Climate change?

The Central Coast has had record heat the past several days. SLO hit 112 and Cambria even exceeded 100. Seem to remember Sept had some hot periods last year too. Maybe just normal variation, but maybe not.

Saw a National Geographic show last night that described the consequences of the melting of the tundra in Alaska (and presumably elsewhere in the polar areas). Carbon is locked in the permafrost--not released into the atmosphere as vegetation dies and decay releases carbon. As the tundra melts because of warming caused by GHG emissions the carbon then released further accelerates the warming--classic positive feedback loop with the potential to assume non-linear onset. Another reason to believe that climate change could be much more rapid than most accounts suppose.

Reviewed the state association committee documents over the weekend, including the propositions. Typical political slant to everything. Some things never change--regardless of the laws of nature (they must not be real estate related!!). Will there be a position taken on Proposition 23??? That will be interesting.

A couple posts are in progress. Will get them up before the meetings.

what's in a name??

Got the meeting materials for state association fall meetings coming up and an agenda items under MLS/Bus Tech meeting mentions a new name that MAY actually be the new name for the statewide that isn't. It uses the term "regional" together with CA--odd combination, given the statewide mentality. We'll see if that name is for real or just a placeholder.

Nothing exciting on the agenda in terms of action items re MLS--SO FAR. It's been 3+ months since approval of the merger--aside from the actual signing it's hard to say what's happening because it's all secretive at least to those who are paying for it with their dues.

Some comments tomorrow on public MLS portals, 3rd party data providers, franchise/mega independent sites and the public (remember them, those folks who pay the overhead of this crazy industry).

not real estate related

Just a quick post reminding readers of Open Secrets the website that posts PAC contributions by election cycle.
Checking the national real estate trade association's PAC contributions to House and Senate candidates is always entertaining and a little bewildering.

I was drawn to the site to check on monies received by the senior senator from AZ after that amazing display yesterday during discussion of DADT with the press. He received $3000 in the 2010 cycle through August. Guess that means he's a friend of real estate--but is that really all there is in measuring character? Maybe real estate related voting records supersede all other measures?

(un)green ripples

Other possibilities are raised by the one size fits all, no point of sale anytime, anywhere for any reason doctrine apparently espoused by the trade associations where energy efficiency and home energy ratings are concerned,. This is particularly true with the ever expanding left coast trade association/mega business enterprise. 

If indeed there is going to be an effort to minimize the consequences of owning a house with poor energy efficiency at time of sale, there are some hard questions to ask about other aspects of the business of real estate under various degrees of control by that trade association.  

The vast majority of the transactions done in the state employ that association's standard forms array. The content of those forms represents the legal basis for the transaction and accounts for much of the information about the house, the community and the decisions facing the Buyer and Seller in the transaction. Does the present set of forms adequately represent the relatively new world of green housing, energy efficiency and climate change issues? Will they evolve in that direction? Will the political (leaning just a bit to the right--LOL) underpinnings of the association influence that path? In the near future I'll run through the forms looking for content that addresses green and forms that could address green in a more helpful way. 

The association is also still attempting to gain control of MLS services in the state--thus far with little success. 

None of the existing MLS systems do a very impressive job of displaying green features, ratings, etc. in their databases or reports. Our present MLS system already has an array of green features, but the agents are very slow to populate the fields so it has little effective value at this time. There a great deal of improvement in the display of MLS information to better facilitate buyers and sellers making wiser and greener decisions about housing, but if the parent corporation behind the MLS subsidiary is not enthusiastic about perceived negative effects of bringing energy efficiency into the mix of factors in housing decisions, there's a real  question about how the subsidiary's new statewide (that's not) MLS system will represent the greening of the housing market. 

In all fairness it should be pointed out that the state association does not represent the public, it represents the members and the most powerful members are the broker/owners of the larger firms, mostly in the metro areas. That group largely represents "the industry" when lobbying promotions mention protecting "the industry". In many cases what's good for "the industry" is good for the member practitioners and also the public, but not always. It's that one size fits all syndrome again. 

