A Challenge to America's Realtors

Yeah, I remember you.

I would like to issue the following challenge to every single active Realtor(R) in the United States of America to make a series of phone calls this coming week to your top five (5) home sales clients (home buyers) in terms of highest sales transaction value for each of the following three years: 2005, 2006 and 2007.

1. Ask them how they are doing? Job? Family? Finances?

2. Are they still happy with their new home?

3. Are they happy that they bought the home when they did?

4. Is there anything they would have done differently?

5. How has the financial meltdown and housing crash affected their lives?

6. Would they accept your Realtor services in the future?

Good luck.

Please add responses in the comments section.

Thank you.

Markus Arelius

California Realtors: 2010 to be "New Normal"

Ms. Leslie Appleton-Young of the California Association of Realtors:

"I think what we're going to be doing in 2010 is building a foundation for what will be called the new normal. The recession is probably over as measured by a decline in growth, negative growth if you will. But the recovery will be contingent upon additionally likely stimulus spending and doing more to facilitate job growth because I really feel that if we don't do more direct policy initiatives aimed at putting people to work, this is going to go on for quite some time."

Not bad. For a realtor.



I'm pinching myself. Did she just say..? I'm pleased to observe a realtor in California finally displaying some measure of honesty about the situation we are all in and the uphill battle that most certainly lies before us in this state and around the nation.

California real estate appreciation, including appreciation of home values Orange County California, was based on a lie. Reckless lending practices, duplicitous sales tactics by realtors all across the state, not to mention financially inept and credulous decisions made by home buyers (homedebtors) all poisoned the water we're now swimming in together. Only now that water has become raw sewage do we understand. Ms. Appleton-Young knows and must now admit that the government is broke and it's probably going to take a very long time indeed for all of the crap to settle to the bottom, and for the stench of lies to be blown away by the ocean breeze.

The one thing I must disagree with Ms. Appleton-Young on is the call for more stimulus spending.

We DO NOT, I repeat, WE DO NOT need more American taxpayer dollars appropriated to prop up an industry that was built on lies and questionable sales practices in the first place. The price crashes all around California and Orange County are a market correction. This is not in dispute. It has been long overdue and repeatedly obstructed by the stimulus spending initiatives and political action committees funded by the CAR and NAR. Americans would benefit significantly more over the long term from a thorough housing market correction, not less of one. Stabilized markets should be our destination of choice, not the cliff hanging of the last 10 years. Of course, realtors would rather have the clocks turned back to the imbalanced market, irrationally high prices, lax lending standards, poorly informed and credulous buyers, and other craziness so that their own felt pockets could be appropriately lined with sales commissions.

I don't know about anyone else, but I don't pay my state and federal income taxes to support the REIC and the financial livelihood of California realtors. As far as I'm concerned that money should be used on something far more productive than rewarding debt slavery among those least capable of ever paying back such debts.

Using Fear to Earn Real Estate Commissions: "Housing Prices Going UP in Orange County!"

I am searching for a home to buy in Lake Forest, California and surrounding communities. I wanted to share with you a recent real estate flyer I received via e-mail from a rather well-respected, highly experienced realtor in the area. I've removed the names to protect the shameless (except for those quoted in the flyer).

Read it. What do you think?

Housing Prices Going UP in Orange County! So Consider Buying NOW.
In case you forgot, you first contacted me through my web site at www.xxxxxxxxxxxxx.com and started searching there for homes. You have been getting your requested emailed updates from me since then.

If you are waiting for housing prices to hit rock bottom before you buy a home to live in or rent out, wait no longer.

Orange County home prices last month ACTUALLY ROSE for the first time since June, according to DataQuick.

The median selling price was $375,000 — up $5,000 from January but still down 27.9% from a year ago.

For calendar month February 2009, Orange County saw:

$375,000 median selling price that is 42% below June 2007’s peak of $645,000.
Single family homes sell for 41% less than their peak pricing (June ‘07) while condos sell 46% below their peak in March 2006. Builder prices for new homes are 42% below their February ‘05 top.

Home prices usually rise in February vs. January. Last time they fell in this period? 1999!

January was the 7th straight month of sales gains vs. the year-ago period. That follows 33 consecutive months where sales failed to beat the previous year’s pace

Delores Conway, a real estate economist at the University of Southern California, says home prices have come down 40 % in Los Angeles and Orange County since the mid decade peak.

