I have other posts perking along, but the annual Sacramento meetings intervened. The drive gets longer every year. Made it in 4:30, but I think some of brain cells didn't arrive till evening. Heavy traffic, but fast. The trip home took 5:15 and included traffic jams (2) and the aftermath of 3 wrecks, accented by more flashing CHP lights than I usually see in a year. Glad to be home!
The state association has a number of new educational offerings (as usual--it is a business), including a mentoring program--apparently aimed at replacing brokers and managers from bringing newer agents along in their careers. Maybe there will be a time when brokers aren't needed at all. Just a statewide broker and some online tools. How efficient and what a nice cash flow that would be for the state association--further standardization is just what the industry needs at this critical time.
Speaking of which, there was a live appearance of the home heads Weds PM--OMG! How much did they spend on this bizarre campaign? There was little support from any demographic group and we learned later that the campaign had been scrapped--I was not the only member who did a OMG!! The money's spent and the organizational process didn't work that well--for the same reason it seldom does--and I'll say more about why a little later. Consequences? Hey, this is the state association. When leadership and or staff screws up there are no consequences. It's fantasy land!
Thursday's crush of meetings further revealed that the new organizational system is an accident waiting to happen. If everything goes smoothly and the leadership of the committee is focused and prepared it's possible to cover the details and stay within the time allotted. That doesn't always happen. Things get squished, truncated, ignored, etc and not always in reverse order of importance.
I had a brief opportunity to talk about vacation rentals to Land Use. Perhaps a push to gather material to populate a statewide data base is near. I also got some fine ideas about politics and policy from local government forum. There is a reason I still attend these meetings--they are a catalyst, regardless of the frustration levels.
Friday AM I did my cultural escape and spent time at the Crocker Art Museum--including the new building. I could have spent all day there and later wished I had.
The director's session demonstrated yet again that institutional memory is absent. Committee work on the floor is never pretty, irritates all involved and wastes an amazing amount of time. In this case a task force had been grappling with some short sale issues for many months and came up with some action items to address a few of them. The task force spent considerable time in research and discussion, but that didn't deter the executive committee from proposing alternative wording in an amended action item. Then a director proposed a substitute motion from the floor. There were now three versions, producing discussion that took the better part of an hour and revealed much about the organization and the real estate community in general.
Real estate is not a business that respects intellectual acuity. It's about repetition and persistence in performing tasks that have changed little in 50 years. Technology offers new ways to accomplish the tasks, but those are all hung on the same template that was in place when I started in 1985. It's a simple business model producing the misplaced belief among agents and brokers that simple works well in all settings. As a result, the real estate community is not the slightest bit reticent in proposing plans for GSE restructuring, QRM standards, mark to market accounting and just about anything else. The fact that the finest minds in the nation can't agree on a plan is of no concern to most brokers who fondly remember the 2000-2006 boom and try to figure a way to have more of the same please!
A rough analogy would be if a salesperson who worked at a dealership specializing in Ferraris was asked to assume the chief engineering role in a team tasked with creating the next Ferrari production model. Hilarious concept? That's what happens at the state association meetings--anything to do with houses is assumed to fall within the expertise of the directors, most of whom are focused on their next commission more than the fate of the worlds economic future.
Because of the odd timing this year, the national association met this week in D.C. Of course the California delegations has many of the shakers and movers in the national organization. The delegates will consider many of the same issues from the same perspectives. No surprises anticipated. The condition of the market will be sugarcoated with just enough uncertainty dribbled in to support the agenda for change in national policy.
Facebook Badge
Friday, May 13, 2011
Friday, May 6, 2011
outside of inside
Watched "Inside Job" a few days ago. Good movie as far as it goes, but there's another part of the story that probably wouldn't be as easy, or pleasant to film. BTW, the film got mentioned at state association meeting today--as a great movie--staring those evil bankers and wall street folks--real estate trade associations love to sling a little mud that direction--when they're not so close they could get some mud on themselves.
The movie focuses on the captains of the banking, rating and insurance industries who created and mutated mortgage backed financial derivatives into the CDOs that nearly no one understood (understanding isn't much better now). That creative streak and a dollop or two of naked greed is assumed by many to have brought the world economy to the brink of collapse. Whether that fate is behind us remains to be seen. The storied few had a lot company looking over the brink. A few years later, quarterly profits are way up for the key players who survived and prospered, but for much of the US life is still in a questionable condition. The creative opportunities posed by CDO's merely opened the door leading down a murky path illuminated by greed. A very diverse array of individuals, organizations and institutions from all corners of business and all strata of society tumbled through the open door into a Neverland of false promise, fleeting hope and delusional optimism.
The Inside Job gazes at the alluring, glitzy upper end of the food chain spangled with millions and billions and trillions of dollars, exotic automobiles, mega yachts, high priced hookers and mountain ranges of cocaine. That world seems far removed from the reality of most viewing the movie, but it's sure fun to look and feel a vicarious tingle or two. The actual meltdown included players from all walks of life--a rather prosaic lot, whose participation in the grand plan, for often trivial reward, sustained and nurtured it.
