SunWest, REALTORS®

Last week I wrote about Cap and Trade legislation, H.R. 2454, (American Clean Energy and Security Act of 2009) passed in June 2009 by 211 Democrats and 8 Republicans in the House and then sent on to the Senate.

Some people, knowing my sense of humor, called me to see if I was making that stuff up! Unfortunately, I am not. The points I addressed last week are as follows and they are true. I invite you to read the bill yourself. I have not even addressed the building retrofit program in the bill that seems to imply that a house could not be sold until it is brought up to government standards.

• The Secretary may establish a national building code regarding energy efficiency. This code would override all local building codes and local jurisdiction. Local building inspectors would be charged with “full compliance” to the national codes and, therefore, the federal government. 
• Tenants would have the right to install solar energy systems in their residence overriding whatever their leases said. 
• Homeowners in an HOA would have the right to install solar energy systems overriding whatever the HOA rules said. 
• Farmers and ranchers would be able to create saleable offset credits by regulating the diets of their cattle to emit less methane gas. CFCs (cow fart counters) or whatever the government will call them would have to establish a baseline of emissions and then measure the reduction in emissions by the dietary manipulations of the farmer or rancher thus creating the offset credits. 

Government employees will literally be counting and measuring cattle farts. Sorry folks to be somewhat gross but that is exactly what the bill says. Nowhere in the bill is anyone measuring the amount of emissions by Washington bureaucrats which, to my way of thinking, is much more hazardous to our health than cow farts! But what would we, the common people, know?

It was a slow day at the office so I decided to read the House version of the infamous “Cap in Trade” (American Clean Energy and Security Act of 2009) legislation as agreed by the House last year. Although I did not get through the entire 1,428 pages, I did read enough to provide you with some highlights especially as it applies to housing. The overriding theme is more federal government takeover of state’s and community’s rights and homeowner’s rights.

For example, “The Secretary may by rule establish a national building code energy efficiency target for residential or commercial buildings.” The states would be charged with the cost of the program “including…hiring enforcement staff, providing training, providing manuals and checklists, and instituting enforcement programs, designed to achieve full compliance within 5 years after the date of the adoption of the code.”

So what if your rent house tenant wants to poke some holes in the roof and install a solar energy panel or your neighbor in your homeowner’s association wants to cover his roof in solar panels? Never fear, congress is here and it doesn’t matter what your HOA rules are or your lease says—property rights—gone!

“The Secretary of HUD in consultation with the Secretary of Energy, shall issue regulations—(1) to prohibit any private covenant, contract provision, lease provision, homeowners’ association rule or bylaw, or similar restriction, that impairs the ability of the owner or lessee [emphasis added] of any residential structure designed for occupancy by 1 family to install, construct, maintain, or use a solar energy system on such residential property;”

The code would regulate everything from energy efficiency buildings to televisions, spas, urinals and electric cars. If it uses energy, it is pretty much on the regulated list. Now, you may be thinking that this topic is a great conversation piece for around the old water cooler. I would agree. As a matter of fact the “old water cooler” has special mention in the legislation.

“BOTTLE TYPE WATER DISPENSERS.—

Test procedures for bottle type water dispensers shall be based on ‘Energy Star Program Requirements for Bottled Water Coolers version 1.1’ published by the Environmental Protection Agency. Units with an integral, automatic timer shall not be tested using section 4D, ‘Timer Usage,’ of the test criteria.” You just thought you needed cold water.

Congress has admitted in the legislation itself that its implementation will cost you money. “Not later than August 31 of each fiscal year, the Energy Information Administration shall estimate the annual total loss in purchasing power that will result from American Clean Energy and Security Act of 2009.” Households that qualify (roughly if you qualify for food stamps) will receive a “monthly energy refund” to make up for this loss in “purchasing power.” The states (with all the accompanying costs including “appropriate bilingual personnel and materials” will be charged with figuring out who qualifies under this new wealth distribution system.

This legislation will also create new jobs that demand new skills and training. Farmers and ranchers in particular will have the ability to create a new profit center in their operation. They will be able to generate “offset credits” by the “(G) reduction in greenhouse gas emissions due to changes in animal management practices, including dietary modifications;” In other words the farmers and ranchers can make money by managing the methane gas emitted by their cattle. Theoretically, the offset credits “issued under this title may be sold, traded, or transferred….” These credits would be sold to polluters who find it cheaper to purchase the credits rather than clean up their pollutions.

Two jobs are created immediately when the farmer or rancher implements this program—a CFC (Cow Fart Counter) and a CCFC (Chief Cow Fart Counter). Under the legislation the CFC would first have to establish a baseline of cow emissions because you can’t calculate the reduction in farts until you know what the average cow emits. “A standardized methodology for establishing activity baselines for an offset practice of that type. The Secretary shall set activity baselines…” The law provides that an “offset project developer” be designated (CCFC). The CCFC would manage the CFC to ensure that promulgated methodologies were used. OSHA would be assigned also to make sure that the CFC took his smoke break at least 100 yards away from the cows.

