October 14, 2010
Host: Ted Simons
- Nearly half of the existing homes sold in the Valley last month were foreclosures. That’s a new high for the year. ASU real estate
professor Jay Butler discusses how foreclosures are impacting the area’s housing market.
- Jay Butler - ASU Real Estate Professor
Ted Simons: Nearly half of the existing homes sold in the valley last month were foreclosures. That's a new high for the year. Joining to us help figure it all out, is Arizona State University Real Estate Professor Jay Butler. Always good to see you. Thanks for joining us.
Jay Butler: Glad to be here.
Ted Simons: What does it all mean?
Jay Butler: It means that the story continues. We thought we would be getting towards the end of the story by now, but it seems to be mounting, and new curves get thrown in all the time. It just -- coupled with the weak economy, things just don't seem to be improving.
Ted Simons: Bottom line, uncertainty in the housing market?
Jay Butler: Very much uncertainty. Because now with the moratoriums and discussions of issues and other things, the one big group that was active in the market were people buying foreclosed homes, they have sort much backed off. Even in some states you can't get title insurance for them. So it's an ongoing issue.
Ted Simons: Talk about this investigation now of deceptive and/or unfair practices regarding foreclosures. What's going on here?
Jay Butler: Basically it's provocatively procedural errors. They didn't sign documents in the presence of a notary public. The person that signed the documents didn't review the documents. The Attorney General Consortium is looking not only at these document, but the entire foreclosure process as to were there problems with legal descriptions, what about people who made payments but they weren't recorded correctly in their mortgage company? So they've broadened the level of investigation over what initially was discussed.
Ted Simons: Do we know how many people have actually lost their homes because of this?
Jay Butler: Well, probably from the standpoint that they lost their homes, they should not have lost their homes, probably very few. Basically these are as bad as it sounds, procedurals. But there's no doubt people were told they might lose their homes when in fact those were errors, and they should not have even been informed of that issue.
Ted Simons: You mentioned moratoriums, those likely to accelerate?
Jay Butler: Right now you have banks doing different things. One bank is doing a total moratorium on foreclosures, and selling foreclosures throughout the United States. Another one is only doing out selling foreclosed properties, but only in the judicial states. Other lenders are saying, we didn't do anything wrong, we're not going anything and we continuing with the process.
Ted Simons: So take this with prior problems with real estate, mortgages, lenders, etc., what does this do to the public perception of the home finance process?
Jay Butler: Well, it convince people what they thought it was a desirable process. That lenders were out for their own good, that there were errors regardless of what they say, there's been stories -- the lawsuits concerning these procedural situations started in 2008. Really it's only what's happened in the last few weeks is the publicity about these lawsuits. You have situations in which MERS, mortgage electronic registration system, which nobody has heard of outside the industry, is big news. One judge wrote probably correctly, favoring MERS, that basically we have modern technology, modern commerce forms, based on law derived from medieval England. So we have a situation while the law has not kept up with the technology and the marketplace.
Ted Simons: Does the law need to keep up in order for the marketplace to avoid even more -- you're talking about uncertainty and now you're talking about these investigations of foreclosures, talk about self-perpetuating, it seems like a death spiral.
Jay Butler: It is. You think you're on your way home, and another curve shows up on you. This really has convinced a lot of people -- investors have been driving the market, there have been areas where owner occupants have been buying foreclosed homes, but it's been the investor. They started backing off a couple months ago. Concerns about oversupplying in some areas of whatever is there, and I think some concerns about can they get title insurance, can they get a clear understanding of what's happening.
Ted Simons: And as all this goes on, median prices, just keep dropping?
Jay Butler: They kept slowing. Really what the problem is median price of what? You have median price of foreclosed homes, which has been going up because people have been foreclosing on a nicer style of home now. Overall median price of homes being sold has been dropping. But in some areas, you're beginning to see stabilization and pickup. You even saw some areas the banks that were selling REO property were selling for more than what they foreclosed on. So they were beginning to make a profit or at least recover all their costs.
Ted Simons: Very quickly, how long before you think all of this, the investigation especially, shakes out and the market starts deciding to move forward again?
Jay Butler: I don't think anybody has a guess on this. I think many of the banks have talked about end of the year, but the repercussions could go on for quite a while.
Ted Simons: Jay, always good to see you. Thanks for joining us.
Mesa Proposition 420
- Mesa voters will decide whether to allow the city to raise hotel taxes and use other funds to build a new facility for the Chicago Cubs. Mark Killian, former lawmaker and head of the Department of Revenue, and Bob Kammrath of the Mesa Taxpayer’s Alliance will debate Proposition 420, which will be on the ballot in Mesa this November.
Category: Vote 2010
- Mark Killian - Former lawmaker and head of the Department of Revenue
- Bob Kammrath - Mesa Taxpayer’s Alliance
| Keywords: proposition 420
Ted Simons: On November 2nd, Mesa voters will decide on a ballot proposition that allows the city to spend money for a new Chicago Cubs Spring Training Facility. Earlier today the issue was debated with Former State Lawmaker Mark Killian in support of Prop 420, and speaking against the measure, Bob Kammrath of the Mesa Taxpayers alliance.
Ted Simons: Thank you so much for joining us tonight.
Mark Killian: Glad to be here.
Ted Simons: Mark, why should Mesa voters go for this?
Mark Killian: That's a great question. That is the question that everybody is talking about in Mesa. To me, the basic reason they need to vote for this is that we have a sure thing in the Cubs. Cubs have been in Mesa for 50 years. It's been a part of our economy, the Cubs Spring Training Program has provided many jobs and opportunities, it's infused millions of dollars into our economy, and it's not like we're going out and trying to get a new business to come to town. The whole deal makes sense. Economically, fiscally for the city, and to lose the Cubs and look at the economic impact it would have on our community right now would be devastating.
