By NAR 2013 President Gary Thomas
Owning a home of your own is a vital part of the American Dream.
The 75 million Americans who do own their homes can testify that homeownership helps people, communities and the nation. Homeowners are happier, healthier and enjoy a greater feeling of control over their lives. They vote, volunteer and contribute more to their neighborhoods. And because homeowners pay 80 to 90 percent of federal individual income taxes, they provide ongoing support for programs benefiting all Americans.
At the National Association of REALTORS®, we are working hard to inform, educate and engage people across the country about the benefits of homeownership. During this year’s Midyear Meeting & Expo, we asked REALTORS® from coast to coast to step up and tell us that “Home Ownership Matters.”
We heard from REALTORS® all the way from Maine to California. Their genuine enthusiasm for what they do is evident in their personal testimonials. If you want to see for yourself, watch our video.
By NAR 2013 President Gary Thomas
Our hearts go out to the victims of the terrible tornadoes that ripped through Oklahoma. Tragically, as it stands now, 24 souls were lost in the storm, including nine children. Property damage is estimated to reach over two billion dollars.
We’re hearing from neighboring associations that as many as 38,000 people were affected, with 12,000 to 13,000 homes damaged or destroyed.
The loss is overwhelming.
Through it all, though, there were so many acts of courage and kindness worth noting, such as the brave teachers who protected children by laying over them to shield them from the storm.
Oklahomans have certainly proven their resiliency.
Still, they could use a helping hand. To assist where they can, the Oklahoma Association of REALTORS is working with the local boards surrounding the disaster area in Moore, as well as with neighboring association executives from Missouri and Kansas who have offered their help.
They plan to distribute supplies and funds to help those in need.
If you’d like to help the tornado victims, please look for further information from the Oklahoma Association of REALTORS® at the following link:
By NAR 2013 President Gary Thomas
As Bob Hope said, “a bank is a place that will lend you money if you can prove that you don’t need it.”
All kidding aside, we understand banks play a vital role in the housing market. And just as banks are important, so is protecting the interests of consumers.
In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). It established a new government agency, called the Consumer Financial Protection Bureau (CFPB). The purpose of the CFPB is to supervise banks, credit unions and other financial companies and enforce the federal consumer financial laws.
According to the CFPB, their mission is “to make markets for consumer financial products and services work for Americans — whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products.”
Because of their important role, NAR maintains an ongoing dialogue with the Bureau. Recently, NAR organized a mortgage roundtable with Iowa REALTORS®, CFPB Director Richard Cordray, NAR staff, and other industry partners. The meeting went very well and demonstrates the importance of presenting the REALTOR® perspective on lending issues to the CFPB. It also shows our members the value of NAR and our ongoing partnerships with federal agencies.
Last March, the CFPB held a field hearing in Iowa on their release of an expanded version of its consumer complaint database, including complaints on obtaining a mortgage, loan modification, or short sale. We welcome the database as a good start in addressing some of the difficulties facing consumers, and our REALTOR® members will appreciate that a light is being shined on deficient banking practices.
Let me mention that CFPB Director Cordray spoke at the May Midyear Legislative Meetings & Trade Expo in Washington, DC. We were interested to hear his perspective on how best to protect consumers.
Here at NAR, our goals are to increase mortgage liquidity and help consumers make better decisions about which mortgage is right for them. This will allow the real estate market to continue improving, help lift the country’s economic markets, and ensure that the dream of homeownership remains within reach for the majority of Americans.
Did you know that 45% of recent buyers used open houses to find their home? NAR encourages REALTORS® to participate in the upcoming Nationwide Open House Weekend, April 20-21, when REALTORS® will hold open houses in neighborhoods coast to coast. President Gary Thomas shares more about the Nationwide Open House Weekend in the video below, and talks about the buyers who are most likely to use open houses in their search for home.
By NAR 2013 President Gary Thomas
On April 15th, it’s a good time to remember something Will Rogers once said. He noted that, “the difference between death and taxes is death doesn’t get worse every time Congress meets.”
As the U.S. Congress considers action on comprehensive tax reform, you can be sure that NAR is doing its best to protect the many long-standing tax incentives to home and property ownership.
These include the following:
- mortgage interest deduction
- capital gains exclusion on the sale of a principal residence
- deduction for mortgage insurance premiums on private mortgage insurance and FHA-backed insurance
- state and local property tax deduction
- carried interest on commercial real estate
We’re going to have to stay on top of the action. These are complicated issues that will not be settled with a direct up or down vote that affects only real estate. They may easily be tucked into the language on a larger bill, and things may move very fast when the time comes.
Right now, we’re in the early stages of what we expect will be a long process. The House Ways & Means Committee and the Senate Finance Committee are holding ongoing meetings on the issues. As REALTORS®, we have a seat at the table and are sharing our views.
We tell members of Congress and staff how necessary these incentives are for rebuilding the national economy. Since we’re in the midst of a fragile recovery, additional housing taxes would crush the real estate market just as it is poised to help lift us out of the economic doldrums.
