Heather Smith knows how to get young professionals engaged in our political process. She founded an initiative called Young Voter Strategies as a way to reinvigorate our democracy by making clear to young people the importance of their political involvement. One outcome of that, arguably, is the success of Barack Obama’s presidential candidacy. Whatever your views of his politics, his camapign was built on a massive influx of young Americans who had little or no involvement in politics before. That can only be healthy for a democracy, regardless of where you fall on the political spectrum. She’s now head of an initiative called Rock the Vote. You might have heard of that: it works through rock acts like the Fall Out Boys and entertainers like Zach Braff to reach out to young adults about voting.

I mention Smith because she’s one of the speakers at a forum called Rock the REALTOR® at the 2009 REALTORS® Conference & Expo on Friday that touches on an important topic for the health of real estate in the years ahead: getting today’s young real estate professionals to take an interest in the politics of real estate.

Heather Smith

What are the politics of real estate? Getting the home buyer tax credit extended and expanded is a good example. If you don’t follow the day-to-day machinations of the legislative process—hopefully you’re too busy cultivating customers and closing deals to do that—it might seem like there was little controversy behind the effort to get the credit extension passed, which it did about a week ago. After all, the Senate passed the credit without a single “no” vote. But in fact passage of that law was in some sense years in the making. That’s because it’s taken years for NAR (and other real estate associations, for that matter) to develop the ability to energize its members on behalf of what’s best for real estate.

You should know that NAR broke all records on its Call for Action to extend and expand the tax credit. I don’t have the latest figure, but the last time I checked NAR had an 18 percent response rate. Compare that to just two years ago, when the typical response rate was 3 percent. That kind of turnout is crucial, because lawmakers respond when thousands of real estate professionals in their district or state contact them about an issue.

Here’s where young people come in. The average age of NAR’s members is 52. For the health of real estate markets going forward, NAR must continue to educate lawmakers about the impact of their proposals on your business. That’s a job that increasingly will fall to the up-and-coming generation of real estate professionals. As such, NAR recognizes the need to get its younger members involved in the advocacy process. And this forum is an important part of that effort.

Peter Leyden

Other speakers are Peter Leyden, director of the New Politics Institute, and Keith Kanemoto, a 2005 REALTOR® Magazine 30-under-30 winner and a broker of Prudential Rocky Mountain, REALTORS®, in Longmont, Colo.

Keith Kanemoto

If you’re not already planning to attend that session, I encourage you to check it out. If you’re a broker with younger professionals in your office, you could learn much about how to get them to make the connection between their success and REALTORS® adviocacy success in Washington, at your statehouse, and before your city council.

The BOR 90 is the U.S. team's vessel for the 33rd America's Cup race, taking place in February 2010. The boat is docked next to the San Diego Convention Center.

The NATIONAL ASSOCIATION OF REALTORS® kicks off its 2009 Conference & Expo this week in San Diego. It’s the first time it’s ever been held here, and attendees who have never been to “America’s Finest City” before are in for a real treat. San Diego offers a very agreeable climate (at least to someone who’s coming from Chicago in November), and the Convention Center and nearby hotels are surrounded by interesting things to see and do.

This year’s Conference & Expo promises to be edifying and fun. There are approximately 400 exhibitors this year, and the aisles will be packed with real estate pros checking out the latest in everything from mobile real estate apps to transactional tools to selling techniques. Also, the workshops and sessions will provide insights on just about every topic related to real estate, from social media to research resources. Attendees can get info on a broad range of subjects, or go through more concentrated tracks based on their background; these include young professionals, broker/owners, and commercial practitioners.

The conference also has great headliners, including former U.S. Secretary of State Condoleezza Rice, negotiation expert Daniel Shapiro, and social media guru Tara Hunt. Additionally, we’re excited about a couple of recent developments in the program. First, as Rob Freedman mentioned in a prior post, FHA Commissioner David Stevens will be addressing hot topics in mortgage financing in a one-hour talk on Saturday, Nov. 14. Second, this year’s NAR Booth Celebrity is none other than TV legend William Shatner. (No word yet as to whether he’ll be doing any renditions of “Rocket Man.”)

