Here are a few relevant news stories that have popped into my inbox in the last few days:
- Money Magazine: When it makes sense to rent (Seattle is #1—woo!)
- Seattle P-I: Tax credit down-payment plan waiting for IRS
- Seattle P-I: Dueling indexes: How much are Seattle-area house values down?
- USA Today: Condo market fights to recover as prices remain down
The plan referred to in the second story above would be the irresponsible, counter-productive one we discussed here last month. Frankly, I hope the IRS figures out a way to prevent people from pre-acquiring the tax credit, but realistically I suspect the plan will move forward.
Nobody can accuse real estate professionals (or, more accurately, their lobbying groups) of letting the bubble deflate without a fight, I suppose.
softwarengineer » May 28, 2009 at 8:44 am
WHO ARE THE RE BANKSTERS FIGHTING FOR ANYWAY?
The IRS announced a 44% plunge in income tax revenue for 2008, now the banksters want RE tax credits too?
Don’t worry, the latest way to keep the Titanic afloat is to slap a federal sales tax on the working poor, after all they use almost all their income to survive, while the rich can save much of their’s….avoiding the latest federal tax increase plan. This will help prop up the bubble. LOL
Kary L. Krismer » May 28, 2009 at 9:12 am
Tim wrote: “Nobody can accuse real estate professionals (or, more accurately, their lobbying groups) of letting the bubble deflate without a fight, I suppose.”
I think that’s a very unfair statement. I haven’t read the Money or USA news, but the two P-I articles and comments hardly support this claim at all, especially the IRS one.
On the plus side I’m glad to see you’re reporting on the IRS issue.
anony » May 28, 2009 at 9:35 am
Kary,
You don’t think real estate lobbying groups are fighting to keep house prices from falling?
I think Tim’s statement is perfectly fair and accurate.
Also, check out today’s Seattle Times.
http://seattletimes.nwsource.com/html/realestate/2009272178_apusforeclosures.html
“A record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure ”
“Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process.”
I was a little bit stunned.
The Tim » May 28, 2009 at 9:39 am
RE: Kary L. Krismer @ 2 – From the P-I blog post I linked to in my April post about the tax credit pre-distribution plan in WA (emphasis mine):
So how exactly is it an inaccurate statement for me to say that real estate professionals and their lobbying groups are refusing to let the bubble deflate without a fight? Note that I did not say that this was true of every single individual real estate professional.
Joel » May 28, 2009 at 10:38 am
Oh come on, nearly everything the NAR does is aimed at either maintaining their monopoly or propping up house prices.
Racket » May 28, 2009 at 10:52 am
RE: Joel @ 5 –
Can’t blame someone for doing their job.
acerun » May 28, 2009 at 10:55 am
Higher prices equal higher commissions, it is not rocket science.
Realtors are only in it for one reason.
NoMoreWork » May 28, 2009 at 11:20 am
RE: acerun @ 7 – Exactly. It’s amazing how obvious this is, yet still gets lost on the masses.
Can’t tell you how many times I’ve heard “My co-workers’ brothers’ fiance is an agent and she says now is a great time to buy. She has my best interests at heart…” or the like. Get a grip, she’s got a car payment and credit card bills she needs to pay. That’s why it’s always a great time to buy… because she gets paid.
It’s a great time to buy a Boeing airplane if you ask me, always is :)
Ray Pepper » May 28, 2009 at 11:21 am
RE: Joel @ 5 -
I would love to be there spokes person.. Maybe its just me. I have a vision on how it would go down.
Ira Sacharoff » May 28, 2009 at 11:37 am
By acerun @ 7:
That may be true for many of them, and to be technical, I’m a real estate agent and don’t pay all that extra $ to belong to the Realtor’s group, but:
I am not in it for one reason, and I’ve always resented the propaganda from the NAR and other real estate groups, and there are at least a few other agents and Realtors like me.
Of course I want to make money, but I want to make it honestly. If that means warning people against certain houses, so be it, or if that means suggesting that prices have more to drop, so be it.
I’m always try to do the right thing, and strongly believe that if you’re doing the right thing, the money will follow.
But yes, there’s a very good reason why real estate agents are thought of as sleazy hucksters who would sell their grandmothers to earn a commission.
The Tim » May 28, 2009 at 11:51 am
RE: NoMoreWork @ 8 – In related news, it’s also a great time to buy ad space on your local blog. And to buy high density communications power management solutions. Tell your friends.
jon » May 28, 2009 at 11:54 am
RE: acerun @ 7 – “Higher prices equal higher commissions,”
That’s not the reason, because they would make more money by dropping prices and getting higher volume. A lot of them have investment properties and so they stand to gain more by pumping and dumping.
The Tim » May 28, 2009 at 12:04 pm
RE: jon @ 12 – I actually don’t think most agents who were constantly touting that it was a “great time to buy” were being disingenuous. Rather, I think they really, truly believed it, which is why they themselves loaded up on investment properties as you point out.
