NAR conference addresses smart growth

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The National Association of Realtors Conference and Expo, held in San Francisco Nov. 10-13, featured numerous forums on a plethora of topics ranging from smart growth to the state of the commercial and investment real estate market. |ret||ret||tab|

The following summary is condensed from NAR releases generated by the four-day event, which drew more than 23,000 Realtors and guests. |ret||ret||tab|

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Smart growth|ret||ret||tab|

Smart growth, a broad term that embraces techniques for curbing the worst effects of unbridled growth, was addressed in a number of forums and education sessions held during the National Association of Realtors Conference and Expo.|ret||ret||tab|

"When smart-growth issues are on the table, Realtors should be at the table and we earn our seat by being knowledgeable and committed," said Pat Kaplan, a Realtor from Portland, Ore., and 2001 NAR treasurer. |ret||ret||tab|

Smart growth occupied center stage at the forum, "Selling Smart Growth to Home Buyers," a panel discussion on new niche markets that are emerging in the wake of smart-growth issues.|ret||ret||tab|

"Real estate markets are becoming remarkably diverse," said Peter Calthorpe, founder of Calthorpe Associates in Berkeley, Calif., and a leader of the New Urbanism movement.|ret||ret||tab|

"Recent shifts in the American economy and demographic profile mean that only 25 percent of our households still reflect the Ozzie-and-Harriet model, and half of those have both adults working full time," Calthorpe said.|ret||ret||tab|

Higher densities are inevitable, he added. "The social, environmental and fiscal costs of galloping sprawl are unsustainable.biggest obstacle to an even faster shift toward smart-growth issues and the New Urbanism principles is deep-seated inertia in zoning practices and in the banking industry," Calthorpe said.|ret||ret||tab|

Other panelists confirmed the increasing availability and expanding opportunities in niche markets under the umbrella of smart-growth issues.|ret||ret||tab|

"Real estate follows art," said Debbie Thomas, a Realtor from Portland, Ore., explaining how she picked up early signals of rising property values in Portland's blighted downtown neighborhoods. "Homeownership in the Pearl and River Districts is 10 times higher than it was five years ago," she said.|ret||ret||tab|

At a forum on the recent elections, Jerry Brown, former governor of California, now mayor of Oakland, noted the absence of affordable housing as an issue in the presidential campaigns. "We can achieve affordability by encouraging sprawl, or, as I'm trying to do in Oakland, we can try to sell elegant density,'" Brown said.|ret||ret||tab|

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Commercial investment|ret||ret||tab|

The commercial and investment real estate market looks fairly stable for the coming year, although high tech companies and lending criteria are changing, according to a panel of commercial real estate professionals at the NAR's commercial forum.|ret||ret||tab|

David Lereah, NAR's chief economist, said banks are now tightening credit in the commercial sector. "As the economy slows, problem loans will increase in the commercial market and lenders will be more cautious," he said.|ret||ret||tab|

Geoffrey Dohrmann, chief executive officer of the Institutional Real Estate Letter, located in Walnut Creek, Calif., said real estate investment trusts "are well outperforming the S&P 500 average, and have shown a year-to-date return of 21.6 percent." REITs are invested mostly in the office market, followed by industrial real estate and apartments, he said.|ret||ret||tab|

Dohrmann said commercial mortgage-backed securities also are showing good returns, with pension funds continuing to invest in this secondary market. "When you look at asset allocation, we see real estate rising from 5.8 percent of holdings this year to 7.5 percent in 2001," he said |ret||ret||tab|

"We've just gone through the largest bull market in history, with 78 million baby boomers invested heavily in the stock market. When they pull out of the market to retire, they'll look to more stable vehicles such as real estate," Dohrmann added.|ret||ret||tab|

John Koza of Koza & Co. in San Francisco, said he generally expects about the same amount of capital to flow into commercial real estate in 2001 as was invested this year. "However, we expect to operate in a capital-constricted market in 2001," he said. Koza added large, liquid REITs will have the greatest access to debt.|ret||ret||tab|

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Credit score disclosure|ret||ret||tab|

Fannie Mae, Freddie Mac, and Fair, Isaac & Co. recently joined the NAR in support of legislation that calls for the disclosure of credit scores to consumers. |ret||ret||tab|

NAR has long supported legislation to force full disclosure of the credit scores, risk scores or risk predictors that determine whether a potential home buyer is able to obtain mortgage credit. NAR also has testified before the U.S. Congress on a number of occasions to emphasize its position. The legislation was recently signed into law in California and is pending in the U.S. Congress. |ret||ret||tab|

Peter M. Zorn, director of financial strategy and policy analysis for Freddie Mac, said during a panel discussion, "Technological innovation, including automated credit-scoring, is the key to getting more Americans into homeownership. But consumers must have full confidence in the integrity of these new technologies." |ret||ret||tab|

