OUCH! That’s almost as bad as my MOST abhorred blunder (especially by actual agents on radio ads) of “REAL-IT-TOR”…

I think I just armortized in my mouth a little…

Most realtors support the Interest only and adjustable ARM loans. How else can you move inventory? How many buyers in San Diego can afford a 30 year conventional loan with even 10% down? Not many, unless you have a ton of equity to realize which is almost impossible with the entry level market drying up. Interest only, adjustable arm loans, even some reverse amortization loans are the only way to get into the SoCal market. Unless you want prices to drop, but what realtors want that to happen?

Now Congress wants a bailout, that will only make the problem even worse.

Mr. McMansion – We can agree on one thing: Interference by the Federal Gov’t will only make it worse. Not that their intentions are bad, but they are messing with market forces that should be left to their own.

Your statement that “most agents support interest only and adjustable ARM loans” (presumably just to get the deal done) is your own prejudicial position and is simply not quantifiable.

Regarding the problem of so few people qualifying for conventional loans with 10% down, I submit that many can. They just need to save $$ to do it. In fact, I believe that many zero down buyers had the 10% but wanted to spend it (overspend it) on other things such as cars, home upgrades, buying too much home (for their income), etc. The relative ease of availability of zero down, interest-only loans somewhat negate the old fashioned ethic of EARNING it. Feeling the pain of signing that check for that 10% down payment made a lot of people very proud and damn sure they would do whatever it took to protect their hard earned investment. Those days are gone, at least for the moment.

Prices dropping at some point in time are a reality of every business cycle since the beginning of the free enterprise system. What owner of anything wants to see the value of their asset fall?? But, unless you were born just a few days ago, you would know and understand this very basic macroeconmic principle.

Real-I-tors are just so darn sleazy, huh? Amazing what generalities are thrown around under a veil of relative anonymity! I just aRmortized in my mouth a little bit again…

ARW – You’re funny!! But be careful. I’m not sure your dental coverage covers this condition.

Steve, if you and Kris went head to head on stage at Comedy Hour… who would take home the $1,000 prize? I’m quickly becoming conflicted…

ARW – Of course Kris would walk away with the $$.

(I had to say that)

Do you still say ” It is a great time to buy”? If you were renting, you know you would wait, as this is only yr ~2 of the bear market. (7 yr cycle usually). 89-96 was bad, this is much worse.
Most Realtors are lazy and uneducated, heck, they can even fill out the entire MLS for of take good photos. That is all they have to do when listing a house. They will go away like other brokers as the web makes them obsolete.

Steve:
Sure many can, lots of people have 100K or more in their checking accounts, that why the savings rate is at 0%, right? Move-up buyers had the 10% but they thought that appreciation would get them a better return on their money (hence the run up in prices) Of course this was the exception to the rule. Most first time buyers did not truly have the 10%; and it is a big stretch for you to say that they did. The entry level created the move up buyer. I really don’t know why you got so hot about my comments but I know that Realtor’s job is to get people into homes (your whole success model is built on moving inventory, i.e. the “Prudential President’s Circle Award”, etc). I am sure you have customer satisfaction awards as well but your main driver is sales. That’s what you do Steve.

When the boom was in full swing the real estate industry was fully participating in changing the financing paradigm of home mortgages. My last agent was a big believer in interest only because of the tax benefits. Now that things are going bad you want to say that you were a big believer in those crusty ole 30 year loans all along! Please, you are not creditable with that. If that was so then there would not have been a exotic boom at all; supply and demand would have kept housing values at the rate of inflation or maybe a little more. But, that would have had a dramatic effect on the sales of homes which translates into less $$ for Realtors. I guess you were advising people not to get into those bad loans and doing a personal financial inquiry on every client, if so then good for you. You are a saint.

