Buyer’s Choice Realty blog

Kathleen M. Howley wrote an interesting article recently. Check it out on Bloomberg.com. Howley’s thesis, built in large part upon interviews with Nobel laureate economist Joseph Stiglitz and co-creator of the widely used Case-Shiller housing index Robert Shiller, submits that speculators are largely to blame for the current housing recession and these same flippers/professional investors will keep prices down for some time to come.

How did this happen? Flippers bought more than they could afford thanks to no-documentation loans and other risky mortgage products during the housing market bubble in the late 1990s and early 2000s. When many of these loans ultimately went into default and the homes were foreclosed on, the bubble burst. This has been happening for four years now, and prices are still rapidly dropping.

These same speculators have been buying up foreclosures at auction and directly from lenders, which has prevented the housing market from collapsing completely, but Professor Stiglitz contends that speculators may cause a double housing recession. He said, “We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve.”

The problem is huge, and banks (who own at least $11.5 billion of homes, according to the FDIC) also continue to contribute to it. How do you feel about banks, Professor Stiglitz? “…the same banks that created the problems by mismanaging their risk are mismanaging the disposal of their assets.”

There is no easy solution to this murky issue, but states will soon receive money allocated from the Housing and Economic Recovery Act of 2008 to purchase & renovate foreclosed homes, then sell them to families who intend to occupy the homes. States have 18 months to use their money or they will lose it. Hopefully this program will be run well by states and community groups so that potential buyers, mostly low-income, can occupy their own home, which will improve communities and settle the housing market. I have seen no indication that this money has been sent to states yet, but it is likely to be soon. Florida, Nevada, California, and Michigan, those most widely affected by foreclosure, need to act quickly and rationally.

What’s your view? We would love to hear from you. Call 800.25.BUYER (ask for John) or email me.

House Hunters has a fairly simple premise — a salesperson shows a buyer three homes, they make a decision to put in an offer, and we check in with them a few months later.

As part of HGTV’s first-time home buyers’ week, we meet recent graduate Lindsay who is looking for a condo closer to her job, and enlists local practitioner J.J. Love to help. She has a price range up to $160,000. Lindsay tours three condos in the Nashville, Tenn. area, ranging from a bargain-priced two-bedroom townhouse listed for $125,000 to a brand new unit with an asking price of $162,000.

Lindsay ends up choosing the place at the top of her price range. She explains that she loves the fact that she would be the first owner, that the unit has a garage, plenty of closet space and that her parents both like it — always helpful, especially since they are providing the down payment.

But a few questions need to be raised about House Hunters. Why is the buyer only shown three places? Most buyers would look at many more before choosing. Sure, it’s only a half-hour show, but would you want to have to commit to placing an offer on a home when you have only seen three? How much did Lindsay end up paying for her new condo? We never find out, so we don’t know if Ms. Love is a skilled negotiator and is truly working on behalf of Lindsay in order to find her the best deal possible. It appears that her agent has picked out each unit to show her. Were they her listings, or listings from her office? This issue is not addressed either.

As an agent who works exclusively for buyers, I would love to see a show that portrays how a knowledgeable real estate practitioner puts clients’ best interests first. This means consulting with potential buyers at length about their goals, while also educating them about market conditions — rather than merely focusing on selling them a home.

In this era of escalating foreclosures and short sales, consumers should occasionally be able to see what is involved in the process of buying “distressed” properties, not just cute, new-construction condominiums. The final verdict: entertainment first, reality second, if at all.

What do you do with all the junk mail you get? Or, for that matter, any mail? Shred anything with personal information on it and keep it along with all discarded paper, and drop it at one of the many bins all over Massachusetts to be recycled. Even better, change every bill you have to electronic statements. Most companies save at least a year of statements to view online, and you can just save the statements on your computer for easy access. Can’t beat it - less paper mail also helps those of us who tend to be ‘organizationally challenged’.

Recycling is easy to do, and is becoming mandatory in cities and towns around the commonwealth.

My second tip involves saving money. All those plastic bottles of water we buy and drink and toss out? Buy a durable water bottle, wash it fairly often, and use a faucet-mounted water filter or a pitcher to put in the fridge if you don’t enjoy drinking regular tap water. Replacement filters are cheap and each filter lasts several months depending how much you use, but most estimates state the price for the unit and filters amounts to about a nickel per gallon. How much did you pay for your last bottle of water at the gas station?

The folks at Buyer’s Resource in Ohio wrote about this topic and mentioned a great resource that is available online. It’s called the The Home Energy Saver. If you are concerned about the environment, or just interested in saving money each month, you should utilize this free tool. One of the most useful features I found on their website was a page full of links to ways we as people - owners/renters/lessors/lessees etc. can make our home or business more energy efficient, either for free or at low cost. These are the types of resources that can make a difference, since so many have access to them. Even if you are not in the market to buy a home right now, I encourage you to check this site out.