Last year, student debt surpassed credit card debt for the first time, topping $1 trillion. Here in Ohio, with our more than 200 colleges and universities, graduates carry some of the highest average debt levels in the country.

At this point you may be saying…wait, isn’t this a real estate blog? Why are we bringing this up? Because a variety of news outlets are making the connection between rising student debt and the long-term impact on housing. Says Bloomberg Businessweek:

Totaling close to $1 trillion, America’s mounting pile of outstanding student debt is a growing drag on the housing recovery, keeping first-time homebuyers on the sidelines and limiting the effectiveness of record-low interest rates.

According to a recent Federal Reserve study, only 9 percent of 29- to 34-year-olds got a first-time mortgage from 2009 to 2011, compared with 17 percent 10 years earlier. “First-time homebuyers are typically an important source of incremental housing demand, so their smaller presence in the market affects house prices and construction quite broadly,” Federal Reserve Chairman Ben Bernanke said at a homebuilders conference.

And more:

Recent college graduates carry an average debt load of more than $25,000, limiting their ability to qualify for mortgages even if they’re able to land a job in a market with an unemployment rate of of 9 percent for 25- to 34-year-olds. Dubbing it a “student loan debt bomb,” the National Association of Consumer Bankruptcy Attorneys warned on Feb. 7 about the effects of rising student debt on recent graduates, parents who co-signed loans and older Americans who’ve gone back to school for job training.

The situation may be even more alarming in Ohio, says the New York Times, which has published a series — Degrees of Debt — examining the implications of the soaring cost of college and the affect on students and families. The newspaper touched on three Ohio schools (both public and private) – Ohio Northern University, The Ohio State University and Bowling Green University – to illustrate the situation and the challenges it presents:

College presidents across the country are confronting the same realization, trying to manage their institutions with fewer state dollars without sacrificing quality or all-important academic rankings. Tuition increases had been a relatively easy fix but now — with the balance of student debt topping $1 trillion and an increasing number of borrowers struggling to pay — some administrators acknowledge that they cannot keep putting the financial onus on students and their families.

With schools receiving fewer and fewer state dollars — for example, Ohio State only receives 7 percent of its budget from state money — the burden is likely to continue shifting to students. According to a Department of Education survey of 2007-2008 graduates, roughly two-thirds of the bachelor degree students borrowed money to attend college (from both the government and private lenders), a jump from the 45 percent of 1992-1993 graduates that similarly borrowed funds.

In terms of real dollars…the debt levels are eye-opening. Says the Times:

• For all borrowers, the average debt in 2011 was $23,300, with 10 percent owing more than $54,000 and 3 percent more than $100,000;
• At Bowling Green, 62 percent of graduates have debt averaging $31,515;
• Ohio State graduates have an average debt load of $24,48;
• And in the case of one Ohio Northern graduate, the tally reached $120,000. Her assessment:

I knew a private school would cost a lot of money. But when I graduate, I’m going to owe like $900 a month.

That’s a lot of real money being taken out of the economy – whether its on purchases for clothes, cars or even a mortgage — for the months and months, and years and years. Says Bloomberg:

People aged 25 to 34 made up 27 percent of all homebuyers in 2011, the lowest share in the past decade and 6 percentage points below their 33 percent share in 2001, according to the National Association of REALTORS. “Students coming out of college are burdened with more debt than traditionally they have been, and they are also coming into an economy that is underperforming previous recoveries,” says Rick Palacios, a senior research analyst at John Burns Real Estate Consulting in Irvine, Calif.

Palacios says first-time buyers are key to a housing recovery because they allow current owners to move into larger, pricier homes. “Move-up buyers need somebody to purchase their homes to move,” he says. “You need that first leg in the recovery to materialize.”

With a tad less than six months to go before Election 2012 is ultimately decided it’s become increasingly clear that Ohio will not only take center stage in determining whether Team Red or Team Blue occupies the White House, but that every aspect of life in Buckeyeland will be analyzed and reexamined for clues about which candidate will garner our collective vote this fall.