She notes that those prices, coupled with record low interest rates, mean today’s buyers can secure the same monthly payments home buyers enjoyed six years ago."

This is marketing from a Realtor. This person is trying to earn my trust.

Look, I understand as well as the next person that even Orange County California Realtors have to earn to eat.

What I don't agree with is cherry picking recent 2 month MLS and DataQuick numbers, throwing down a fear hypothesis (prices going up) in an e-mail piece with zero supportive evidence, all in order to cajole people to buy a home and promote a self-serving, commission-paying agenda.

We've all seen this film before. And it sucks.

If I'm of just average intelligence and I read the above Realtor pamphlet with the stated 41% drop in single family home prices, I'd be asking myself "why did that happen?". "What factors could cause such a major drop?", and then determine whether this drop might continue down to 50% or 60% or more?

50%! You're crazy!! NO! NEVER! That can't happen. This is Orange County, California!

No, you've got to BUY NOW or....*yawn* you'll be priced out of the market forever you no-buying-fence-sitting-wastes-of-space!!!!!

I'm just an idiot renter here. But do we really need this? I mean, given all that's happened over the last 2 years in Orange County residential real estate, at what point do we conclude: "Hey, we should really stop ourselves with all the shameless bullshit!"?

Here's a message to Realtors from a prospective buyer: Drop the fear tactics, and do what you can to start instilling some confidence instead.

Renting in Orange County. No Ball and Chain.

I'm still renting a single family house here in Lake Forest, California, paying way less than it would otherwise costs me to go into debt to live in a similarly-sized home per month here including mortgage, insurance, taxes and upkeep, particularly when one considers the economic situation and unemployment risks in this state. I mean, if I lose my job in the coming months, I have flexibility to pick up and go elsewhere. Look Mom! No strings!

I've said all along that this is wrong. It should be a privilege to rent and have this kind of freedom to get up and freaking leave. I should be charged a freaking premium to live this way and have no real obligations other than the monthly rent and utilities, especially right now.

But Orange County, California, and I presume many parts of the United States of America, have had it wrong all along. Instead, homeownership (homedebtorship) has been marketed at the premium, partly due to narcotic-like liar loan products since 2002, the resulting run up in single family home prices, and the incessant industry lies about "home appreciation" that everyone and their dog was suppose to "take to the bank". Come on. Who doesn't remember the famous Orange County, California adage: "15% is in the bag!". Jesus, who in their right mind isn't for 15% appreciation on their money?

But I've been renting. And I've been saving.

Like a mad dog.

I can't say I'm way, way ahead. Indeed, I've even lost money on investments over the last 12 to 18 months. But I have no ball and chain to me. I'm still throwing money into savings accounts and retirement accounts. I've cut my expenditures where I can. I started to grow a garden in my back yard, and I'm not eating out as much. Driving my car less and my motorcycle way more.

That all said, I would love to "own" (or actually go into debt for a home) here. I have been looking too. Carefully so. Homedebtorship definitely makes sense under certain circumstances. But not under all circumstances, and certainly not at any price.

We are now witnessing record home sales in Orange County the last few months.
And local realtors have claimed that these transactions have occurred either at or above the asking price! So these buyers either have a lot of down payment cash available, or their willing to continue borrow large amounts of money to live in a house. That's their choice. They must have awesome job security and a dependable income too, or maybe they won the lottery and inherited some serious dough.
More power to them.

Single family home prices are coming down now and mortgage rates too. Maybe the time is now to buy, or at least may be quickly approaching?

Not in my view. Not yet because home sales prices are still not congruent with local incomes in Orange County. Not yet because renting is cheaper, and it shouldn't be. Landlords can't rake renters over the coals. They certainly want to, and there time will soon come. Also, as I have stated numerous times on this blog, I do believe more housing trouble is on the way in the form of the shamefully under-reported Alt-A prime loans.
Sunny times are not necessarily guaranteed, nor is it "full-steam ahead" for California housing market.

OC Realtor Commissions Down 50% from 2005 Peak

Jeff Collins posted an excellent piece on the Lanser On Real Estate Blog today that realtor commissions nationally fell by 34% since market peak in 2005. Orange County realtors, it would appear, are really getting the shaft on commission earnings as estimates indicate a 50% drop since the 2005 peak.

