settlement's "effect on the legal system", instead of simply because of its "effect on the financial system".

If I, an average individual citizen, brazenly lie to the court in an affidavit, I go to jail or pay a huge fine or both. The prosecutor may be free to settle with me and not prosecute in exchange for community service or whatever. But judges, whose courtrooms have been violated by lies, tend not to look kindly on such things. Without truth to the best of one's knowledge, our entire legal system collapses.

Here we have a situation in which literally tens of thousands of felony perjury crimes, along with dozens if not hundreds of cases of suborning perjury, have completely hijacked our legal system to deprive people of their homes. But because the liars and perjurers work for giant banks and servicing companies, they're going to go scot-free in exchange for a few billion dollars of principal reductions and payment to some government fund to help deal with foreclosures?

Laws that are selectively enforced based on whether one has money or not are not laws at all. Stand up for our legal system, and demand that any settlement include guilty pleas for those responsible for thousands upon thousands of cases of perjury and suborning perjury. Without criminal prosecution, this settlement is a fraud upon our nation.

This is something that should outrage all Americans, of both parties, and of whatever belief you have about foreclosures, borrower responsibility vs. lender responsibility, or whatever.

Crimes have been committed; prosecute the criminals. Regulate the industry later through legislation by all means, but if the laws mean anything at all, prosecute the robo-signers. Fix the broken system, by all means, but prosecute the criminals.


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]]>are you kidding mecriminal prosecutionforeclosuregateperjuryRepublicanrobo-signing scandalrobosigning settlementstate attorney generalsuborning perjurytimothy geithnerRob Hahn2011-03-11T14:20:00 00:00Could Generation Y Lift the Housing Market?http://realestate.aol.com/blog/2011/03/08/could-generation-y-lift-the-housing-market/http://realestate.aol.com/blog/2011/03/08/could-generation-y-lift-the-housing-market/http://realestate.aol.com/blog/2011/03/08/could-generation-y-lift-the-housing-market/#commentsA few years ago, the real estate community was gripped with Millennial Fever: the idea that the Millennials (or Generation Y), born between say 1983 and 2003 (according to NewGeography.com anyhow) and representing the largest demographic group in the United States after the Baby Boomer generation, would be the single most important thing to housing. Quite a few people, even now, believe that Gen Y would transform the nation by the sheer weight of their numbers.

Naturally, a population that large will have enormous impact on home purchases, no? Back in 2008, a couple of Harvard men (George Masnick and Eric Belsky) showed that by 2010, the Millenials (now aged between 25 and 34) would constitute 8 million new homebuyers, by far the largest and most important segment.

Well, 2010 has come and gone, and the National Association of Realtors (NAR) has released an interesting new study, in which it concludes, "The share of adults under age 35 living at home, especially among those aged 25 to 34, is at the highest level since 1981."

And as we all know, the housing market is not exactly the picture of vibrant health.

But there are still those optimistic sunny people who believe that surely, this enormous group, some 80 million strong, would get married, have babies, and therefore, buy houses. They're not wrong. Some will, because homebuying is driven by family formation more than just about any other factor.

Yet, I don't think that counting on the Millennials to save the housing market is such a good bet. Here are four reasons why:

1) Millennials Got No Money

On my personal blog, I mused openly on the Millennials back in 2010. As referenced there,
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Robert Samuelson of the Washington Post noted that 37 percent of those aged 18 to 35 were unemployed, the "highest in more than three decades," and that only 41 percent have full-time jobs, down from 50 percent in 2006. It isn't exactly a secret that this economy somehow seems to manage recovery without any jobs, and the younger, less-experienced get hit the hardest. No wonder more Millennials live at home with mom and dad than at any time in 30 years.

But it gets worse! According to a Yale economist, Lisa Kahn, the impact of of recessions on lifelong earnings is extremely bad and long-lasting. Each 1 percent of unemployment leads to 7 percent drop in income for new college graduates, but even seventeen years later, those college grads who entered the workforce in a recession earned 10% less on average than people who did not face a recession. Uh-oh, Millennials.

2) Millenials Will Be the Chump Generation

Huge millions of those 80 million Gen-Y'ers celebrated the election of Barack Obama in 2008. They worked hard for Obama, for Hope and Change. Three years later, the country is some $15 trillion in debt, and adding more to it daily, and we'll have to see where that ends up. When the Baby Boomers retires and start collecting Social Security and needing Medicare, just who do you imagine will be footing that bill?

Sure, Generation X will have to cough up a bunch of dough, but we're tiny in number compared to the 80 million (at least, the 41 percent of those 80 million who have full-time jobs) Millennials, who by the way, are making 10 percent less on average over the next couple of decades. If you think their tax burdens are going to be less during their prime homebuying and family formation years....You have the kind of faith that sustains prisoners in Chinese jails.

Less income + higher tax burdens = Generation Chump. Thanks for paying, kids!

3) Millennial Family Formation Will Be Lower

Family formation is the key to driving new homeownership. So with 80 million of them out there, there oughta be some serious family formation going on, right? Maybe. I'm not so sanguine.

You see, the gender gap amongst Millennials in education and employment is something we have never seen before in this country... or any country. Some universities today have two male students for every three female (which makes for interesting social scene on Friday nights). Women earn more bachelor's degrees, more advanced degrees, even more doctorates then men do. Women are now the majority of the workforce. Women are taking over the kinds of jobs that were male dominated, like finance and law.

Maybe Millennials will be different from every other generation that came before it in every single country in the world, but for the most part, female lawyers do not marry (that is, "family formation") male janitors. Smart, college-educated, employed women do not marry the barista from Starbucks. Date? Sure. Fun and games? Of course. Family formation? I seriously, seriously doubt it.

Maybe it will be up to the Millennial single women (and there are going to be a lot of you, judging by college graduation stats) to save housing. But few of them will need that 4BR/3BA Colonial with a backyard designed for a family of five. Realtors, take note.

4) Millennials Can't Get Mortgages

And of course, as I've written about on these pages and elsewhere for months now, Federal housing policy has shifted away from homeownership to rentals. Change! Higher down payments and more rigorous credit requirements are on their way. Can't save $120,000 required to buy that $300,000 house? Well, there are plenty of HUD-sponsored rental programs available for you, young man!

Oh, and you make 10 percent less, and pay more in taxes? Might take a bit longer to save up for that down payment then.

Am I being overly dark on the prospects of the Gen Y? Yeah, probably. Americans are naturally resilient, and maybe we'll see some hope and change on the horizon. But as things stand right now, betting on Millennials to lift housing up out of its doldrums strikes me as the kind of thing that a Vegas bookie would love to give you odds on.

I'm a gambling man, but on this one, I'll pass, thanks.

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]]>demographicsGen-Ygen-y and the recessiongender gapGeneration YHomeForSalehousing marketMillennialsnational association of realtorsnewgeography.comRenter NationunemploymentRob Hahn2011-03-08T17:01:00 00:00Buying a Home: Why Single Women Do It More Than Menhttp://realestate.aol.com/blog/2011/03/08/buying-a-home-why-single-women-do-it-more-than-men/http://realestate.aol.com/blog/2011/03/08/buying-a-home-why-single-women-do-it-more-than-men/http://realestate.aol.com/blog/2011/03/08/buying-a-home-why-single-women-do-it-more-than-men/#commentsIs buying a home genetically programmed? According to the National Association of Realtors, almost twice as many single women (20 percent) are buying homes than single men (12 percent). Why would that be?

Well, Century 21 thinks the reason is because women are outperforming men in the job market. According to the New York Times, as of January 2010, women outnumbered men on the payrolls of American companies. (I do love what Casey Mulligan, an economy professor at University of Chicago and a man, had to say about that: "Important milestones remain to be achieved...." Milestones like... 75 percent of the workforce? 90 percent? 100 percent?)

And the same Times story mentions why this triumph of women happened in 2010: The recession has impacted men far more than women. "Since the recession began in December 2007," it reads, "men have lost 7.4 million jobs on net, whereas women have lost 3.9 million jobs. In other words, both sexes are worse off than they were before the downturn, but men have suffered more."

Apparently, the tale is far worse that anyone imagined, however, if The Hamilton Project of the Brookings Institute is to be believed: The median wage has been stagnant since 1969, or so people thought, but it turns out, if you look at only the median wage of men, it's down 23 percent or $13,000 in real dollars since 1969.

Plus, women are just better educated than men: They are twice as likely as a man to have a college degree; they also have more advanced degrees, including Ph.Ds. They're taking over jobs that were traditionally considered bastions of male domination, like finance and accounting.
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On many college campuses, there are three women for every two men. Not that those guys are complaining, mind you....

Now, Ms. Magazine points out (along with every other article referencing the gender gap in education) that women still make less than men, and are more likely to be poor. That may or may not be true, depending on who you ask, but what is clear is that the women who make less and are more likely to be poor are buying houses at twice the rate of single men.

How can that be?

Either Ms. Magazine is overstating the case, and all this educational and career achievements of women are translating into their greater ability to buy extremely expensive things, like houses, or... there's another factor at play.

Turns out that "single women" in the NAR study does not necessarily mean "never married." A divorcée would be considered a single woman. Some 50 percent of American marriages end in divorce (although the accurate stat breaks down by first, second, third marriage and age of the people involved). Given that most divorces end up with the wife taking custody of the children, isn't it more likely that she would be the one doing the purchasing of a new home for herself and the children, while the man goes and rents a bachelor apartment or something? (Plus, there's the whole matter of alimony and child support payments, which tend to get paid by the man to the woman, naturally reducing the ability of the former to be homebuyers while increasing the ability of the latter to do so.)

Or maybe it's both: Women do make more money than men while working, are smarter with their money (35 percent of the single women buyers in the NAR survey said they cut out luxuries and sacrificed to save up for a home; we don't know what the single men buyers cut out, if anything); and if divorced, women are more likely than men to buy homes out of living situations.

Either way, the real estate industry has noticed.

Is there a useful lesson in this? I don't know. Unless you're a never-married heterosexual single guy with a job. In which case, may I recommend that you don't pay for dinner next time you're on a date until you've bought your own house?

Your date is twice as likely as you to have already bought hers.

