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Homebuying plans plunge, are housing prices next?

UmichsurveyStunning new finding today.  According to the University of Michigan’s monthly Survey of Consumers, consumer confidence dropped to it’s lowest point in 12 years, pulling homebuying plans to their lowest point in a decade.  According to Inman News, "The decline in home-buying plans was due to an
increasingly negative reaction to high home prices, as consumers expressed in
September the least favorable assessment in nearly a quarter century." 

How did the housing market go from record high real estate searches on Boston.com in March of 2005 — seven million page views generated by one million homes for sale searches — to no-shows at suburban open houses, and now this news? 

How far should consumer access to real estate data go?

How far should access to real estate data go in an e-commerce era when consumers expect access and transparency?  Web 2.0 functionality is already opening up new ways for consumers to manipulate real estate data to inform their own homebuying decisions.  For example, The Real Estate Cafe’s clients are using MLS data we provide them to create personalized Google Maps to value properties and make offers in ways that make HousingMaps.com look simplistic.  Should the real estate industry try to anticipate those needs and provide solutions, or should consumers be free to access housing data and innovate as they please?  Here’s what one future-oriented real estate consumer advocated proposed as the first article of a Real Estate Consumer Bill of Rights way back in 1999.  How would you update it for 2005 and beyond?

DRAFT REAL ESTATE CONSUMER BILL OF RIGHTS

Article 1. Right of information access without limitation
No consumer should be denied access to information sources just because that individual is not a real estate professional or because the real estate professional attempts to use membership in a trade association or a listing service as a condition of “representation”. To the extent information may be available, its access should not be denied except to lawfully protect the adverse party only.

As written in an earlier blog post entitled, Cell phone bill of rights? Why not real estate?, The Real Estate Cafe will:

Shouldn’t real estate consumers be free to choose based on informed consent?

Surveys conducted by the real estate industry over the past decade repeatedly find that some consumers want the convenience of one-stop shopping.  In response, real estate consumer advocates advise consumers to look carefully at the trade-off between time-saving convenience and cost, and to protect their right to make free, informed choices.  That’s the goal of this second article of a proposed Real
Estate Consumer Bill of Rights.  Initially drafted in 1999, how would you update it for 2005 and beyond?  If federal regulations were finally changed to allow banks to provide residential brokerage services, would this language need to be expanded? 

DRAFT REAL ESTATE CONSUMER BILL OF RIGHTS

2. Right not to be coerced into using products or service providers.
No consumer should be forced, without the consumer’s full informed
consent, into using any particular service or product. Consumers should
especially be cautioned where the real estate professional may, by
office policy, be required to act as a dual representative or shift
services without the consumer’s full informed consent. Consumers have
the right NOT to use real estate brokerage services and to “self-represent” if so determined by the consumer.

As written in an earlier blog post entitled, Cell phone bill of rights? Why not real estate?, The Real Estate Cafe will:

From double-digit expectations to double-digit disappointments

About this time last year, CNN/Money Magazine reported that a survey by economists Karl Case of Wellesley College and Robert Shiller of Yale revealed that home owners in Boston, Milwaukee, San Francisco and California’s Orange County were "counting on double-digit growth [in real estate appreciation for] EACH YEAR for the next ten years.  Just twelve months later, some of those double-digit expectations are turning into double-digit disappointments, at least in Boston.  Beneath the median and average prices that Realtors report going up, up, up every month; price changes on individual properties are crushing seller expectations and falling faster than consumer confidence

We’d be glad to send you an example of a listing that has been canceled
once, expired twice, and been listed by two different real estate
agencies.  Originally listed for $750,000, the property could sell now
for under $600,000 — a savings of $150,000 or over 20%.  This trend will become more wide spread as interest rates, still near a forty year low, return to traditional levels.   

Call for Real Estate Consumer Bill of Rights expanding?

Hearthatcall
Glad to read that fellow real estate innovators are blogging about a real estate consumer bill of rights and that a CNN reporter may be working on a story.  Given that, maybe it would be worthwhile for readers to collaborate on a short history of efforts to create a Real Estate Consumer Bill of Rights.  Since everyone in Boston is talking about the "Rolling Rally" today for the World Champion Red Sox, hope you don’t mind if I use a baseball metaphor to categorize time:

1st Inning:  To my knowledge, Erle Rawlins, a buyer agent / consumer advocate in Dallas, Texas wrote the first draft of a real estate consumer bill of rights in 1999.  A working draft is currently online on The Real Estate Cafe’s wiki.  Our goal is to invite the public to comment and coauthor on the wiki.

2nd Inning:  Two years later, in May 2001, a coalition of leading real estate
consumer advocates nationwide — including buyer agents,
fee-for-service consultants, and for sale by owner publishers —
cosigned a petition calling for a Real Estate Consumer Bill of Rights
which Consumer Union, publishers of Consumer Reports, echoed in their
testimony in Congressional hearings on banks as brokers:

"We
also call on Congress to hold hearings on the real estate marketplace.
…Are consumers being treated fairly by real estate brokers? Are
commissions priced fairly?" asked Consumers Union legislative counsel
Frank Torres during testimony May 2nd before the U.S. House of
Representative’s Committee on Financial Services Subcommittee on
Financial Institutions and Consumer Credit.

"Perhaps what we should be talking about is a Real estate Consumer Bill of Rights."

3rd Inning:  Note sure of the dates, by my recollection is that some government
agencies began discussing a borrower’s bill of rights.  Here’s a link
to one version by the Mortgage Bankers Association published on their website, StopMortgageFraud.com, copyright 2002.  (Your comments and links to other borrower’s bill of rights are most welcome.) 

4th Inning:  In May 2006, The Real Estate Cafe reminded fellow real estate consumer advocates that it had been five years
since the call for Real Estate Consumer Bill of Rights had been heard
in Congressional testimony.  That was six months after we initially blogged about the topic.

5th Inning:  To my knowledge, Redfin released their version of a real estate consumer bill of rights about seven months ago, on or around April 2, 2007.  Personally, I was pleased to see Redfin expand talk about creating a real estate consumer bill of rights and encourage others to separate the need for consumer protection from their critique of Redfin. 

6th inning:  The call for a real estate consumer was greeted enthusiastically in informal conversations at a workshop on mortgages and lending hosted by the Congressman Barney Frank (D-MA), Chairman of the House Committee on Financial Services at the Federal Reserve Bank in Boston on Friday, October 26, 2007.

Where will those private conversations with legal and consumer advocacy groups lead?  I hope there will be a growing recognition that a Real Estate Consumer Bill of Rights is long overdue and more timely than ever.  Whether you are a homebuyer, seller, or professional, we’d love to know what you would like to see included in a Real Estate Consumer Bill of Rights.  As written in the past, I’d love to see real estate commissions separated.  This short video / slide show, created nearly two years ago, bullet points 10 mega-trends leading towards that tipping point.

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