The latest comes courtesy of Reuters with a piece on what the state of the housing market might mean in 10 key swing states, including Ohio:

The November 6 U.S. presidential election between President Barack Obama and presumptive Republican challenger Mitt Romney may be decided by a small number of “swing” states – those that could go to either man – where the health of the housing market looms large for voters as they weigh their choice.

It highlights some positives that might help President Obama in certain areas of the country, while noting pluses for Gov. Romney in others. Improving employment and rising sales and prices in select markets are countered by inflated foreclosures and underwater owners in others.

The collapse of housing markets around the country played a key role in triggering the financial crisis that dragged the United States into recession from 2007 to 2009.

The health of housing markets continues to exert a strong influence on the economy, and some experts believe that high levels of foreclosure and losses in home values are helping hold back the economic recovery. A home is the most costly purchase most Americans make, and for many it is their most valuable asset.

“The housing market is a lot in the news and that will certainly weigh (on voters),” said Mark Rom, an associate professor at Georgetown University’s Department of Government.

So what about Ohio? Reuters obviously asked themselves that very question and approached the expert — OAR President Bob Miller — for his thoughts:

Ohio, a state that often plays a pivotal role in deciding presidential elections, has seen its housing market improve steadily, with median prices up 8.9 percent in March from a year ago and sales up by almost the same level.

“The perception is that Ohio is coming back, that things are good, and in my industry, perception means an awful lot,” said Miller.

It’s evident that activity in Ohio’s housing market is really picking up based on the tremendous influx of calls the OAR Legal Hotline has received recently with questions about how to properly handle offers — and even multiple offers — once they are received!

Peg Ritenour, OAR’s Vice President of Legal Services & Administration, provides a review of a licensees’ obligations once an offer to purchase is in hand. Timely, informative and definitely a must see!

By Stan Collins, CEO, Columbus Board of REALTORS

“My seller is almost ready to put their house on the market – but wants me to put up the For Sale sign with a Coming Soon rider.The house won’t be ready for showing for another week, but the seller wants to stir up some anticipation. Is this acceptable?”

Recently, many of us have seen some of these signs pop up in our neighborhoods. In fact, I and our MLS staff receive calls from members who see this sign in the yard of a property that their buyer would like to see, they cannot find the property in MLS, and after calling the listing company are told that the property is not yet available to show. 

To be sure, the Coming Soon sign can be an appropriate marketing tool for a property that will soon be available for sale. Unfortunately, the Coming Soon sign, alternatively, can be what really amounts to an unethical practice. This discussion seeks to illustrate why the use of a Coming Soon sign is not just automatically unethical, as some agents believe, but that it is a risky practice. 

The rules
(Columbus) MLS Rules require that all eligible listings be entered into the system within 72 hours of signing the listing agreement, unless the seller has given the agent specific written instructions to the contrary. MLS rules recognize that a seller does have the right to instruct the listing firm to withhold the listing from MLS, pursuant to what is referred to in the MLS rules as an “office listing”. MLS rules still require that an office listing be in writing, and be registered with the MLS. Doing so will provide some protection to the listing agent/broker from a rules violation charge. The office listing form, which is available from MLS, documents in writing that the listing agent has explained the benefits of the MLS, and that the seller has directed the property not be entered into the MLS database.

Additionally, the Code of Ethics of the National Association of REALTORS, Article 3, Standard of Practice 3-10, obligates REALTORS to share information on listed property, and to make listed property available to other brokers for showing to prospective purchasers/tenants when it is in the best interests of sellers/landlords. Ohio License Law reiterates these same duties to act in the best interests of the client.

Why would any seller want to keep a listing out of MLS? Sometimes there are valuables such as art collections, etc., and the seller wants only their listing agent conducting showings. There may be a better work-around than keeping the listing out of MLS; but legally, the MLS can’t force a seller to have their property shown in MLS, the seller’s wishes must be generally respected.
 
