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July 2005 Archives
So the currency shift, and its resultant impact on long rates (and therefore Real Estate), plays very much into our Bearish 2006 scenario.
Consider the Yuan depegging in light of the increasing number of "exotic" mortgages: 30-Year Fixed mortgages are down to just over 40% from ~70% of all mortgages; Adjustable mortgages, up from under 10% to over 40%; Interest only mortgages, up to 20% -- from 0 in 2001.
Its hardly intelligent to take an APR when rates are at half century lows; Interest only mortgage holders don't really own their homes -- they are more like renters with an option to buy. Hey, that's the free market -- people are free to be as dumb a they want to be.
Marketers were able to do what they wanted because they were given a bye from a corporate governance aspect by the C-suite," Mr. See said, using the shorthand term for leaders like chief executives. "But now," he added, "the C-suite sees marketing as the last bastion of uncontrolled spending, and it's being viewed as a risk, a financial risk."
"It's the old story of the C.E.O. who asks the chief marketing officer, 'What happens if I take 10 percent out of the marketing budget?' and the C.M.O. replies, 'I don't know,' " Mr. See said, "so the C.E.O. says: 'O.K., I'll take 20 percent.' "
John Nardone, executive vice president and chief client officer at Marketing Management, said the survey showed that it was more important than ever for advertisers to give their marketing departments the types of controls, models and "repeatable processes" they use in areas like supply-chain management and human resources.
Robert W. Hahn, Robert E. Litan, Jesse Gurman (150K PDF):
This paper provides an economic analysis of the residential real estate brokerage industry. We find that the traditional model for residential real estate brokerage services may be dated, and could be improved substantially with some public policy interventions that spur innovation.AEI-Brookings Link
We believe that there are numerous barriers to entry that are slowing the emergence of new models for serving consumers. Some of these barriers are likely to be anti-competitive. Examples include discrimination against new brokerage models and online brokers who wish to join multiple listing services; state legislation that would require minimum service requirements, effectively preventing "a la carte" offerings; and prohibitions by real estate commissions on providing rebates to customers. In our opinion, none of these practices should be allowed.
We offer three broad policy recommendations: First, federal and state antitrust authorities should carefully scrutinize efforts to limit competition in the residential real estate brokerage market. Second, state governments should refrain from adopting laws or rules that inhibit competition in real estate brokerage. Third, Congress should allow the Federal Reserve Board and the Treasury Department to permit banks, which have long been natural potential entrants into this business, to offer residential real estate brokerage services through separately capitalized affiliates.
We do not know which business models are likely to succeed in the marketplace for residential real estate services in the future. We do believe, however, that judicious public policy interventions could have a marked impact on improving services and lowering costs for home buyers and sellers.
No provision of the advertising contract between Shorewest and Journal Sentinel makes any reference to circulation, the newspaper company said in a memorandum supporting its motion to dismiss the complaint.
"As such, the plain terms of the contract have not been breached," the memorandum argues.
California Insurance Commissioner John Garamendi said Tuesday that two of the state's largest title insurers have agreed to halt a kickback scheme that cost home buyers nearly $23 million, and said the insurers will pay $33.3 million in refunds and fines by way of restitution.
Fidelity National Title and First American Title, the two firms that have agreed to settle, according to Garamendi, could not be reached for confirmation. A department staffer said settlement talks continued Tuesday night with a third firm, LandAmerica Financial, which allegedly had made $2.7 million in questionable payments in a practice known as "captive reinsurance."
In simple terms, big builders, lenders and real estate firms formed subsidiaries, called captive reinsurers. Ostensibly they were formed to share the risk of issuing the title policies. Title firms, in turn, paid these subsidiaries several hundred dollars each time an insurer issued a policy based on a referral from a subsidiary's parent company.
At Sapphire Pointe, a subdivision in Castle Rock, huge beige and cream houses, dubbed prairie palaces by local residents, are clustered along curving lanes and cul-de-sacs. Last week the builder, D. R. Horton Continental Series, was offering a four-bedroom, 4,371-square-foot house for $489,697, $40,000 below the listed price. The builder had added upgrades that included fireplaces; granite countertops; and metal banister pickets on the curving staircase. The master bathroom was bigger than some studio apartments in Manhattan.
Many sellers of existing homes are offering incentives of their own. When Mary Ann and Brian Kuklinski put their mocha-colored three-bedroom house on the market in May for $275,000, they knew that a house nearby had languished on the market for eight months. After five weeks and 30 showings, they reached a deal by lowering their price to $270,000 and throwing in their washer and dryer, the refrigerator, and a swing set in the backyard.
Apollo Advisors LP is emerging as the possible winner over Bain Capital LLC for the marketing-services division of Cendant Corp in a close race. Both bids are considerably higher than the $2 billion analysts originally expected, according to people familiar with the matter.The pieces that Apollo may purchase are largely those that Cendant acquired via its' troubled merger with HFS.
A final decision has yet to be made, and a bid from Bain could still top that of Apollo. An announcement could come as soon as today.
The higher-than-expected bid for the Cendant unit mirrors recent auctions in which some large private-equity firms dropped out, shaking their heads at the rising price. As in recent auctions, the high bids are supported by favorable financing terms from banks, which make some private-equity firms more willing to bid aggressively.
Realtors have taken some knocks lately in Washington, where antitrust officials accuse them of trying to stifle cut-rate competition. At the state and local level, though, real-estate trade groups are fighting back -- and in many instances prevailing.
At issue is the proliferation of discounters offering lower fees on home sales than do traditional broker firms. In the past year or so, half a dozen states have imposed laws that require real-estate brokers to offer a minimum level of services, whether customers want to pay for them or not. Such hurdles could undercut the discounters' business model.
In a further blow, some local Realtor groups are imposing rules that make it harder for discounters to get their listings on national and regional Web sites. Even some discounters' advertising claims have come under attack.
LIKE most homebuyers, Debra Kling did not pay much attention to title insurance when she and her husband bought a home in Larchmont, N.Y., last year.
It was just part of the blizzard of papers they had to sign and the endless checks they had to write at closing.
She and her family moved in and all was well until her neighbor told her that they could not use most of the driveway they had assumed was theirs. Nor could she and her husband, Jeffrey Shaffer, build a basketball court for their 12-year-old son, Ricky, as they had promised they would when they moved from Manhattan.
It turns out that a decision in a 1987 lawsuit gave the neighbor the right to use the driveway - and took away that right from their house - but that was not disclosed by the seller or the real estate company, Ms. Kling said.
Nor did their title insurance company, Fidelity National Title, discover it, she said.
"If we had known this, we wouldn't have bought the house," Ms. Kling said.
Title insurance, which is intended to provide protection against any disputes that may arise over ownership of property, is one of many required costs faced by home buyers. It is an expense that has come under increasing scrutiny as regulators in California and Colorado investigate whether buyers have been overcharged for the insurance.
Some of the biggest title insurers, the regulators say, were paying as much as half of the policy premium for referrals of customers, suggesting that title insurance might be overpriced in much of the country.
In Iowa, though, title insurance costs are often 20 to 30 percent lower, sometimes even more, than average nationwide. The state banned conventional title insurance in 1947 after the collapse of insurers in Sioux City, and it instead offers an equivalent called title guarantee.