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The Great Housing Policy Distortion

Todd Waller — Wed, 25 Aug 2010 16:27:09 +0000

Arnold Kling is all over it:

Old consensus: we need Freddie and Fannie in order to make housing “affordable.”

New consensus: we need them in order to “prevent further house price declines,” in other words, to make housing less affordable …

Government interference in housing markets, which helped produce the disorder known as the financial crisis, is still producing disorder…

The effort to prop up home prices does the following:

1. Diverts capital from other uses.

2. Uses up taxpayer money that could be spent on other things.

3. Increases the wealth of people who find suckers to buy their houses at too-high prices.

4. Decreases the wealth of the suckers who buy now.

5. Decreases the liquidity and mobility of people who cannot find rational buyers for their houses because rational buyers do not buy into a rigged market.

6. Decreases the investment opportunities for rational buyers, who are unable to buy homes in an un-rigged market.

The old government-backed system had a rationale of sorts in the old industrial order, providing a “geographic Keynesianism” which spurred consumption of durable goods coming off of U.S. assembly lines – everything from cars to refrigerators, washer-dryers, air-conditioners, and TVs. But little of that is produced in the U.S. anymore – it’s now a subsidy to offshore manufacturers. And the economy is far less manufacturing-intensive and far more knowledge-driven. These newer economic structures come along with much greater labor market flexibility and mobility, and conventional housing policy is thus at odds with Kling’s point #5. It’s time to put this bad policy to bed. But, we’re faced with an Olsonian political bind where there is not enough political clout to counter the housing and related lobby. And as Olson long ago pointed out, it’s just these kinds of political constraints that put nations and regions on the road to economic decline. Are counter-forces sufficient to overcome them? That seems to be the real question.

Tags: economic crisis, financial crisis, homeownership, housing prices

This entry was posted on Tuesday, August 24th, 2010 at 12:59 pm and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

via creativeclass.com

If you’ve not read or heard of Richard Florida, I suggest looking into his blog and his books. His book, ‘The Rise of the Creative Class’ was first suggested to me in 2006 at Certified Commercial Investment Member (CCIM) class in Chicago. Since that class, I’ve tried to keep up with Richard’s take on our current “state of being.” His most recent book, “The Great Reset,” is raising eyebrows proposing that the current economic upheaval is, in part, due to a shift in our economy; from a labor economy to a more knowledge-based economy.

Being a real estate agent, I of course had great interest in this post about our nation’s current housing policies. Definite food for thought as we work our way through this mess.

21685 Roosevelt, Farmington Hills, MI | Fresh Bungalow

Todd Waller — Wed, 25 Aug 2010 14:22:34 +0000

View the rest of my videos at http://www.wellcomemat.com/ProfessionalOneRealEstate/

This 1955 Farmington Hills bungalow is waiting for you. Hardwood floors, neutral decor & an expansive master bedroom await you. Centrally located, you are minutes from everywhere, with quick access to freeways. Check out the video walkthrough and pictures, then call for a showing.

9564 Alice Hill, Dexter, MI | Relaxed, Country Living

Todd Waller — Mon, 28 Jun 2010 20:48:58 +0000

View the rest of my videos at http://www.wellcomemat.com/ProfessionalOneRealEstate/

Located on nearly 1700 sqft of space on a beautiful country acre and located in Dexter Twp, your new home is 5 minutes from the Village of Dexter and around the corner from the University of Michigan and all that the city of Ann Arbor has to offer. Amenities include: solid six-panel interior doors, tile floors, tiered deck, spacious family room, newer appliances, master suite, 10×12 shed & fireplace.

Situated on over an acre of land, homes in this Huron Creek subdivision are well spaced for a great sense of privacy, yet not so far apart as to feel you are in the middle of nowhere.

Tips for the 2010 Plymouth Michigan Real Estate Market

Todd Waller — Thu, 18 Feb 2010 22:50:17 +0000

Plymouth Michigan real estate… buying and selling your home will get more challenging, the deeper into the year we go. Here’s a quick video highlighting the recent changes to FHA mortgage guidelines and how they will affect Plymouth home buyers and sellers.

Ann Arbor Short Sales…The Insider's Take

Todd Waller — Sat, 08 Aug 2009 15:55:09 +0000

Everyone wants a deal! We want the best price and quality combination our shrinking dollars can afford us.