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]]>buying a homebuying a housegender equalitygender gapinternational womens daysingle women home buyerssingle+women+buying+homessinglewomenbuyinghomeswomen in real estatewomen in the workplacewomens rightsRob Hahn2011-03-08T10:54:00 00:0020 Percent Down Payments on the Way...If We're Luckyhttp://realestate.aol.com/blog/2011/03/03/20-percent-down-payments-on-the-way-if-were-lucky/http://realestate.aol.com/blog/2011/03/03/20-percent-down-payments-on-the-way-if-were-lucky/http://realestate.aol.com/blog/2011/03/03/20-percent-down-payments-on-the-way-if-were-lucky/#commentsFiled under: ,,

20 percent down paymentsFederal banking regulators are pushing for 20 percent down payments, according the Wall Street Journal. You see, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 -- the name which draws guffaws of cynical amazement among those who know what Chris "Friend of Angelo" Dodd, pictured left, and Barney "My Boyfriend is a Fannie Mae Executive" Frank were actually up to during the Bubble Years -- contains a provision authorizing federal regulators to define a "gold standard residential mortgage." Well, the busy beavers at the FDIC, OCC, and the Fed have done just that.

What they're pushing is for private mortgage loans that "qualify" to require 20 percent down payment for the mortgage, 25 percent equity for a refinance, and 30 percent equity for a cash-out refinance (where you take on a bigger mortgage, while liquidating the first one).

Predictably, various folks are squawking in response. Inman News, a real estate industry site, is reporting that an outfit named the Center for Responsible Lending thinks it's a horrible, horrible idea to require higher down payments. According to the CRL lobbyist cited in the story, Susanna Montezemolo, there really is no problem with low-down payment loans. The problem was with bad lending practices during the bubble years, with risky loan terms and weak underwriting standards.

Who to believe? What to think?

On the one hand, you've got a bunch of our feudal baronets -- sorry, public servants -- who know better than the banks who are risking their capital what sort of down payments they should require. Historical experience with government price controls -- whether a floor or a ceiling -- has not been a positive one overall, so I'm loath to credit that line of thinking.

But on the other hand, you have a "consumer advocacy organization" founded by two billionaires, Herb and Marion Sandler, who were named to Time magazine's list of "25 People to Blame for the Financial Crisis." It appears that the Sandlers made their billions by engaging in -- ready for this? -- subprime lending with risky loan terms and weak underwriting standards,
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namely the option-ARM.

How risky were their lending practices? Wachovia, the bank that bought their company, World Savings, imploded when these loans failed and was sold to Wells Fargo. To be fair, we must take into account the Sandlers' own version of what happened, but suddenly, I'm finding myself questioning the motivations of the CRL people. I know, it's because I'm evil and cynical.

In any event, what is even more interesting than the provenance of any particular policy position, is this "qualified residential mortgage." Qualified? Qualified for what?

It appears that when a mortgage is "qualified," there is a legal "safe harbor" presumption that would exempt said mortgage from a variety of unpleasantness (if you're a bank), such as the inability to charge points, the requirement to hold 5 percent of the loan amount as "risk retention" and such. That creates a pretty significant incentive for lenders to make sure their mortgages are qualifying as otherwise, they'd have to hold 5 percent of the amount in reserves even if they sell off the mortgage notes to the secondary market to be securitized.

Here's why we'd be lucky to end up with only 20 percent down payment requirement as one marker of a "qualifying residential mortgage": Big banks are pushing for even higher requirements. See, if consumers find it harder and harder to get a "qualifying mortgage" because it would require 25 percent down, or 30 percent down, then banks would likely want to step in and provide mortgages that require less money down. But those loans would be "non-qualifying", and be subject to the 5 percent risk retention rule. Big banks like Wells Fargo and Bank of America have the capital reserves to make those "non-qualifying" loans; little banks, thrifts, and S&Ls do not.

And should we take bets on whether those non-qualifying loans might carry a higher interest rate than a qualifying-loan? Any takers?

With strategic default no longer taboo in America, I would not be surprised if banks -- particularly big banks -- really push on as high a down-payment as possible. They cover themselves from risk on the one hand, while on the other, the big banks drive the little guys out of the market for the soon-to-be-ginormous non-qualifying mortgage market.

What of the Center for Responsible Lending? With enough lobbying and campaign contributions, I'm sure CRL can find some wiggle room over at FHA, but given this Administration's firm stance on housing as good rentals... I'd say good luck to them.

So, be prepared for 20 percent down payments in the not-so-distant future. But don't be surprised if that 20 percent turns out to be 30 percent...in the name of investor safety, of course.

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]]>20 percent down paymentsCenter for Responsible LendingDodd-Frank Actdown paymentFDICFederal ReserveObama AdministrationOCCqualified residential mortgageRob Hahn2011-03-03T11:59:00 00:00All Cash Deals: Why Rich Homebuyers Don't Borrowhttp://realestate.aol.com/blog/2011/03/01/all-cash-deals-why-rich-homebuyers-dont-borrow/http://realestate.aol.com/blog/2011/03/01/all-cash-deals-why-rich-homebuyers-dont-borrow/http://realestate.aol.com/blog/2011/03/01/all-cash-deals-why-rich-homebuyers-dont-borrow/#commentsFiled under: ,,,

all cash dealsCalifornia has hit a record for buyers striking all cash deals for houses, particularly on the ultra-high end. Apparently, some 31 percent of all buyers in California paid cash -- and the higher up you go in the price category, the greater that percentage. For example, 62.2 percent of people buying homes worth at least $5 million paid all cash.

On the surface, this does not appear to be all that surprising. We've known for years that it is harder and harder to get a mortgage, especially if you are self-employed and can't produce a pay stub. The wealthier people in America tend to be business owners, so I suppose it makes sense that more of them would pay cash.

Plus, California is one of the epicenters of the foreclosure crisis. Investors and homebuyers are jumping in to pick up properties they think are once-in-a-lifetime bargains. So that makes sense.

But here's what I wonder. Rich people didn't get to be rich because they're stupid. Nor did they become rich throwing money around loosely. Investors in particular don't just go plopping down a couple of million bucks on a whim; they tend to think about those decisions pretty carefully.

So what do they know that the rest of us don't?

I think one answer is that the very rich believe inflation is headed our way. And how.

For months now, we've heard that inflation is non-existent, low, or very very moderate. The real danger, we have heard, is deflation. Hence, the whole barrage of monetary policies from the Fed
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to increase the supply of money -- e.g., QE 2, which is not a large boat, but "quantitative easing, the second round", which injected some $600 billion of money into the economy, scratch that, into the big banks. Another way to read "barrage of monetary policies" is, "printing money".

Over the same few months, average consumers have noticed a few things. For one thing, every time they go to the gas station to fillup the family minivan, the receipt gets more and more troubling. And trips to the grocery store are getting more and more expensive too. CNBC reports that the price of butter is up 27 percent over last year, coffee is up 12 percent, bread is up 3 percent, and the price of meat is up 11.1 percent. I can't have breakfast anymore!

And buried in boring economic stats is the news that commodity prices are up across the board too: up some 7 percent this year, driven by higher oil prices. But the price of steel, for example, is up an incredible 37 percent since November of last year. Houses tend to use some steel. The price of timber is also up. Plastic prices are up.

Of course, you have quite a few serious people who think that what the U.S. government is doing, between Bernanke's printing hundreds of billions -- sorry, quantitative easing -- and Obama's borrowing trillions -- sorry, fiscal policy, is to devalue the dollar. Most of us ignore such people. But I suspect that the very rich do not. They have highly paid investment advisors, private bankers, hedge fund managers, and other very rich friends, all of whom talk about Fed policy, global commodity prices, and currency trading the way we might talk about who won the Oscars for Best Supporting Actor, and who the hell is Arcade Fire.

If you're a very rich guy, and have a few million in cash lying around, and you're expecting inflation as reflected by commodity and food prices -- as opposed to the official government figures which exclude those -- then you're staring at your money being worth maybe 10 percent less next year than it is this year. House prices are depressed, and have some more to go, but say you find a beautiful McMansion for $3 million in foreclosure that went for $5 million three years ago. You're hearing about timber prices, steel prices, building supply manufacturers all raising prices, and so on.

You might want to drop $3 million cash on that house too. A year from now, that will only be $2.7 million, after all. Instant "discount"! Good for you, Mr. Richie Rich. Plus, land does tend to hold value over the long run, and people do have to live somewhere. Real estate, if you can get it at the right price, and avoid rent control socialist paradises, could be a very nice inflation hedge.

What does that mean for the rest of us non-millionaires? The answers are complicated. And I hope to cover some of them in future columns. But here are some general thoughts:

1. If you believe that inflation is coming, and can buy (a major assumption given how hard it will be to get a mortgage in the first place) -- do it. Real estate should hold its value better than, say, cash.

2. If you're having to sell, then think about what you're actually going to do with that money from the sale. If you're planning on holding it, and you expect inflation, um... well... talk to your financial advisor.

3. If you don't have to sell the house, it might not be a bad time to become a landlord, assuming there aren't any rent-control issues. Rents will go up with inflation, even real inflation. The 30-year fixed-rate loan you've got, won't.


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]]>all cashall cash dealscaliforniacash buyers hit real estateFederal Reserveinflationquantitative easingreal estate marketRob Hahn2011-03-01T16:45:00 00:0030 Percent Down Payment: The New Normal?http://realestate.aol.com/blog/2011/02/23/30-percent-down-payment-the-new-normal/http://realestate.aol.com/blog/2011/02/23/30-percent-down-payment-the-new-normal/http://realestate.aol.com/blog/2011/02/23/30-percent-down-payment-the-new-normal/#commentsI've always been fond of news stories that are neither new nor particularly unknown, like when some local TV station runs a human-interest story on some local teen who organized a charity drive three months ago. They're cute!

And they're no less cute when the Wall Street Journal runs such stories, as it did recently, reporting that banks are requiring larger down payments to buy a home, as much as 30 percent of the purchase price.

Real estate and mortgage professionals everywhere read that and said, "Hey, welcome to the way things have been for the last three years, Wall Street Journal!"


I tease the Journal, but I do think the story is important -- not for the fact that private mortgages have been requiring higher down payments, but for some nuggets buried in the story.
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Taken together with some other recent items in the news, what we have here, ladies and gentlemen, is the New Normal for American housing.

And as you will see, perhaps what has happened in the past was in reaction to events -- like the foreclosure crisis. But what we will have in the future is by design.

Chicken Little Nuggets

One such nugget is the Obama administration's proposal to raise down payments. But of course, the actual proposal to reform housing finance goes far beyond just that. The proposal more or less advocates eliminating Fannie Mae and Freddie Mac, getting the government out of the business of financing home mortgages, and sets forth what I've been talking about for a while now: a programmatic shift away from Homeownership Society to Renter Nation.

