Robert Calloway

Recent Posts

Rent Control Means a New Reality for REALTORSĀ®

Posted by Robert Calloway on Sep 20, 2019 3:51:30 PM

Rent Control means a new realityI admit it. I was somewhat disappointed with the recent approval by Sacramento lawmakers of statewide rent control legislation. AB 1482 will limit yearly rent increases to 5 percent, plus inflation, beginning Jan. 1, 2020. The new law will effectively limit rent increases to around 7 to 8 percent a year in San Diego County, based on our local inflation rate. The new law is not only rent control, but itā€™s also anti-rent gouging.

Fortunately, single-family homes and condominiums will be exempted from the new law, but our state's housing affordability and availability crisis deserves a comprehensive approach that prioritizes building more homes for rent and ownership. This new law offers nothing in support of production or protection.

Throughout the debate, the California Association of REALTORSĀ® (C.A.R.) advocated for a balanced solution that protected renters and respected the rights of property owners. While several of C.A.R.ā€™s recommendations were included in AB 1482, the final bill did not do enough to support the increase of supply of affordable rental housing. Even legislators who voted yes did so acknowledging its shortcomings.

With its restrictive rent cap, AB 1482 will not incentivize production of rental housing or help more people find an affordable place to live. It will actually discourage new rental housing and make it more difficult for hard-working Californians to find an affordable place to live.

In a statement after the bill passed earlier this month, a C.A.R. representative said, ā€œIt was disappointing that the California Apartment Association and the California Business Roundtable did not stand with us. In fact, the Apartment Association opposed an earlier version of the bill with a higher rent cap and a shorter sunset date and then withdrew their opposition when the bill was amended to lower the rent cap and extend the sunset date, contrary to the interest of their members. Only C.A.R. advocated for small mom-and-pop investors by successfully obtaining an exemption for single-family homes and condominiums.ā€

Just last year, when more Californians than ever voted in a midterm election, their message was clear. They wanted a balanced solution to our affordability crisis. Voters in 56 of California's 58 counties rejected a statewide ballot measure that would have dramatically expanded rent control without respecting property rights. Clearly, AB 1482 is an end-run after the failure of last yearā€™s statewide proposition for rent control.  

Still today, headline after headline remind us of the immediate need for more housing. In recent weeks, we learned the state has issued just 111,000 permits for new homes in 2019, 12 percent less than a year before. Even worse, apartment development is down 42 percent from last year. Todayā€™s real estate market is complex and interconnected. Home ownership is on the decline and rents are ever increasing.

Californians are being forced to make tough decisions because of the housing crisis. In a recent survey, 53 percent said they were considering leaving the state due to high housing costs and an even greater share of young people said the same. That number bears repeating: more than half of Californians think leaving the state may be the best option for them if they want to find more affordable housing.

Rent should be only about 25 to 30 percent of a person's income, but for more than 30 percent of Californians it is approaching 40 to 50 percent of their income. California needs to remove barriers to additional housing, not create them. Unfortunately, thatā€™s exactly what AB 1482 has done.

Now, with AB 1482 becoming law, our PSAR members are facing a new reality. Perhaps REALTORSĀ® should consider focusing on identifying more investor-owned properties. In some cases, rent-controlled properties can still be a valuable addition to an investorā€™s portfolio.

For example, rent-controlled units can offer lower acquisition costs. After capital improvements, there can be potential for substantial upside. Rent-controlled properties can provide a consistent stream of revenue and be a great investment for those with a long-term, buy and hold strategy.

I donā€™t blame you for being skittish about rent-controlled properties. But, perhaps investors who want to sell might have a broker manage their properties for them. Itā€™s an idea that might help both tenants and landlords, including the economically disadvantaged and most vulnerable who generally get hit the hardest by rent control.

Although we did not prevail, PSAR remains steadfast in its commitment to overcome Californiaā€™s historic housing supply and affordability crisis.

The right response is a dramatic increase in the number of homes, especially apartments, across California. Thatā€™s the only way to close Californiaā€™s chronic jobs-to-homes imbalance and keep the state economically viable. If we donā€™t build the homes that working families need, employers will pack up and take their jobs to states that will.



Topics: Marketing

Donā€™t Worry About iBuying, They Still Need Us

Posted by Robert Calloway on Aug 16, 2019 4:54:25 PM

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By Robert Calloway

The real estate industry is constantly evolving as new products and practices are introduced to the marketplace. On a daily basis, our PSAR members are experiencing new disrupters trying to shake-up the traditional business model of buying and selling with the assistance of an experienced REALTORĀ®, which remained unchanged for decades. PSAR is active in our efforts to combat this disruption by empowering our REALTORĀ® members.  