We’ll be covering much of the action right here on this blog. We hope we’ll see you in San Diego, but if you can’t make it this year, we hope to see you at Speaking of Real Estate.

In an effort to give condo lending a boost, FHA yesterday released a mortgagee letter (2009-46 A) that lets lenders make loans to condo buyers even if it means 100 percent of the project units would have FHA financing.

That’s a level of market exposure far above what FHA is allowing in its baseline rules (which you’ll find in another mortgagee letter: 2009-46 B), which limit FHA concentration to no more than 30 percent of units.

FHA is also easing its 50-percent owner-occupancy requirement—long an industry concern—by allowing lenders to exclude foreclosed properties in their calculation. That could go a long way in helping buyers in the hardest-hit areas tap FHA financing because it means none of a project’s distressed units count against the owner-occupancy limit.

The agency’s also allowing lenders to make spot loan approvals until February 1, 2010. If you’re not familiar with spot approval, it’s an authority given to lenders to finance one unit in a project that hasn’t yet been approved by FHA for financing.

These and a few other changes that reflect a realistic assessment of today’s market conditions take effect Dec. 7 and they last, with the exception of the spot approvals, until the end of 2010.

If you’re going to San Diego for the 2009 REALTORS® Conference & Expo this week, make it a point to hear FHA Commissioner David Stevens in the An Hour with the FHA Commissioner session. He will almost surely cover these condo rule changes as well as FHA’s recent guidance on appraiser selection. That guidance has been widely praised for helping to bring clarity to implementation issues that have plagued the Home Valuation Code of Conduct (HVCC), the set of guidelines adopted by Fannie Mae and Freddie Mac earlier this year.

I had the privilege of interviewing Stevens a couple of weeks ago on FHA’s appraisal guidance, condo rules, and financial health. If you’re interested in what he has to say, you can listen to excerpts here.

The next year or two may be a “test of survival” for anyone in the commercial real estate sector, but the upswing could be very lucrative for the ones who make it through that period. This was the overarching message coming from panelists and speakers at the Urban Land Institute’s Fall 2009 meeting in San Francisco last week, as well as ULI’s Emerging Trends in Real Estate 2010 report, which was released at the event.

Right now, the consensus among industry experts seems to be forming around a slower, “L-shaped” recovery in the commercial market, with employment repeatedly being cited as a key factor in determining exactly when that recovery may come. The discussion was well-timed, seeing as how the U.S. unemployment rate topped 10 percent last month, reaching levels we haven’t seen in a quarter century. Predictions as to when we’d see real job creation again ranged from late 2010 to 2012.

Employment is just as critical an issue in commercial as it is in residential, if not more so, because it affects so many parts of this industry. Many of the millions who lost their job and have been unable to find a new one have had to move in with relatives, hurting both the housing and multi-family markets. It’s safe to assume these people aren’t shopping much either, which partly explains the slump in retail. And the office and industrial sectors obviously aren’t benefitting from rising unemployment. So the “jobless recovery” is a real fear.

Other problems abound as well. Total office vacancies rates may peak close to 20 percent this year, according to Bret Wilkerson, CEO of Property and Portfolio Research. Commercial development is stagnant, and the glut in existing office and retail space ensures that it will remain so for a while, says Stephen Blank, senior resident fellow at ULI. And rents in the multifamily and office sectors aren’t going anywhere.

With all of these negative forecasts, it might not seem like there’s much to be hopeful about in commercial. But the companies that can survive might be able to take advantage of a turnaround in just a few short years, especially if the unemployment rate falls next year. “Whoever’s left standing will be in a great position,” Blank said. “2011 could be a great year for people with investment dollars.”

The rebound of the real estate investment trusts (REITs) may also be a catalyst for a broad recovery in commercial, he added. “REITs have recapitalized and stabilized,” Blank explained. “If they continue to have access to the capital markets, they’ll help commercial recover.”

A panel of experts that included representatives from the Hass School of Business at the University of California, Berkeley, and RREEF Alternative Investments predicted that the best places for commercial real estate over the next few years would include markets with thriving tech industries and large coastal cities (particularly New York). The worst locations for commercial would be anything in depressed Rust Belt cities such as Detroit and Cleveland and many Sun Belt cities in Florida and the Southwest (especially in the office sector).

