Celebrate
National Home Ownership Month
June is National Homeownership Month. Join us in
celebrating the record number of American Homeowners – 75
million.
Today, 68.5 percent of Americans are homeowners, and the
minority home ownership gap has reached historic lows. Home
ownership is becoming more important to our lives and our
lifestyle as the number of home-based businesses and
teleworkers continues to soar. There are currently
approximately 16,371,000 home-based businesses according to
the U.S. Small Business Administration’s Office of Advocacy.
While most were part time and/or very small, nearly 100,000
homeowners earn more than $50,000 a year from their
home-based business, and the number is growing rapidly. And,
lead by the good example set by the U.S. government,
teleworking is also expanding rapidly.
Technology has enabled many Americans to spend more of their
time at home, and in the future it will help even more do
so. Not only will the ranks of home based businesses and
telecommuters continue to soar, but new technological
applications in healthcare will permit many of the millions
of chronically ill to continue to live at home, while their
medical condition is monitored 24/7 through wearable health
care devises connected to health care providers in hospitals
or other locations.
“These trends are a boon for homeowners, the environment,
and society”, said American Homeowners Grassroots Alliance (AHGA)
President Bruce Hahn. “They also explain why public policy
issues that affect homeowners and home ownership are
growing. There’s a dizzying array of issues that
significantly impact homeowners and home ownership.”
The issues span regulation, tax, the environment, healthcare
and many other policy areas. Happily the outlook for many is
quite good. Updates on the status of several are contained
in this month’s issue of “Home Base”.
Unfortunately the outlook for home appreciation, which has
been impressive in many parts of the country in recent
years, is not so good. The bubble may have burst on many of
the real estate markets across the country. Some areas that
had double digit appreciation last year now have triple the
number of homes on the market today compared to this time
last year. Despite some uncomfortable signs the outlook for
the housing market is generally good, according to a June 13
study by Harvard University. "Large house-price declines
appear unlikely for now. But if the economy falters, both
job growth and housing prices will come under renewed
pressure. This would spark higher default rates, especially
among sub-prime borrowers, and turn housing from an engine
of economic growth to a drag," according to Harvard’s
report, "The State of the Nation's Housing 2006."
“Adjusting to this new market, where buyers now have the
upper hand, requires a new way of thinking by home sellers”,
said Bruce Hahn, who is also President of the American
Homeowners Foundation (AHF). AHF is a nonprofit education
and research organization serving homeowners and prospective
homeowners, and the sister organization to AHGA.
Selling a home in a sellers market may be easy, but getting
top dollar for your home in the current buyers market
requires brains, creativity, and hard work. The right kind
of preparation and planning by a thoughtful homeowner can
make a big difference in the selling price and the time it
takes to sell the home, whether they list it with a
traditional full service real estate broker, a discount
broker, or choose the “FSBO” (For Sale by Owner) option. In
recent years a new “list only” discount brokerage model has
appeared. These brokers will list your home in the local
Multiple Listing Service (MLS) for as little as several
hundred dollars, but this is a very helpful step. The MLSs
feed those listings to both Realtor.com, the world’s largest
aggregation of real estate listings, and the consumer facing
websites of the MLSs local member brokers. Both are very
important since over 70% of home buyers conduct home
searches on the Internet either before or while they they
are working with brokers. “It costs an MLS member broker
virtually nothing to distribute your home listing through
this method, so there’s absolutely no excuse for them not to
do so”, according to Foundation President Bruce Hahn.
If you are dealing with a real estate broker make sure they
agree to put your home on the Internet. The National
Association of Realtors has recently been sued by the
Department of Justice over proposed rules that would allow
brokers to “opt out” of letting the local MLS share the
homeowner’s listings on the Internet through Realtor.com and
the websites of the broker’s local competitors. Opting out
may increase the chance that the home will sell to one of
the broker’s prospective buyers, but it is bad for sellers
because the majority of home buyers won’t see the home in
their Internet home searches. Smart sellers will specify, in
an addendum to their listing agreement, that their listing
will be distributed to Realtor.com and all the consumer
facing websites of the local MLS members and their national
association. If you are using a traditional real estate
broker the addendum should also list local publications
where ads will be run, their frequency, and the frequency of
open houses. This will help avoid future disagreements over
whether the agent is doing all that he or she had promised
to help market your home.