The phenomenon of iBuying is currently one of the most pressing concerns.

The idea behind iBuying is to reduce transactional property costs by utilizing digital tools. This direct-to-consumer, all-cash, online homebuying option is known by many names, including Opendoor, which launched in 2013, and Offerpad, which started purchasing homes directly from homeowners in 2015. Others include Knock, Ribbon, Redfin Direct and Zillow Offers, which launched last year.

The idea of selling and buying homes directly from consumers has grabbed media attention, investor dollars and a certain level of consumer acceptance. What started as a moonshot idea of selling your home with the help of an algorithm has become a homebuying market in its own right.

To some, this method appears to be a modern alternative to the often complicated and complex process of real estate transactions. For example, in theory, once a seller accepts a Zillow Offers price, they are able to pick their own closing date. Also, buyers who purchase a Zillow-owned home will be able to pick a move-in date of their choice.  

I know many PSAR REALTORSĀ® who have justifiable concerns about giving consumers technology tools needed to buy or sell a home without an agent. We all could be impacted by technology that minimizes the role of agents or poses a threat to both homeowners and real estate professionals.

But, the truth is that most homebuyers and sellers need advice on how much to offer, whether to include an inspection, how to arrange financing and a host of other issues related to the real estate transaction process.

In fact, during the past five years, PSAR has worked hard to empower REALTORSĀ® with more data and new technology to help them remain in the center of the transaction. PSAR provides new technology that can be leveraged to provide an experience for the consumer that is second to none. 

For example, the move to CRMLS has had a major impact on the ability of REALTORSĀ® to compete in todayā€™s market. CRMLS has access to more San Diego County listings than any other MLS. ā€œCloud Streamsā€ is better than the MLS at sharing listings with clients through texting and an improved user search experience. SavvyCardĀ® is another new tool that is helping agents share their business card and listings through social media and online marketing. Cloud MLX also provides a superior search experience. Agents who use Glide are providing a consumer-friendly tool that helps sellers fill out their disclosures easily on multiple platforms. CRMLS negotiated a special deal with LionDeskĀ® so that agents can have access to a fully functional CRM at no additional cost. Remine takes MLS data and enhances it with consumer data to put marketing power in the hands of the REALTORĀ®.

These new tools are powerful and, if used, can help a REALTORĀ® leverage their relationships to provide a superior client experience. To learn more about new technology tools that PSAR is providing to empower the REALTORĀ®, visit https://info.psar.org/benefits.

So, letā€™s ask a simple question: Just how many consumers are actually trying to go it alone without an agent? Real estate industry watchers expect the iBuyer market will represent less than 10 percent of the overall market.

Glenn Kelman, CEO of Redfin, has stated publicly that he doesnā€™t expect the number to go any higher than 10 percent or 20 percent any time soon. Currently, in Boston, which is regarded as a tech-savvy market, Redfin says less that 5 percent of the offers are from unrepresented buyers. Earlier this year, Kelman said a majority of people who receive offers from Redfinā€™s iBuyer program ultimately reject those offers. ā€œMost customers who get a RedfinNow offer donā€™t take it,ā€ Kelman told Inman News.

So, who really is using iBuyer tools? Itā€™s a mixture of people who are experienced at homebuying and younger customers who have never bought a home before. Some companies predicted a majority of iBuyers would be people with extensive homebuying experience, but that hasnā€™t always been the case.

Another slant to the iBuying trend is that selling a home to an iBuyer company could cost the seller tens of thousands of dollars. The iBuyer model may appeal to consumers who are looking for ease and hoping to avoid some parts of the home sales prep work, such as open houses, staging, showings and the like. But, the convenience is likely to come at a considerable price tag.

A recent investigation by MarketWatch of multiple transactions involving iBuyers shows that the offers would net their customers an average of 11 percent less than owners who choose to sell their homes on the open market, when fees and other costs are considered.

Simply put, iBuyer deals are stealing equity from homeowners. Opendoor and Offerpad both charge sellers fees of about 7 percent, in contrast to the average of 5 percent charged by real estate agents, according to REAL Trends.

A recent report said that RedfinNow might save home-sellers some time, but it also is likely to reduce the amount of money homeowners will earn from a purchase. Maybe some people donā€™t care about losing $5k or $20k on a sale, but this is real money to most working stiffs like us.