Now that the air is coming out of the bubble, there’s probably some amount of willful denial, but I’ll bet that a large number of RE professionals still really believe the overused lines like “your home is your best investment” and so forth.
patient » May 28, 2009 at 12:11 pm
RE: jon @ 12 – I think there is imo a huge misunderstanding by the NAR and the realtor community that they can fight economic fundamentals and turn this market around by creating another “buy now or be priced out” or “buy now interest rates will never be better” or “buy now we are at the bottom” hysteria. I really think many believe this is possible and do not realize that the masses just can’t afford it whatever desire or fear the realtors can whip up. So the result is still a falling, low volume market but where a few uninformed buyers will likely see their savings evaporate since they bought the bs.
Kary L. Krismer » May 28, 2009 at 12:59 pm
RE: The Tim @ 4 – I’d agree the lobbying groups are in favor of it. That wasn’t the part I found inaccurate. As to agents, some are for and some are against, and I’m not sure there’s a way to get a handle on that.
Kary L. Krismer » May 28, 2009 at 1:03 pm
By jon @ 12:
If you assume that the agents’ interests are the same as King County in collecting excise tax at roughly 2%, then clearly volume is the problem, not price. And lower prices could increase the volume.
On the other hand, at some point lower prices are counter-productive as they move more and more listings to short sales.
Joel » May 28, 2009 at 1:54 pm
By Racket @ 6:
Are you implying that it is the NAR’s job to maintain a monopoly while trying to prop up prices? Even if it is you can still blame them. Nobody is forcing them to do the idiotic things they do.
Also, I don’t believe they want to prop prices up because of higher commissions. What they really want is to restore the (incorrect) notion that a house is the best and most important investment you can ever make.
Kary L. Krismer » May 28, 2009 at 2:08 pm
RE: Joel @ 17 – What monopoly does the NAR have?
tomtom » May 28, 2009 at 2:19 pm
By patient @ 14:
The new mantra should be:
Sell now or be unable to pay off your mortgage FOREVER!
Kary L. Krismer » May 28, 2009 at 2:35 pm
RE: tomtom @ 19 – If you think about it, paying off your mortgage isn’t dependent on the future price of the property. The only things that matter are what you originally paid and the loan terms.
It’s only because Americans became more and more mobile, more and more materialistic, and sought new financing tools to stretch their dollars (e.g. non-amortizing loans), that current homeowners typically care what the value does after they buy.
In saying that I’m again reminded of the estate sale situations you sometimes see where the person owned the house literally forever as far as Realist is concerned, because their purchase is so old it doesn’t even show up. And guess what? They didn’t re-encumber it every 2-3 years for ever increasing amounts. How many people today would buy a 2 or 3 bedroom, one bath home, and plan on living in it the rest of their life?
tomtom » May 28, 2009 at 2:53 pm
RE: Kary L. Krismer @ 20 – Kary, This is a Real Estate Slogan. The goal is to get people to stop thinking and rely on fear to motivate action. Just like every other real estate slogan.
David Losh » May 28, 2009 at 3:16 pm
RE: NoMoreWork @ 8 – RE: tomtom @ 21 –
Real Estate is a very misunderstood profession. Many people see the commission as a pay check. Some agents see the commission as a way to get a property with little or no money down. That’s why there are sooooo many dual agency rules.
The professionals are the ones who buy, sell, and trade property. Many buy and hold forever. They buy a property a year, no matter what. They buy for what the property will rent for. Some times, not often, but some times, they will feed a property up to five years. It depends on the circumstances.
So for the professionals it is always a great time to buy. I’ve got a ton of stories that I would love to tell and that’s why I follow this blog. Blogging seems a good way to generate writing material.
What I will say, and have said many times, is: Everything you have ever heard or read about Real Estate is true. All the infomercial, seminar, books, investment group, crap is real. Some one right now is making money by buying a property.
Dave » May 28, 2009 at 3:58 pm
RE: David Losh @ 22 – “Some one right now is making money by buying a property.”
Everyone else right now is losing money by buying property!
Joel » May 28, 2009 at 5:04 pm
RE: Kary L. Krismer @ 18 – Are you being deliberately obtuse? Try this for starters.
deejayoh » May 28, 2009 at 5:09 pm
RE: Joel @ 24 – Anti-trust litigation with NAR was settled a year ago…
and good monopolists never admit they have a monopoly
David Losh » May 28, 2009 at 7:35 pm
RE: Dave @ 23 –
Interesting that the online brokerage monoploy claim is on the same thread as a claim that every one else is losing money by buying Real Estate.
You make money by knowing what to buy. Pretty pictures on your computer combined with your limited product knowledge is a recipe for disaster.
The trick is to find some one to work with you. You have thirty minutes with me. You will either listen or find some one else. Most people find some one who will listen to them, then tell them what they want to hear.
If I’m paying an average of $11K in a commission I want to hear from some one who knows what they are doing.
Kary L. Krismer » May 29, 2009 at 6:06 am
By Joel @ 24:
Buzzzzz! Oh, you lose. Try updating the results of that suit, or try even seeing if it had any merit. If you get your “news” from 60 Minutes you might think a trade association has a monopoly, but if you get your news from anything more credible than the National Enquirer you’d know better.
So I’ll ask it again, and hope for something better than a link to Google. Why do you think the NAR is a monopoly?