The Journal goes on to report, "A 2009 Federal Reserve Bank of St. Louis study concluded buyers who made smaller down payments were more likely to default during 'unfavorable economic circumstances, such as a housing market slowdown or job loss.'"

What is left unsaid is that the new emphasis on larger down payments (i.e., more equity in the property) is being driven by the fear of strategic defaults -- walking away from the house even when you can make the payments. As home values continue to plummet, banks are realizing that even a great credit score doesn't mean the homeowner is going to keep paying for a $600K mortgage on a property now worth $300K. The rational thing to do is to walk away...unless you have significant equity in the house.

Then we are told something that industry professionals knew for quite some time: The federal government is now directly insuring half of all mortgages in 2010:

FHA-backed mortgages, which require 3.5% up front, made up about half of loans for home purchases last year, according to housing-research firm Zelman & Associates.

Which means that if those borrowers default, you and I the taxpayers are directly on the hook for the full amount of the mortgages -- that's what mortgage insurance means, after all. If you think that the new Republican Congress is excited to continue funding these expenditures, you haven't been paying much attention to what's been going on in Washington D.C.

Finally, we have this little nugget:

"Many people will turn to the multifamily market," he said. "Or if you don't have whatever is deemed to be the appropriate down payment, the alternative is to be a renter while you accumulate that. You can't put a formula down that is going to fit every borrower's profile."

What's interesting about that quote is the source. The "he" in the story is John Courson, the President and CEO of the Mortgage Bankers Association. I believe that we have yet to see the other shoe drop in the Federal housing policy: government support for rentals, via financing of multifamiliy projects.

Adding It Up: The New Normal = Renter Nation

So when I add up all of the pieces, what I get to is the unavoidable conclusion that we are seeing the New Normal being born. The past few decades of what we Americans considered the norm -- owning your own home as quickly as possible -- appear to be in the rear view mirror.

Setting the real estate industry aside for a moment, it may be that this is in fact what is best for the nation as a whole. Perhaps all of the subsidies of housing in pursuit of Homeownership Society were misguided and led to a irrational financial system. Maybe over the long haul, these are very necessary reforms.

However, in the meantime, as consumers, as buyers and sellers of real estate, the New Normal does mean that while the value of housing will drop (a simple matter of supply and demand), it will become harder and harder to become a homeowner. If you do not currently own, you will find yourself renting for longer while you build up the downpayments. Sheila Bair, Chair of the FDIC, is quoted as supporting a minium 20 percent down payment on mortgages. The key word is minimum. At the Future of Housing Finance conference, PIMCO's Bill Gross said if his money were going into funding mortgages, he'd want 30 percent down payments. Prior to the New Deal in the 1940s, 50 percent down payments were not uncommon.

Now, it's true that none of these government policy issues have been resolved. We don't yet know exactly what will happen over the next several months. Having said that, bankers and financiers did not become wealthy bankers and financiers because they sat around waiting for the other shoe to drop. They have been taking action already in anticipation of these moves, and I expect that they will immediately adjust their lending practices as soon as the temperature in DC becomes readable.

So, welcome to the New Normal. Say hello to Renter Nation, everybody. We're going to be here for a while now.

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]]>30 percent down paymentdown paymentfannie maeFHAfreddie macfuture of housing financeHUDloan to valueObama Administrationstrategic defaultsTreasuryRob Hahn2011-02-23T16:11:00 00:00Farewell Fannie and Freddie, Hello Renter Nationhttp://realestate.aol.com/blog/2011/02/17/farewell-fannie-and-freddie-hello-renter-nation/http://realestate.aol.com/blog/2011/02/17/farewell-fannie-and-freddie-hello-renter-nation/http://realestate.aol.com/blog/2011/02/17/farewell-fannie-and-freddie-hello-renter-nation/#commentsFiled under: ,

In an earlier AOL Real Estate post, I speculated that the 30-year fixed rate mortgage -- the mainstay of residential housing funding in the United States -- was on its way out. I thought that based on comments from administration officials, think tanks, and other leaders, the goal of the Obama administration was to move towards "sustainable housing" which backs away from homeownership and incorporates rentals as one of the primary objectives of federal housing policy.

Based on the recent proposal to eliminate Fannie Mae and Freddie Mac by the Obama Administration, it appears that I wasn't completely out to lunch.

The introduction sets forth the objectives:

Our plan champions the belief that Americans should have choices in housing that make sense for them and for their families. This means rental options near good schools and good jobs. It means access to credit for those Americans who want to own their own home, which has helped millions of middle class families build wealth and achieve the American Dream. And it means a helping hand for lower-income Americans, who are burdened by the strain of high housing costs.

The report by the Treasury and HUD is fairly straightforward in stating the objectives, even if it
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plays games with actual recommendations and timelines.

There is much consternation within the housing and mortgage industries over this, and other proposals, coming from the Obama administration, as well as the GOP-controlled House. At the same time, many industry insiders believe that the power of the housing and finance lobbies will ultimately prevail and that the final plan would preserve some significant role for Federal government in the financing of homes.

Here's where I beg to differ.

When you have both the New York Times -- a bastion of liberal thought -- and the Wall Street Journal -- whose Op/Ed pages normally track conservative thought -- agreeing that the current system is totally broken, we are at a political moment where the housing lobby has to be thinking "minimize the damage" rather than "win the war."

Read these words:

Sure, these entities would be overseen by a "strong regulator," as the Mortgage Bankers Association asserts. But if the credit crisis demonstrated anything, it was how easily regulators can be co-opted by the enterprises they are supposed to oversee. And if the mission of these "new" guarantors includes affordable-housing goals, you can be sure that regulators will again be persuaded to let them take more risks in the name of meeting homeownership benchmarks.

Typical of the regulation-hatin' capitalists at the Wall Street Journal! Except that was from Gretchen Morgenson, an editor and columnist at the New York Times. Meanwhile, the WSJ gushes:

The Administration puts the case for federal withdrawal from the broader housing market in compelling terms: "The strength of this option is that it would minimize distortions in capital allocation across sectors, reduce moral hazard in mortgage lending and drastically reduce direct taxpayer exposure to private lenders' losses." Bravo.

Bravo. Wow. The Wall Street Freakin' Journal telling the Obama Administration "Bravo" over economic policy.

However this upcoming battle shakes out, it seems clear that Fannie Mae and Freddie Mac have no friends left on either the Left or the Right. It may take years, but they will be wound down and American housing finance changed for good. Mortgages will be harder to get, more expensive, and safer for investors. Take that to the bank. (Actually, the bank will gladly take it to you, so you can relax and wait for that.)

Here's the next piece I'm waiting to find out more on. There is no doubt that the Administration believes that rentals will become a new focus of Federal housing policy. They've pretty much said so, and have been saying so for a while now. What will be the form of that policy? Will it be, as I've speculated, a new mechanism for encouraging multifamiliy development, especially under Section 8? The Report by Treasury and HUD contains these tantalizing paragraphs:

Promoting a housing finance market that provides liquidity and capital to support affordable rental options can alleviate the high rental burdens that many low-income households face. It can also expand rental options for low-income households in urban, suburban, and rural communities of opportunity, with good jobs for parents and quality schools for children. Private credit markets have generally underserved multifamily rental properties that offer affordable rents, preferring to invest in high-end developments. By contrast, Fannie Mae and Freddie Mac developed expertise in profitably providing financing to the middle of the rental market, where housing is generally affordable to moderate-income families. As we wind down Fannie Mae and Freddie Mac, it will be critical to find ways to maintain funding to this segment of the market. (emphasis added)

One option the report puts forth is to "expand FHA's (Federal Housing Administration) capacity to support lending to the multifamily market." Uh-huh.

I believe that as Fannie and Freddie are wound down, we will see those people start to transfer over to either the FHA or some new agency, or a government chartered entity (e.g., FDIC), responsible for "supporting" multifamily lending.

This may or may not be a good thing; it's too early to tell. But at this point, I'm feeling positively Nostradamus-like.


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]]>fannie freddieFannie MaeFreddie Macfuture of housing financehousing policyHUDObama AdministrationRenter NationTreasuryRob Hahn2011-02-17T13:03:00 00:00Our Homeownership Society: Is It Coming to an End?http://realestate.aol.com/blog/2011/02/16/our-homeownership-society-is-it-coming-to-an-end/http://realestate.aol.com/blog/2011/02/16/our-homeownership-society-is-it-coming-to-an-end/http://realestate.aol.com/blog/2011/02/16/our-homeownership-society-is-it-coming-to-an-end/#commentsFiled under: ,

homeownershipAfter months of processing the input from the Conference on the Future of Housing Finance, as well as countless hours of speaking with various lobbyists from innumerable organizations behind the scenes (resulting, no doubt, in the premature death of many thousands of $250 bottles of wine), the Obama administration finally unveiled its plan for the future of real estate finance.

Or, rather, it unveiled not just one, not merely two, but three plans.

There are some persnickety evildoers who might consider such a thing a "total lack of leadership." They would be dead wrong. Leadership doesn't necessarily mean loudly leading from the front; it could also mean the quiet leadership of letting people choose where they want to go, then following along claiming to have led them there in the first place.

So what are the three plans? You might call them the "Let's Hope the Republicans Go For This," the "We're Not Real Sure, Either," and the "Let's Just Make It Palin's Problem in 2020."

The Wall Street Journal reports:

The administration's proposal to Congress is likely to assess the merits and drawbacks of each of the three options. The most conservative would propose no government role in the mortgage market beyond existing federal agencies, such as the Federal Housing Administration.

The two others would create a way for the government to backstop part of the secondary mortgage market, a role long filled by Fannie and Freddie. Under one, that government backstop would kick in primarily during periods of market stress; under the other, the government would play a role at all times.


Option One is probably political suicide: The housing lobbies would absolutely go to war over a zero-government proposal, and the finance markets are likely to seize up for a bit. Sure, with
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time and perspective, the residential mortgage market would return. But it wouldn't look anything like what we have today. We're talking about perhaps 10-year terms, no more fixed rate loans, and 30 percent down payment requirements. Should the Tea Party Republican-led Congress choose this option, the resulting economic devastation would likely strengthen the argument of those who would point and say, "See what happens when we just cut government out?" Knowing this, I assume this option is a nonstarter for anyone involved, at least in the next several years.

