Richard's Real Estate Thoughts: May 2008

At a recent luncheon with the Chattanooga Home Builders, Pam Duffy, President of Chattanooga Association of REALTORS, mentioned that the unit sales number in Chattanooga had dropped by roughly the percentage of prior year sales that were closed with subprime loans.

That is a remarkable coincidence.

What is needed is to qualify those buyers with loan programs that exist today. Otherwise we lose a significant chunk of the market forever.

The focus should be to identify them and to provide the services they need to become qualified. This means affordable credit repair, or credit building. It could mean accessing underserved markets.

I plan to work through these ideas about expanding the pool of qualified buyers, legitimately, with as little impact on my time as possible. Any thoughts are appreciated.

You will find a mortgage professional here. Whether you want conventional, FHA, VA, Rural Development, Reverse Mortgages, Construction Permanent, credit guidance, mortgage or home or other information in Tennessee, Georgia, or Alabama, call me, Richard Smith:

Last week the Chamber of Commerce conducted two grand openings. A Super BILO opened in Hixson, TN, moving its location from the older store in a major expansion. The O'Charley's restaurant on Shallowford Village Drive reopened after closing for 2 days to complete renovations, as part of the chain's rebranding program. The goal is to enhance their patrons dining experience.

I frequently eat at that restaurant as it is close to my office. I am excited to see what has changed.

These are two of many grand openings and ribbon cutting ceremonies that the Chamber conducts weekly. They point to the continuing growth in the Chattanooga economy.

The BILO ceremony was full of local dignitaries, including Major Ron Littlefield, and several commissioners. Many of BILO's corporate officers were present as well as several major vendors, including Scottie Mayfield.

The Hixson High School string class supported by members of the Hixson High School band provided music and gave this event a strong focus on supporting the Hixson school and community. BILO contributed $1000 towards the Hixson High School and Hixson Middle School music programs.

This is a significant event, and a sign of our growth in Chattanooga. The community supported the opening by showing up in very large numbers. My estimate is at over 700 in addition to Chamber members and the numerous other invited guests.

Here is a link to the story in the Times Free Press.

The grand opening at the O'Charley's restaurant also was well attended, by the local business community, and by Chamber members. The Ooltewah Middle School band played, again giving focus on commitment to the local community. O'Charley's gave $1000 to Chattanooga Schools.

Here is a link to the story in The Chattanoogan.

Chattanooga is on the move. We can also look to the possibility of the VW plant decision to move into our area. We are very much in the running.

You will find a mortgage professional here. Whether you want conventional, FHA, VA, Rural Development, Reverse Mortgages, Construction Permanent, credit guidance, mortgage or home or other information in Tennessee, Georgia, or Alabama, call me, Richard Smith:

Friday a group of interested people from government, business, and private concerns met to discuss the issues surrounding Fair Housing.

Chattanooga has for the last 3 years held a luncheon to focus attention on the issue of Fair Housing. The luncheon is held in April to coincide with National Fair Housing Month. This year the luncheon commemorated the 40th anniversary of the Fair Housing Legistaltion.

The issues that were disussed were how to make next year's event better. A major concern was to improve turnout, but also to provide better access to information for those who might be suffering from discriminatory acts.

The focus of the discussion was also towards seeking ways to help with access to programs that exist to encourage home ownership. Many people are not necessarily denied access because of discrimination, but because of a lack of information and guidance.

The discussion went to the issue of discrimination, which is more of a problem than I had realized, judging from the accounts of many who took part in the meeting. Much of the discrimination had to do with landlord/tenant relations, but much also involved home purchases. This is especially true in relation to directing someone from or to certain neighborhoods. Comments were also made to the effect that mortgage terms are often not the same for minorities.

A related blog thread has been initiated by Anthony Clark. His blog thread is http://activerain.com/blogsview/37047/Hate-bigotry-discrimination-Oh. There have been many posted comments on that thread.

At the meeting in Chattanooga, we discussed issues of race, gender, disability. Anthony's blog thread is focusing on sexual preference, but he is fundamentally discussing discrimination in all forms.

Our group made specific mention of systematic and subtle discriminations, many of which are committed unaware.

It is an important matter. I was honored to be invited to the meeting, and fortunate to have gained some new insight. 

Ooltewah has defended its national ranking by winning the Class AAA softball tournament with a 6-1 win in the final over Beech.

GPS another local power house softball team also won the state championship in its classification Division II, Class AA.