Indeed, according to Redfinā€™s initial public offering filed with the Securities and Exchange Commission, it states: ā€œCustomers who sell through RedfinNow will typically get less money for their home than they would listing their home with a real estate agent but get money faster with less risk and fuss.ā€

Meanwhile, many of us have experience with the shortcomings of Zillowā€™s Zestimates, which even the company acknowledges are a starting point in determining a homeā€™s value and not an official appraisal. According to Zillow, there are 102.7 million homes with Zestimates on Zillow. Nationally, the Zestimate has a median error rate of 7.9 percent, which means half of the Zestimates are closer than the error percentage and half are farther off. The company admits that in about 20 percent of sales the Zestimate misses the sale price by more than 20 percent.

Even some traditional brokerages, including Keller Williams, are also entering the iBuyer space with Keller Offers, which features a KW agent serving as an advocate during the home selling process. Earlier this week, Offerpad announced it would finance Keller Offers in selected markets, giving KW agents a chance to rep both sides of a sales transaction for the iBuyer.

Finally, my word to you is simply, letā€™s keep working hard, confidently knowing that our expertise, knowledge and services will be sought-after traits in the marketplace. Life is about relationships, and we were put on earth to make a difference and a contribution. There will always be a need for people with outstanding character, work ethic and professionalism. At PSAR, you will always be highly valued and considered extremely valuable.

Topics: Marketing

Sacramento Politicians Missing In Action on Housing Supply Crisis

Posted by Robert Calloway on Jun 21, 2019 4:47:38 PM

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By Robert D. Calloway
2019 PSAR President

One of the most serious threats to our stateā€™s future is lack of housing supply. This is the root of the housing crisis. With every delay to address the root cause of the crisis, it means the more we deny hard-working Californians the quality of life they deserve. Our stateā€™s legislators have spoken with great passion about solving the housing crisis. They make dramatic-sounding statements about how housing is the most critical issue facing California. Yet, those same lawmakers are missing in action and havenā€™t been willing to make the tough votes to move forward policies that advance a solution.

Many of us were disappointed at our Sacramento politicians and their recent delay until next year of a Senate bill that would have remade Californiaā€™s zoning laws to increase the housing and apartment development around major transit hubs and job centers. The Pacific Southwest Association of REALTORSĀ® (PSAR), as well as the California Association of REALTORSĀ® (C.A.R), were proud to support SB 50, which would have required a certain portion of affordable units, ensuring the new housing would help all Californians. But, the bill was stalled in the Senate Appropriations Committee leading to the decision to hold SB 50 until 2020, apparently due to opposition to its provisions that would override local zoning laws.

While Capital politicians display their reluctance to do what we elected them to do, California residents continue to suffer. A recent survey from the Public Policy Institute of California revealed that 52 percent of California adults and 45 percent of likely voters say their housing costs are causing financial strains, particularly 67 percent of renters.

California is at a tipping point of choosing a future that denies our children the same housing opportunities weā€™ve had. Inactivity by the legislative leadership is pointing to a future that will force the next generation to make the difficult, gut-wrenching decision of whether to stay in California with a poorer quality of life or move out of state to afford a decent place to live. Californians deserve a place to call home without worrying about putting food on the table for their kids. We expected our political leaders would be willing to take bold action to solve this man-made crisis, even at the risk of their political future. But, there has been no discernable progress on eliminating obstacles, including burdensome regulations, which are hindering more housing construction.

Gov. Gavin Newsom spoke to our members at a recent CAR meeting. In his speech, he admitted that we donā€™t have enough housing supply to meet the demand. He pledged millions of new homes during his campaign for governor last year. Unfortunately, our elected lawmakers in the state houses are not joining the governor in prioritizing action to solve the supply crisis. Time is running out to protect the opportunity for all Californians to continue calling the Golden State home.

Topics: Industry

Best practices: Helping Senior Citizens with Housing Needs

Posted by Robert Calloway on Apr 12, 2019 4:53:33 PM
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By Robert Calloway

As real estate professionals, itā€™s our responsibility to provide wise counsel about housing needs in the best way possible with our clients, including clients who are senior citizens. Itā€™s been said that senior citizens represent the real estate industryā€™s greatest, untapped and under-served market. And, a growing market means opportunity. Serving most senior clients is likely to become a niche for a growing number of agents.

I believe agents have an obligation to understand and learn about the housing needs of seniors so that we can do right with this fast-growing and often vulnerable group. We need to be better listeners to their needs, wants, frustrations and fears. We need to understand the empathy and support needed from day one to establish trust.

It should come as no surprise to you that Americaā€™s population is aging at a rapid pace. People are living longer than ever before. None of us are getting any younger.