Examine motives and rational
It is recommended that agents exercise extreme care when recommending that clients withhold their listings from MLS. If an agent were to recommend that their seller issue this instruction, it is advisable that the agent closely examine the motives and rational for that recommendation.

• Is it the seller’s intent to keep the property off the market while repairs are made or some other work is done to the property? If so, then the recommendation may indeed be appropriate.
• Is the recommendation made to afford the listing agent an exclusive window of opportunity to sell it themselves, omitting others from showing it? If so, your policy on cooperation with other REALTORS must be disclosed to your client to comply with Ohio license law.
• Is it the seller’s or the brokerage’s intent to preclude some buyers from seeing the property? If so, the practice may be illegal under Fair Housing law.

Consider all the risks
Our industry has grown to realize that in any situation where only certain potential buyers are shown the property while others are not can be a real problem. If no one can see the property yet because the property is not on the market yet, then the Coming Soon sign seems acceptable. However if only some and not others are permitted to see the property while it is being advertised as Coming Soon, this raises some red flags.

So before posting that Coming Soon sign, ask the important questions above. Decide whether the property really is “coming soon” (as in not yet for sale), or is it really a listing that can bring into question the ethics and fair housing practices of all involved, placing the agent, broker and potentially the seller at risk. And always, always, always get written and signed instructions from your seller.

By Carl Horst

Two leading economists have scanned the current real estate landscape and come to the same conclusion: it’s time to buy!

Says Reuters’ Felix Smith:

The first thing to look at here is the blue line, which shows that the median asking rent for vacant rental units tends to rise pretty steadily. It doesn’t spike during housing bubbles, and it doesn’t plunge when those bubbles burst. Which is one reason why if you can, it’s always a good idea, when you’re buying a home, to take a look at what rents are like in the area. That’ll help you work out whether prices are too high.

In the chart, the red line shows the mortgage payment you’d have to make if you took out a standard 30-year mortgage for the median asking sales price for vacant sale units. In reality, your mortgage payment would be lower, since this doesn’t take into account any downpayment. But in any case, thanks to ludicrously low mortgage rates below 4%, that number is now lower than the median national rental price. This is the first time that’s happened since 1988, and probably for quite some time before that, too.

Slate’s Matthew Yglesias looks at the same chart and echoes the same sentiment:

Now before you go buy a house, do make sure to check against local conditions. My understanding is that this math doesn’t necessarily add up in Hawaii, the New York area, or the vicinity of San Francisco. But if you’ve never owned a home you should take a hard look at the local math. In fact if you’re daring and you already own a home, you should think about buying another one and renting it out. Personally, I don’t want the hassle of being someone’s landlord, but your return on investment at this point is way better than anything you’ll get in a bond market.

 Tip of the hat to The Dish for highlighting this news.

This morning I was bogged down with accounting – not my personal genius! Following this strain on my brain, I worked out and it became so obvious to me – again – the importance of moving our bodies. All of the tension that had developed in my body, resulting from this morning’s less than delightful activity, quickly and easily went away. 

The benefits of physical activity are vast – we are healthier, have more energy, less stress and can control our weight easier, and, our brains function at a higher level because we are generating more oxygen in our bodies. So, why don’t many of us engage in more physical activity? I know what you’re saying; you just don’t have the time especially with the market picking up.

And, I would suggest that you don’t have the time not to. Believe it or not you are getting older. That is hard for most of us to swallow, however it is the truth, and there are countless statistics on the benefits physical activity brings to the aging process.

So, find something that you enjoy, there are so many ways! Right now, stand up and do some simple stretching – reach your arms straight up, pull your ribs and waist up out from your hips, and press your heels firmly down, stretching your spine. Take some deep breaths…and enjoy the rest of your day!