What moves do you see for the commercial market in the next few years? Up, down, or sideways? Let us know.

Better Homes & Gardens Real Estate launched an iPhone app today. True to their brand, the app adds the flavor of the magazine by including tips on how to live green, make over a room, or tackle an entire remodel. BH&GRE also added a neat camera function to allow an end user to take pictures of homes they like, geo-code them, and send them off to one of their agents. Toss in RedFin’s more utilitarian but awesomely executed app, and both brokers and brands throughout the industry have two fine examples of how to execute a mobile application.

That’s great for big companies, but what about the little guys? Here’s a list of cool apps I’ve found that real estate pros should consider running.

WalkScore – This GPS-enabled app not only lets you determine a WalkScore on the fly for a particular address or neighborhood, but also points out where restaurants, schools, and other services are located with map-based navigation.

Everyblock – If Everyblock works in your city, this app is pretty amazing. It pulls down news, crime reports, health-code violations, and a ton of other data at the city-block level. This app also uses GPS to assign a location.

Home Value Pro – RealQuest’s AVM application gives you estimated values, plus other local data like median sales price, percent of homes in default, addresses of bank owned homes in the neighborhood, and a value map helps to show how one property’s value compares to others on the block.

Smarter Agent – This consumer-focused real estate search tool co-brands with brokers to include their IDX listings. This is an interesting option for a company that wants to offer an mobile search product without developing one themselves.

NAR 2009 - If you’re attending NAR’s Annual Conference & Expo, our app includes schedules, speaker information, a San Diego dining guide, and more.

Each of these apps can be downloaded in the AppStore for free by searching for their titles.

But not in the way you might think.

A new financial regulator is in the works but it’s one of those developments that’s easily lost in the news while other federal initiatives command the headlines.

The Consumer Financial Protection Agency (CFPA), which passed the House Financial Services Committee just a few weeks ago, would represent a sweeping change in the way financial services companies are regulated. Right now, our alphabet soup of federal banking regulators—OCC, FDIC, NCUA, and so on—have two missions: 1) to oversee the safety and soundness of financial services companies, and 2) to protect consumers.

The logic behind CFPA is to split off the consumer-protection side of the regulators’ portfolio so they can focus on bank safety and soundness. The new agency would focus on consumer protection.

What’s key for real estate professionals is that CFPA will focus only on financial services companies. That seems obvious, but it wasn’t always this way. As the language was originally drafted, any number of professional services that handle money in some way would have fallen under the definition of financial services. Thus, real estate professionals, who handle earnest-money deposits among other things, could have been subject to regulation under CFPA.

Rep. Barney Frank (D-Mass.), chairman, House Financial Services Committee, and chief sponsor of CFPA legislation.

The fact that the House Financial Services Committee makes clear in its bill that real estate brokers and sales associates aren’t regulated under CFPA is an advocacy victory for REALTORS®, who, through NAR, let lawmakers know that the original draft would lead to unforseen consequences if it wasn’t changed. It was.

You should be aware that CFPA could still touch the real estate transaction in several ways, though. Assuming the bill passes in something close to its current form, the Real Estate Settlement Preocedures Act (RESPA), which today is overseen by HUD, would be placed under CFPA.

Aspects of the Home Mortgage Disclosure Act (HMDA), which real estate professionals know mostly for its role in providing data on mortgage lending, would also fall to CFPA. But CRA—the Community Reinvestment Act—would not. CRA is the law requiring banks to make loans in all the areas from which they collect deposits. In other words, they can’t collect deposits in a low-income area but not make loans there.

What’s next for the CFPA bill? It must still be passed by the House and it has yet to be introduced in the Senate, but in the latter chamber, Sen. Christopher Dodd (D-Conn.), the chair of the Senate Banking Committee, has said he plans to introduce the bill soon. There’s momentum on the side of CFPA getting passed.

I sat down with NAR financial services analyst Tony Hutchinson last week to learn exactly how CFPA could touch the real estate transaction. You can hear what he had to say in the brief video interview above.