The Ooltewah win gives Chattanooga area schools 4 consecutive state titles in Class AAA. According to the Times Free Press, this is an historic event. The shortest time that three schools from the same district have won state championships in Class AAA. The article does not say this, but it must be one of the few times a single district has won 4 straight state titles.

Red Bank High School where my daughter played.

Soddy Daisy High School , 2 consecutive state titles.

Ooltewah High School, this year's state champs.

GPS won its tournament final game with a 15-0 win over St. Benedict.

There are video highlights for both team on the links to the Chattanooga Times Free Press articles below. Be careful, the videos will bring tears. The videos are below the written articles, and well worth the watch.

Go Ooltewah Lady Owls and GPS Bruisers, and Chattanooga girls softball!

Video links:

Lady Owls get to Hoot

GPS Cruises

Tina Christein, the Vice President over Wholesale Operations here at American Acceptance Mortgage, has been elected as President of Tennessee National Association of Mortgage Brokers for 2008. She is well deserving of this. She has coordinated fund raising and recruitment for the Chattanooga area for the last several years. This included organizing and executing an annual golf tournament. Last year, in the midst of the start of the mortgage woes, she was able to put on the only one of 4 Mortgage Broker golf tournaments that made a profit for our organization.

She has served in various state level postions, including Secretary and Vice President. This year after being elected, she presided over a very successful state convention. It was successful even in this down year, largely because of her efforts.

The upcoming year is proving to be full of challenges, from the economy, from loss of membership, from loss of lenders, from state and federal regulation, from program loss and guideline restrictions.

She plans to keep working through all of this. One piece of legislation, TN Mortgage Originator Reform bill, that she and the Mortgage Brokers have supported is licensing and continuing education for mortgage brokers. This will improve the level  of service, weed out unqualified brokers, ensure a minimum level of knowledge, provide for continual development, and establish our profession as professional.

This bill has just recently been signed into law by the governor.

The article about the convention, Tina's election, and a synopsis about the TN Reform Law is available by clicking here.

Congratulations to my friend and coworker, Tina Christein. You go girl!!

Pam Duffy, president of the Chattanooga Association of REALTORs, gave an uplifting presentation to the Home Builders Association of Southern Tennessee today at their monthly luncheon.

Her main point was that all real estate is local. Chattanooga is not the national market. We did not experience the great high, and we are not experiencing the terrible low, There are many things to be excited about in Chattanooga. She specifically mentioned that we are very much in contention for the VW plant. I myself am excited about the prospects for fiber optic cable and its impact. There are many other things to be excited about - the 3^rd best city to live in.

Pam referenced the Harley Davidson advertisement that acknowledges the many problems of the day - Iraq, terrorism, the down real estate market, foreclosures, high gasoline and energy costs, etc. The advertisement acknowledges these problems, and says Screw it. Let's ride.

Pam interpreted that message for us today to mean that there are problems, but we cannot let worries and fears dominate our thought. We should do what we know how to do. There are buyers out there. Builders should build. REALTORS should sell.

Let's ride. Help families reach the American Dream of home ownership.

Her message was encouraging, and then she turned practical for her builder audience. The question is not whether a builder should build or not. The question is what a builder should build. What does the buyer want?

Universal design.

Pam said that consumer studies reveal that square footage is no longer king.

Formal dining rooms, high ceilings, large homes are out. Too expensive to build, to heat, and to maintain.

She indicated most buyers prefer around 2500 square feet with a good floor plan. Open layout, one large room for entertainment and family evenings, open to the kitchen, 1^st floor bedroom, multi cook friendly kitchen, over sized garage with cabinets, heat and air, and generous storage, outdoor living spaces, environmentally sound.

Comfortable, durable, easy to maintain.

She said that new construction should accommodate people no matter their age, at all phases of life. The universal design.

Demographics are tending such that over 50% of homeowners will soon be over 50 years old.

Builders should consider the active older adult who wants to remain in their home and to remain a homeowner into their later years.

She spoke then about Certified Aging in Place (CAP) plans and construction.

Her presentation was well received and appreciated by the builder audience. It was encouraging and pointed to some options with direction and focus for builders in a tough time.

Here is a link to Pam's website.

The Home Builders Association website is www.hbast.org.

The last meeting of the Chattanooga Chamber of Commerce Ambassadors featured Bill Rush, Executive Director of the Downtown YMCA. He discussed the extensive renovations  ($5 million) to the facilities and how the new facilities will help accomplish the overall mission for the local YMCA.

