by G. Sax
A couple of weeks ago, I wrote a smarmy little piece for this blog from the comfort of a desert outpost in California, far from the madding crowd of Twin Cities real estate professionals trying to turn the tide against media misinformation about the availability of credit for buying homes.
It was all tongue-in-cheek jive, and I meant no harm in it, but even my wife told me I was toeing the line. Why would I go on a website that exists to promote the joys of homeownership—particularly homeownership in a city that I love—and make it sound like it's impossible to buy a home?
I have an answer for my antics in three equal parts:
1) anti-establishment silliness,
2) exercising and testing given freedoms, and
3) enjoyment of the sound of my own voice.
It also stems somewhat from frustration. I do quite a bit of real estate writing and research outside of this blog, and I get frustrated by the continued shiny-happy vibe I get from official industry outlets and even from my own professional writing, which is sometimes homogenized for a wide audience that understandably wants to be reminded that the sky is still in place overhead.
I admit that I do enjoy being a foil and a rapscallion, but I also enjoy fact and honesty, and the truth is that not all borrowers need 20 percent down. Lending is based on unique, personal finance situations, of course, but 20 percent is not the hard-and-fast rule that is probably scaring qualified buyers away. If you do put down less, you'll want to learn the phrase "mortgage insurance," but it's not a scary thing.
Yes, lending is tighter than it was when people were getting floated a quarter mil with no proof of employment, but there are a lot of decent options available and a lot of lenders looking to work with buyers.
The cool not-so-new kid on the block these days is the Federal Housing Administration (FHA), because FHA mortgage insurance provides lenders with protection against losses if homeowners default on their mortgage loans. Loans must meet certain requirements established by FHA to qualify for insurance.
These FHA loans didn't make much sense in a 21st century marketplace of rise-rise-rising home prices until February 2008 when qualifying loan limits were raised, thus making more homes eligible for an FHA loan. What once was 4 percent of the market is now expected to reach 25 percent of mortgages signed in 2009, according to the National Association of REALTORS®.
For many homeowners, an FHA loan has become the way to buy a house. For most first-time buyers, FHA deserves a good first look, especially with a minimum FHA downpayment requirement of 3.5 percent. Unless you've been remarkably frugal, lucky, wise, or you're just super rich and want to stop taking free rent from the 'rents, that 3.5 could come in handy.
Twitter
Flickr
LinkedIn
Facebook
RSS
Posterous
Email
FourSquare
Yelp
SlideShare
G I don’t think this blog ha ever been shiny happy I have always presented the truth. Sometimes it is happy other times not
I have been reflecting the last few months on the role of realtors in the housing/mortgage/credit crises and have wondered to myself why this hasn’t gotten much attention. But, alas, somebody has been paying attention. So, in the interest of fact and honesty which, as you say, is something you enjoy, I have included the following link: http://www.ritholtz.com/blog/2009/01/david-lereah-jackass/ Let it be said that I don’t mean this post to be incendiary but rather presenting an alternative view of St. Paul Real Estate and the interests we all share.
Scott, you stole the untyped words from my keyboard. I, too, clicked the ‘comment’ link so that i could be the cool guy that referenced an external post of like-mindedness. Jeez, thanks for unwittingly stealing my thunder!
G, your ‘smarmy’ post may have had a slightly cynical overtone, but I would venture to say your safe from repurcussion. The emerging norm in industry reports has been to gloss over the facts that seem not-so-attractive so as to coerce buyers into thinking the market is somewhat stable. As far as I’m concerned, this is classified as flat-out lying. But who’s surprised; we are talking about the media here. NAR is no different/better than Fox News or CNN, just industry specific.
That said, it’s refreshing to read a post such as yours, G. Undeniably cynical and eeyore-ish, but at the same time it made me laugh and it was just as undeniably REAL. Thank you for not bothering to ‘gloss’ and presenting your readers with factual, relevant, dare i say valuable content, no matter how disturbing. Keep it comin.
Realtors tend to promote home ownership. I know I do. I did that through the boom and the bust. I rarely work with investors; the majority of my clients need a place to live. I don’t see anything wrong with promoting home ownership.
If I had promoted flipping and serial investment during a boom and bust cycle, I would feel guilty, but I didn’t. I have always been careful to advise my clients to make sure they could afford what they’re buying and not to over-extend themselves. Most were responsible borrowers; a few were not.
G, I know your article is not criticizing Realtors like myself, but I do hear people criticize Realtors for the downturn (as implied by the two commenters). I don’t think that’s fair. There are good Realtors and bad Realtors, just like any other profession. You can’t blame all Realtors for the economic crisis; that’s a gross example of scapegoating.
Replying to my blog mistress, T: I didn’t mean to insinuate that the St. Paul Real Estate Blog is shiny-happy. I would never have been drawn to this place if I sensed a fakeness to it. I was talking more about “official industry outlets,” as stated in the article, specifically the big association that all REALTORS® must be a part of in order to be REALTORS®. You know, the one that invests time and promotional effort in Rose Bowl floats.
No, T, official this place is not. If you really want this to have a more “official” feel, you’ll have to let me help more with spelling and punctuation (neener, neener, neener).
To others: Thanks very much for your comments. My other big draw to this blogspace is the intelligence level and additional perspectives of those who join in on the conversation.
Nah I am not into spelling and punctuation. I sell real estate.
Laura, you seem to try to dismiss the “unfair” criticism out of hand without addressing the issues brought up by the article I linked. The main thrust of the article’s claim was that sales data was repeatedly and one-sidedly misinterpreted by the NAR over the last few years, overhyping the market at peak and downplaying the negative when it turned down. In addition, the article was aimed at the national leader of the NAR as spokesperson for the organization and, supposedly, representative of the views of the group at large. I have no doubt that there are “good” realtors and “bad” realtors as you say, but this misses the point. What responsibility do Realtors, as a whole, bear for their role in this mess? It is without question that bad mortgage loans being made by dubious lenders is at the root, but who put them there? If you have, as a realtor, no personal responsibility, then what of the people that supposedly speak for you and shape policy in your professional name?