And so the legislation goes. I’m sorry I didn’t have more space but maybe we’ll get a chance to revisit the bill in the future. In the meantime I’m looking for training for those new jobs.

From the $8,000 and $6,500 housing tax credits but all indications are that it did provide an incentive for many people to change their housing situations. Final figures will not be available until the end of June which is the deadline for closing in order to receive the incentive. We have had a number of these transactions in our office. 

Since the cutoff on April 30, I have noticed that the number of listings coming to market has gone down. Seems as if sellers were trying (and rightly so) to capture these incentivized buyers. Many were successful. 

Now we are back to a more normal market. I will be interested in seeing how these incentives affected the market. Hopefully not everyone that was going to buy a house this year has already done so, although that possibility does exist to a certain extent. 

We are continuing to see the subprime mortgage holders struggle to make their payments. We are also seeing short sales coming to market with their accompanying 6 month average closing times. I had one approved yesterday to close by the end of this month that I first opened the file on July 22, 2009! I wish I was kidding you about that but I am not. 

Even with all this going on, we are continuing to assist our clients in accomplishing their real estate goals. Let us know how we can help you. 

Such is not the case with our local elections. Here we have influence and the ability to talk one-on-one with our elected officials. Lewisville has an important city council election coming up in May. In the spirit of the Tea Party, we need to elect local officials with conservative views and, heaven forbid, the idea that laws are to be obeyed and enforced.

With that in mind, we at SunWest. REALTORS hardily endorse John Gorena for Lewisville City Council, Place 4. I have known John for over 20 years and respect his judgment, work ethic and dedication to the good of Lewisville. Here is a good man who has volunteered his time and money over and over again for the good of the community. He has served well this last year and rightly deserves to be elected to a full term. Thank you John for your service.

Get out and vote! (voting schedule here) If you don’t vote you have no right to complain!

Don’t you just love headlines—they capture and arrest our attention but what do they mean to us?

On February 25, the Dallas Morning News trumpeted the headline, “Federal report says that D-FW home prices were up last year.” The Dallas Business Journal proclaimed in an article on February 26 that “Existing single-family home sales in North Texas dropped 27 percent in the month of January.”

Just as you suspected, there is no proof yet of Russians on the moon, and the proof behind the above headlines is shaky in my opinion. Is there a hidden agenda? I have no idea but I would like to explore the stats behind the headlines and how they apply to you.

Homes prices up, that’s good news for us. Sales down, that bad news for us. Russians on the moon, well… According to the Federal Housing Finance Agency, Dallas area homes sale prices are up .43% as of the end of 2009 as compared to a year ago. What that is saying is that when I come out to list your $250,000 house for sale the conversation goes something like this.

“Congratulations, because we waited until January this year to sell your home as opposed to December 2008, the value is now $1,075 higher!” In December 2008, your home was only worth $248,925.” Now that’s accuracy!

Of course, there is no appraiser or REALTOR® that can figure the values that close. If we can get the market value of your home within 5%, we’re doing well. (And normally, we can.) The value of your home is dependent on the current market, but there are many factors around its value that are totally in your control. Is your home clean? Clean is cheap to do yet I could not begin to tell you home many homes I’m in that are not clean. Is your home in good condition? I’m not talking about age, but about repairs, paint, carpet, etc.—that “honey-do” list that you never quite get around to.

Sales drop 27%. In a normal market, if sales go down prices follow. My calculation of this stat, says that January 2010 homes sales were only off about 6% compared to January 2009. I have yet to source this 27% number. But like my Russian headline, 27% just sounds more ominous thus attracting attention. What if the first headline would have said something like this? “Your $125,000 home is worth $537.50 more in 2010 than in December of 2008.” Not much excitement in that is there?

Where am I going with all this? No matter what the headlines say, we as professionals can advise you in the purchase or sale of real estate with common sense solutions that work in the current market. Give us an opportunity to turn your Real Estate Challenges into Choices. Now as far as that Russian colony…

Last week I talked about homeowners that are just walking away from their mortgages. This occurs most often when home values fall below the amount of their mortgage. In common vernacular, they are “upside down” in their homes. These individuals have not lost their jobs nor suffered a financial disaster; they are just walking away from their mortgages as a strategic move. They figure that since they have negative equity, they will just take the credit score hit and wait for the market to improve when they can purchase again and the foreclosure has dropped off of their record.

This is a very short-sighted decision to which the government is not contributing by bailing “over mortgaged” homeowners out. Under the law, there is a doctrine known as “sanctity of contract.” It is the doctrine on which much of our system of capitalism is based. In other words, if one signs a contract they are expected to live up to the terms of that contract or the law provides remedies for default.

Think about the consequences if there is no legal remedy for all the contracts we sign in our lives. For example, you borrow money to purchase a car and about 10 months into your note, the lender doubles the interest rate. Without sanctity of contract—the premise that both parties are bound to the terms of the contract—you have two choices, either pay the increase or surrender the car. Your common sense reaction would be to pay cash for your next car. Fool me once shame on you, fool me twice…

In the case of mortgages, if the lender is continually faced with homeowners walking away from their obligations, fool me once…. A reasonable business decision by the lender would be to increase the interest rates, increase the down payment requirements and place tighter qualifying restrictions on the next borrowers seeking home loans. Increased risk requires an increased reward for the lender.