Amid several news reports that the first-time home buyer tax credit will almost certainly be extended, I’ve seen more than a few blogs and online comments arguing against it. Some of them say the government can’t afford it, and lament the fact that we’re borrowing from our children and grandchildren to pay for this. Others maintain that the tax credit artificially stimulates demand, and the market will resume its slump whenever it does expire. Still others claim that it hasn’t really motivated enough buyers who would not have otherwise purchased a home to justify the program.

I may disagree with some of these arguments, but I’m glad people are making them. It’s essential that we have a healthy debate on this important subject rather than move forward with our eyes closed and our mouths shut.

However, there is one argument that I take issue with: The tax credit and the “Cash for Clunkers” program are essentially the same thing. I’ve read this line of reasoning in a few places, and in each instance, it seems to confuse rather than clarify. It seems to me that the two initiatives are very different in a few significant ways:

• Appreciating vs. Depreciating Assets: Most of the time—and the past couple of years notwithstanding—a home will appreciate in value, whereas an automobile will always depreciate (unless it’s some sort of rare collectible). The tax credit encourages spending on something people can use to build and preserve wealth; Cash for Clunkers does not.
• Capital Flows: One criticism of the Cash for Clunkers program was that the biggest beneficiaries were Japanese auto manufacturers. Six out of top 10 vehicles purchased through Cash for Clunkers were Japanese (Toyota alone accounted for nearly 20 percent of all sales), yet all of the top 10 cars traded in were manufactured by American companies. With the tax credit, much more of the money remains in the U.S. economy.
• Distribution: The Cash for Clunkers program was a credit at the point of sale, meaning if you traded in your car for one with better mileage, you got an amount somewhere between $3,500-4,500 knocked off the price, depending on fuel efficiency. Although the tax credit can be—and has been—monetized up front in many instances to help with closing costs and down payments, it’s structured to be doled out the following year as a refund.
• Target: In the case of Cash for Clunkers, the aim was to boost sales of a certain kind of product: new cars that get good mileage. With the tax credit, the goal is to encourage a certain kind of consumer: the first-time home buyer. The distinction is important because the latter should have a greater and more enduring impact on the economy.

I understand why people are skeptical about whether the tax credit extension will produce the desired outcome and how it will be financed. But to me, the tax-credit-is-the-same-as-Cash-for-Clunkers argument falls flat, and isn’t helping people make their case.

If you regularly visit REALTOR® magazine online, chances are pretty good that you also check out our sister site, REALTOR.org, from time to time. In case you haven’t seen it yet, NAR’s official site got a design refresh yesterday, and it’s already getting some props in the RE.net. Deservedly so, too–kudos to our REALTOR.org colleagues on a job well done!

Looking to maximize on Snickers and Milky Way bars this Halloween? Zillow.com has put together a guide to the best homes in Seattle and Los Angeles for trick-or-treaters based on property values, population density, a walking score, and safety. “There is a common belief that wealthy neighborhoods are the Holy Grail for harvesting the most Halloween candy,” Zillow’s Whitney Tyner writes. She claims that their calculations have produced a list of neighborhoods where children will get the most candy while doing the least walking (is this really a good thing?).

Recently I was chatting with a very successful real estate pro who took great pride in the many plaques and other forms of recognition that his brokerage gave him month after month to acknowledge his enviable sales record. This Florida-based gentleman, with more than 40 years of experience under his belt, is still hard at work every day scoping for buyers and going after new listings.

His business has slowed some in the past few years as it has for many. But clearly the trophies of his excellent work were, and still are, a major source of pride, as well as a centerprice of his marketing effforts. But the encounter made me wonder about the real value of sales contests these days. Do your brokerages encourage competition among sales associates with plaques and other highly visible rewards for individual success?

For a future article in REALTOR® Magazine, we want to hear from broker-owners, managers, and sales associates how important you think it is to publically recognize top performers? Does such recognition motivate others to work harder or does it result in unproductive jealousy or griping? Please share your thoughts and experiences concerning sales contests. Feel free to e-mail me directly if you prefer at wcole@realtors.org.