I think this article this morning from the San Diego Union Tribune says it all about the mortgage issues. Never knew that it was the NAR themselves actually lobbying Congress for risky changes in the loan industry throgh passage of the Zero Downpayment Act and changing the the interest rate from 1% to 2% in the first year. I think that this information makes the case that Realtors due support Interest only and and risky adjustable ARMS. How can you say otherwise? Read about it in the Business section front page from DEAN CALBREATH:

http://www.signonsandiego.com/uniontrib/20070415/news_1b15dean.html

David Lerach really is doing more harm then good for professional Realtors.

This is the actual quote from the article, why not start a thread about it…… ha ha

“Under the belief that home prices would keep going up, the Realtors spent the past several years clearing the way for more adjustable rate, zero-down or interest-only financing.

In 2004, the association successfully pressed Congress for the Zero Downpayment Act. And in 2005, the association helped push through a law to let lenders raise interest rates on adjustable loans by 2 percentage points within the first year they are issued, twice as high as the previous cap.

The changes wrought by the association helped stave off the decline in housing prices that some economists were predicting. The alternative mortgages became part of a new reality for real estate, just like the dot-com stocks were part of a “new economy.” “

Don Doerna – Your credibility just tanked when you suggest that the current market correction is worse than the early ’90′s. That downturn was a combo of a national and local recession and the concurrent demise of General Dynamics (+75,000 jobs lost here in 24 months). Interest rates were at approx. 10% and we had the S&L debacle, just for good measure.

Personally, I never say whether it’s a good or bad time to rent or own. That is a decision of the client based upon many reasons, different and personal to each one. My job is to advise as best I can based upon every day experiences and research, as well as to protect the clients interests. The client is my boss and the decisionmaker.

Your critical comment about realtors is a stereotype that may be rooted in a bad experience you have had. Maybe you didn’t do your due diligence in the selection process. I will not deny that there are good and bad practitioners, just like in every profession. In many cases, critical comments like yours are a smokescreen for not taking responsiblities for your actions and simply wanting to place the blame on anyone but yourself. Your percieved and professed knowledge about what exactly a realtor does is naive at best and confirms the preceding. I certainly hope that for your next transaction, you are more particular in the selection of your representation.

Mr. McMansion – For the record, I have never been a fan of zero down and/or interest only loans. I actually caution my clients against these loans (sorry if I’m too old fashioned). Having said that, many clients, my own included have opted for the vehicle. The only other thing I can do, at this point is to try to steer the buyer to a mortgage broker whom I trust, who is philosophically conservative (as I am) and who will actually explain the worst case potential for the future. I have had many clients whom I cautioned in this regard. One, who is now in one of those nasty loans, told me they had an “absolutely great” lender (whom I did not know). They rejected my plea that they get another quote, both for the purpose of generating competition and to gain a better understanding of the risk. Now, two years later, they are regretting their decision not to listen to me and recently told me they “hate” their lender for having put them in such a bad loan. Unfortunately, this is not a solitary example.

Yes, my job ultimately is to sell. But I am in it for the long haul and I refuse to compromise my principles just to get a sale. I want every client I represent to want to use me again someday or to refer me to a freind or neighbor. I know this concept may sound old fashioned, too, but it allows me to sleep well every night.

With regard to the zero down problem, I still disagree with you. The difference is when you suggest that not many people have $100,000 to drop on a home purchase. At 10% down, that example suggests that they are buying a $500,000 home. Now I know that in San Diego that is about the median ptice, but the point I was trying to make is that people have a tendency to overstretch their budget. In every case that I have bought a home, I can tell you that I wanted more. But I had to bite the bullet and take less because I could not afford the home I really wanted (including today). The first purchase was a 420 sq. ft. studio condo in Mission Valley. It was years later before I was able to move up to a whopping 640 sq. ft. 1BR unit. In each case I had to spend many years saving to get to the point of putting down 20%, because I felt that by imputing equity not only lowered my monthly payment, but gave me a security buffer for downturns in the market. The message in this is that people are not necessarily entitled to buy what they want. I certainly wasn’t. It’s a hard earned priviledge. Maybe a potential buyer should buy to their budget, even if that means they get a small condo and not a house. Or maybe they should wait until they have saved more for the purchase.