Home sellers should also take advantage of free marketing
opportunities (free listings on Craig’s list on the Internet
in many cities, bulletin boards in churches, grocery stores,
offices, fraternal organizations, or other locations, etc.).
Be sure to develop, or have your agent develop, an
attractive promotional brochure with attractive photos and
descriptions. With inexpensive and simple to use desktop
publishing software available there is no reason for
prospective buyers to leave your home with only the cryptic
MLS form.
Most libraries have quite a few books on home selling, and
the real estate section in local newspapers often contain
helpful information about prices and local market
conditions. AHF also has free tips for home sellers (and for
buyers) on its website, and has published
How To Sell Your Home Fast!, a
142 page book to help homeowners get the most for their home
in the least amount of time. The book tells sellers how to
develop and execute a marketing plan and many of the tasks
they’ll undertake. It includes work sheets to help
homeowners develop a plan to market their home - an
important step they should take whether they are using a
broker or going the FSBO route. If you choose to sell your
home yourself, you’ll have to do the open houses and conduct
your own negotiations, but you can get a real estate lawyer
to help you make sure you carry out all of a seller’s legal
requirements and save a bundle in the process.
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Taxes: Going
Away, or Coming Your Way?
There’s mostly good news for homeowners on the tax front
these days. Some federal taxes are being cut, and others may
be cut.
On the good news side, late last month the Treasury
Department admitted that the 3% long-distance telephone tax
enacted 108 years ago to pay for the Spanish-American War is
no longer necessary. After careful research the Treasury
Department apparently discovered that the Spanish-American
War ended 107 years ago.
The American Homeowners Grassroots Alliance has long opposed
the tax, which will go out of existence on July 31.
Homeowners and other consumers will be able to deduct from
their federal taxes three years' worth of the telephone tax,
the legal limit on claiming tax overpayments, on their 2006
tax returns. The Internal Revenue Service is developing a
simplified method for taxpayers to claim their refunds.
The $13 billion in rebates will be apportioned out relative
to long distance usage. Individuals and businesses with the
biggest phone bills will be the biggest winners. Gene
Kimmelman, of Consumers Union cautioned that many, perhaps
most, households will see only a modest refund -- possibly
$10 or so. A similar levy on local calling remains in
effect, and AHGA and many other groups would like to see the
repeal of the excise tax on local service as well.
The IRS has also just announced that it is creating a new
program to allow taxpayers to split direct deposit of their
federal tax refund among savings, checking and retirement
accounts. The average refund last year was $2,171. Instead
of requiring refunds to be delivered in a lump sum, the
ability to split refunds among multiple accounts will be
more convenient and hopefully also encourage consumers to
save greater portions of these refunds.
AHGA and others have joined in asking the Senate Committee
on Finance to take up legislation that could protect the
growing number of home-based businesses. S. 2721, the
Business Activity Tax Simplification Act of 2006 (“BATSA”),
would make it clear that home-based and other businesses
would not have to collect and rebate state and local taxes
from customers outside of their state. “With thousands of
state and local governments across the country, it would be
impossible for a home-based eBay seller to keep up with the
paperwork.” noted AHGA’s Hahn.
AHGA is also opposing a proposal by state government groups
to mandate state and local sales tax collections by
individuals and businesses from customers outside of their
state. The so-called Streamlined Sales and Use Tax Agreement
(SST) among 19 states (and counting) would force them to
collect taxes on remote sales and remit the proceeds to the
states by formula.
The Expanding American Homeownership Act of 2006 (HR 5121)
would give many first-time home purchasers financing options
they can’t get in the mortgage market today. It would give
the FHA the authority to offer a wide variety of insured
home-loan types it currently does not offer, and would
increase the maximum loan amounts to the median home price
in every metropolitan area. FHA backing is important because
interest rates on them is lower than on similar conventional
mortgages. The legislation would also enable FHA to price
mortgage insurance based on a risk. Buyers with good credit
could make small down payments (or in some cases none at
all). They would pay less for mortgage insurance than those
with weaker credit histories. At the same time buyers with
flawed credit histories would still be able to get
mortgages, albeit at higher rates.
