John M. Lee: Real Estate Industry Update

I spent a few days at the California Association of Realtors' (CAR) business meeting at Monterey in January, snooping around to get the latest news on what's happening in the industry. The mood was somewhat somber because of the declining real estate market, but also upbeat in that it is the start of a new year and we just witnessed the inauguration of our 44th president of the United States, Barack Obama.

There seems to be changes in the air and the feeling that, in some markets, we have bottomed and others are nearing bottom. Most feel that 2009 will be the "inflection year" and we will be heading back into a good market shortly after that. In the outlying areas, home sales actually have been increasing due to better pricing from bank foreclosure proceedings.

When prices are low enough, buyers purchase. Also, add in the fact that interest rates are at historic lows, in the five percent level, making it tempting for buyers to purchase. In San Francisco, where there have not been too many foreclosures and not much in the way of price decreases, our number of sales have gone down and prices have decreased a little.

But, compared to neighboring areas, we have reasons to celebrate!

Other tidbits I learned were that the number of real estate salesperson's exams was down 80 percent in the second half of 2008, meaning fewer people are getting into the real estate business. The license renewal rate is also down significantly, demonstrating that real estate professionals are suffering along with the rest of the work force. When the market slows, the strong survive and the weak drop out.

There was a lot of talk about how and what we as an industry should propose to Washington concerning the distribution of the bail-out money. Though plans varied widely, there was a consensus not to throw good money after bad, and not to use the funds to bail out the bad guys. It should be used to benefit the people who have been following the laws but got caught up in this deteriorating economy.

For example, the government should not bail out homeowners who refinanced their home and used the money on expensive vacations and exotic cars, and now are looking for a mortgage reduction. But, perhaps they should look into reducing rates for homeowners who made a commitment not to lose their homes and have not been late on their mortgage payments.

Another large topic of discussion was on the companies that collect advance fees to help people negotiate a short sale or to re-negotiate the terms of their mortgages.

The California Department of Real Estate (DRE) had to re-allocate some of its personnel from other departments to enforcement as complaints in this area skyrocketed. They have also enacted legislation whereby companies need DRE approval before collecting advance fees.

The California Association of Realtors also launched and funded a venture to develop a statewide multiple listing service (MLS), where all the listings in the state of California will be on one Web site. Currently, there are other vendors that aggregate the data amongst different MLS systems, but no one can claim they have all the data. I saw a demonstration of this software and it was extremely impressive. There should be a public version soon.

There were many things going on at this meeting as real estate practitioners from all over California came together to discuss, debate and set the policies of the association and to exert its influence at the state and federal levels. We are all hoping the changes we are putting in place will help stimulate the real estate market and put life back into our struggling economy.

John M. Lee is a director for the California Association of Realtors. For real estate questions, call (415) 447-6231 or e-mail johnlee@isellsf.com.