Realtors across the nation no doubt earned well as the home buying market soared to stratospheric heights. But let's not forget that they earn well on the way down as well, particularly in Orange County where single family home prices have fallen dramatically over the last 18 months, but in my view still remain hopelessly out of alignment with real take home incomes here and the reality of current financing opportunities.

I mean, we are still observing idiots being advised by local realtors to put their 4 bedroom, 2.5 bath P.O.S homes up for sale at borderline $650,000.
When will these people finally get a clue that their house is not worth this much money anymore? I completely understand why realtors around these parts do what they do. Their payday is dependent upon the home sales price, so let's do all we can to make the transaction attractive, and get paid our 6%.

My view is that realtors in the United States of America, if paid at all, should be paid a flat fee for their services. Those services may have value for people who want to buy or sell real estate, but don't want to deal with all of the hassles themselves. I will admit that there might be some value there that consumers would be willing to pay for. But regardless of a realtor's efforts, overhead costs, etc. they are performing the same sales services regardless of the value of the home. I mean, realtors cannot demonstrate that they do more work or incur more costs when selling a $640,000 piece of crap house than they would selling a $900,000 piece of crap house. So why should I as a seller (or buyer) pay a fee that is a relational function of the transaction value? That kind of arrangement makes no f&%king sense!

Everytime I complain about this real estate commission ridiculousness, do you know what the response is from realtors?

Don't blame us. The brokerage house makes us do it.

Yeah, whatever.

Just explain to me like I'm 4 years old, what on earth should convince me that what Realtors do is worth 6% of a Lake Forest, California single family home price?

I didn't think so either.

This Just In: Housing Prices Actually Linked to Income, Jobs and Mortgage Rates

Holy cow! I mean, if you had been listending to a Realtor the last 8 years, you might never have suspected this 2x4 of obviousness across the face. But it's true.

Wait a minute, you mean, income, jobs and mortgage rates determine..... Yep, there's this complicated thing called "fundamentals".

This is a fantastic article by Susanne Trimbath which restates the critical success factors for prospective homebuyers.

1.) Do I have enough income (take home after expenses and debts) to purchase a home at the market prices?

2.) Will I have a job in 6 months?

3.) How do current and future mortgage rates coincide with local home prices and my monthly take home budget?

This is the part where our hall monitor Realtor friends step in and remind us, in that I-never-sold-anyone-into-foreclosure-ever condescending manner, "real estate is local".

True.

But so too are jobs and incomes.

And last Friday, California and Orange County got some interesting news:

California, the worlds' 9th largest economy according to GDP numbers, has an unemployment rate of 10.1%.

Orange County California's unemployment has reached an all-time high since 1993 of 6.5%

So why is it that a 4 bedroom, 2.5 bath, single family home in Lake Forest, CA is priced at $650,000, or 6 times the median income here of approximately $100,000 per family?

If you were to go to Redfin, Trulia, RealtyTrac, or Zeus forbid, Realtor.com, you'd be surprised as to the homes available for sale in Lake Forest.

And you would be far from impressed.

In a word, almost all single-family homes in Lake Forest, California are over-priced pieces of crap. I'm dead serious here. Most of the homes for sale right now in February 2009 in Lake Forest are foreclosures, or trashed out short sale properties. Nobody who doesn't have to sell is trying to sell their home right now. The availability of quality homes for families with children, for example, to consider purchasing are few and far between. Most fence-sitters must not only cope with still unbelievable home prices (between $450,000 and $750,000), but also the reality that the home they might buy will be riddled with defects and necessary repairs. It's just a fact. And this I'm reporting AFTER the housing crash has supposedly occurred.



Paseo Verdura, Lake Forest, California, 350 days later, still $650,000.
Bank get's an A for stubborness, and an F for creativity.

I submit that parts of Orange County are still living in a dream world in terms of their asking prices.

Why?

Well, because the local real estate market is screwed up. Yes, Orange County is a nice place to live. A beautiful place. Perfect weather, oceans nearby, mountains nearby. I mean OC living has its' merits, and those should be priced at a premium of some measure. But single-family homes remain overpriced.

Earned incomes in OC are higher than the rest of the country. However, I suspect that job market uncertainty combined with ridiculous home prices that bear no relation to incomes will keep many on the sidelines through a difficult 2009.