Option Three -- where government backstop "plays a role at all times" -- sounds a whole lot like kicking the can down the road. It is, more or less, what happens today: 9 out of 10 loans in the past year were funded by the Treasury (through Fannie, Freddie, and other agencies). The details are missing, but nothing substantive would change and Obama would just pass along the problem of what the role and scope of the Federal government is in financing housing to 2012 and beyond.

Option Two is the most intriguing, and is likely what the administration would like Congress and Republicans to accept: government as a backstop only in "periods of market stress." The trouble is, until we read the white paper, no one knows what that means. Is today's economy a "period of market stress"? What if unemployment goes to 8 percent? Is that a period of market stress? Who would decide and declare a "market stress event" to trigger the Treasury backstop? Therefore, it's the "We're Not Real Sure, Either" plan; or perhaps the, "Trust Me, I'm From the Government" plan.

Whichever plan is selected, they each gives a sense that the Sustainable Homeownership Society envisioned by the Obama administration will be moving ahead:

o.Maximum loan limits for agency purchase will be lowered.
o.Fannie, Freddie and other agencies will raise the fees for mortgage guarantees and couple such price increases to higher down payments. This means higher downpayments, since loans with lower LTV have less default risk, making mortgage insurance cheaper.
o.GSEs and agencies will reduce their holdings of mortgages. (Wait, weren't they already doing this? I suppose the signal here is that the agencies are just not all that interested in buying more mortgages....)

The upshot is lower buyer demand across the board. But on the other hand, buyer quality would go up, as the marginal buyers simply couldn't get a mortgage. This is, after all, the whole point of Sustainable Homeownership.

Before y'all panic and start stockpiling canned foods, let's remember that this is just the first step. There are many, many steps between this and actual legislation. And folks like the NAR, NAHB, MBA, and various other real estateplayers will have their say, and their say, and then some more say, before it's all said and done.

But the game is now officially on. To quote Bud Light, then, "Here we go!"


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]]>Conference on the Future of Housing Financefuture of housing financeHomeOwnershiphomeownership societyHUDmortgage backed securitiesmortgagesObama AdministrationTreasuryRob Hahn2011-02-16T14:01:00 00:00Realtor Fees Play Role in Home Priceshttp://realestate.aol.com/blog/2011/02/15/realtor-fees-play-big-role-in-home-prices/http://realestate.aol.com/blog/2011/02/15/realtor-fees-play-big-role-in-home-prices/http://realestate.aol.com/blog/2011/02/15/realtor-fees-play-big-role-in-home-prices/#commentsMy family and I recently made a change that apparently thousands of my fellow Americans have made: We moved to Texas -- in our case, from New Jersey. As a result, I am now in the extraordinarily interesting position of being not just an industry observer, but a client. My first observation? Realtor fees matter.

One thing I did not realize until it happened to me was how much the nature of real estate agent compensation would affect my own decisionmaking. I believe the way that we compensate real estate agents for their work affects how we price homes to buy or to sell. Anecdote follows.

I put my little house on the prairie -- if by "prairie" we mean wealthy New Jersey bedroom community filled with Wall Street bankers and lawyers and their herd of German automobiles -- on the market a couple of weeks ago at $480,000 (this is considered affordable housing in that
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part of the country, by the way) upon the advice and counsel of my Realtor, Sue Adler. Now, I've known Sue for a while, and for this story, the pertinent fact is that she's pretty much the best damn agent in the area with over thirty years of experience (more if you count her teenage years working for her father's real estate brokerage) in buying and selling houses. She's the #1 KW agent in New Jersey since 2005. Given her expertise and track record, I take her pricing advice wholeheartedly.

A couple of days later, I get an offer from some family interested in the house. They bid $465K -- below asking, but certainly within negotiation distance. Without getting into details, negotiations fall apart, and I elect to wait it out. The buyers also elect to keep on looking, I presume.

We both -- myself and the buyers -- think nothing more of it.

A day later, I get a bill from my attorneys, whom I've retained to pursue a totally separate legal matter. Looking at the bill, I start thinking, "Wow, I hope this case ends soon in settlement." And I catch myself.

Why was I so willing to turn down an offer "within striking distance" and yet, somewhat anxious to see my legal case settled?

The answer: I'm paying the lawyers on an hourly basis; I'm paying Sue when the house sells.

Financial Calculus and the Human Being

A central tenet of economics is that human beings modify their behavior based on incentives, both positive and negative. In every single professional services situation I can think of, there is an ongoing cost to using a professional. There is a financial impact to using a lawyer for two hours vs. twenty hours. Seeing your doctor once a month is a different thing than seeing her once a week, even if your insurance picks up much of the cost. A tax accountant will charge more to spend an hour doing your 1040EZ versus spending a week on your corporate tax filing. Even project-based fees -- common in advertising, web development, and consulting -- have clauses that say that if the amount of work goes way beyond what the firm estimated, there will need to be an adjustment.

In cases where time and effort equal money, there is a strong incentive on the part of the principals -- the buyer and the seller -- to come to agreement. Because every day, every hour that they don't reach agreement, the meter is running on all of the professionals they have on retainer.

With residential real estate, however, there is no such pressure. Incentives to get a deal done quickly stem from things like mortgage payments, additional rent you might have to pay, more utilities, or life situations (you've been relocated, and the family is still back over there). But the cost of real estate brokerage services is not one of those factors. Those boys and girls get paid only upon a successful sale.

The buyer has no real incentive to hurry up and get a deal done, since that nice lady who is showing them around, sending them listings, and negotiating terms isn't costing them anything -- until the end. Might as well hold out for the absolute best. The seller's incentives to get a deal done quickly is also much less: if I expect to pay another $5,000 in professional fees by foregoing an offer, that would change how I'd respond. But since Sue's time and effort are not costing me anything out of pocket, I also might as well hold out for better offers.

(To be fair, experienced real estate agents constantly tell their sellers that houses for sale age badly, like cheese, rather than wine. But the point is that the seller doesn't feel it as there is no out-of-pocket cost.)

Does This Compensation Model Distort the Market?

If you speak with an experienced real estate agent who handles listings, they will tell you that their top concerns are (a) convincing the homeowners that their dream house isn't worth what they think it should be worth, and (b) convincing the homeowners that it is time to drop the price. They go through all sorts of contortions and tools and data and so on to convince their clients to do the right thing.

Now, as it happens, when someone who only gets paid upon a sale starts advocating a price drop, the average human being gets a wee bit suspicious. Is she telling me to lower the price for me, or for her paycheck? That's natural, I think, despite the fact that many a real estate agent recommends that step precisely because they want to help the client.

I think broker compensation does in fact distort the market, by decreasing the incentive on both the buyer and seller to get a deal done. And given the naturally suspicious minds of humans, it is difficult for a professional to break through.

The situation is even worse when we're talking about distressed properties, whether owner-occupied, or foreclosed. There, the carrying cost is so low (no mortgage payments, minimal utilities & upkeep) that the seller really doesn't have much of an incentive to drive a bargain.

If somehow the heavens and the earth moved, and Realtors were to start being paid like any other professional, and buyers and sellers both take on costs to dither and wait for a better situation... I think we'd see transaction speed pick up significantly. Sellers would respond to the incentive by calculating how much more money they would need to pay to wait for a better offer; buyers would respond by thinking about how much the search is costing them. And frankly, real estate agents would find that they're no longer worrying about whether the client is actually going to pan out or would be yet another moneysink that ends up costing them more cash in gas, time, and expenses. It's a win-win-win.

If only...

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]]>Basic Economicsbuyerscompensationhome pricingincentivesrealtorsrob hahnsellersSue AdlerRob Hahn2011-02-15T11:55:00 00:00Loan Modification Plans Fail, Banks Not to Blamehttp://realestate.aol.com/blog/2011/02/07/loan-modification-plans-fail-banks-not-to-blame/http://realestate.aol.com/blog/2011/02/07/loan-modification-plans-fail-banks-not-to-blame/http://realestate.aol.com/blog/2011/02/07/loan-modification-plans-fail-banks-not-to-blame/#commentsFiled under: ,,,

loan modificationSo it appears that some Congress-critters are agitating about the utter failure that is the suite of government loan modification programs. House Republicans want to repeal the Home Affordable Mortgage Program (HAMP), calling it a "colossal failure". Home Affordable Foreclosure Alternatives (HAFA), a sub-program, is also under attack, and lo and behold, there's a Democrat involved: Sen. Ted Kaufman.

The Treasury Department spent $4.3 million on incentives to servicers and investors through the Home Affordable Foreclosure Alternatives program through November, a fraction of what it spent on HAMP, according to a report from the Congressional Oversight Panel.

It seems only natural that a Democrat would be offended that the government spent too little money. In any event, it's a bipartisan effort in Washington.

But why? Even the government isn't this incompetent most of the time. What happened? And what's likely to happen as a result?



If you're a homeowner who's had some dealings with HAMP/HAFA/whateva, or merely a taxpayer with something of a passing interest in why some $75 billion of your money appears not to be doing much at all in dealing with the foreclosure crisis, you might be curious. Well, let me put some pieces together for you.

Banks Aren't the Problem

In the media and general chitchat, we're told that the problem is the banks who aren't able to get with the program(s) fast enough. Those damn greedy Wall Street bastards! But truth is, unless said bank owns a servicer, it's likely not the problem.

You see, once a mortgage is made ("originated"), the nice loan officer you spoke with isn't dealing with you anymore. His job is to go make more loans. Instead, he passes the mortgage, all of your information, your entire file, to another company called a servicer. The servicing companies are the ones who send out statements, process your payments, send late notices,
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answer questions, and generally do all of the things a lender would want done -- including, by the way, initiating foreclosures and alternative actions such as loan modifications, short sales, and the like.

Trouble is, servicers have two issues when it comes to programs like HAMP/HAFA and alternatives to foreclosure.

First, most servicers are not setup to handle large volumes of loan modifications (including short sales). Adam Levitin, a professor at Georgetown Law School, and Tara Twomey of the National Consumer Law Center, have written what may be the definitive paper on servicers and loan modification. In it, they describe a highly automated, machine-like system for handling foreclosures. Once payments get past a certain past-due date, the software automatically bundles all the paperwork, sends an email to a pre-designated law firm (sometimes called "foreclosure mills" for the mechanical way they crank out foreclosures) or some other company that would then file the necessary paperwork to get things rolling. In contrast, loan modification and short sales require human beings, with training and judgment:
In contrast, handling defaulted loans through loss mitigation [industry term for anything other than a foreclosure] involves tremendous discretion, expertise, and manpower. It does not benefit from economies of scale and needs significant well-trained human labor to staff call centers.... Loss mitigation involves pursuit of negotiated outcomes, and each negotiation is individualized, adding significantly to the transaction costs of loss mitigation.
While many servicers are trying to ramp up their loss mitigation departments as quickly as possible, such things take time. People have to be interviewed, hired, trained, monitored, managed, and so on. And all of those things are expensive.