Marilou Butcher Roth is owner of The MBR Group, a national coaching and training company working primarily with REALTORS who have a desire to work and live from a more inspired place. She is also the Broker/Owner of Group REALTORS in Cincinnati. You can contact Marilou at Marilou@mbr-group.com.

Just in case you might have missed it…interest rates are at all time lows.

Seriously. Historic lows.

According to Freddie Mac’s weekly survey:

• The 30-year fixed rate hit an all time record low of 3.83 percent.
• The 15-year fixed rate is down to 3.05 percent.
• Finally, a 5-year ARM is now at 2.81 percent.

Amazing.

When I started working for the Cincinnati Board in 1990, I recall we sent out a press release when rates dipped under double-digits. It was big news, especially considering that not too many years before that interest rates for home purchases were at credit card levels.

Now they’re at 3.83 percent.  Might want to share that with a buyer or two.

It wasn’t that long ago that Ohio was among the nation’s leaders in terms of the number of properties facing foreclosures.

The good news is that things are improving, perhaps just not at the pace that most of us would like. In fact, according to Realty Trac, the Buckeye State is no longer in the top 10 of this dubious category…currently ranking 11th, with one in every 609 properties receiving a foreclosure notice in March.

Realty Trac says the top 10 states with foreclosure filings are: (1) Arizona, (2) Nevada, (3) California, (4) Florida, (5) Georgia, (6) Illinois, (7) Utah, (8) Michigan, (9) Wisconsin, and (10) Colorado.

The negative implications associated with a foreclosure are significant, not only for the affected property owner, but also on the value of the surrounding homes. Another victim are the states, according to the May issue of Housing Wire magazine.

Most states are struggling under the weight of distressed mortgages.

For every household not paying the mortgage, chances are taxes on that property might not get paid either. The sooner these properties are flushed out of the shadow inventory pipeline, the closer the property gets to returning to a fully taxable entity.

According to the magazine, Ohio has 71,000 bad mortgages (tied with Pennsylvania). Not good, but not the worst. Florida — with 292,000 properties — leads the nation, followed by California (174,000), Illinois (111,000), New York (100,000), New Jersey (86,000), Texas (81,000), and Georgia (72,000).

The Webinars are designed for all real estate professionals, but HUD is specifically seeking broad participation from REALTORS.

Make plans to be a part of the Ohio Webinar event — scheduled for June 14, from 2-4 p.m. Among the objectives:

• Indentify REALTOR “Best Practices” when utilizing FHA’s Preforeclosure Program.
• Describe how HUD Servicers are required to apply loss mitigation tools to consumers in need.
• Identify the benefits, features and qualification criteria for FHA’s Preforeclosure Program.
• Recognize the difference between the market/appraised value for a property and the minimum acceptable new sale proceeds.

There’s no charge for the Webinar, but registration is required.

NOTE: There are a series of eight regional Webinars being offered between May 16 and Aug. 2. Ohio is part of the HUD Region 5 event set for 2-4 p.m. on Thursday, June 14. Included in Region 5 will be participants from Illinois, Indiana, Michigan, Minnesota and Wisconsin.

By Carl Horst

Gallup — the folks that survey opinions on everything from politics to pop culture — recently issued a look at job creation in the United States, noting that new hiring is at its highest level since it began tracking it in January 2008.

The Gallup Job Creation Index increased to +20 in April from +18 in March. The figure is derived from 36 percent of workers nationally saying their employers are hiring workers and expanding the size of their workforce, while 16 percent saying employers are letting workers go. To put that into context, here’s Gallup:

The current 36% “hiring” figure is the highest since August 2008, and the current 16% “letting go” figure is the lowest since July of that year.

Closer to home, the Midwest posted the second-best regional outcome — an index of +21 — trailing only the South’s mark of +23. Year-over-year the Midwest’s Index has jumped 6 points.

The nation’s gains in hiring are solely attributable to the private sector, which posted a +25 in April. Comparatively, government jobs has an index score of -7.