The bill was approved unanimously at the subcommittee level
in May and will hopefully go to the House floor this summer.
A Senate hearing on a counterpart measure is scheduled in
late June, with final floor action possible before Congress
adjourns.
On the other hand the outlook for AHGA-supported legislation
which would allow the deduction of private mortgage
insurance premiums – subject to some limits – is uncertain.
It is possible it may be included in a broad-based reform
package that could see action before Congress adjourns later
this year. This would particularly benefit low and middle
income homeowners who did not have the 20% down payment
needed to avoid having private mortgage insurance.
Negotiations to end the “New Home Tax”, a tariff on Canadian
lumber that has added up to $1,500 to the price of an
American home since they were imposed in 2002, may have hit
a snag. The tariff rate has already been cut substantially
and the U.S. and Canadian governments are in negotiation
over a possible compromise that may replace what’s left with
an agreement that would end the tariff entirely under most
market conditions.
Among the sticking points are what to do about the $5
billion in taxes collected over the life of the tariff. AHGA
would like to see it go back to homeowners who paid for it
as reflected in the price of their new homes built while the
tariff was in place. The Canadian companies would get back
about 80 per cent of the $5 billion in duties they have paid
while U.S. timber companies would receive about $500
million.
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Pressure
Grows in the Real Estate Sector
Internet companies are increasingly becoming sources of
useful assistance for home buyers and sellers. Congress is
having new hearings that may thwart the real estate sectors’
efforts to undermine that trend.
Internet content providers from outside the real estate
brokerage sector are increasingly helping consumers
interested in buying and selling homes. In addition to
providing helpful background information, some of the larger
Internet portals and search engines such as MSN, Yahoo!,
Google and AOL, also provide the ability to search listings.
Other Internet content companies that specialize in real
estate but aren’t brokers, such as HomeGain, LendingTree,
Zillow, Trulia, and Propsmart, also offer buyers and sellers
helpful services. In some cases buyers can get rebates or
other benefits if using their referral services.
Home buyers are increasingly taking advantage of those
services. A recent study of California home buyers revealed
that buyers who used the Internet extensively in the home
purchase process spent an average of 5.8 weeks researching
the purchase of a home before contacting a Realtor. Buyers
who did not use the Internet in the process spent 2 weeks in
the research stage. Conversely Internet buyers spent 2.2
weeks actually looking at homes before they purchased, as
compared with 7.1 weeks for non-Internet buyers. The first
figure demonstrates how much useful content is out there,
and the last reflects how much time that good preparation
can save, both to buyers and to real estate agents who need
to spend far less time with educated buyers who have already
researched the market.
The services these companies provide benefit home sellers as
well as the real estate brokers and agents who represent
both sellers and buyers. Many of these content providers are
exposing listings to more potential buyers, which will help
the home sellers get a higher price and assure buyers more
choices. It benefits the sellers’ brokers, because they are
getting free advertising and are likely to receive a higher
commission, and receive it sooner, as a result of the
additional market exposure.
Not all real estate brokers see it that way, however. Mike
Long, CEO for Move Inc., the company that manages
Realtor.com and Move.com property-search sites, criticized
these Internet companies that he believes are trying to take
control of real estate consumers while taking listing
content from real estate professionals. His views were
recently echoed by Alan Yassky, a former National
Association of Realtors treasurer who serves as a Realtor
representative on the Move board of directors. Their view
incorrectly presumes that real estate brokers own
homeowners’ listings, and have the right to block
dissemination of homeowners’ listings rather than the
fiduciary duty to use all reasonable methods to broadly
disseminate those listings. With 70% of home buyers using
the Internet in home searches, and no cost associated with
the additional listing distribution by the large Internet
companies, it’s hard to defend that view.
“What’s going on here is that the dominant real estate
brokers are trying to limit the distribution of information
on homes for sale to buyers working with their own company’s
agents”, observed American Homeowners Grassroots Alliance
President Bruce Hahn. “That way they can get both ends of
the commission while squeezing out their smaller local
competitors as well as the Internet intermediaries who
compete for consumers eyeballs.”