The grand opening ceremony was held on Wednesday, May 7.

There are 7 local area YMCA's: Downtown, North River (Hixson), Hamilton Family (Shallowford Rd), North Georgia, JA Henry (Brainerd), North Georgia, Cleveland, and Rhea County. Address and contact information is available on the above link.

He said the number 1 concern for the YMCA is addressing social concerns. The  Y started in 1844 in England to help address crime and homeless men. It came over to the US in Boston. There are over 3000 branches and the organization is world wide, in 300 countries.  This is just some of the information about the YMCA organization that he gave out.

The social concerns he is focusing on now are obesity and health. His hope is to use the new facility to break down barriers, whatever is preventing good meals and good exercise habits.  He called for activating lives.  He mentioned several times, there is no reason not to join. Scholarships are available for membership and for child care. Programs exist for adults and for children. He said that the YMCA is the number 1 child care provider in the US.

He specifically mentioned the Strong Kids campaign which is going on now. The goal is to raise $130,000. They are now at $100,000. Here is the link to information about the Strong Kids program.

And lastly, he gave a push for membership. His point is that a Y membership is more than just joining a health club. It is participating in the YMCA goal of bettering the community.

The renovations include a family center and  a fitness center. The link to the renovations descriptions  is here.

Drawing of YMCA renovations taken from www.YMCAChattanooga.org

Congratulations to the Ooltewah Lady Owls and to the Soddy Daisy Lady Trojans for such successful years in highschool softball. Ooltewah is nationally ranked and headed to the state tournament. Soddy Daisy is focused on its 5th straight trip to the state championship game.

Soddy Daisy won the last two state titles, and lost in the state championship game the two previous years. My daughter played on the Red Bank team that won the state title 4 years ago.

The Chattanooga area is really a hot bed for girl's softball. UTC and Chattanooga State both have ranked collegiate teams.

GPS and Whitwell are also headed to the state tournaments for their classifications.

Good luck to all our teams. 

This is an update to an earlier blog about fiber optic to the home. The Cable Telecommunications Association is continuing a law suit to stop the project. I understand that fiber optic will impact the cable industry. They are also fighting against AT&T entering the market. I understand their presence will impact Comcast's business.

But I do not appreciate their effort to stop a very important piece of our infrastructure development. The pluses from fiber optics are too numerous to list. It will bring a fundamental change to our area, probably in ways that cannot not be imagined. Kind of like how Al Gore could not have imagined Active Rain back in the days when he invented the internet.

I do not know the details of the lawsuit against the EPB fiber optic project, but the suit was previously dismissed. That speaks to me of the likely merit. It looks to me the only objection to the project is that it will make the cable companies become better companies.

Like the real estate market problems have made me become a better loan officer.

Recently the Chattanooga Association of REALTORS released its 1Q 2008 report, which showed what I thought were very encouraging numbers. And I posted that opinion in a previous blog.

The headline in the Chattanooga Times Free Press gave a different interpretation. The headline in Wednesday's Business Briefs was Local housing sales off 19%. The second paragraph of the brief pointed out that the median price in 2008 was down from 2007, $135,000 compared to $136,900.

The article gives the perception that the Chattanooga market is down and struggling, like so many of the larger market areas.

Actually the 1Q figures tell a different story for me. The underlying fact is that 2007 was a record year for the area. After such a boom year, the market must naturally slow a bit.

Given the number of distressed sales that we have experienced in the area and the large inventory from excessive new constrution, the numbers speak to me that the local market is quite strong for there only to have been such a slight decline in the median price.

The reduction in the number of sales, so forbodingly decried in the headline as a drop of 19%, looks much better in the larger perspective of the last decade.

The report shows the trend the housing prices since 2000.

2004       $116,000

2005       $126,000

2006       $131,500

2007       $136,900

2008       $135,000 1Q

This does not seem to me to be a scary trend of home price decline. In fact, taking out the numbers from a very slow January, the market is very much showing growth.

The report provides these numbers. (Units/Median price)

Jan 2008               395/$127,000

Feb 2008              496/$138,375

Mar 2008             570/$138,000

Foreclosures remain a problem, but except for the hardest hit areas of California, Florida, Michigan, and some areas in the North East, housing seems to be holding up. The media is not really reporting this truth, and I think that lack of balance is hurting consumer perceptions.

With the recent news that core inflation is holding, mortgage rates should remain low. This will insure that housing continues its rebound, and help to quicken the recovery in the larger markets. As long as Congress does not kill off the industry.