The same is true for folks entering the real estate market to purchase. If you haven’t noticed, many folks when they call for housing information, ask for information regarding foreclosures and these “short sales.” I’ll tell you right now, that of the folks that I closed that originally told me they wanted a foreclosure or short sale, only 1 in the last year actually purchased a distressed property.

You know the drill, prospect says, “I want to only look at foreclosures and short sales,” thinking that these are the cheapest properties out there, and, therefore, the best value. As a buyer’s agent, you likely know how the dance is going to go….

Send prospect list of homes that meet their criteria, distressed properties and non;
Immediate phone call from prospect, “Only want distressed properties!”
While showing the prospect homes one beautiful Saturday, they ask why they haven’t gotten 123 Main St sent to them
1. 123 Main St is a non-distressed property
123 Main St is priced appropriately, in great shape and already under contract

At this point, the prospect does one of two things:

Begins to listen to you; or
Decides to work with a different agent that “listens to me.”

Ok, so a bit of an over-simplification of the process, but you get the gist.

Need more reason to be wary of short-sales, specifically? Check out this article from USA Today:

Just 23% of short-sale offers that homeowners receive from potential buyers actually close, according to a February study of 1,300 real estate agents by Campbell Communications. More than 90% of agents cited a slow response from the lender as the reason short sales were lost.

23% is an extremely LOW execution rate! 77% fail…over 3 out of every 4 short sales fail to close. Yikes, those are low odds for closing…

That’s a Grim Picture of Short Sales, but…

There is a silver lining, thin, but it does exist.

If you are the listing agent of a short sale listing, you need to stop trying to negotiate with the banks on behalf of your clients. Your efforts are best utilized, on behalf of your clients, in marketing the property and negotiating the deals to be presented to the bank. For your sanity, and the sanity of your clients, you should enlist the help of a short sale specialist or a real estate attorney.

RIP Ann Arbor News | Hello AnnArbor.com

Todd Waller — Tue, 24 Mar 2009 02:57:03 +0000

So the announcement has been made and referenced many times over already:

The Ann Arbor News will close in July 2009, after 174 years. A new news source will arise online and in twice a week print editions: AnnArbor.com. The question that real estate agents and sellers should be asking is, “What do I do now?”

Here’s the video describing the upcoming change by Matt Kraner, President and CEO of AnnArbor.com:

The newspaper has been a mainstay of marketing advertising listings for sale. Within the last 3 years, it has been easy to see, but hard to predict, when online marketing would supersede the use of newspaper advertising. For many agents, it is another way to get their face and name in the paper. For sellers, it’s a tangible way to see that an agent has done something to expose their home to the marketplace.

While it appears that AnnArbor.com will be doing a Sunday edition, let’s play what-if and ask:

What if there were no Sunday paper? How would you expect your agent to market your Ann Arbor home?

Todd

Ann Arbor Real Estate Statistics – February 2009

Todd Waller — Sat, 21 Mar 2009 16:54:19 +0000

The Ann Arbor Real Estate market is underway for 2009. With two months behind us, let’s review some numbers. Below is a brief video discussion on the housing market here in Washtenaw County. “Below the fold” are the charts and some more discussion.

From the BigHouseData Monthly Summary:

So the first two months of 2009 are done and the numbers are in. As everyone “knows in their bones” sales price continues to decline, as does the volume of business being closed. Two silver linings for the Washtenaw County housing market though: the pace of new listings coming on the market is down and the number of closed transactions is not down precipitously.

BigHouseData believes there may be a couple of reasons for the decrease in the number of transactions. However the biggest has to be uncertainty. Uncertainty over which direction Congress would go with their stimulus package. Uncertainty in the economy, jobs, etc. All the talk of the economy’s stumbles makes buyers (and nearly everyone else) nervous.

Average List Price – Month 2008

The overall average list price in February was $216,408, down over 15% compared to February 2008.

Average Sales Price – Month 2008

February saw an average sales price of $133,206, down nearly 43% from February 2008.

Number of Listings v Closings – Month 2008

# of Closings: 127 closings in February 2008, down over 21% compared to February 2008.

# of New Listings: With 497 new listings in February 2008, that represents a nearly 32% drop over February 2008.

Team366 | Ann Arbor Real Estate | Real Estate One

Ann Arbor Property Tax Assessments: A Repost

Todd Waller — Wed, 04 Feb 2009 20:51:46 +0000

Originally posted in March of 2008.