Our goal is to see that the tax code will continue to reflect the fundamental American value that homeownership helps build financial stability. Not only is this the right policy for housing, it’s also the best for families, for communities and the entire country.
Our government tax policy should encourage homeownership while giving more Americans a chance for their little piece of heaven. Support NAR and keep real estate tax incentives alive!
By NAR 2013 President Gary Thomas
The Internet has changed everything, and home sales are certainly no exception. A recent joint study by the National Association of REALTORS® and Google finds that real estate searches on Google.com have grown 253 percent over the past four years.
The report, The Digital House Hunt: Consumer and Market Trends in Real Estate, examines the connection between consumer Internet use and online home search and shopping patterns. Google wanted to work with us, using NAR’s custom research and leveraging it against Google’s proprietary and third-party research. The results reveal some interesting consumer trends.
While REALTORS® may not be surprised by these results, it’s important for us to be aware of any and all consumer trends. That way, we can reach home buyers where they are—online. We can do this through paid searches, relevant websites, video environments and mobile applications.
We’ve found that buyers use specific online tools at different points during their home search process. They tend to rely on search engines and general websites at the beginning of the search, then maps in the middle, and mobile applications toward the end.
Indeed, 48 percent of people who used a mobile device in their home search used the device to get directions to homes for sale, and 45 percent used it to request more information about specific home features or real estate services.
According to the 2012 NAR Profile of Home Buyers and Sellers, multiple listing service websites and REALTOR.com were the top two websites used in recent home searches. Realtor.com, NAR’s official property listing website, attracts an average of more than 20 million unique visitors per month. Mirroring the Google/NAR study, search activity on REALTOR.com has picked up 31 percent between March and October of this year.
This trend bodes well for the year ahead. It shows that more people are regaining confidence to invest in their future though homeownership. And rather than replacing real estate agents, the Internet is actually helping connect home buyers and REALTORS® in new ways.
So come see me on Facebook, and check out the new NAR Leadership page. Try it, you’ll “like” it.
By NAR 2012 Vice President Gary Thomas
While the real estate market is certainly started on the road to recovery, there are still a few hurdles that are preventing it from gathering steam. These include tight credit and uncertainty about the rules and regulations governing the mortgage market.
A recently released NAR survey found that issues with appraisals are also holding back home sales. We’ve certainly had this problem in Orange County, California, where I live. I’ve also heard about it from my agents, who have had deals delayed or blown due to problems with appraisals.
Appraisals are a vital part of the real estate transaction. Most appraisers work hard to provide accurate valuations that comply with the Uniform Standards of Professional Appraisal Practice.
However, appraisals generally lag market conditions and some changes to the appraisal process have caused difficulty. These include use of out-of-area valuators, inappropriate comparisons and excessive lender demands. Also, before the beginning of last year, some lenders’ loan processors edited valuations across-the-board, cutting them by a certain percentage.
Although most REALTORS® surveyed in September reported no contract problems, about 35 percent reported some kind of problem that negatively impacted completion of the sales contract.
The following problems were reported:
- Some appraisers are using foreclosures, short sales and run-down properties as comparables, without making adjustments for market or property conditions.
- Appraised values don’t always reflect market conditions such as rising prices, multi-bidding and/or low inventory.
- Appraised values fluctuate widely.
- Out-of-town appraisers are unfamiliar with area or local market conditions and may lack full access to data.
- Slow turn-around time by appraisers and banks delay closings.
There are signs of improvement. The appraisal industry has made progress in adapting to market conditions, expanding education and making adjustments for distressed homes used as comparables. We know that there have been cases where appraisers have faced pressure to complete appraisals using distressed sales as comparables, often in too short of a time frame, and with a scope of work not justified by the fee. NAR continues to advocate for an independent appraisal process and enhanced education requirements that allow appraisers to produce the most accurate reports possible.
Fortunately, the number of distressed sales is decreasing. They were one-third of all sales in 2011, but have averaged about one-quarter of sales in recent months. We expect it to continue to decline, reaching about 10 to 15 percent by 2013.
Meanwhile, we should all be aware of the issues surrounding some real estate appraisals. All home valuations should be made without pressure from outside sources. That said, know that REALTORS®, along with buyers and sellers, have the right to communicate with appraisers and lenders about errors or concerns with individual valuations.
By NAR 2012 President Elect Gary Thomas
So how do we sustain the housing recovery? That was the question on the table at a forum put together by the Progressive Policy Institute and the American Action Forum. It drew many people who care deeply about housing, including economists, politicians and public policy experts and media.
As part of the event, I participated in a panel to discuss future reform of government-sponsored enterprises (GSEs). We enjoyed a lively debate among panelists Douglas Holtz-Eakin, President of the American Action Forum; Jason Gold, Senior Fellow for Financial Services at the Progressive Policy Institute; and Christopher Mayer, Professor of Real Estate at Columbia University School of Business.