Awareness of the credit scoring issue has increased as mortgage lenders have become increasingly dependent on credit-scoring techniques to evaluate risks associated with lending to consumers. |ret||ret||tab|

Although certain efficiencies have been achieved since 1995 by integrating the underwriting and evaluating processes, an iron curtain of secrecy now walls off essential elements of the mortgage-lending transaction, according to NAR.|ret||ret||tab|

In a typical transaction, mortgage lenders contract with the three major credit-reporting bureaus to gain access to a personal credit report, a practice regulated by the federal Fair Credit Reporting Act and Privacy Act. However, the NAR asserts that when reporting bureaus subcontract with a mathematical modeler to obtain a credit score, these protections evaporate. |ret||ret||tab|

For this reason, NAR states, there is a need for federal legislation to cover the spectrum of critical decisions in mortgage transactions.|ret||ret||tab|

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Electoral success|ret||ret||tab|

The 2000 elections, however muddled at the presidential level, were clear victories for Realtors and homeownership in Congressional races across the country, according to a consensus of professionals at the Realtors Conference and Expo.|ret||ret||tab|

"It was a big win for housing," said NAR President Dennis R. Cronk during a media briefing to recap the nation's elections.|ret||ret||tab|

"We invested $3.7 million hard dollars in the primary and general elections this election cycle and enjoyed a win rate of 95 percent in the U.S. House of Representatives and 82 percent in the U.S. Senate," said Lee L. Verstandig, NAR senior vice president for government affairs.|ret||ret||tab|

Cronk added that NAR is especially proud of its success in shaping the final language of the housing and homeownership planks in the 2000 campaign platforms of both the Republican and Democratic parties. "I'm disappointed, however, that affordable housing was a relatively low priority for both presidential candidates," he added.|ret||ret||tab|

Looking ahead, Verstandig said, "We are now fully prepared to achieve final victories on many of our priority issues, including brownfields reform, database protections and taxes."|ret||ret||tab|

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Going, going, gone|ret||ret||tab|

Some properties sell better at auction than by conventional means, and the tendency to sell via this route is growing in the electronic age, according to the National Association of Realtors.|ret||ret||tab|

According to David Gilmore, a Realtor and owner of Gilmore Auction & Realty, Kenner, La., more real estate is going under the hammer every year. While still representing less than 2 percent of the overall real estate market, auction sales brought in $49 billion in 1998, up nearly 20 percent from two years previous, he said. |ret||ret||tab|

"For sellers, auctions mean immediate cash and no long-term carrying costs. For buyers, auctions offer both excitement and bargains," Gilmore said. "In fact, the growing trend to use auctions to sell properties may be even more accentuated in the case of commercial real estate."|ret||ret||tab|

A forum on property auctions, sponsored by NAR's Auction Group, focused on how Realtors are using new technology to connect with real estate professionals nationwide, represent buyers in transactions that may involve properties not listed by Multiple Listing Services, and receive referrals from the association's "Circle of Success" interactive program. |ret||ret||tab|

The Internet is a significant factor in the growth of sales by auction. "The latest figures we have available for the first half of 1999 show more than $20 million worth of real estate was sold via online auction sales," said Kim Hagen, a Realtor from Carrolton, Ga.|ret||ret||tab|

According to Stephen J. Martin, president and CEO of The Gwent Group Inc. in Bloom-ington, Ind., "The entire real estate scene is changing significantly due to both age demographics and the Internet," he said. "No longer is it unusual for higher quality properties to sell via auction or for buyers to seek out this marketing venue when searching for property," he added. |ret||ret||tab|

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Land use issues|ret||ret||tab|

Despite numerous issues surrounding the federal govern-ment's management of public lands, there is strong support by Americans and lawmakers for the U.S. Forest Service to continue its policy of acquiring land under the nation's land endowment program, according to Jack Craven, national director of lands for the U.S. Forest Service. |ret||ret||tab|

In an NAR land use forum, Craven discussed with Realtors the dynamic role that public lands play in the health of the American economy and environment.|ret||ret||tab|

The nation's land endowment is in an expansion phase, Craven said, however, a lack of funding has left the agency backlogged with paperwork, causing frustration for both private property owners and the federal government.|ret||ret||tab|

Don Leal, senior fellow at the Political Economy Research Center in Montana, told forum attendees that the problems that plague the land endowment program are deeper than can be addressed by any improvement plan that relies simply on more political clout. |ret||ret||tab|

"In dealing with the complexities of land management, the federal government should adopt a viewpoint that is more purely economic, and seek to replace the failed command-and-control approach with market-based solutions," he said.|ret||ret||tab|

Meanwhile, Alan Front, senior vice president of the Trust for Public Lands, said, "Serious congressional consideration of the Conservation and Reinvestment Act, along with a reinvigorated Land and Water Conservation Fund, signals that the U.S. government can now be considered a qualified buyer,' and this change in the equation will encourage all kinds of new and productive arrangements." |ret||ret||tab|

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