Second, there is a real question as to whether the financial incentives of servicers are aligned with programs like HAMP/HAFA. Under HAFA, the Treasury pays $1,500 to mortgage servicers for a short sale, which would presumably recover more money for the lender than a foreclosure followed by a bank-owned sale. But that would remove the mortgage from the portfolio that the servicer manages. The fee for managing a loan is typically 50 basis points annually on the unpaid principal balance of a loan (for subprime, the most likely loan to get delinquent). So if the mortgage is $300,000, the servicer would make 0.50% on it every year, or $3,000.

But that's not all. Servicers also keep the float from money sent in by the borrower until they have to send that money along to the bank. And finally, and most egregiously, servicers get to keep "ancillary fees" related to a loan -- late fees being the biggest example. In one case of now-bankrupt Countrywide, late fees alone amounted to $285 million in 2006.

Combine the two factors and you get a situation in which a servicer would give up a steady revenue stream plus possible bonanzas from late fees, fax fees, property inspection fees, and so on, while incurring significantly higher costs from personnel intensive loan modification efforts... all for $1,500 from the Treasury (that is to say, you and me)? Mmmmkay.

It would be shocking if doing a loan modification under HAMP/HAFA was not a major money losing proposition for a servicer. Is it any wonder that HAMP and HAFA are such dismal failures?

Plus, The Servicers Often Don't Have he Power

Even if there were servicers who do want to do the time-consuming, labor-intensive work with homeowners to modify a loan instead of foreclosing, they may not have the power to do very much.

Most residential mortgages are not held down at the local Savings and Loan. They are securitized into massive pools of mortgages to be made into mortgage-backed securities. The bank has already sold the loan to these giant trusts. And many of the agreements that govern such trusts make it extremely difficult, if not impossible, to modify a loan.

In many cases, the trust documents prohibit the servicer from changing interest rates, because that's the income that the investors are expecting. Extending the term can also be difficult because of how the mortgages are put together into the trust to have similar termination dates.

So... What Can I Do?

To be sure, the federal government and the industry itself as well as academics and organizations like the National Consumer Law Center are looking at all sorts of ideas. Recently, the Obama Administration blasted servicers and called for a total revamp of the system. While I expect significant regulation to be handed down, none of us knows what would ultimately be the result.

As a consumer, however, is there anything you can do?

Well, if you have any concerns about the economy, about your ability to pay the mortgage (after all, you could lose a job, have a medican issue, etc.), or health concerns, you might ask a mortgage broker to put you into a mortgage from a portfolio lender (i.e., someone who makes a loan and just holds it, instead of securitizing it). This way, if something should happen, you at least have a single lender who might have the authority to work with you, instead of a trustee sitting on top of 7,000 mortgages with little power to do anything for you.

If you are currently in a bad situation and facing foreclosure or short sale or what-have-you, I would consult an attorney. Far too few consumers facing foreclosure bother to contest the foreclosure, bother to talk to a lawyer, and often don't have the cash to hire an attorney. There are some pro bono organizations that take on foreclosure cases if you're flat broke; if not, then spend the money, since you're far more likely to be able to navigate the maze of banks, servicers, securitization trusts, and so on with professional assistance.

Finally, you can care about the issue. A lot of the foreclosure crisis is the result of most citizens just tuning out all the boring legal and high finance stuff, to focus on the latest round of voting for the American Idol. Make a phone call to a Congresscritter, write a blogpost, tell your friends, whatever -- just care about the issue, because it's an important one for every homeowner, future homeowner, and every taxpayer.

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]]>Adam LevitinHAFAHAMPloan modificationmortgage servicersObama AdministrationTara TwomeyRob Hahn2011-02-07T11:59:00 00:00When to Get a New Real Estate Agenthttp://realestate.aol.com/blog/2010/12/16/real-estate-agents-when-to-get-a-new-one/http://realestate.aol.com/blog/2010/12/16/real-estate-agents-when-to-get-a-new-one/http://realestate.aol.com/blog/2010/12/16/real-estate-agents-when-to-get-a-new-one/#commentsFiled under: ,

Real estate agents come in all different stripes, but it takes a personal experience to hammer that home. As my bio says, I'm a management consultant for institutions in the real estate industry, and have been working in the real estate space for several years. But recently, my wife accepted a tremendous opportunity for her career in Houston, so I've been busy doing consumer things in the consumer world: trying to find a place for us to live, at least for a year, while we get to know the area to decide where to purchase.

The experience of looking at the real estate industry through a normal consumer's eyes is... interesting. I'd like to relate a few of the experiences I've gone through and am still going through here, starting with...

The Subscriber's Voicemail Is Full

So I travel down to Houston, taking a couple of days, to locate a house that my brood and I might transform into our lair while we settle in. I find a pleasant, professional real estate agent to help me with my search (wave to everybody, Sara Nguyen of Prudential Gary Greene), and use the various online tools on HAR.com to conduct the search. I'll have a word or two about that experience later.

Together, Sara and I narrow our options down to a couple of neighborhoods, and a dozen houses or so. We start going through them rapid-fire style on Monday, so I can narrow the choices down. We get to one house that looks
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promising, and Sara turns to me in the car and makes a confession. (Much of the dialogue below consists of me putting words in people's mouths, but hey, I didn't have a tape recorder on me or anything while, y'know, just being a consumer. But the facts are absolutely true.)

"I'm so sorry, Rob, but this house... I need a few more minutes," she says.

"Why is that?"

"Well, I've been trying for the last four hours to get a hold of the agent here to make an appointment, and she's not answering her phone."

I had noticed that Sara was awfully busy while we were touring the four previous houses. Now I knew what she had been trying to do.

"I tried to leave her a message to call me back as soon as possible, but her voicemail is full."

Say what now? I pull my Blackberry out of the holster and check: yep, it says right there that this is year 2010. For a moment, I thought I was back in the days when Motorola RAZR was the hot phone, and voicemail was this new thing that people didn't know how to use.

By sending her a couple of emails, leaving messages with her office, and perhaps by divine intervention, Sara gets a call back, and we're able to go in and see the place. I like the house, seems like it'll do for a temporary hideout, and talk it over with my wife that evening. We decide that we'll take it.

The next day finds me in Sara's office filling out applications and lease agreements. We're not in the least bit worried about approval; my wife and I are homeowners, have been for some nine years, have good credit, and the rent is cheap to our New Jersey eyes. We send the forms over, and I hope to have cashier's checks ready to go by the afternoon.

In the age of instant communication, of Twitter, Facebook, email, email on mobile phone, text messages, and so on, I figure it'll be a couple of hours before we hear back and can start negotiating the fine points of the lease.

Four hours pass without a word. Sara, in a near-panic, tells me that she's tried the other agent's phone a dozen times. "Her voicemail is still full, so I can't leave her messages, and she's just not getting back to me at all."

I'm about two minutes away from deciding to say screw it, and move on to our second choice house, when the other agent finally calls Sara back.

If Your Agent's Voicemail Is Full... Fire Her

I'm not going to bore you with the details of the negotiation, which still has not concluded, because, guess what, the other agent rarely answers the phone, and her voicemail is still full. But as a trespasser in Consumer World, let me suggest something: If your Realtor's voicemail is full, you've let her know this, and it's still full after an hour... fire her.

This agent, whose name I never learned, came within two minutes of losing her client the deal. In my case, he almost lost out on a great, stable tenant who would take care of his property, pay the rent on time, and won't make a fuss (without a very, very good reason). If I had been a buyer, her client might have lost the deal completely, simply because she can't be bothered to delete old voicemail messages (or answer the phone for that matter).

Let me be charitable and assume that perhaps the other agent is Hillary Clinton, moonlighting to supplement her income, while she tries to negotiate some treaty with Azerbaijan. That might be great for Azerbaijan and American foreign policy, but if you are Realtor Clinton's client, you're gettin' screwed.

Within the industry, we've heard that consumers are getting more demanding. Consumers want answers immediately, we hear. You'd better get on Twitter, and get that iPad, and have four mobile phones to deal with the impatient consumer - that's what we hear. Well, from Consumer World, let me suggest that the reason why consumers might be impatient is that we live in 2010, and we have jobs, and we have clients, and we know that we have to respond when our boss or our client calls us. We have mobile phones and voicemail too, and we know how they work. We're pretty reasonable folks, I think, but not when your damn voicemail has been full for two days and you can't be bothered to take five minutes to delete your three-month old messages!

There are complexities to being a real estate agent these days, I get that better than most people. But the essence of being an agent is to represent the client. Tell you what, it's awfully hard to represent your client when you don't pick up your phone, and people calling you with offers can't leave messages because your voicemail is full.

As a buyer/seller, or a landlord/tenant, your financial future might hang in the balance in a real estate transaction. Even if you are renting for a short-term, like I am now, you have to make decisions, and usually with very little time. Using a real estate agent who can't even be bothered to check (and delete!) voicemails might be your choice as a consumer, but don't be surprised if you're having trouble selling that house of yours.

Oh, and if you happen to think that technology is the solution -- well, someone who can't even be bothered to pick up phone calls and deal with a full voicemail inbox is not exactly a prime candidate for using avatars in SecondLife to do real estate transactions. Yes, the industry itself needs to do better at pruning out bad agents. Brokers need to do more to train, educate, and discipline agents who (in theory) work for them. But you, as the consumer, can do more too: stop hiring morons.

One clear sign? Her voicemail is full. Move on, friend, move on. Find someone else. Because I, and millions of consumers like me, will find another house instead.

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]]>bad real estate agentsbuying a houseBuyingAHouseReal estate agentsreal estate brokersRealEstateBrokersrealtorsselling a houseSellingAHousetechnologyRob Hahn2010-12-16T15:48:00 00:00Mortgage Interest Deduction: Do You Need It?http://realestate.aol.com/blog/2010/12/06/mortgage-interest-deduction-do-you-need-it/http://realestate.aol.com/blog/2010/12/06/mortgage-interest-deduction-do-you-need-it/http://realestate.aol.com/blog/2010/12/06/mortgage-interest-deduction-do-you-need-it/#commentsFiled under: ,

In case you missed it, The National Commission on Fiscal Responsibility and Reform, released its recommendation last week, including the proposed elimination or limitation to the mortgage interest deduction ("MID") for homeowners.