Yes, the financial ecosystem that produced those impressive figures and corporations and governmental officials (lots of overlap there) at the top of the food chain was dependent on primary producers and consumers low down in the hierarchy. It was an aberrant ecosystem perking along for quite a few years--evolving toward the ultimate catastrophe. Back in my university lifetime, I loved looking at the graphical representations of catastrophe theory and attempting to apply the principles to real world situations. This fits the classic cusp!
Way down the food chain, real people bought real houses with the mortgages that got packaged into the CDOs that fueled the whole big bubble. There were mortgage companies, real estate brokers and agents, escrow/title companies, insurance companies, construction firms, suppliers etc, etc. all along for the ride. Some very smart people and probably some not so smart KNEW that things were headed in a wrong direction. The money sure looked attractive though! Maybe things will hang together until we all grab another handful of green?
Unlike the huge salaries and bonuses that seduced the top of the food chain, the folks way down the food chain performed acts they knew were pretty sketchy for almost nothing. A few more commissions here and there, plenty of work at prevailing wages etc. That's all it took--they were all part of the magnificent pageant. Life was good--maybe not a lot better than before, but better enough so not many wanted to ask questions or take a long look in the mirror before going off to do the deeds.
The collateral damage is huge and few are talking about it--heck the simple, straight forward damage is terrifying enough. The most disturbing aspect is that a generation of young people will be altered psychologically by forced relocation and the ancillary nightmare of abandoned friends, separation from beloved pets, loss of familiar scenes and a new life where expectations that were most often realized before will now often be torn asunder. Will those young people ever understand about CDOs and greed and the top of the food chain exerting their diverse, but convergent, manifest destinies?
It's hard to put a price on that sort of decline in the quality of life for millions of people lasting over the next several generations---but we did. The Wall Street, Banking, Insuring, Rating and Governing folks DID put a price on it --- what it would take to make them whole--and we paid that price. The country, and the world will be paying installments on that amount for a long long time. The psychological fallout is unfathomable and can't be measured in dollars, all the easier to ignore!
Oh, anyone who doesn't think there's a next time coming is still living a dream that never started.
The movie focuses on the captains of the banking, rating and insurance industries who created and mutated mortgage backed financial derivatives into the CDOs that nearly no one understood (understanding isn't much better now). That creative streak and a dollop or two of naked greed is assumed by many to have brought the world economy to the brink of collapse. Whether that fate is behind us remains to be seen. The storied few had a lot company looking over the brink. A few years later, quarterly profits are way up for the key players who survived and prospered, but for much of the US life is still in a questionable condition. The creative opportunities posed by CDO's merely opened the door leading down a murky path illuminated by greed. A very diverse array of individuals, organizations and institutions from all corners of business and all strata of society tumbled through the open door into a Neverland of false promise, fleeting hope and delusional optimism.
The Inside Job gazes at the alluring, glitzy upper end of the food chain spangled with millions and billions and trillions of dollars, exotic automobiles, mega yachts, high priced hookers and mountain ranges of cocaine. That world seems far removed from the reality of most viewing the movie, but it's sure fun to look and feel a vicarious tingle or two. The actual meltdown included players from all walks of life--a rather prosaic lot, whose participation in the grand plan, for often trivial reward, sustained and nurtured it.
Yes, the financial ecosystem that produced those impressive figures and corporations and governmental officials (lots of overlap there) at the top of the food chain was dependent on primary producers and consumers low down in the hierarchy. It was an aberrant ecosystem perking along for quite a few years--evolving toward the ultimate catastrophe. Back in my university lifetime, I loved looking at the graphical representations of catastrophe theory and attempting to apply the principles to real world situations. This fits the classic cusp!
Way down the food chain, real people bought real houses with the mortgages that got packaged into the CDOs that fueled the whole big bubble. There were mortgage companies, real estate brokers and agents, escrow/title companies, insurance companies, construction firms, suppliers etc, etc. all along for the ride. Some very smart people and probably some not so smart KNEW that things were headed in a wrong direction. The money sure looked attractive though! Maybe things will hang together until we all grab another handful of green?
Unlike the huge salaries and bonuses that seduced the top of the food chain, the folks way down the food chain performed acts they knew were pretty sketchy for almost nothing. A few more commissions here and there, plenty of work at prevailing wages etc. That's all it took--they were all part of the magnificent pageant. Life was good--maybe not a lot better than before, but better enough so not many wanted to ask questions or take a long look in the mirror before going off to do the deeds.
The collateral damage is huge and few are talking about it--heck the simple, straight forward damage is terrifying enough. The most disturbing aspect is that a generation of young people will be altered psychologically by forced relocation and the ancillary nightmare of abandoned friends, separation from beloved pets, loss of familiar scenes and a new life where expectations that were most often realized before will now often be torn asunder. Will those young people ever understand about CDOs and greed and the top of the food chain exerting their diverse, but convergent, manifest destinies?