Some of the practices used by the real estate brokers to
limit consumer access to listing information and restrict
new real estate business models were laid bare by the June
19 Consumer Federation of America study, “HOW THE REAL
ESTATE CARTEL HARMS AMERICAN CONSUMERS”. CFA’s study
followed a June 17 New York Times editorial which called on
Congress to give the Federal Trade Commission additional
power to address the barriers that real estate broker groups
are seeking to erect.
The Department of Justice, which has already sued the
National Association of Realtors, for its efforts to limit
the distribution of listings, has recently begun studying
the practices of multiple listing services as well. The
House Financial Services Committee is reportedly considering
additional hearings into the practices as well.
“The American Homeowners Grassroots Alliance strongly
supports such steps.” said the AHGA’s President. “Congress
needs to take a look at what policies might be appropriate
to protect the best interests of consumers in cases where an
Internet intermediary attempts to limit the distribution of
real estate listings by other Internet companies. In this
case it is certainly in the interest of consumers that their
intermediaries, Realtor.com or the nation’s multiple listing
services, be precluded from restricting the dissemination of
homeowners’ listings”.
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New
Legislation to Lower your Cable TV Bill
Monopolies in many cable TV markets could end under
legislation that will increase TV services competition and
drive down prices.
Legislation that passed in the House of Representatives by a
321-101 margin in early June will scrap the time-consuming
system where prospective providers must negotiate
individually with every locality. "This legislation can
increase competition not only for cable services, but also
unleash a race for who can supply the fastest, most
sophisticated broadband connections that will provide video,
voice and data services," said House Energy and Commerce
Committee Chairman Joe Barton, R-Texas.
“The savings for homeowners will be substantial”, said
American Homeowners Grassroots Alliance President Bruce
Hahn. The most recent study of the impact of competition on
TV services pricing in four separate markets, revealed that
average monthly subscription fees dropped from $60 a month
to $40 a month when a new competitor was allowed to compete
with the incumbent cable TV monopoly. “That’s $240 savings a
year, which is real money for most homeowners and most other
consumers.”, Hahn noted.
The Grassroots Alliance is urging speedy action in the U.S.
Senate, which is considering telecom legislation containing
similar provisions. AHGA believes the Senate should pass a clean TV
services competition bill quickly, so consumers can start
saving now. To avoid bogging the Senate bill down and risk
that the bill might not pass in the waning days of this
Congress, the Senate should use other vehicles to address
the current problem of real estate brokers limiting the
Internet dissemination of homeowners’ listings, and other
substantial existing challenges, such as finding ways to
make broadband available and affordable for rural residents.
“While we would also like Congress to look at practices of
content providers and protect the interest of home sellers
and buyers in the online space, we recognize that
legislator’s knowledge of this issue is still in its
infancy” conceded AHGA’s Hahn. This issue and other
important issues are unlikely to be resolved in the waning
days of this Congress in any event.” For these reasons AHGA
has asked members of the Senate Commerce, Science and
Transportation Committee to go full speed ahead with their
pending legislation. “With
the many important issues before Congress in its waning days
we urge Senators to focus on those issues, like TV services
competition which enjoy overwhelming support and put real
money into the pockets of their constituents”, the AHGA leader
recommended.
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Beware of Real Estate Agent Misrepresentation
Many real estate agents do not provide legally required
disclosures to consumers, and the problem is getting worse.
And what they do tell you, whether mandated by disclosure
laws or not, may be inaccurate.
Laurie Janik, general counsel for the National Association
of Realtors (NAR), recently said that misrepresentation
accounted for about two-thirds of all litigation against
real estate brokers and agents. NAR’s 2005 Legal Scan, which
broke down the thousands of lawsuits by category, found that
24% of lawsuits related to disclosures (usually to their
absence), and 20% related to fiduciary duties.
Most of the lawsuits against brokers are brought by buyers.
Successful lawsuits against brokers relating to Fair Housing
Act violations, breach of fiduciary duties, and antitrust
violations usually result in the largest damage amounts.
