Good morning MAR members!
Safely back in Marin this week after spending two of the prior three weeks on the road…it’s good to be back home. I was looking forward to a nice quiet three day weekend, but many of you responded with new listings this week! Alas, our customers don’t care about three day weekends…other than the fact that they have an extra day to look at homes. So back to showing and listing properties.
I’m going to find a quiet moment this weekend to honor those who have served our country…Happy Memorial Day everyone! Coming from a certain generation, most everyone in my family from the generation before me served in the military. My father Warren served in the Marine Corps in the Korean War, and both uncles on his side of the family served, Uncle Ray in Korea and Uncle Blaine in World War II. My Grandfather Blaine served in Europe in World War I, nearly 100 years ago. Plus my longtime stepfather Allen Coates was a full-bird Colonel in the Army, and he served in an artillery brigade in Korea.
I say all of this because it’s easy to forget the sacrifices made by those who came before us. Take a little time this weekend to honor those who served our country. And wish for a safe return home to those currently serving. As President Lyndon Johnson said on this day in 1966 (my first Memorial Day as a 3 1/2-month-old!): “On this Memorial Day, it is right for us to remember the living and the dead for whom the call of their country has meant much pain and sacrifice.”
Thank you to MAR member Chelsea Ialeggio for her feedback on pictures of buyers in offer packets. One of her clients wanted to include a nine-page letter filled with pictures of the family with an offer. These buyers shared that all their friends looking for homes were sharing similar letters and pictures. Chelsea shared that she had been advised throughout her career to not include pictures, as it creates opportunities for possible discrimination concerns.
Letters are fine, but regarding pictures my response to Chelsea was that to my knowledge there was no part of the REALTOR Code of Ethics preventing this practice, and that it is more of a broker risk management issue. I still feel that way. Last Thursday, however, I asked MAR CEO Andy Fegley to find out CAR’s position on the matter. Andy called June Barlow, CAR’s Chief Legal Counsel. June just happened to have a conference call set up that afternoon with the entire CAR legal staff and agreed to pose the question.
After that call, here is what June came back with: “I spoke with the hotline attorneys during their meeting and they confirmed that it is problematic from a fair housing perspective for real estate agents to participate in activities, such as including photos, that may put the seller in a position to discriminate or facilitate discrimination based on familial status or marital status or even race or other protected class. Universally we advise against it. However, none of us knew of a specific bulletin or advisory that speaks to the issue about photos in particular, though that doesn’t mean one does not exist. Regulation 2780 does list many variations of fair housing violations that could cause one to lose a real estate license. There are quite a few in there that may cover this activity.”
So, to repeat, as far as I know, it’s not against any specific REALTOR policy that we’ve been able to find, but my advice is to tread very carefully with this issue and speak to your broker about your company’s policy. I know during my time in the business it has been against the policy of my brokers.
In the category of “odds and ends”, I thought it would be useful to share some info from a presentation given a couple of weeks ago by CAR CEO Joel Singer in Sacramento during the mid-year meetings.
- Joel compared the housing downturn we’re just emerging from as “just as bad as the Great Depression.”
- The early years of the recovery were the strongest, and the current number of sales he is seeing is not performing as he would expect.
- Appreciation is moderating. There is a current “pause” in appreciation is due to the recent rise in interest rates, general economic components, and the fact that affordability has decreased statewide.
- Inventory has improved but remains tight. Inventory is essentially all existing homes; there are almost no new homes.
- During the downturn, in California we lost a million households that “should exist”. During the housing boom of the mid-2000s, “new household creation” peaked at 300,000 new households created annually. During the downturn, “new household creation” bottomed out at 30,000 new households created annually.
- California needs to “replace lost housing that should have been created over the past 5-6 years, but we are not doing so.”
- The market is over-relying on investment sales. Currently, statewide, 25% of sales are “investment sales”. Normally, that figure is 6-10% of sales. First-time buyers should be able to buy, but they can’t compete. Demand is not a problem, but the share of first time buyers is alarming. Pent-up demand is not resulting in sales. There is nothing to sell them, and when there is, these first-time buyers are competing with investors with cash.
- Along that line, the share of first-time-buyers should be higher than it is right now. He would like to see it over 40%…even 50%. At the current rate, which is around 38%, we are not seeing a healthy, “ladder-like” market
- With all of that said, first-time-buyers remain our hope once again. Millennials view homeownership as a positive thing at essentially the same rate as the Gen-X and Baby Boomer generations before them. The level of student debt, however, is staggering, and is holding back Millennials from being able to buy.
- The homeownership rate is dropping statewide. In the US, the homeownership rate is 65.4%. It’s in the mid-50%s right now in California. He bemoaned the fact that in California we are nearly 50% renters.
- There is political fallout as we become a renter society. Low homeownership rates in San Francisco have a profound effect on public policy in SF, with homeowners being a small minority of the population.
- And rents are continuing to go up because new homes are not being constructed…and the future demand for housing is not going to lessen.
- The good news is that the attitudes of homeownership remain positive…but people continue to leave California over the cost of housing. Young families, the Millennials, want to buy houses and participate in the California dream. We need more supply. In California, we need 165,000 new units of housing annually, which will create a balance of supply and demand. We are currently only building 65,000 units, which is leaving us a staggering 100,000 units short.
So let’s all go find some more listings and do our part to improve these numbers!
I wish you a safe and prosperous week.