A recent article online at RealtyTimes.com by Jennifer Allen asks the question: Is real estate really a relationship business? She says that it should not be, but adds:

“This means the more people who know you and like you, the more real estate you’ll sell. Selling real estate is about knowing how to sell real estate. Let’s say that differently. It’s about knowing how to manage and facilitate the exchange of real property so that the buyer or seller who hired you is satisfied with the outcome.
Sure, building a real estate business may have everything to do with your relationships, but, as agents, that’s not what we do. Is tax preparation a relationship business? Is dentistry a relationship business? Is dog-training a relationship business? No, we expect our tax preparers to know how to prepare taxes. We hope our dentists know how to fix cavities. We expect a dog-trainer to be a master in dog behavior. That’s their business. Our buyers and sellers have the right to expect that we know our business. This means how to manage and facilitate the exchange of real property, not how to persuade our “dear friends” to provide us with easy paychecks.”
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But what really stands out to me is this telling statement:
“It’s about knowing how to manage and facilitate the exchange of real property so that the buyer or seller who hired you is satisfied with the outcome.”

Really? Is it about facilitation? My answer is an emphatic “Heck no!” A “facilitator” just tries to get along to “do the deal”… and not be an advocate for the buyer. We ARE advocates!

You want a “facilitator”? Go find another real estate broker. You want an “advocate” as a true Exclusive Buyer’s Broker? Then you know who to use! After all, it’s “only” your home and the biggest financial transaction of your lifetime!

“The biggest tragedy in urban education in the United States is forced busing.” That is a quote from a retired school official here in the metro Columbus area, but it doesn’t take a genius for the majority to recognize the failures beginning in the late 70′s here in the Columbus City School District (and other urban districts in the US) due to court ordered busing and inept planning. Instead of the court focusing on the quality of education they focused on transportation… Neighborhood demographics are always identifiable because every neighborhood is unique!

I graduated from Columbus Whetstone in 1972 with a graduating class over 600 and the Columbus CSD had over 112,000 students then. Clear back in 1963 my parents had narrowed down their home choices to two homes – one in Upper Arlington and one in The Knolls off of Olentangy River Road and south of Henderson. The difference in price was less than $250 for virtually identical homes! But here is the key teaching point – they did not perceive a big difference in the quality of education between the two districts! And in fact, other than our football team, we were on par with UA academically, athletically, musically and so on. But all of that began to change with court ordered busing in the late 70′s.

Consider the following points, in no particular order, to demonstrate the frivolity of the current Columbus Board of Education’s recent “examination of win-win”:

1. School boundaries do not match up with municipal boundaries which do not match up with zip codes which do not match up with telephone exchanges! Never have, never will in Ohio.

2. The township areas annexed to the City of Columbus when needing water and sewer services (note: it’s the City, NOT the school district!) have ALWAYS been in their respective suburban school districts – they have NEVER been in the Columbus CSD. There is no “taking back” because they never had that land or the homes or the families to begin with!

3. Neighborhood students and their families transferring between two districts would have to have approval from both school boards and the Ohio BOE. Unless all three would agree it will not happen. End of discussion.

4. Even IF a suburban district wanted to transfer students away to Columbus CSD then the resulting retail, office and commercial tax revenues would also transfer in addition to the students families and their school property taxes. The result would be utter devastation to the suburban districts which would have a drop in students and revenue, thereby needing to cut teachers, staff and programing.

5. The loss of those students and their parents votes would also cause the historical majority of “yes” votes that support the suburban schools bond and operating levies to be
transferred away too! In New Albany, for example, the majority of Plain Township voters and about 50% of the “country club” voters do NOT support New Albany schools. If the “win-win” voters left New Albany Schools so would any chance of bond or levy financing being approved. And this is not unique to New Albany – look at the other school districts too. Historically much of their “yes” votes come from “win-win” parents.

6. Sadly over the years the Columbus CSD Board of Education and administration have proven inept at properly managing the existing students, curriculum, teachers, staffs, and physical buildings and assets which has resulted in the erosion of students and academics. And yet an area of Columbus on the far northeast side is growing and needs a local school. Developers have even offered the land for free and to build the school buildings at cost – yet nothing happens
because the Columbus BOE is fearful. If Columbus schools cant be trusted with what they have how can they be trusted with more?

