Main Street Report

A TLC Show That Might Finally Offer A Realistic View of Real Estate

I enjoy watching HGTV and some of the programming on TLC, but my taste for home shows soured a while back.  First, you can watch shows about other people doing things that you might or might not want to do to your home for only so long.  And second, all of the shows seemed like they were taped at the top of the housing bubble, with home sellers smiling broadly as real estate appraisers inform them of their huge profit potential.  This is 2008, not early 2005, so where's the reality in the reality shows? 

TLC added a new series to its property-themed Saturday lineup called Hope For Your Home (debut Aug. 9, 8:30PM ET) that it claims "puts the real back in real estate", helping homeowners find "solutions to their real-life mortgage challenges."  From the press release:

HOPE FOR YOUR HOME takes on the tough circumstances so many homeowners in this country are facing today. Hosted by real estate expert Kirsten Kemp Becker (TLC's PROPERTY LADDER), HOPE FOR YOUR HOME lends a hand to homeowners in financial need by giving them critical resources to make improvements to their property. The goal is to add enough value to their home so they can either refinance their mortgage or make the best possible sale. Kirsten advises the homeowners on what improvements will actually increase a home's value, while a contractor ensures that all projects are done properly and safely. Once the improvements are complete, a real estate agent and a mortgage broker tour the home, examine the upgrades, and determine a market value. In the end, the homeowners are empowered to decide if they should stay in their newly renovated home, or sell their home and find something more affordable for their family.

Come to think of it, maybe I prefer shows that show smiling people who just made a quarter million profit on their home.  Putting the 'real' back in real estate might be too depressing. 

A Sobering Assessment of the Housing Market

If you've been depressed about the state of the housing market, and were hoping the bleeding has stopped, you might not want to watch this video from Yahoo Tech Ticker (A Bottom in Housing?  You've Got to Be Kidding).  Host Henry Blodget talks with Barry Ritholz, CEO of Fusion IQ and financial blogger for The Big Picture.  The video is five minutes long, and Ritholz packs more valuable information and honest insight into each minute on this subject than anyone I've heard to date. The bottom line, says Ritholz, is that the housing market is nowhere near a bottom, and it will likely wobble down and sideways for a at least a couple more years - a 25 percent further decline - until the price to income average returns to normal levels.

There are exceptions, like the New York City market, which has defied the laws of bubble-pop gravity.  The location, location, location rule is in effect, and a Manhattan address is still on the covet list for those who can afford it.  What bothers me is when the media throws out scary stats about this being the "worst housing price decline ever", when they fail to balance it with the fact that we had the "biggest price jump ever" from 2000 to 2005.  Prices in my region (Northern Virginia) were jumping 25-30 percent per year at the height of the bubble, between 2003 and 2005.  And if current home values around me have declined an average of 20 percent the past three years, how can we complain?  If you make 60 percent, then lose 20, you're still up 40 percent in a relatively short period of time. 

One sign that a bottom may be forming is that discounted, foreclosed homes are starting to be snapped up en mass.  A New York Post article titled Lost Sovereignity: Oil Rich Fund Eying Foreclosed U.S. Homes, details what it terms a "new land grab in America", where billions of dollars in foreign money is now being focused on the foreclosure market.  So basically, money we're sending to the Mideast for oil is now being used to purchase tens of thousands of our homes on the cheap.   

I hope the housing pain won't continue for years, but I'm a realist, and Ritholz' analysis - while sobering - is probably right on the money.