The consequences of the lender’s business decision will result in fewer qualified buyers in the marketplace. Fewer qualified buyers in the market will demand reduced housing prices before they will purchase. As homes become harder to finance, prices will fall. I always like to ask this question. What would you have paid for your last car if you had paid cash? Most people would probably say $1,000-$2,000.—about the amount of money they paid as a down payment on the car they’re driving.

The natural consequence of homeowners “walking away” from their mortgages will hurt all of us in the long run. If the government forces lenders to change their mortgages to “help” “over mortgaged” individuals thus destroying the sanctity of contract, all of us will not only pay now but for decades to come.

A recent New York Times articles, No Hope in Sight, More Homeowners Walk Away, talked about the phenomena of homeowners just “walking away” from their properties and their mortgages. This occurs most often when home values fall below the amount of their mortgage. In common vernacular, they are “upside down” in their house.

These aren’t people who have lost their jobs or their ability to pay; they are just choosing, as a so-called strategic measure, to quit paying. The critical threshold seems to be when the values drop to 75% of the mortgage amount. It is estimated that 4.5 million homeowners had reached this threshold. Fortunately, for the most part, this is not a problem here in North Texas.

The article points out that bloggers are quick to say that large scale real estate investors walk away from properties and mortgages quite often when they are upside down and the investment no longer makes economic sense. This is true but there is a vast difference between the two situations. The difference is personal liability. 

In the case of investors, the lender is looking to the investment itself as collateral for the loan. In the event the borrowers default, the lender will repossess the investment property and not hold the investors liable for any deficiency that may occur.

That is not the case with a home owner. When the homeowner signs a mortgage or deed of trust, they are pledging to be personally liable for the debt. So the lender is not only looking to the property to secure his loan but also the individuals themselves. In the event of a foreclosure and a subsequent deficiency, the lenders may pursue the borrower’s personal assets for satisfaction of the deficiency.

Feng Shui is a blend of philosophy, interior design and ergonomics. The Feng Shui symbol literally means wind (the top symbol) and water (the bottom symbol). The idea is that we should harmonize with our environments.

One of the principles of Feng Shui is the Predecessor Law. This has to do with the vibrations that remain in an environment after those who lived or worked there moved on.

Having been in real estate for over 30 years, I’ve had the opportunity to see this phenomenon in action. I remember that our real estate office sold the same home three times in six years. Each time the reason for the sale was that the couple was getting a divorce. We, the agents in the office, jokingly called it the ”divorce house.”

There was another home that we knew would be on the market shortly. Over a time of ten years, that house was sold six times. We knew that if we sold a couple that home that they would soon be moving on and all of these couples had different reasons for moving. I personally think that the home had bad Feng Shui and the sellers could never identify exactly their reason for wanting to move.

Science has demonstrated that all (yes, I mean all) elements (including us) have their own internal vibrations. Hebrews call it Ruach, Greeks, Pneuma, Japanese, Ki, and Chinese, Chi.  Because of these vibrations, our environment affects us more than we realize.

Feng Shui carries the idea of attuning ourselves with these vibrations harnessing them rather than struggling against. A good analogy might be the 98 pound lady that, using judo, can throw down a 200 pound man by aligning her energies with his and using that combined force against him. Judo teaches you to use your opponent’s energy to defeat him.

Interestingly enough, in the course of a week, I preview many homes for my clients and very few of them have what I would sense as good Feng Shui. Mind you, these are nice homes, there is nothing about their decorating that shouts “bad Feng Shui.” They just don’t “feel good.”

You know how you feel good at one table in a restaurant and not another? You work well at one desk and not another? You walk into a room and instantly feel comfortable almost like you have been there before. I will walk into a home and the home will give off good vibrations as if I have good memories in this home and yet I’ve never been there before.

So how’s the Feng Shui in your home? We have connections with individuals who will stage your home (for a fee, of course) and give it those good vibrations. They, whoever they are, say a home will sell 40% faster if staged properly. (Don’t ask me how they got that figure.)

Call us; we’re full of house information.

December 25, 337 is noted by some scholars as the earliest date that Christmas was celebrated on that particular date. No one really knows when Christ was born. The Bible prophesies in Isaiah and then later records the birth in the Gospels but not the date.

There are two issues that come to mind when thinking about Christmas. The first is if Jesus’ birth should be celebrated. I would think that as we celebrate each other’s birthdays, setting aside a day to honor us as individuals, we should set aside a day to honor Christ.

The second issue is when that should take place. To my way of thinking, it doesn’t make any difference. Here in the United States, we have traditionally celebrated Christmas on December 25 and that works for me. Since we don’t know the exact date of Christ’s birth, we choose to celebrate it on the 25^th.

The importance of the event does not reside in the date but in remembrance of the Person of Christ–what He has done for us and what He continues to do.