7. As a graduate of Columbus schools and a life long resident I DO want Columbus City Schools to succeed so that the core of our metro area doesn’t rot scholastically with our young people! I want the Columbus CSD to excel so that people will want to send their children there and those parents that cannot move away are thankful that they DO have a great school system to send their children. “Rebuild a great school system and they will come!”

8. Using the Columbus BOE twisted thinking how about prohibiting ALL children within the Columbus City limits from attending all A).private, B). charter, C). Catholic, D). Christian, E). Jewish, F). Muslim or other church-sponsored educations, and finally G). home-schooled students too? Let’s get every student between 5 and 18 to be forced to attend Columbus CSD if they live in Columbus… just where does it end?

9. Honestly you’d think the Columbus BOE would have been briefed very year by their professional staff to be up to speed in the “win-win” agreement and not clueless. Considering that one district opted out of paying the “fee” and nothing happened transfer wise (other than Columbus CSD missing out on that fee each year) you have to wonder if all the other suburbs decided to opt out then Columbus CSD would lose another $6.3 million and still not get the students!

So while 4 members of the Columbus BOE stir the pot needlessly maybe it’s time for the “win-win” districts to quit paying the ransom that was never earned or warranted in the first place. And finally would someone please help restore the Columbus CSD to the greatness it had by focusing on what it has
has?

Andrew

Co-Chair, The Rocky Fork Blacklick Accord Implementation Panel
Chair, The Smart Growth Coalition
Whetstone High School, Class of 1972
Ohio State University, Class of 1975

Note I live in the New Albany-Plain Local School District with City of Columbus police, fire, refuse, etc services and a Gahanna mailing address

So the $64 question for those debating whether to buy a home now or wait until later is this:

Is right now thru April 30th really a great time to buy (and close by June 30th) to get the first time buyer $8K tax credit (or 6.5K for current homeowners)? Or will prices drop even more? Have we really “bottomed out”?

1. If you don’t buy you won’t receive any extra money from Uncle Sam. The federal government is ending a home buyer tax credit to help stimulate housing. First-time buyers who aren’t under contract to purchase a home by April 30, 2010 will leave the $8,000 that is available to them through the tax credit on the table. Meanwhile, current buyers will miss out on the opportunity to collect up to $6,500 from the government.

2. Buyer’s might not lock-in on the historically-low interest rates. Thanks to measures taken by the Federal Reserve including the purchasing of mortgage-backed securities, interest rates have remained historically low. The Federal Reserve is ending their purchases of “mortgage backed securities” at the end of March which will most likely cause interest rates to increase. (The FR’s purchases have kept interest rates artificially low in my opinion!)

An interest rate increase of 1% on a 30-year fixed mortgage of $200,000 could cost a buyer $125.46 more a month or $45,166 more over 30 years.

3. Buyers may miss out on record home price affordability. Home price affordability is at its most optimal level in Central Ohio in the last 50 years. Those who wait to buy may pay more for the home they purchase than what that same home would cost right now. Mike and I have started to see a few homes that are actually selling quickly and at near list price (it all depends on how a property is priced though!) And in a few instances some of our current Buyer-Clients are having to compete with other buyers for the same home! Don’t panic, because this sales trough we’ve been in will most likely continue thru Spring of 2011, but…

Recap: Call us to discuss your options. Low seller expectations, slowly rising interest rates from historic low levels, and elevated inventories of homes for sale make it a great time to buy. Now if we can just keep congress out of medeling with housing the market will end it’s price correction faster!

Here is the link to Zillow and the Columbus and Clintonville chart.

Zillow Home Value Index

More Columbus Home Values

Just in case you missed my forecast from this past winter…

Source: Bloomberg, Craig Torres and Scott Lanman (03/16/2010)
The Federal Reserve renewed its commitment to keep key interest rates near zero for an “extended period,” but also confirmed that it will stop buying mortgage-backed securities at the end of March.
The Fed, whose regular meeting began Tuesday, said that “housing starts have been flat at depressed levels” and “employers remain reluctant to add to payrolls” as a reason for extending the cap on interest rates.

“The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability,” the Federal Open Market Committee statement said.
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So what that means is interest rates WILL rise. Some are optimistically predicting only to about 5.25%. I believe it will be more than that!

I saw a recent story from the Supreme Court of Ohio (www.supremecourt.ohio.gov) that looked at new foreclosure filings by county in Ohio.

