From The Sidelines

A few years back I decided to take a break and not fight the real estate market. ( commercial and residential). Fifty years in the business taught me to be ultra-sensitive to " the market."Well, for the past many months, things have been not been well in the real estate brokerage world.

From my perspective more changes are in the wind. And these changes will be caused, not by the market, but by the lack of cash and credit.

One can only drive so far on an empty tank. And a few sales, here and there, do not make for a recovery.

As we head into Fall and Winter 2011 the real estate brokerage community is going to witness major changes.

We have seen a drastic decline in the number of active real estate agents in the past several years and this trend will continue.

Who will be hit the hardest: The national franchise brands and local brokerage shops.
More to follow.

Even Real Estate Blogs Take a Hit

March 15, 2011

According to Joshua Dorkin who published "The Top 35 Real Estate Blogs"
a total of 19 or 54,6% are no longer active. Most since mid 2010.
Still around and about are:
360 Digest
The Bigger Pockets Blog ( By Joshua Durkin)
Bloodhound Blog
Bubble Meter
Inman
Matric
Mortgage Fraud Blog
The Future of Real Estate Marketing
Zillow Blog
The Housing Bubble...
gone are Building an Empire
Creative Real Estate Investing
Fliperati
Property Grunt
Real Estate Blog Pro
Realty Thoughts
and many others

Mortgage Electronic Registration Systems:MERS

March 10th, 2011.



Another headache for all those involved in residential real estate. Or as others see it another business bonanza for lawyers. MERS has created a legal nightmare which could take years to resolve. Title to homes in the past decade and in many states may be flawed.

The Mortgage Electronic Registration System(MERS) is little know firm that has been operating behind the scenes and may be involved with as much as 50% of ALL residential mortgages in the US.

It has fewer than 50 employees. It claims to hold 60 million loans.The New York Times reported on Sunday that "MERS was founded 16 years ago by Fannie and Freddie Mac and big banks such as Bank of America and JP Morgan Chase."

The purpose of creating MERS seems to "speed" and "profits," and not for the protection of buyers or sellers. I think it was created just to help Wall Street in the securitization process that help to create the bubble that burst.

Today many states have ruled that MERS can no longer file foreclosure because it does not actually make or service loans. In many places the actual loan documents were lost or destroyed.

Expect to hear more about MERS in the future.


BillMcInerney

30 Year Morages to End?

THE NYT reported that the 30 year fixed rate residential mortgage may end and sooner than you think.

This staple of the US home buyers may just be another casualty in the Real Estate BUST.

Douglas Elliott of the Brookings Institute, " said that congress was being forced for the first time in decades to grapple withe cost of subsidizing middle class mortgages. The collapse of Fannie and Freddie took with it the pretense that the government could so so at no risk to taxpayers."

Not pleasant news for the residential real estate and mortgage brokers.

This" news" alone together with the concept of the coming required 20% down payment indicates to me that prices will have no place to go BUT downward. Home prices must become
"affordable" for the buyers.

What's evident is that the core structure of the residential brokerage business is in for a major changes.

And sooner than one think.


Bill McInerney

Decline in Real Estate Sales Greater Than Stated!!

A recent report from CoreLogic states that the National Association of Realtors methodology appears to inflate home sales by 15 to 20%.

"Statistic published by the N.A.R. appear to overstate sales of existing homes by 15% to 20%, mortgage and property aggregator CoreLogic says in a new report that concludes that homes sales fell more shapely last year than thought."

A NAR spokesman said "CoreLogic claim, " is premature at best," and NAR will be making some benchmark revisions to its historic sales data this year.

Bill MccInerney

U.S.Home Vales to drop $17 Trillion

Stormy weather continues for the entire real estate market!

According to Zillow, Inc US home values are posed to drop by more than $1.7 Trillion this year. Zillow is a closely held provider of home price data.

Also on 12-9-10 the firm reported, " The drop in home values pushed more homeowners underwater, meaning they owe more on their mortgages than their homes are worth.

On Dec 24 this year The Philadelphia Inquirer reported that many homeowners, typical homeowners and renters believe that the "recovery" will occur anywhere from the year 2012 to 2015 or longer. This was according to a Harris survey commissioned by the Internet firm Trulia.

"Sellers and buyers are tamping down their expectations fort a swift recovery in the housing market and bracing themselves for a log, slow climb back to health real estate market" said Peter Flint, CEO of Trulia who commissioned the survey.

On the Greater Boston commercial real estate front things are not much better. According to Colliers Meredith and Grew , on DEcember 30, 2010, office building in the city have 6.1 million square feet of vacant space or 15% of the total market. This is for the best of the best space, Class A & B office space.