By 2030 (about 10 years from now), 1 of every 5 Americans will be retirement age, according to the U.S. Census Bureauā€™s 2017 National Population Projections. By 2035 (about 15 years from now), seniors will outnumber children for the first time in U.S. history; itā€™s estimated there will be 78 million people 65 years and older, compared to 76 million people under the age of 18. The current median age of Americans is about 38 years old, up from 30 years in 1980 and 24 in 1970.

Consider these insights from the National Association of REALTORSĀ® 2017 Home Buyer and Seller Generational Trends Report:

Buyers age 52-61: ā€œThe Young Baby Boomersā€

-- Make up 16 percent of recent buyers.

-- Higher median household incomes.

-- More likely to have children under the age of 18 in their home.

-- More likely to buy multi-generational homes.

-- Buy for an array of reasons, such as job-relocation, downsizing, and being closer to friends and family.

Buyers age 62-70: ā€œThe Older Baby Boomersā€

-- Make up 14 percent of recent buyers.

-- Often moving due to retirement, downsizing, and being closer to friends and family.

-- Typically move the longest distance.

-- Least likely to make compromises on their home purchase.

Buyers age 71-91: ā€œThe Silent Generationā€

-- Make up 8 percent of recent buyers.

-- Often moving due to retirement, downsizing, and being closer to friends and family.

-- Least likely to purchase a detached single-family home.

-- 24 percent purchased in senior-related housing.

-- Tend to purchase the newest homes.

-- More likely than any other age group to find their home by visiting an open house.

So, when dealing with the housing needs of clients who are senior citizens, our goal should be to add value based on our experience, trustworthiness and knowledge as we work through various challenges.

To that end, keep in mind that senior citizens represent a large and diverse group of people. There is no one-size-fits-all solution for housing. Some seniors in their 70s and 80s prefer living in walk-up apartments with stairs because they admit the exercise keeps them strong and healthy. Other seniors have no children or grandchildren to move closer to. Other seniors would do well in a densely population walk-able areas that would require no driving and easy delivery of household goods and meals. Most seniors donā€™t want to travel far to the grocery store, gym or their doctor.

Also, keep in mind the following housing options so you can provide your client with the best housing solution, depending on their individual situation, as well as their social and health needs and available budget:

-- ā€œAging in placeā€ refers to people who prefer their current residence and donā€™t want to move in their golden years. This option is perhaps the most comfortable option for seniors, but the downside is that many older homes are not equipped with built-in features for disabled people. A reverse mortgage could be an attractive way to pay for repairs and remodeling that could improve the homeā€™s accessibility.

-- ā€œCo-livingā€ refers to living arrangements with roommates or group homes. This option can reduce loneliness but can mean less privacy when everyone wants to use the kitchen at the same time.

-- Living in retirement communities with rented condos or apartments for people over age 55 is another option. Common areas for group meals and social activities can give residents a built-in social network.

-- Moving-in with relatives is another option. Advantages of multi-generational households include a build-in support system with loved ones who can care for the elderly.

-- Accessory Dwelling Units (ADUs), also called granny flats, is another option. ADUs are second homes built on the same lot as an existing single-family house. Often, these smaller, secondary units are constructed by homeowners in backyards or above garages of single-family residences. They can be used for family members or rented out as a source of income for homeowners. PSAR has been a strong advocate for ADUā€™s this year. They are ideal for seniors and their children.

-- While seniors should consult a tax adviser, they should ask about Propositions 60 and 90.  Prop 60 gives homeowners 55 and older a way to move or downsize without greatly increasing their tax bills. There are restrictions in order to receive this benefit. Proposition 90 refers to property tax transfers from certain counties like San Diego to other select counties in California. Many seniors are not aware of this generous tax break.

Clearly, the future is old. I recommend you consider attending a class to earn your Senior Real Estate Specialist (SRES) professional designation from the National Association of REALTORSĀ®. The SRES program is designed to equip you for serving the senior market. You will learn more about housing options and trends for older Americans, along with typical senior financial situations and how Medicare, Medicaid and Social Security can affect real estate decisions. PSAR is looking forward hosting classes for this designation later in the year.

Topics: Education

REALTORSĀ® Empowered by PSAR, Prepping for March on Sacramento

Posted by Robert Calloway on Mar 22, 2019 2:12:45 PM
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By Robert Calloway
2019 PSAR President

Iā€™m proud to report that legislative advocacy continues to be an important activity at PSAR. Advocacy plays a critical role in supporting property ownership throughout our communities. A powerful alliance can be formed with other REALTORSĀ® and affiliates when we speak in solidarity with one voice and work together with elected officials to protect and promote homeownership and property investment.