Then there's the planet. I keep mentioning the planet, but there's a higher purpose involved with the greening of the housing market, at least if you believe that climate change is real and that human activities played a significant role in creating it.

The trade associations aren't very forthcoming with definitive positions on climate change and the causes. That topic is a political tightrope considering their base. Green is good because it saves homeowners money in utility bills--that's the thrust of all the promotion behind green features and the certification courses for agents--oh and the agents that are green certified allegedly do more business and make more green stuff. The ultimate greening of real estate!  

Green glimmer

Here are some way points I passed on the journey to prepare for the Home Energy Rating event. When I taught in college (another lifetime) I always learned so much more than I did as a student. Nothing like thge being able to stand at a podium and explain a topic to an audience that's following the logic and understanding the content.

First, here's a link to a Fact Check entry re the energy bill and the removal of point of sale provisions once therein regarding home energy ratings on resale houses. Makes the national real estate trade organization's position pretty clear!

1. Energy efficiency can (and should) be treated like any other measure associated with the decision process in purchasing a home. A HERS II rating is an attribute of the house, albeit not one that's readily seen. This is an important point in the event efforts are marshaled to limit use of Home Energy Reports, either by opposing point of sale mandates for Home Energy Reports or otherwise seeking to deny Buyers access to what is a material fact associated with each house and its cost of ownership.

2. In addition, if a HERS II score is just another measurable characteristic, it follows logically that some houses will have better scores than others. Scales of measurement run both ways. Some houses have more living area than others--we don't assume the smaller homes are UNDULY stigmatized and devalued or that a need exists to suppress the availability of living area figures to Buyers--and in fact small houses DO tend to be worth less than larger homes--other factors being equal. Ask any appraiser. The same thing should happen with HERS II scores. Less energy efficient homes may well be devalued by SOME buyers, but more energy efficient homes will be valued higher by SOME Buyers-- helped by the verification of fine HERS II rating. The trade associations only focus on the possible decrease in value--NEVER mentioning the other end of the scale and the benefits associated with a good energy efficiency rating. The proportion of Sellers and houses adversely affected by HERS II information is likely to be relatively small. Another tail wagging the dog scenario. Oh, and remember the planet?  

The objective (at least for many people, if not organizations) is to increase the energy efficiency of the existing housing stock in the most efficient way in the least possible time USING EVERY means reasonable available.

3. All Buyers won't have the same interest in energy efficiency ratings. Buyers differ in their priorities--be they ocean views, yard area, etc, etc. There seems to be an assumption that all Buyers will share a common perception regarding energy efficiency and ratings. That won't be the case. For a variety of reasons, some Buyers may not be sensitive to energy efficiency differences at all--that would decrease the dread decline in value used to justify lobbying pressure from the trade associations. Buyer just trying to enter the house market may seek out the most affordable houses regardless of the energy efficiency and even then may value the recommendations for upgrades included in HERS II reports.  

4. Home Energy Ratings produce index numbers that are not predictable by the intuitive expectations of the public, the real estate agents and in most cases the energy raters themselves. This contrasts with Home Inspections--that often confirm fairly accurate expectations about condition issues. As a result, the HERS II rating should be available DURING the decision process to enable comparison of energy ratings along with other variables before the RIGHT house is selected for purchase. Adopting the Home Inspection model of performing the HERS II tests after the house is in escrow will not work well at all. The benefits of being able to provide an objective energy efficiency number for comparison, offering upgrade suggestions and removing a source of uncertainty from the Buyer's decision process will more than offset the Seller's expense in obtaining a HERS II rating.  

Greener than what?

 The Home Energy Rating workshop on Sept 15th is history. Turnout was OK, fewer real estate agents than expected, but more members of the public than I anticipated. Event was reportedly mentioned at the SLOCo Board of Supervisors session the day before.