It's hard to put a price on that sort of decline in the quality of life for millions of people lasting over the next several generations---but we did. The Wall Street, Banking, Insuring, Rating and Governing folks DID put a price on it --- what it would take to make them whole--and we paid that price. The country, and the world will be paying installments on that amount for a long long time. The psychological fallout is unfathomable and can't be measured in dollars, all the easier to ignore!
Oh, anyone who doesn't think there's a next time coming is still living a dream that never started.
Sunday, May 1, 2011
Earth Day-Sunrise or Sunset?
I may have mentioned before that I was at the first Earth Day--it was another era back then some 40+ years ago. People thought they could change the world-and whata you know--they did. Now---not so much. Getting even a small group of people to agree on what change to pursue is an extreme long shot. Polarization is a way of life. No middle ground in politics and everything is about politics. No middle ground often means to resolution.
Even real estate has become overtly political--trade organizations have their own party. The state and national trade organization share leadership people and political leanings, so there's really only one party and if you don't fit, you still get to pay the money. Funny how the public runs the gamut from right wing nut to lefty progressives, but their real estate agents are all supposed to be political clones. How's that work in the real world? Trade organizations don't care. An additional $40,000,000 flowing in the the national associations coffers could cast a warm light on almost anything. BUT will the state association approve another year of $49 surcharge? That's almost $100 and just how much success has the lobbying and political contributions had in improving the real estate climate. I guess you could argue that things would be worse without those efforts, but that's hard to prove.
What about houses and real estate information? Can they be influenced by politics? The trade organization HATE point of sale. Buyers would benefit from knowing the energy efficiency of houses BEFORE they make a choice. Sellers of extremely energy efficient houses will only see full return on their investment with energy ratings available prior to purchase so buyer can appreciate the relative efficiency. The trade organization insist the energy inefficient homes would be stigmatized and loose value if ratings were known. If that were even true (see below) it would be consistent with sqft of living area--larger homes tend to be worth more than smaller homes and we let Buyers know size before they choose. Fine views add value and we let Buyers look out the windows before they choose which house to purchase. Energy efficiency isn't easy to judge--even for energy raters. Buyer should have a figure, just like automobile gas mileage and appliance energy use. The trade organizations are in the way and their point of sale policy POTENTIALLY HARMS Buyers who are owed a fiduciary duty by their agents. Those agents are paying dues to further that potential harm. Sound a little bizarre? When fiduciary duty and politics collide what happens? Follow the money and you'll find the answer!
Oh (the see below comment) there are buyers for small homes, old homes, homes without views and there will always be buyers for energy inefficient homes. Sure the value of energy inefficient home would decline, but it should. Upgrades and incentives are available and everyone can't be choosy. There will be a market. The idea of stigmatization floated out there by the national association is just a smokescreen for their knee jerk anti point of sale doctrine. Why should owners of energy inefficient homes get priority over all BUYERS and owners of energy efficient homes? Go figure! It's politics wagging the dog!
Even real estate has become overtly political--trade organizations have their own party. The state and national trade organization share leadership people and political leanings, so there's really only one party and if you don't fit, you still get to pay the money. Funny how the public runs the gamut from right wing nut to lefty progressives, but their real estate agents are all supposed to be political clones. How's that work in the real world? Trade organizations don't care. An additional $40,000,000 flowing in the the national associations coffers could cast a warm light on almost anything. BUT will the state association approve another year of $49 surcharge? That's almost $100 and just how much success has the lobbying and political contributions had in improving the real estate climate. I guess you could argue that things would be worse without those efforts, but that's hard to prove.
What about houses and real estate information? Can they be influenced by politics? The trade organization HATE point of sale. Buyers would benefit from knowing the energy efficiency of houses BEFORE they make a choice. Sellers of extremely energy efficient houses will only see full return on their investment with energy ratings available prior to purchase so buyer can appreciate the relative efficiency. The trade organization insist the energy inefficient homes would be stigmatized and loose value if ratings were known. If that were even true (see below) it would be consistent with sqft of living area--larger homes tend to be worth more than smaller homes and we let Buyers know size before they choose. Fine views add value and we let Buyers look out the windows before they choose which house to purchase. Energy efficiency isn't easy to judge--even for energy raters. Buyer should have a figure, just like automobile gas mileage and appliance energy use. The trade organizations are in the way and their point of sale policy POTENTIALLY HARMS Buyers who are owed a fiduciary duty by their agents. Those agents are paying dues to further that potential harm. Sound a little bizarre? When fiduciary duty and politics collide what happens? Follow the money and you'll find the answer!
Oh (the see below comment) there are buyers for small homes, old homes, homes without views and there will always be buyers for energy inefficient homes. Sure the value of energy inefficient home would decline, but it should. Upgrades and incentives are available and everyone can't be choosy. There will be a market. The idea of stigmatization floated out there by the national association is just a smokescreen for their knee jerk anti point of sale doctrine. Why should owners of energy inefficient homes get priority over all BUYERS and owners of energy efficient homes? Go figure! It's politics wagging the dog!
Subscribe to:
Posts (Atom)