Let us translate this vacany rate matter into dollars.If the average price of Class A space in Boston is only $50.00 PSF net, net, net this means a loss of income to the property owners of $305,000,000.00 in a year.

No matter how you slice it, the entire real estate market remains in serious trouble.


Bill McInerney

Home Values Drop by 1.7 Trillion!

Commercial Real Estate: May 2010

Is the worst over for commercial real estate?

That depends upon what you read, see on TV and hear on the radio. And sadly we have a great deal of "industry driven" mis information.

Brokers and agents everywhere want a health to "boom-time" market regardless of the facts. However we a far from either.

According to the publication, "Real Estate Forum" April 2010,

# 1. " ...commercial property sales in 4 major sectors, office, industrial, retail and apartments, totaled some $44 billion in 2009, down 90% from its peak in 2007 according to Real Estate Analytics. Since then real estate values have dropped 40%

#2."Clouds Hover Over Sunshine State; "Some say Florida's real estate market may not fully recover until the 2030s."

#3. By the end of 2012 $153 billion in commercial loans are coming due and according to Deutche Bank some $ 100 billion will have difficulty getting refinanced.

#4. According to FDIC by the end of 2009, the number of problem financial institutions on its "problem list" rose to 702 with 130 banks failing in 2009. By March 2010 26 banks have failed.

# 5. Retailers are seeing better slightly days but a still-slow economy, lack of jobs and low consumer confidence have both tenants and developers treading cautiously."


Bill McInerney
617-816 3033

THE BIG THREAT TO RESIDENTIAL REAL ESTATE.

The residential real estate business is suffering.



After years of boom times the party has ended. Sales are down. especially in the middle-price market.



The big threat today to residential real estate sales is the "rational consumer."


For decades the business of selling homes has promoted and won the "emotional sales" approach.

The potential home buying consumer knowing many others have been badly burned and financially harmed in recent years no longer buy into the emotional pitches and mindless blather of the past.



With the Great Recession spreading consumers are hyper-concerned about their individual financial status and well being.





Potential home buyers and sellers have become educated to the true potential painful consequences of irrational and emotional buying, resulting in the entire home-selling industry and business being in deep finaicial trouble.





Many real estate agents are fleeing the business as markets stagnate and go bone-dry. Brokerage shops are facing continued higher and higher expenses with fewer and fewer commission dollars. It's called The Big Squeeze.





With growing higher unemployment, contagious job-insecurity, tougher and tougher bank lending policies and credit overview, creeping inflation, many family are staying put, and real estate is no longer as attractive as it once was.




Even real estate window-shopping, or going to open houses, is becoming a thing of the past.

Consumers today know that the home- selling industry played a major role in the recent real estate boom and big bust.

The day of the rational real estate consumer, is now now here , alive, well and very cynical and skeptical.





Bill McInerney

Real Estate in 2010.

The New Hampshire Business Journal recently wrote " The housing slump led us into the Great Recession. Will a housing rebound, fueled by stimulus housing credit, lead us out?

Perhaps -but not right now, the economy is following the real estate rebound sluggishly, reluctantly and sometimes not at all. Most businesses are grateful just to thread water--but they are hardly out of the water."

It wasn't "real estate" that led us into this national and global financial and overall economic turmoil, it was the over-abundance of cheap, unregulated money or financing, orchestrated by Wall Street, banks and financial institutions, with the help of lobbyist groups and governmental policy makers and officials.

The real estate market was always one which reacted to the gyrations, swings and fluctuations of the overall economy. Real estate never before was an economic catalyst. The real estate industry ( the buying, selling, leasing building of homes and commercial properties) cannot sustain a national economy.

The real estate business is dependent on the overall business, agricultural and industrial stability, growth, development and national prosperity.

Real estate is not, and never was .a prime national or even regional economic engine.

For regional or national economic prosperity to return we need to re-create manufacturing and industrial firms together with ancillary assembly, warehousing and distribution entities.

For real estate activity in all sectors, to return to the level it was, would require trillions of dollars of new capital: capital which is no longer available.

Rather than looking for a miraculous real estate rebound, anticipate months, if not years ,of stagnation which eventually will morph into some level of financial property stability simultaneously with a rise in national savings.

We'll always have some real estate activity, sales and rentals will continue, but not at the high prices or the high velocity and volume level of the past.

This means that the real estate industry is headed for some major business structural changes. I believe the year 2010 will be the beginning of a long period of stagnation.


Bill McInerney