In brief, the commission proposes to limit the mortgage interest deduction to only primary residences (today, they apply to second homes as well), and cap the deduction to $500,000 worth of mortgages (today, it's $1 million).

As you can imagine, the real estate industry is in quite an uproar over any changes to the mortgage interest deduction.



Ron Phipps, the President of NAR, has issued a pretty strong statement in opposition, calling the mortgage interest deduction "vital to homeownership and the economy" and vowing to "remain vigilant in opposing any plan that modifies or excludes the deductibility of mortgage interest". The National Association of Home Builders is also, as you can imagine, opposed to messing with the MID.

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The current thoughts are that eliminating or limiting the mortgage interest deduction would crash home values by anywhere from 15 percent to 20 percent, dry up buyer interest (even talking about this is drying up buyer interest, actually, as buyers will sit and wait to see what happens), make investors rethink all of their financial models, and so on. It won't help the industry, that is for certain. I believe whether the National Association of Realtors, together with its allies in the housing industry, can defeat this proposal is potentially central to the identity of NAR itself and the future of the industry as we know it.

But this is all sort of inside-baseball industry stuff.

NAR has done an online survey of 3,000 homeowners that shows that 3/4 of homeowners and 2/3 of renters think the mortgage interest deduction is really very important to them. But given the sponsor, there is reason to be skeptical about how people really feel about the MID.

I just don't see, given the political mood of the country today, who actually supports the MID, which is between $100 billion and $130 billion a year in "lost revenues" to the Feds.

Those on the Left dislike the MID because it's a tax giveaway to the wealthy. Here, for example, is The New Republic arguing against the MID, because it's a tax break for the rich:
From the numbers above, it's clear that the benefit derived from the deduction is almost perfectly increasing with income. Low- and middle-earners are less likely to itemize their returns, which makes them unlikely to benefit from the mortgage-interest deduction. And because they make less money, they pay taxes in a lower bracket-meaning that every dollar in deductions reduces their tax bill by less than it would for someone in a higher bracket. Calling the mortgage-interest deduction a middle-class tax break essentially requires us to define someone in the 80th or 90th percentile of earnings as middle class. But they're not; when you make more than 80 percent of the country, you're rich, even if you don't want to admit it.
Those on the Right dislike the MID because it's a government subsidy that distorts free market prices. Mark Calabria of the Cato Institute, for example, calls for abolishing the MID here:

"All it does is run up house prices [here in the US], which to me makes housing less affordable, not more," he added. "It also increases the volatility of prices."
Given that the dominant theme of the political life of the country right now is a citizen's revolt against high taxes, high government spending, and high debt (I assume you've heard of the Tea Party movement by now), I can't see who on the Right would stand up in full-throated support of subsidizing more debt.

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And the great mythical center, which may or may not exist, just has very little idea of what's going on, though they are remarkably up to date on who is left standing in Dancing With the Stars.

The difference between the two sides, right now, seems to amount to the political left arguing to eliminate the MID so the $100 billion could be used on other programs, while the political right wants to eliminate the MID so that taxes can be cut across the board.

I suppose the thinking is that homeowners who are today deducting their interest payments from taxes would throw a giant hissy fit if Big Brother took it away. But I have to believe that American taxpayers, at least those paying attention, are smarter than that.

Suppose you have a 30-year fixed rate $750K mortgage at 5 percent interest rate, and since you have such a high mortgage, your income is very high as well (say $400,000 a year) putting you in the top bracket of 35 percent. The MID is worth about $13K per year to you, and given an amortizing loan, I'm seeing the MID be worth $63,099.83 over the first five years of your mortgage. If the Commission's recommendation, of capping the MID to the first $500K of your primary residence, becomes law, your tax break is only $8,700 or so a year, and $42,066.55 over the first five. The difference is $21,033.28 for someone making $2 million over the same five year period.

Meanwhile, the same commission report recommends dropping the top tax rate from 35 percent to no more than 29 percent. That results in $24,000 in direct savings to you from the tax cut, Mr. $400K-a-year, or $120,000 over the first five years. Is there someone in America who wouldn't take this deal? Give up $21,000 and get $120,000?

It would only suck if the elimination of the MID isn't matched by anything for the taxpayer anywhere else: That's a straightforward tax increase, and there are people who love that sort of thing, but not many.

Thing is, I could be dead wrong, because voters and homeowners don't have to be rational, or think in the national interest, or care about anything besides, "I want what's mine!" So, here's my question to the audience of AOL HousingWatch, a self-selecting group that cares about housing issues: Do you care about the mortgage interest deduction? How much? Would you trade it for a general tax cut (or if you're a liberal, for extending unemployment benefits or whatever other social program you support), or no way, keep yer grubby paws off my tax break!

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]]>housing policiesmortgage interest deductionObama AdministrationWhite House Deficit CommissionRob Hahn2010-12-06T16:35:00 00:00Mortgage Mods: A Modest Proposal to Avoid Moral Hazardshttp://realestate.aol.com/blog/2010/09/14/mortgage-mods-a-modest-proposal-to-avoid-moral-hazards/http://realestate.aol.com/blog/2010/09/14/mortgage-mods-a-modest-proposal-to-avoid-moral-hazards/http://realestate.aol.com/blog/2010/09/14/mortgage-mods-a-modest-proposal-to-avoid-moral-hazards/#commentsFiled under: ,

Gretchen Morgenson of The New York Times wrote a recent column advocating what she calls a "bold idea" for housing policy instead of the crash that many economists now appear to want. The main thrust of her column is that TARP and other attempts by the federal government have been bad ideas aimed more at keeping big banks afloat than helping homeowners, that there is a moral hazard of rewarding those who took on unreasonable risk. Morgenson says there's a better way to deal with the crisis in housing: mass refinancing.

Citing the work of two Wall Street veterans, Thomas H. Patrick, co-founder of New Vernon Capital, and Macauley Taylor, principal at Verum Capital, the plan Morgenson mentions calls for refinancing all the nonprime, performing loans held in privately issued mortgage pools (except for Fannie's and Freddie's) at a lower rate. "The mass refinancing could have helped borrowers, while retiring mortgage securities at par and thus helping pension funds, banks and other investors in those pools recover paper losses created when prices plummeted," she writes. "Fannie Mae and Freddie Mac could have financed the deal with debt."
Maybe I'm just far too cynical, but ... how is this not moral hazard of the first order?
The idea is a credit risk swap wherein banks exchange the shaky credit of the subprime residential borrowers -- many of whom possess adjustable-rate mortgages -- with the full faith and credit of the United States government. Remember that the borrowers Morgenson, Patrick and Taylor want to refinance are all nonprime, even if they all are currently up to date on their payments.

So, if I'm a big hedge fund that plowed $1 billion into subprime mortgages back in 2006, I'd get fully repaid on the investment -- even though in the private market those securities might be worth 65 cents on the dollar. If I'm a subprime borrower who couldn't afford to buy the house I'm in, except with a subprime or Alt-A adjustable-rate loan -- because my credit and debt-to-asset ratios weren't good enough to qualify for a conventional 30-year-fixed -- I'm rewarded for having bad credit by the government, which hands me a 30-year fixed-rate loan. For that matter, if I'm a speculator who only took out high-risk Alt-A loans to finance my portfolio of properties in Las Vegas, as long as I've been current on my payments so far, I get the benefit of the government-backed 30-year loans.

Sure looks to me like moral hazard.

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Patrick and Taylor argue that there would be no losses to taxpayers unless these refinanced mortgages "took a hit later on." And they're correct that the Patrick-Taylor plan is superior to the boondoggle known as TARP. But to call a plan better than a gaping maw of failure seems to me to be damning with faint praise indeed.

Here's a better plan. Call it the Hahn modification of the Patrick-Taylor plan:

Seeing as how Patrick and Taylor are so certain, I say that they put together a new fund with all of the Wall Street banks who think this plan is a great one and would help them get these horrible mortgages off of their balance sheets. Let's call it the Saving American Housing Fund. It should also be a requirement that Morgenson and the editors of The New York Times be among the investors. Now, none of these parties have to put up a dime, because the Fed will loan this Saving American Housing Fund $1.1 trillion at, say, 1.25 percent (the current federal funds rate plus 50 basis points). But this $1.1-trillion loan will be a full-recourse loan, putting at risk the personal assets of all of the individuals and institutions who participate.

Even at today's 30-year-fixed rates of around 4.5 percent, making a 3.25 percent spread seems like a pretty good deal to me. Since there are no losses to taxpayers unless these refinanced mortgages took a hit later on, then there are no losses to Saving American Housing Fund and its principals unless they take a hit, right? Why, it's like guaranteed money for them! Except, of course, they -- instead of the taxpayers -- have to take the risk.

If their idea works, they end up even more fabulously wealthy than they are now. Private risk, private gain. And the Treasury gets paid a premium over and above the federal funds rate, thereby helping restore the national balance sheet over time, as well. The taxpayer is at risk, of course, if the Saving American Housing Fund blows up. But we'd be at risk the other way, as well. So what's not to like?

I hereby call upon Patrick, Taylor and all of the Wall Street titans, as well as their funds, banks and others to pledge themselves and their fortunes on the Saving American Housing Fund. The country needs bold ideas, as Morgenson so rightly pointed out.

Or... we can just let the market function and let things take their due painful course.

It's up to you, brave captains of finance, and heroic champions of editorial opinion! Lead on! We shall applaud your bold steps from afar, and wish you every success, for by your risks, you will help pull the country out of this crisis. Go forth!

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]]>Gretchen MorgensonMacauley Taylormass refinancing planmoral hazardnew york timesTARPThomas PatrickRob Hahn2010-09-14T17:03:00 00:0030-Year Fixed-Rate Mortgage: Will We Become a Rental Nation?http://realestate.aol.com/blog/2010/09/10/30-year-fixed-rate-mortgage-will-we-become-a-rental-nation-pa/http://realestate.aol.com/blog/2010/09/10/30-year-fixed-rate-mortgage-will-we-become-a-rental-nation-pa/http://realestate.aol.com/blog/2010/09/10/30-year-fixed-rate-mortgage-will-we-become-a-rental-nation-pa/#commentsFiled under: ,

If the 30-year fixed-rate mortgage is on its way out, as I declared in Part 1 of this series, many more Americans will be living in 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 ever imagined:

National Rental Rehaul

Since the United States has never really had a national rental policy, landlord-tenant issues and rent regulation have mostly been state and local matters. It's unclear whether the federal government even has the power to create a national rent regulatory scheme. Besides, national rent regulation might not prove popular with either the American public or -- more importantly, from the perspective of Democrats -- with the AFSCME (American Federation of State, County and Municipal Employees), which is a leading contributor to the party and whose members might lose jobs if a national rent regulation scheme were created.