Bob Myroniuk, president of the Association of Real Estate
License Law Officials, revealed that real estate regulators
receive a significant number of consumer complaints about a
broker's failure to disclose the correct square footage, lot
size or age of improvements at a property. Buyers have
complained that they weren't told of pending zoning changes
or community development projects, before they bought their
homes.
Home buyers and sellers need to be mindful of the current
lackadaisical attitude towards disclosure responsibilities
by real estate brokers and agents. Hopefully states will
begin to put some teeth in their disclosure laws. Until
then, home buyers and sellers should ask plenty of
questions, and save every document they receive as part of
the buying and selling process. Give preference to email
over telephone exchanges, because you can set up a folder
and save both the questions and answers for later referral
if necessary.
Antitrust laws are another area of concern. The U.S.
Department of Justice is suing NAR over proposed national
rules that would enable a broker to withhold the
dissemination of homeowner’s listings over the Internet. The
lack of exposure hurts both home sellers and buyers, 70% of
whom now use the Internet in their home searches. It helps
real estate brokers with a large presence in a market get
commissions from both end of the transaction, while starving
their smaller local competitors of homes to market through
their websites.
Most recently the U.S. Department of Justice asked some
local Multiple Listing Services for information about their
marketing practices, which suggests that some of them may be
undertaking practices that are hurting home buyers and
sellers.
Some of these practices may be addressed through reform of
RESPA (the Real Estate Settlement and Procedures Act), a
broad based federal law that also restricts real estate
brokers from giving or receiving compensation for referrals
from other parties to real estate transactions. Recent
Congressional hearings revealed that some brokers in
Colorado were receiving substantial referral fees from title
insurance companies yet not providing any relevant service
for their clients. In AHGA’s opinion they are, in effect,
thinly veiled kickbacks and should be prosecuted as such.
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Energy Policy of Growing Importance to Homeowners
It is becoming increasingly clear that energy policy is
becoming more and more important to homeowners. With the
cost of all forms of energy rising, it’s obvious that
cash-strapped homeo wners will have a hard time keeping up
with the skyrocketing costs of all types of energy,
including the energy to heat and cool their homes and the
fuel for their vehicles. AHGA is trying to develop a
balanced energy policy that assures both affordable energy
and minimizes the adverse environmental impact of energy
consumption.
We welcome the thoughts of AHGA members as we go through the
process. The Alliance has already engaged in a number of
policy efforts in the energy arena. We have supported tax
incentives for energy efficient new homes, for the retro
insulation of homes, and for the purchase solar powered and
other environmentally friendly technologies that can produce
or save energy. AHGA has also supported tax credits for
hybrid vehicles and federal research into alternative fuels
such as biomass, and clean engine
technologies such as hydrogen power. And AHGA will continue
to support their extension of these tax incentives and
funding for research.
At the same time it is clear that these measures alone will
not be enough to make energy supplies affordable for
homeowners and other consumers. As a result we face some
difficult challenges, some of which involve tradeoffs with
other important issues, such as protecting our environment.
The adverse effects of global warming are becoming more and
more certain, so it is increasingly important to reduce the
greatest cause of global warming, which is the use of carbon
based fuels.
Coal
burning electric power generation plants are the biggest
problem. They produce 2.5 billion tons of carbon dioxide –
the cause of global warming - every year. That is a larger
amount than the 1.5 billion tons automobiles produce
annually.
But homeowners need to heat their home with
something, be it home heating oil, coal, or electricity
(some of which comes from carbon-based fuels).
Even as we continue and expand these kinds of incentives and
continue research that may some day yield breakthroughs, we
must make other hard choices. Alternatives include new
technology that will cut down, but not eliminate, fossil
fuel pollution, and new, and far safer nuclear powered
electric energy facility designs.
Some homeowners may need to make some sacrifices as well.