A Nutshell Lesson from Randy Repicky

Last year, this blog covered the impending Board of Review time line that every Michigander has to appeal their property tax assessments. Kind of like that bag of Bates’ burgers you had earlier today, it’s baaaacckk!

If you haven’t already, you will be receiving from your local municipality that fun, one page document from your municipality telling you that your property value has moved in some direction. If you are like a majority of Michiganders, you are likely staring at this document in disbelief.

Disbelief because it says right there in black and white that the value of your home dropped, but your taxes went up!

“What the deuce,” you might be saying. Or, “How do I appeal this insanity?”

A great article was recently sent to my attention that does a great job of explaining the how and why of the Review Board and how to effectively fight your assessment. From the article:

There is one and only one question that typically matters with a Board of Review… do the SEV(State Equalized Value) or Taxable Value exceed 50% of the market value of the property? Things that are irrelevant and not actionable by the Board of Review include: taxes going up while values are dropping; and the fact that subject property taxes are higher than taxes of neighbors, the fact that a property owner feels her taxes are excessive. Even if the taxpayer is right, it doesn’t matter. What does matter for Board of Review purposes and for a decision that will affect this year’s taxes is that the taxpayer shows their new Taxable value is greater than 50% of the market value of their home as of the December 31st of the prior year.

To lower my 2008 taxes, I need to demonstrate to the Assessor and Board of Review that my Taxable Value exceeds 50% of the market value of my home as it sat on December 31, 2007. Be focused. For practical purposes, Nothing Else Matters!

Sage advice! All that matters is showing the Board of Review that your Taxable Value exceeds 50% of the market value for your home.

Thanks to Randy Repicky for permission to recreate his article and use it here.

Ann Arbor Homes Inventory Report – Q4 2008

Todd Waller — Tue, 27 Jan 2009 00:00:06 +0000

Here’s a quick 2:30 minute video presentation on the residential inventory of Ann Arbor Homes for Sale. The full report for Condos, and other areas of Washtenaw County is available from our Stats page there to the right.

If you are interested in more in-depth Ann Arbor Real Estate statistics, give Todd a twitter.

[Heads up: my mic "peaked" on me at the beginning of this preso...see, getting better all the time!]

Ann Arbor Home Owner Tip: Ice Dams

Todd Waller — Mon, 26 Jan 2009 18:18:26 +0000

Yikes!

If you’ve ever been to Ann Arbor in the winter, you have likely seen ice dams build up on the edge of some buildings. The icicles that form can be gorgeous, but 4 foot long sabers of death really don’t appeal to me.

Seeing that this winter has been a particularly harsh winter, in light of the amount of snow and length of ridiculously cold weather recently, my broker sent out an email highlighting the phenomena of ice dams.

Check out the info after the jump:

CHECK FOR ICE DAMS

Some are worse than others, but most winters create conditions that are ideal for ice dams. Melting snow on the upper portion of the roof refreezes at the bottom.

WHAT

Check for ice dams.

WHEN

When there is snow on the roof and the temperature is a few degrees below freezing.

WHY

Ice dams will cause a perfectly good roof to leak. Considerable damage can occur to interior finishes. Concealed damage also can occur within exterior walls.

HOW

Heat escaping from the house raises the temperature in the attic. This melts the snow on the upper portion of the roof. The melted snow re-freezes when it runs down to the cold eave area, where there is no heat loss from the house. Ice builds up at the eaves and traps subsequent water running down the roof. The water backs up under the shingles causing leakage.

The best solutions include increasing attic insulation and ventilation. This will reduce the temperature in the attic so the snow on the roof does not melt. Of equal or greater importance, is the reduction of warm air escaping from the heated portion of your house, into the attic. Air leakage past the attic access hatch, recessed lights, plumbing stacks and chimneys must be stopped. (There are companies that specialize in air sealing.)

When re-roofing, a waterproof membrane can be laid along the lower edge of the roof. This is called eave protection. It will not stop ice dams — but it will prevent the subsequent leaking.

TIPS

Ice dams are more common on:

low sloped roofs
roofs which change slope near the eaves
roofs with large overhangs (wide soffits)
roofs above heated spaces that extend out over unheated areas such as porches

Electric heating cables can be installed along the eaves to prevent ice dams; however they are only effective if they are turned on before snow and ice accumulate. Ironically, these cables can provide more opportunity for leakage because they have to be secured through the roof covering.

[photo credit]