The answers are found, I believe, by looking at PETRA (the Preservation, Enhancement, and Transformation of Rental Assistance Act of 2010) and the related HUD initiative, TRA (Transforming Rental Assistance). There are lots and lots of details here, but the essentials are:
  1. Expand private financing of public housing.
  2. Expand public payments to private landlords (the basic feature of property-based contracts of Section 8 housing).
  3. Finance the building of new multifamily units as a mixed public-private development.

There are a fair number of people and organizations upset at point No. 1: They call it "privatizing" the public housing stock, and expect that the new landlords, greedy capitalists all, would soon be driving tenants out of their homes to rent them to wealthy stockbrokers and bankers. That led to HUD Secretary Donovan publicly denying that PETRA would privatize public housing. More interestingly for our purposes, Donovan also pointed out during his Congressional hearing that HUD has significant experience in programs that provide affordable housing through private developers:
First of all, we currently have new affordable housing that is developed in this way. We have long experience on how to protect properties in foreclosure from losing that housing. TRA would enhance our ability to do that in a number of ways.
Of course, he's talking about property-based Section 8 housing, that will all be transformed, streamlined and strengthened if PETRA becomes law.

Section 8 housing comes in two basic flavors:
  • project-based, in which the government and the property owner enter into a contractual arrangement, with the subsidy staying with the property.
  • tenant-based, in which the subsidy goes with the renter, who can rent in any building where a landlord is willing to take him.

In both cases, the basic premise is that the landlord will get to charge "fair market rent" (as approved by the government administrator, either the local Housing Authority or the people at HUD). But the subsidized tenant only has to pay a maximum of 30 percent of income; the government will pick up the rest.


Section 8 for the rest of us?

If the goal of housing policy is to make homeownership more difficult (and therefore, more sustainable), then the big question is: What do you do about the millions of people who would have been first-time homebuyers? The obvious answer is to make rentals more attractive to those who will be priced out of buying a home.

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The trouble is, the supply of Section 8 public housing in the United States is low, and the waiting lists can be long. Furthermore, the income requirements, while not as severe as one might think, are not high enough to cover most of those who would have been homebuyers. The chart at the Housing Authority Waiting List website shows that for the St. Paul/Minneapolis region, a family of four may have a maximum income of $64,400 to qualify for Section 8 housing. That's well above the median household income for Minneapolis of $53,315.

Plus, as support for homeownership declines, the demand for rentals would naturally rise, while salaries are not likely to keep pace -- which makes government rental subsidies that much more expensive (remember that the government pays the difference between market rent and actual rent).

In fact, after a few years, it's difficult to imagine that there would be any non-Section 8 rental housing at all in the United States. Perhaps there would be a few luxury rentals in places like New York City and San Francisco for the twentysomething and thirtysomething urban professionals who make far too much money to qualify for Section 8. Otherwise, all other rentals would be covered.


A League of Ordinary Renters

What would the outcome look like? Renters would get to pay a maximum of 30 percent of their income toward housing, and developers and banks would get a brand-new, low-risk market. The public housing stock is not only preserved but vastly expanded, and the state and local government employees get federal subcontracts to administer the whole thing.

It isn't national rent control, or national rent regulation, since any regulation is tied to a subsidy. A state or municipality is absolutely free to refuse the regulation along with the federal subsidy -- just like they are free to refuse federal highway funds and set their drinking age or speed limit at whatever they like. Except, of course, very few do. What governor wants to lay off 40 percent of the politically active and highly vocal government employees at the state housing authority, because she refuses to take federal HUD money?

Along with the goodies, of course, come some strings. There are many, but I'd like to highlight just one.

Basically, every landlord and public housing authority will be required by law to recognize legitimate tenant organizations. This is a statutory provision that does not exist under current law. So, for example, a greater Los Angeles area tenant association might negotiate with every landlord who has any Section 8 units in his building. Whether such a giant tenant union could take into account the particularities of a specific building or not is left up to the reader to decide.

In the last part of this series, we will examine how all of this might get paid for, and assess the political likelihood of it happening.

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]]>Fannie MaeFreddie Macfuture of housing financefuture of rentalsGinnie Maehousing policiesHUDObama Administrationrental marketRob Hahn2010-09-10T08:32:00 00:0030-Year Fixed-Rate Mortgage: An Endangered Species? (Part 1)http://realestate.aol.com/blog/2010/09/08/30-year-fixed-rate-mortgage-an-endangered-species-part-1/http://realestate.aol.com/blog/2010/09/08/30-year-fixed-rate-mortgage-an-endangered-species-part-1/http://realestate.aol.com/blog/2010/09/08/30-year-fixed-rate-mortgage-an-endangered-species-part-1/#commentsFiled under: ,

The 30-year fixed rate mortgage, the foundation of the American housing market, may be on the endangered species list, thanks to the Obama administration.

Based on recent observations, the Obama administration seems committed to moving American housing policy away from homeownership toward rentals. They would do this by: (a) transforming Fannie Mae and Freddie Mac from GSEs (government-sponsored entities) to GCEs (government-chartered entities); and (b) devoting a significant enough chunk of the funds from the new GCEs into financing multifamily projects. I believe that Wall Street would cheer such a move, as it would open up an enormous new market for finance, backed by the explicit guarantee of the United States.

I also believe that the politics of 2010-2011 are such that these changes are far from unthinkable. In this first of a three-part series, I explain why:
The combination of these policy changes will, I think, result in either the end or sharp curtailment of the standard 30-year fixed-rate mortgage. The new standard for individual families to finance the purchase of their home will be something closer to a 10- to 15-year adjustable rate mortgage, with a significant down payment required by the lender.

That is, of course, precisely what is meant by "sustainable homeownership" -- the policy stance of the Obama-era departments of Housing and Urban Development and of Treasury.


The Steps to Transformation

In various documents, articles on media sites and blogs, and during the recent conference on the Future of Housing Finance, co-hosted by Treasury secretary Timothy Geithner (pictured above), various members of the Obama administration revealed its intentions, at least in broad strokes. The conference's panelists seemed to have been handpicked by Secretaries Geithner and Donovan to push a particular line of reasoning.

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Here's my take on the transformation: First, Fannie and Freddie will be fully nationalized -- no longer private companies seeking to generate profits for their shareholders. The most rational thing would be to merge Fannie and Freddie into Ginnie Mae, the Government National Mortgage Association, which means by D.C. politics that is the least likely thing to happen. Making government involvement in mortgages explicit is the recommendation of folks across the spectrum, from Bill Gross of PIMCO to the National Association of Realtors.

The important change here would be that, as part of the government, the new Ginnie-Fannie-Freddie Mae combined entity (which I hereby dub "Giffie Mae") would no longer seeks to generate a profit for shareholders. Rather, it would seek to further policy objectives.

Second, to advance the policy of "sustainable homeownership" (on which I've written about before here and elsewhere), "Giffie Mae" would start to invest heavily into financing multifamily properties (i.e., apartment buildings). For me, the key to why this may happen came from Alan Boyce, the CEO of Absalon, a joint venture between George Soros and some Danes. Boyce noted that government-backed multifamily securities (in alphabet-soup-land, that's a GSE CMBS) outperform their private-market equivalents, and he praised the Danish mortgage market, calling it perhaps the most successful residential-mortgage-backed securitization platform in the world.

Housingwire.com reported that the GSEs (Fannie and Freddie) "are planning a widespread push into the rental space. In fact, it felt [as if] a solution has already been basically settled on, especially as no representative from either GSE spoke at the Treasury conference."

Third, because "Giffie Mae" (and the Federal government itself) has limited funds -- despite what some people in Washington appear to believe by the way they spend -- it cannot continue to provide the same level of support to the residential mortgage market and to the new multifamily commercial mortgage market, even as a nonprofit government entity. As a result, "Giffie Mae" will scale back support for residential mortgages; no one knows by how much.

Banks will have to decide whether they want to continue selling mortgages, and under what terms, when the secondary market for mortgages might be significantly smaller, thereby raising the risk to the bank of default. What we do know is that Bill Gross, for one, has said that if he were funding mortgages out of his fund he'd want a 30 percent down payment, at a minimum, and short-term, floating-rate loans so that he's not eating interest-rate risk.

Historically, the 30-year fixed-rate mortgage with low down payments -- the engine of growth for the U.S. housing market -- is a creature of federal housing policy. Prior to Franklin Roosevelt's New Deal, most home mortgages required 50 percent down on a five-year loan, with interest rates that reset every year. I doubt that we're headed back that far, but changing the norm from the 30-year fixed with 10 percent down to a 15-year adjustable with 30 percent down does not strike me as impossible.


Consequences for Consumers

It is a fool's errand to predict what the consequences of an event that hasn't happened yet would be. So here I go, one fool at your service!

If these changes come to pass, buyer demand would decrease. The remaining questions are: By how much and where? There are likely to be neighborhoods in which "sustainable homeownership" policies wouldn't be noticed -- wealthy urban and suburban areas with great schools, for example. But first-time homebuyers would need to save longer to afford a large enough down payment and would likely face higher interest rates. It would be more difficult to own a home in America. But then, that's the whole point of sustainable homeownership, isn't it?

For sellers, then, the consequences simply would be a drop in price. The brokers and agents I've spoken to about the hypothetical scenario all seem to believe that if some of the policy proposals pass it would cripple the housing market for years. A double-digit drop in home values in a fairly short period is not unrealistic.

With the resulting upsurge in demand for rentals, rents are likely to rise, especially in major metropolitan areas where development is difficult and costly. It isn't as if there's a lack of demand for rentals in Manhattan, for example; the push by "Giffie Mae" into rental financing would help, but it would take a few years for multifamily housing stock to catch up to the demand that will be unleashed. Over the long haul, with multifamily housing becoming the focus for government support, rents will drop as supply catches up to demand.