Most of the policy experts agreed that reforming Fannie Mae and Freddie Mac will be delayed in the near term as lawmakers focus on helping the country recover from the recession. Ultimately, we think it will be the regulator of the government-sponsored enterprises (GSEs)—the Federal Housing Finance Agency—that raises the issue. In the meantime, no real progress will be made on GSE reform until the Consumer Financial Protection Bureau and the Federal Reserve craft rules that establish reasonable underwriting and risk retention standards.
The fact is that today the federal government buys or insures 9 out of every 10 mortgages. In other words, the government provides the capital to keep the mortgage market, and, in turn, the real estate market alive.
Given this reality, there must continue to be a role for government in the secondary mortgage market to ensure the availability of mortgage capital. Therefore, any restructuring must ensure consumers have access to affordable mortgage capital in all markets, at all times, and under all economic conditions.
At the same time, the institutions must be reformed to ensure the failures of the past do not return. The structure that privatized profits and made losses public must be changed.
To address these issues, NAR developed a set of eleven principles to help shape reform that ensures a robust financing environment for both residential and multi-family housing. Broadly, these principles call for reform of the secondary mortgage market to:
1. Ensure the viability and affordability of long-term fixed rate mortgage products.
2. Define a clear and explicit role for the federal government
3. Return to strong regulation and oversight
4. Conduct strong underwriting of government-guaranteed products
5. Continue support of multifamily housing and other specialized consumer products
NAR shared these principles with Congress and industry partners. We have, and will continue to revise these principles to reflect the desires of our members. You can be sure that NAR will continue to speak up loudly and often on this important issue.
By President-Elect Gary Thomas, National Association of REALTORS®
There is a persistent truth about home ownership.
No matter how difficult the last few years have been, and no matter how much of a battering the housing industry takes, Americans still want to be homeowners.
A New York Times/CBS News poll earlier this year said that 89 percent of all Americans continue to see home ownership as an important part of the American Dream.
That’s in large part because our homes are the place where we settle down, raise our children, relax and live out our lives.
And it’s still hard to beat a house as a long-term investment. Home ownership is a contributing factor in building long-term wealth. Historically, a home owner’s net worth has ranged from 31 to 46 times that of a renter.
There are also numerous social benefits to home ownership. People who own homes are more involved in their communities. They vote more, volunteer more and contribute more to their neighborhoods. Even better, their children do better in school, stay in school longer and are more likely to participate in organized activities. As a result, they spend less time in front of the television.
Home ownership even contributes to a better quality of life. Research shows that home owners are happier and healthier. They enjoy more freedom in redecorating and renovating their house to meet their needs. Housing costs are more stable for home owners than for renters, and they can usually deduct mortgage interest and property taxes on their federal individual income tax return—an issue that will come up very soon as tax day draws near.
All in all, Home Ownership Matters! Truer words were never spoken.
By Gary Thomas, 2012 President-Elect, National Association of REALTORS®
In 2011, all of you heard quite a bit about a devastating provision in the Dodd-Frank financial reform law called the Qualified Residential Mortgage or QRM.
There was quite a bit of activity before the August 1st deadline for a letter to be submitted to federal regulators.
After that, things have been kind of quiet. But don’t mistake that for inactivity. The regulators have been reading excellent comments about how this rule would devastate the housing market.
To keep the pressure up, we gathered the Coalition for Sensible Housing to plan strategy for the year ahead. The broad-based Coalition, forged by NAR along with 47 other organizations, focuses on the proposed Qualified Residential Mortgage (QRM) rule. Published on April 29, 2011, the proposed QRM regulation is a complicated issue that could hurt our businesses
It was a great meeting of minds. A lot of smart ideas were bounced around about how to keep the issue in front of elected officials, the media and the regulators.
Last week, there was a meeting of the Coalition for Sensible Housing to plan strategy for the year ahead.
The Coalition has made an impact. We have gathered support from 53 U.S. senators, who wrote and submitted a letter by the August 1st deadline. The letter expressed their intent on QRM and opposition to the larger down payment. In addition, 310 House members signed a similar letter. Regulators have received many comments and are currently digesting that feedback.
The issues surrounding QRM arose from the financial reform legislation. Congress sought to improve the quality of mortgage lending and restore private capital to the housing market. To discourage excessive risk taking, they passed the Dodd-Frank Act requiring that lenders securitize mortgage loans to retain 5 percent of the credit risk, unless the mortgage is a Qualified Residential Mortgage (QRM) or is otherwise exempt.
Unfortunately, the rule defining how the law should be enacted has been too narrowly written. Particularly troublesome are provisions mandating higher down payments—as high as 20 percent—with even higher levels of minimum equity required for refinancing.
Even if we succeed in eliminating the down payment rule, we still need to focus on the debt-to-income ratios and credit standards.
As proposed, the rule would disproportionally impact first-time and minority borrowers. In addition, the higher rates will slow home sales, lower home prices and likely slow the housing industry during what is a fragile stage of its recovery.
We’ve been working on the issue for some time now, and I wanted to let you know that it is still very much a priority for NAR. We don’t know when the final rule will come out, but we are continuing to push back—now and in 2012.