KC – I don’t disagree with you. Dean Calbreath’s article was well researched and well written (as they have been for the relatively short time he has been writing for the SD Union). I am not proud of the NAR, nor their head cheerleader David Lareah. My crediliblity as an agent is diminished when they appear so obviously self-serving in their statements and their economic forecasts. I also know that in my little network of agents, many/most agree with both you. If you have read any of my previous posts, you will know that I am not a great fan of economists, in general, since they are commonly wrong and then simply blame their inaccurate forecasts on “changing conditions”.

You failed to note that later in the same article Calbreath mentioned that the UCLA- Anderson Forecast was also wrong. It is also important to acknowledge that these forecasts are usually fairly macro and consider the nation or an entire region. Individual markets within a region will have varying characteristics that may or may not ever be in line with forecasts.

I will leave it to Kris (the much better writer) to decide if she wants to start a thread on this, but you will have my recommendation and support.

Steve:
Great response to the questions, although I don’t understand that if the majority of Realtors disagree or are outright embarrassed of David Lerach then why is he the NAR mouthpiece? Doesn’t the NAR control who its leaders are? So do you support the lobbying efforts of the NAR? Also when you stated:

“Your statement that “most agents support interest only and adjustable ARM loans” (presumably just to get the deal done) is your own prejudicial position and is simply not quantifiable”.

I think the fact that indeed the NAR has outright lobbied Congress to pass passage of the Zero Down payment Act and changed the interest rate rule from 1% to 2% in the first year is indeed “quantifiable” evidence that Realtors and the mortgage industry both encouraged, lobbied and help put in motion the speculation and mortgage mess were in today. So yes, your industry is indeed responsible for the tinkering of “market forces” that you mention. The end of the article mentioned the fact it is hard to predict what a “crazy man might do”. Realtors are just as responsible for encouraging such craziness.

God help us if taxpayers have to bail out speculators, flippers, bad consumers, speculative realtors, sleazy mortgage people and the like for this.

When And: Austin Realtor’s Wife Says: “Real-I-tors are just so darn sleazy, huh?”

Well that’s just a typical reply to the huge problem; lets be condescending instead of answering the tough questions and actually trying to clean up your industry. Especially when you say that your husband “gives back closing costs at the kindness of his heart”. All I can say is OMG.

However, after reading Steve’s comments I feel that he may be one of the few that indeed has an interest in following ethical guidelines, and at the same time able to enjoy a successful business. You must fall into the minority. Perhaps the fall out will remove the ilk that produced this mess, only time will tell.

KC – I appreciate your very cogent comment. I, personally do not agree with NAR’s PR machine. But I should clarify that when I said that there are many within “my little network of agents” who don’t agree with the NAR/David Lereah strategy and PR, that the operative word is “little”. I obviously cannot speak for the vast majority of agents across the country who are members. And yes, I guess I am guilty of not getting involved in NAR (so I guess I shouldn’t bitch). After 20 years of the development business and seemingly endless negotiations for land use entitlements with governmental agencies at all levels, I am just not an activist anymore. Now I advocate soley for my clients on a home-by-home basis. I just try to do the best that I can. I know this is an apathetic attitude, but it’s reality for me today.

I also agree with you that government interference (i.e., a taxpayer bailout) is wrong. The market needs to be able to move freely to self correct, even if there is pain (and there will be). It will serve everyones best interest in the long run.

With regard to Austin Realtor’s Wife, I will defer to her to respond to your comment.

Again, thanks for your comment.

Steve: Awesome, you are a wise man. It’s obvious why you have a successful business. Hopefully, you can influence NAR for the better. Also I am going to start using the word “cogent” it’s cool.

McMansion – You undoubtedly made Steve’s year. So rarely is anyone accused of calling him “cool”.