What does this mean for you today? Well, speak to your local real estate agent, your financial adviser, or your lawyer. I'm just a blogger-fella on the Interwebs.

Having said that, if you have a 30-year fixed-rate mortgage today, resist refinancing into an ARM. If you're thinking about moving, or buying up because you've outgrown your home, I'd look to do that now before the rules change (if they do). If you're thinking about buying your first home in a few year's time, then it might not be a bad idea to increase your savings by quite a lot. You'll almost certainly need to bring more cash to the deal than in 2010.

Next in the series: a look at what rentals might look like in this fully imagined housing future.


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]]>30 year fixed mortgage30 year fixed rate mortgageFannie MaeFreddie MacGinnie Maehousing finance reformhousing markethousing policiesmortgage ratesNARObama AdministrationRob Hahn2010-09-08T09:14:00 00:00Fannie Mae, Freddie Mac and Missing Real Estate Agentshttp://realestate.aol.com/blog/2010/08/18/freal-estate-agents-absent-in-debate-on-scaling-back-homeownershi/http://realestate.aol.com/blog/2010/08/18/freal-estate-agents-absent-in-debate-on-scaling-back-homeownershi/http://realestate.aol.com/blog/2010/08/18/freal-estate-agents-absent-in-debate-on-scaling-back-homeownershi/#commentsFiled under: ,

It is unfortunate that the Obama administration -- you know, the most transparent administration ever? -- did not allow recording devices or cameras for broadcast into yesterday's Conference on the Future of Housing Finance. By all appearances, it promised to be high political theater, by which I mean that the entire thing was likely carefully scripted from the start. My partner, Jeff Corbett, expressed some skepticism about the proceedings in an earlier post on HousingWatch.

Forgive my cynicism but, again, most of these panelists were smack in the middle of the housing boom, enabling -- even perpetuating -- what became a bursting bubble. Are these the same people we want directing policy, going forward?

And where were the representatives for the nation's real estate agents?

By the time you read this, the circus will be over, and apart from some deeply buried mention in page C17 of the national newspapers, we're not likely to know what truly went down for quite a few weeks and months. But as some in politics like to say -- in Internet-speak -- the optics are not "the roxxorz" (the be-all and end-all) for the future of housing.

First of all, Secretary Donovan is on record as wanting to scale back homeownership. He moderated the panel titled Broader Housing Policy Goals. Why is he moderating? Shouldn't he be listening carefully to the experts who are gathered, seeing as how he's the primary policymaker who will be making the decision? Isn't the entire conference, in a sense, for his benefit (and Secretary Geithner's)?

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That secretaries Geithner and Donovan were moderating, rather than listening, suggests to me that the decision has already been made. The purpose of the conference is to ensure that the "right" experts say just the right things to support the fait accompli decision to scale back homeownership in favor of federal support of rentals.

Second, notice who was speaking on the panels and who was not. The National Urban League is speaking, presumably about how the mortgage meltdown has disproportionately impacted African-Americans. So is Michael Stegman -- whose business card must be crowded indeed, as he is the director of policy and housing for the Program on Human and Community Development of the John D. and Catherine T. MacArthur Foundation. Then there were a couple of academics and a couple of bankers, whose institutions are regulated by (and these days, funded by) the Treasury Department.

Who was not speaking at a conference about housing policy? Well, the National Association of Realtors was conspicuous in its absence, considering that it is the largest trade association in the country, with over 1.2 million members who are directly impacted by any housing policy issues. The National Association of Home Builders was also notably missing; one would think that the people who build homes for a living might have a thought or two about housing policy. Given their biases, one might think that experts from those two associations might have views that differ, from the handpicked panelists, on what federal housing policy ought to be.

The inclusion of the American Enterprise Institute was interesting, as they tend to be pro-market people and widely viewed as a conservative Republican organization. But they are also the people behind this treatise which makes two major recommendations: eliminate the mortgage interest tax deduction, and incentivize local municipalities to ease building restrictions. I imagine that the Obama administration will split the difference and adopt half of the "conservative" solution in order to proclaim that they are taking Republican ideas seriously. Guess which recommendation will be accepted and which will be rejected? If you think the mortgage interest deduction will survive past 2012, you're far more of an optimist than I am.

And what do the real estate agents generally want in a new housing policy? I discuss them in greater detail (and at far greater length) over on my blog, and the comments by working Realtors are interesting to read. On the whole, they appear to want the government to simply stay out of futzing with housing at all. Reform Fannie and Freddie, by all means, but those are government-created entities now well on their way to becoming a quasi-government organizations like the FDIC and the CPB. (This, by the way, is the official recommendation of the NAR; it isn't clear to me how many of its rank-and-file members really support such a thing.) Perhaps in future columns, we'll examine some of the fallout from yesterday's play in three acts.

Here's what I expect to come out of the housing finance summit (keep in mind that I'm not a lobbyist, nor a Washington insider):

o. Blame will be spread around to everybody, and it will be declared that the nation's housing policy needs urgent reforms.
o. Fannie and Freddie will come in for a beating.
o. There will be much gnashing of teeth about how badly these homeowners were hurt by the foreclosure crisis, and that they all would have been better off continuing to rent instead of buying a home.
o. The experts will all loudly proclaim that there needs to be a private-public collaboration on housing.
o. The mortgage interest deduction will be roundly vilified, setting the stage for its repeal.

What I am interested to hear, however, is to get some more substance behind the Obama administration's policy of "sustainable homeownership." What exactly does this phrase mean? What are the contours of such a policy? Are we looking at higher down-payments? Higher rates? No federal support for mortgages period, or just low-income mortgages? We've seen some of the outline of the policy for supporting rentals, at least for low-income families. But what does such support look like, for what would today be considered middle-class, affordable-housing buyers, and who tomorrow will become renters instead?

The political theater of the absurd that took place yesterday was a puppet show in support of a done deal. The real drama begins in the coming days as the elites in New York, D.C. and elsewhere try to figure out what to do about housing. Stay tuned and hold on; we live in interesting times.


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]]>future of housing financenational association of realtorsreal estate industryRob HahnRob Hahn2010-08-18T17:27:00 00:00What Real Estate Agents Wish You Knew About Their Job, Part 3: What Motivates Them (It's Not Always Money!)http://realestate.aol.com/blog/2010/08/09/what-real-estate-agents-wish-you-knew-about-their-job-part-3-w/http://realestate.aol.com/blog/2010/08/09/what-real-estate-agents-wish-you-knew-about-their-job-part-3-w/http://realestate.aol.com/blog/2010/08/09/what-real-estate-agents-wish-you-knew-about-their-job-part-3-w/#commentsFiled under: ,

Real estate agentFew professions come in for more abuse than real estate agents. Maybe lawyers. And possibly politicians, but I hesitate to call that a "profession" in any sense of the term. And since housing is so much in the news these days, one can't help but pick up the animus of the general public against real estate agents.

Megan McArdle's recent post on The Atlantic website regarding Wisconsin's $1,000 down payment program, for example, was a critique of the government program. But in the comments, you find sentiments like this:
"I agree that this program doesn't make sense. But why do you end the post by saying that the motivation for it is to buy votes from low-income voters, when you have already recognized that it is surely the realtors* who are behind it. (And that it is not their votes that the politicians want -- it's their money.)

*'Realtors' is a trademark and you are supposed to capitalize it. Screw them."

From the outside, that line of reasoning makes a lot of sense. Real estate agents make more money when they sell more houses at higher prices, given the particularities of how they are compensated, and the National Association of Realtors has a lot of political power. Surely, they're conspiring with politicians in smoky back rooms trying to stick it to the average American to enrich themselves, right?

The thing is, when you're inside the industry, the picture is a bit more complicated.
First, the average Realtor is not exactly a mini-Trump lighting his Cubans with $100 bills. More than 62 percent of Realtors earn below the American median income of $52,000; some 39 percent of Realtors earn less than $25,000 per year. Consumers who rage against the "real estate machine" should at least acknowledge that most Realtors are solidly middle-class people. To earn that money, real estate agents have to deal with: incredibly complex and incredibly annoying local, state, and federal rules and regulations; unrealistic and obstinate sellers; panicked phone calls in the middle of the night; driving people around on weekends; spending vacations glued to the Blackberry; and very often, long, long, long hours. No wonder that when confronted by hostile consumer sentiment, most real estate agents respond, "If you think it's so easy, why don't you try it for a month?"

Second, every single real estate agent is an independent contractor by statute. They have no benefits, no 401(k), and few of the rights that most workers simply take for granted. Which means that every real estate agent is a small business owner -- you know, the "engine of the American economy" that politicians of both parties embrace (at least rhetorically, before they go screw them over) and consumers love over "Big Corporations"?

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Third, real estate agents are usually your neighbors. Think about it. If you're going to sell a house, or help someone buy a house, you need to have at least some real knowledge about the neighborhood. It'd be a tough act for a New York City-based broker to try and sell a house in upstate Binghamton, N.Y., even if he is licensed by the State of New York. Often, the concerns that you have about your town, the value of your home, local government rules, zoning issues, school performance, traffic problems -- these are all concerns that real estate agents share with you. Because chances are, they live down the street from you.

Finally, and most importantly, because I work in the industry but am not a real estate agent or broker, I'm always curious about why people enter this business at all. Why do they keep doing it? The No. 1 answer that I have gotten over the years is that they love to see the absolute joy that a family experiences walking into a home they own for the first time. "Because I love helping people" is the most cited answer from real estate agents as to why they keep working in this crazy business.

A Realtor friend recently told me about a client family. They had rented for years, scrimped and saved for the down payment, and bought their dream house in the suburbs. Less than a year later, the husband got laid off, and they decided to move out of state to be near the wife's family, where housing happened to be about a fifth of the price. Most of their assets and savings were tied up in their new house, since they had to put down a significant down payment, and they were terrified of losing all their money due to the falling housing market. My Realtor friend got their house sold somehow in 45 days, above the family's asking price. I spoke with her right after the closing, and she was just so happy for her clients, who had become her friends over the course of their ordeal, and she couldn't stop talking about just how relieved they were that they could move on with their lives and start over.

Now, you could be cynical and think that she was just selling a load of horse crap to justify the 2.5 percent commission that she earned on that sale. You could choose to believe that she only cares about the money. And maybe she's just unique among real estate agents for caring about people, about her clients. You could think those things. But you'd be wrong.


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]]>home buying advicehousing marketmiddle-classprofesssionsReal estate agentsrealtorsRob Hahn2010-08-09T10:25:00 00:00