A couple of ideas occurred while I was running a couple days before (good thing the ideas were good, the run sucked--felt every one of my 62+ years--hate it when that happens).

Houses have a wide array of characteristics, features and attributes related to the house itself, the yard, the location etc. Some of these are obvious, some not at all. Some are easy to evaluate and compare, others are more difficult and still others involve personal taste that may defy analysis--the art effect--I know what I like.

Energy efficiency fits in there somewhere as an attribute of the house. With HERS II we have a standardized way of measuring energy efficiency that holds the potential to allow comparisons among otherwise similar houses (and dissimilar houses too). Predictably, trade organizations don't want point of sale HERS II reports--that's consistent with their historic doctrine, but this point of sale issue isn't about retrofitting or upgrading, it's just about measuring and making that measurement available to the decision process. That information may be a material fact to many Buyers. Buyer have the right to determine what their array of material facts are--the trade associations don't. Based on their own documents, trade associations don't want information about energy efficiency made available to Buyers, because it might devalue some houses with poor energy efficiency and it might trigger pressure to upgrade older houses at time of sale. It's important to note that this argument isn't really limited to Home Energy Ratings mandated at point of sale by ordinance. Logically, the trade associations would similarly oppose voluntary adoption of Home Energy Ratings as a prevailing practice at the time of a sale transaction. Put another way, the industry seem to believe energy efficiency should not impact value or desirability of existing housing stock, apparently to protect the "private property rights" of owners of older less energy efficient homes. What about owners of newer MORE energy efficient homes? What about owners of homes that received energy efficiency upgrades? Do those owners have a "private property right" to fully experience the benefits of energy efficiency in resale value or future appreciation? Measurement scale run both ways! Do we suppress sqft of living area because some houses are smaller than others? Decisions are made on the basis of differences--points of distinction. Prejudging what points of distinction the public might deem important is just bad policy.

In the more global view, how is this particular application of historic trade association doctrine consistent with increasing the energy efficiency of the exiting housing stock by the greatest amount possible in the least amount of time? It isn't. How does it benefit Buyers? It doesn't. How does it benefit Sellers? It might benefit a few Sellers of older, less energy efficient home who are able to complete a transaction to a Buyer who didn't care about energy efficiency (perhaps for economic reasons--could only afford the least expensive house regardless) or didn't understand the role energy efficiency will very probably play in present utility costs and future appreciation. MOST Sellers would actually benefit from wide use of Home Energy Ratings. Moreover, Sellers are often Buyers at a later time. Whose private property rights are being protected?

The ideal (you've read this before) is for the Buyer to find the RIGHT house--one that best meets the wants and needs of the Buyer from among all the houses available to purchase. Those wants and needs span the gamut. To evaluate how a house meets those wants and needs Buyers should have access to information across the full spectrum of attributes. Without that information, the decision is based on partial information reducing the probability that the house chosen is actually the RIGHT house. If the Buyer fails to buy the RIGHT HOUSE, an unknown Seller missed a sale and the Buyer made a less than optimal decision that could have significant financial and psychological implications.

On a larger scale, the real estate industry and the trade association are not concerned, at least in a statistical sense, with whether Buyers find the RIGHT house. The industry is focused on houses sold--two sides per sale--RIGHT houses are just another sale--it's the same commission whether it's the RIGHT house or not. GCC (gross closed commission) defines success -- just like it did 100 years ago.

Where's the Green come into the picture (aside from the commission currency color)? There may be a faint tint on the distant horizon--but it begs the question--Greener than what?

Maybe this climate change stuff is just a phase some of the public is going through?

Next post will cover a few bullet points from the event--pulled from my slideshow entitled Framing the Early Adoption of Using Home Energy Ratings in Real Estate Decisions.

sneaking up

In a little over a week, the Home Energy Rating event will unfold--how it will unfold is still pretty much up in the air. Another meeting in a couple days and then serendipity will take over--we hope.