The result can be public policies that uphold private property rights and build strong communities with a vibrant business environment and free enterprise system.

Indeed, whether or not your clients know it, or the average homeowner realizes it, government relations can influence the price of real estate and affect the state of the economy, level of interest rates and nature of demographics, along with a host of other variables that can ultimately determine a propertyā€™s value. 

Currently, a number of PSAR members are preparing to travel to Sacramento on May 1 for the California Association of REALTORSĀ® (C.A.R.) Legislative Day 2019. The event, the 47th annual, will include opportunities to meet and discuss real estate issues directly with state legislators and their staff members, as well as hear from Californiaā€™s political leaders and the leadership of the state association.

As a follow-up to C.A.R.ā€™s Legislative Day, several Association members also are planning to attend the upcoming National Association of REALTORSĀ® (NAR) 2019 Legislative Meetings and Trade Expo, May 15 in Washington, D.C. NAR is widely considered one of the most effective advocacy organizations in the country.

I am very proud to say that the majority of attendees to Sacramento and the nationā€™s capital will be committed and dedicated members of PSARā€™s Governmental Affairs Committee (GAC). The GAC focuses on all things governmental and how public policy can affect real estate issues. In it is role as an advisory committee to the PSAR board, the GAC provides a forum for political advocacy and policy discussion.

GAC members are diligent in keeping track of proposed city and county ordinances that could have a potential impact on the local real estate industry. Their savvy political advocacy efforts have prevented the passage of detrimental laws that could have hurt PSAR membersā€™ business activities. GAC members communicate with their local government officials to help stop government agencies from finding ways to tax and regulate real estate transactions.

Statewide, itā€™s an incredibly busy year because our real estate industry has emerged as a major player in the current legislative agenda.

The California Association of REALTORSĀ® (C.A.R.) recently announced its recommendations for the 2019 legislative session, including bills that address Californiaā€™s housing shortage through increasing supply and removing barriers to development. C.A.R. said it stands ready to work with Gov. Gavin Newsom, the Legislature and key stakeholders during the 2109 legislative session to advance innovative solutions to ensure all Californians can realize the American dream of homeownership.

ā€œCalifornia is at a tipping point, and the housing crisis threatens to permanently impede the stateā€™s economic growth,ā€ said C.A.R. President Jared Martin. ā€œItā€™s time for Californiaā€™s leaders to take the necessary bold action and support legislative solutions to address the housing shortage and answer the governorā€™s call earlier this year to ā€˜build housing for all.ā€™ā€

C.A.R. is proud to champion the following measures aimed at addressing the housing crisis:

-- SB 50 (Sen. Scott Wiener) Housing Development Around Transit: Boosts housing and apartment development in and around major transit hubs and employers, and provides developers with a ā€œdensity bonus,ā€ or authority to build additional units in exchange for building below-market units, and other incentives or concessions.

-- AB 1568 (Asm. Kevin McCarty) Housing Accountability: Holds local governments accountable by withholding gas tax revenue if counties do not meet home building benchmarks verified by the California Department of Housing and Community Development.

-- AB 1074 (Asm. Tyler Diep) Accessory Dwelling Units: Increases housing supply by selling bonds to provide loans to homeowners to construct accessory dwelling units (ADUs).

-- AB 1020 (Asm. Jacqui Irwin) State Housing Agency: Establishes a state Housing Agency with a cabinet-level Secretary of Housing to oversee all housing-related initiatives and activities throughout the State of California.

-- SB 509 (Sen. Anthony Portantino) Affordable Housing License Plate Program: Establishes a housing crisis awareness program through the issuance of aspecialty license plate by the California Department of Motor Vehicles. The license plate would generate revenues for affordable housing programs throughout the state.

These measures, along with other bills that C.A.R. is supporting this year, are intended to increase housing construction as the solution to Californiaā€™s housing shortage.

ā€œWe are encouraged by Gov. Newsom and the Legislatureā€™s leadership to focus on solving the stateā€™s housing deficit,ā€ said Martin. ā€œCalifornians deserve policies that make housing more available, affordable and accessible, and we believe that will be accomplished by these bills. To do anything less would put our stateā€™s economic future in peril as more and more Californians are priced out of the housing market.ā€

You can be assured that PSAR remains committed to reaching out to elected officials, motivating and mobilizing the real estate community and keeping our members involved and informed about legislative issues in an effort to protect private property rights and homeownership.

Topics: Leadership, Industry