Forclosure Filings from 2008 to 2009
Delaware County (north of Columbus) - 909 to 1003, up 10.3%
Fairfield County (southeast of Columbus) – 964 to 1019, up 5.7%
Franklin County (Columbus) – 9,305 to 9,499, up 2.1%
Licking County (northeast of Columbus) 1,204 to 1,178, down 2.2%

The bottom line is without new jobs this situation will continue in 2010 resulting in continuing downward pressure on resale values. Just with these four counties the total for 2009 was 12,699 new foreclosure filings.  Compare that number to 2005 which was 8,561!  Just the extra 4,138 foreclosure filings will depress resales…

I spoke at a meeting of the New Albany School Board in 2008 and advised them that this down market would continue at least into the Spring of 2011 and if Congress tinkers with things (which they have) it could delay the recover.  Just remember – housing doesn’t drive the economy.  It’s a barometer of jobs!

Well contrary to popular belief (I am a professional buyer’s broker in the metro Columbus, Ohio real estate market) the Obama Stimulus Package as signed will be LOUSY for housing and only delay the recovery!

What?  Aren’t many housing groups and builders in favor of it?  Yes they are, but that doesn’t mean it is good for you or us (the U.S.).

I’ll cover the details of the Federal Tax Credit for first time buyers in my next blog post, but for now the renegotiation of “toxic assets” is only going to prolong the recovery.  Here’s why…

Let’s assume there are 100 homes in the whole USA.  About 60 of them are owned free and clear.  40% needed financing of some kind.  So of those 40 homes that needed financing 4 of them were purchased by people who really should not have been allowed to buy them, but greedy builders and banks let them buy with no downpayment, no closing costs and below market interest rates.

So now these 4 homes are in default.  Once they get foreclosed on and repurchased they will no longer be on the market dragging everyone else’s home values down.  But by allowing “toxic” homeowners to slide with renegotiated loan rates will only exacerbate the problem!

Other neighbor’s who are holding on barely to their homes will look at their bailed out neighbors and say to themselves, “Gee, let’s stop making payments so we can get a better rate too!”  And when that happens another wave of defaults will occur – trust me!

Here in the metro Columbus, Ohio housing marketplace we have been in a decline since around 2004 when we noticed the number of Buyer-Clients we were helping each year began to contract.  So we’ve actually seen a company wide reduction in the number of Buyer-Clients which we think hit bottom in 2008.

It’s interesting that the Ohio Association of Realtors reports that our 2008 sales volumn is “just as good” as 2001.  While the sales volumn statewide is at the same levels as 2001 what they don’t mention is that a portion of these “sales” are distressed – either foreclosed properties, short sale properties (where the seller owes more than the home can be sold for and the lender is “willing” to take less for the payoff) or distressed sellers who have enough equity to sell for much less than normal.

What’s interesting is that once these bank owned, short sale and squeezed sellers get re-purchased (snapped up) by new owners then the market will slowly begin to switch to slowly appreciating property values.  I testified last Summer to the New Albany Board of Education that this trough will last at least until the Spring of 2011.  In my professional opinion that is when we should see these bottom deals fully absorbed and actual suppy and demand equalizing since the 2002/03 era.

Of course it goes without saying that governmental intrusion will only delay this “self correcting” market.  And who knows when they will finish tinkering with the housing market!

The last think builders should do is begin building again.  Sit tight and wait.  They only further the delay if they begin to crank out the single family homes again… but that’s another post!

I was on Bob Connor’s AM radio show on 610 WTVN two weeks ago about the so called shortage of mortgage money that seems to be spewing from the media recently.  It simply is NOT true!

If mortgage money was that tight or if investor’s found it soooooo undesireable then we’d have interest rates that would have skyrocketed!  Instead of 6% they would be at 16% on a 30 year fixed rate mortgage!

But here’s a news flash – rates continue to hover right around the 6% mark which is what it’s been percolating at for many months.  And you must keep things in historical perspective…

In 1983 I got married and we bought our first home using an Ohio First Time Buyer mortgage at a great rate of 9.98%.  Yes, that’s right – basically 10%!!!  Why was I happy?  Because regular rates were about 12 and 1/2%.  So a hair under 10% was a great “deal” at the time.

Bottom line – as a home buyer this is absolutely the best time to buy since the mid 1970′s.  The market has too many sellers and not enough buyers creating a “buyer’s market” and interest rates are still great (gad, I hate sounding like a Realtor!)  We are getting absolutely STUNNING DEALS for buyers…

Perspective people!