I've been pondering how to summarize and pull the information together without excessively irritating the Kool Aid Krowd--there will probably be a few devout state association ladder climbers there. Sorta leaning toward just ignoring the state association--they've ignored energy rating of houses because of their persistent point of sale paranoia, so that's kinda logical.

The challenge is to stress to the public and agents that if helpful tools are available to assist in choosing the best possible home to buy, they should be used. Sounds simple, but the real estate industry doesn't like change and it doesn't like complications. New tools inevitably bring change and complications. The industry would rather just continue to do business like it does now (or even better-- like it did 25 years ago--BHI (before home inspections)).

State association leans in the direction of the Sellers (as always) and infers that information from home energy rating could decrease the value of their house if it's older and not upgraded. That's true, but continuing along that path you reach an end point suggesting that its OK for Sellers to transfer ownership to Buyers minus important information about the cost of ownership and potential future appreciation. That opens up the fair and honest dealing vs fiduciary duty threshold. Buyers agents certainly have the fiduciary duty going on. Sellers agents owe fair and honest dealing to Buyers and their agents. Where does Seller's agent fiduciary duty end and fair and honest dealing begin? Is there a gap just the right size for home energy ratings? I think not.

Home energy ratings provide potentially important information about houses, information that many Buyers would consider to represent material facts about the house. Home Energy Ratings are very seldom ordered, even though they've been available for years. There's a disconnect somewhere in this system of representation. The optimistic view is that home energy ratings are relatively new and most agents really don't understand the what, why and how just yet. The cynical view is rather darker.

It will be interesting to see how the event turns out next week---what the vibe is from the public and the agents--if anyone shows up at all.

I've got the beginnings of a slide show and will flesh it out later in the week.

real quick review

New state association magazine arrived yesterday--they exceeded last month's avoidance of green coverage. As you recall last month there was an ad from the national association re a green certification course and a promotion placed by a home warranty company to announce a new green tips booklet available for download.

This month--NOTHING. That point of sale doctrine is wagging the dog! The problem is the tail isn't connected to the public. They're more interested in green matters than ever. Who pays out the commission checks? The PUBLIC! Who do real estate agents represent in a fiduciary manner? The PUBLIC! Is it in the best interest of the public to ignore the green aspects of real estate (and the planet) and purchase houses without having a clue about their energy efficiency? NOPE!

Sounds like some changes are up ahead.

Discovery?

Saw a blog and press release re the former Statewide (but really not) MLS vendor firm, now morphed into another firm with a new name and a plan to market some iteration of the allegedly groundbreaking software nationwide. The R/D for which was paid by state association members money--ironically the members never really got a fully functional product and with the recent merger the new application may soon be history as the few MLSs using it may opt for the other vendor (which is a leader and will certainly be around in 5 years). I seem to recall that there is some royalty fee involved with proceeds coming back to state association--IF there are contracts with MLSs in the nationwide release. The exact arrangements there were never disclosed, even though the state directors voted "aye" with enthusiasm--it's that Kool Aid again.

It would be very cool if the application was finished at some point--been in development over 2 years and it's been over a year since the Fresno debacle. The Hybrid version--allowing existing MLS application and the new application to run in parallel is still a non-entity and may never see daylight, what with the availability of a strong alternative system used by the other mergee.

Meanwhile, the rest of the MLS vendor world is moving ahead, but there's more looking over the shoulder than looking ahead to glimpse a future marked by major advances in MLS technology to better accommodate the decision process that remains the hallmark of the real estate industry. Data quality and relevance to the decision process needs major upgrading, as does photo display and control. The technology is there, the will is not, largely because the users remain relatively passive players. They use what is available and complain about it all the while. Political forces control the users and ultimately the MLS vendor world.

As is usual, I'll point out that the interests of the public lie elsewhere.