The size of homes has grown over the years, and in some
areas 3-5,000 square foot “McMansions” are becoming
commonplace. They are almost double the size of average new
homes a generation ago. Even if well insulated, these homes
can still consume nearly twice as much energy as one half
their size, yet the homes of a generation ago contained all
the basic amenities most families need. Since oversize homes
consume more energy than typical homes, they are
unnecessarily driving up the cost of energy to all the rest
of us. Perhaps it is time to consider the equivalent of a
“gas guzzler” tax on oversize new homes in the future, or a
premium on energy bills for the buyers of such homes. That
tax and/or those premiums could be directed towards energy
efficiency research. It would not prevent home buyers from
having their McMansions, but they would be contributing to
the effort to solve the high cost of energy that their own
demand is contributing to.
More legislators in both parties are coming to recognize the
need for a broad based approach. They are recognizing that
the very comprehensive energy bill passed last year was a
good first step, but that there is a long road ahead before
we will be able to reduce our energy costs and our
dependency on foreign energy sources. More comprehensive
energy measures will gradually lead us to that goal, but
only if we continue to work at it.
What do you think? We’re searching for other innovative and
other good policy ideas, with the goal of developing a
thoughtful omnibus AHGA energy policy proposal. Please email
your thoughts to us at
energy@americanhomeowners.org and
help us solve one of the biggest challenges facing
homeowners today.
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New Homes Tax
Shelved…Sort of
The U.S. and Canadian governments have reached a tentative
agreement to resolve the “new homes tax”, a tariff imposed
on Canadian softwood, which is imported into the U.S. in
large quantities for the purpose of home building,
remodeling, and other uses. While the agreement would
totally eliminate the tariff under certain market conditions
and peg it at a lower rate (5-15%, versus 27% previously) if
it does kick in, it leaves AHGA, U.S. home builders and
Canadian timber companies somewhat disappointed.
The reason is that decisions in recent legal challenges have
suggested that the tariff might have been reduced if not
eliminated had the challenges continued. Unfortunately the
Canadian timber companies had limited leverage over their
government’s policy since the timber they harvest comes from
government lands. In the U.S., American timber companies
have unfortunately had more leverage over U.S.
Administration policy than the combined force of a
broad-based U.S. coalition opponent that includes AHGA, U.S.
home builders, and other U.S. business segments adversely
affected by the tariff.
The Ontario Lumber Manufacturers Association and the Ontario
Forest Industries Association have filed international trade
actions to challenge the U.S. and Canada’s suspension of
NAFTA panel proceedings on the issue. They seek a North
American Free Trade Agreement (NAFTA) ruling that Canadian
softwood lumber is not unfairly subsidized. If successful
that would certainly cloud the outlook for the conditional
tariffs under the agreement and perhaps cloud the agreement.
Assuming the agreement goes forward the devil will be in the
details, which are vague in many respects. The details will
decide whether this will be a good deal for American
homeowners or not," says AHGA President Bruce Hahn. “If
resolved in our favor, the threat of additional cost to new
home buyers and other consumers will be substantially
reduced. We will work to minimize the impact during the
development of specific regulations.”
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When it comes to legislation and regulation too many
homeowners sit and the sidelines and watch as their future
is decided for them. Others weigh in on the issues important
to them, and often one letter, email or phone call can make
the difference.
Are any of the issues in this month's Home Base of interest
to you? If so, please take the time to contact your
legislator and express your views. It's easy - you can reach
your legislator in a couple of mouse clicks, and you can use
the content in Home Base on our website to help you develop
your message. To look up the phone number and send an email
to your U.S. Representative or your U.S. Senators,
click here. The site can look up their names by zip code
for you if you don’t know them.
Many legislators also reserve office hours when they are
available in their home state or home district offices to
meet with constituents to discuss policy issues. You may be
able to arrange a personal meeting while they are home for
recess during the first week of July and all of August. To
find out federal legislator’s availabilities for constituent
meetings, you can use our
congressional look-up tool to look them up by name or zip
code, and contact their offices by email, phone, or fax, or
simply call the Congressional switchboard at 202-225-3121
and ask to be connected to your representative or either of
your senators by name.
Are you interested in an issue that is important to you and
significantly impacts home owners or home ownership?
Any member may propose a position on an issue, so please
check the American Homeowners Grassroots Alliance
2006 policy priorities list. If your favorite position
isn't on the list, please send us an email and tell us why
you think the American Homeowners Grassroots Alliance should
be working on it.
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