Ted Simons: Bob, why not? Why should the state not -- the city not go for this?
Bob Kammrath: Thanks for inviting me. Our position is basically that this does not make financial sense. The reason for it is that the cost to Mesa residents has quadrupled over the past six months. Going back to the inceptions of this project, the cost to Mesa residents was estimated to be $25 million, with the State of Arizona contributing a large portion of the rest of the money for this project. Since then, the State of Arizona for a number of reasons didn't get their act together on this project, and the City of Mesa has stepped up and said, we'll take over the entire public funding of the project. The last estimate that has been given by city officials is $99 million, including infrastructure. That of course if the money needs to be borrowed, would have to be upped with financing costs. So our position is that it's a much different transaction today than it was six months ago, and it's very difficult to justify a 400% increase in almost any project.
Ted Simons: Talk about that.
Mark Killian: Well, you know, what I can't understand, what I can't justify is losing the Cubs. And the economic impact it would have on Mesa. First of all, one of the things Mesa has benefited from over the years are all of our small businesses that are dependent on the tourism revenue that comes from that. We would lose that. We would also lose many hundreds if not thousands of homes. A lot of the Cub fans come and buy homes in Mesa. If the Cubs go to Florida, they're going to sell those houses and leave, which is going to impact already devastated real estate economy in Mesa. But the bottom line is, you're taking a nonperforming asset that the City of Mesa has, you're selling that and taking that money and putting it in a performing asset. That will generate revenue and taxes for the city. To me that makes a lot of sense.
Ted Simons: There doesn't seem to be a lot of question marks regarding the Cubs' impact on Mesa, and the valley in general. Shouldn't that be factored into the numbers, whether they're 25, 84, 99, whatever the final number is?
Bob Kammrath: I think Mark made a good point by saying if you look beyond the economics, you get into an image. You get into an image issue, and it's really hard to put numbers on to that. But there again, I think my point is basically that 99 million plus financing is a lot different than 25 million. And whether we sell nonproductive assets, which is perhaps a good idea, nevertheless, those assets were purchased with taxpayers' money.
Ted Simons: It's different, it changed. Is it still worth it? It -- just because it changes, does that mean it's not worth it?
Bob Kammrath: I'm not saying it's not worth it to the state as a whole, and all of the studies that were done and paid for by the City of Mesa, it envisioned the state of Arizona being involved in this project, and therefore, the numbers such as economic activity of $138 million annually, is statewide. Unfortunately, we can't control where the fans are going to spend their money.
Ted Simons: Well, that's an interesting point. The idea that Mesa is taking on too much of this on its own, how do you respond to that?
Mark Killian: Well, you know, if we had some leadership in the legislature, maybe we wouldn't have to worry about that. And there's a point at which the city has to say, we have to protect our interests. And the bottom line is, even in today's real estate market, if you could get an 8% return on your money, you would think that's a wonderful thing. I think you can get that at least at a minimum. Even if a third to 40% of that money that $138 million was spent in Mesa, you're getting a return on that 90 million. But again, remember, that money that's tied up in Pinal County in that water farm is not generating the city anything right now. Other than paying property taxes.
Ted Simons: But critics will say there might be better uses for that money than a Cubs’ Spring Training Facility.
Mark Killian: And I would say, you know, could you make that argument on everything. Could you have made that argument about the city putting money into McDonald Douglas. That turned out to be a bonanza for the City of Mesa. The city has a tradition, and a history, because the city helped the Cubs when they first came. Helped them again, and again. And it's been a win for the city.
Ted Simons: Infrastructure is already in place, Cubs are already in place, a lot of history, a lot of tradition, people moving here, tourism, the whole nine yards. Voting no puts all of that in the rear view mirror apparently because it sound as though the Cubs are working with Florida, we can debate on whether that's serious or not. But something is going on there. Do you chance it?
Bob Kammrath: Well, I think there again, from our perspective, it's an economic issue. And there are lots of private enterprises, as Mark pointed out, that contribute to the economy of both Mesa and the state. So certainly the largest employer in the State of Arizona is Wal-Mart stores. And if we lost all the Wal-Mart stores, that would be a crisis. However, you have to draw the line somewhere and say, what will we do to facilitate these people coming in? And I think on this particular project, there's a certain line. There's sort of a line in the sand where certainly they're a major contributor, but on the other hand, if you go up to where we are today, that has crossed that line. And so certainly there again, we don't want to lose contributors like Wal-Mart and Costco, or any other major employer or retailer, but we don't build their stores.
Ted Simons: As far as retail is concerned, there's some concern regarding this site, you've got River View close by, Tempe marketplace, the cubs want to build Wrigleyville that has retail element there as well. Does that make sense?
Mark Killian: Absolutely. You see retail establishments congregating together. I don't see that as a problem. And again, if the bottom line is if you're trying to build economic development for the east valley for Mesa in particular, this makes a lot of sense. You want to talk about drawing the line? Let's lose 1600 jobs right now. Let's lose the Cubs to Florida right now. And the ripple effect in our economy. We can't afford that right now. This is a great deal. And the reason it's a great deal is because other cities should have done what Mesa has done by taking underperforming assets, not raising new taxes, not going out and creating new taxes to fund a stadium, but using an underperforming asset, converting it, and using it to generate revenue for the city. It's a win for all of us.
Ted Simons: Last question to you -- critics will say the publicly financed stadiums rarely, if ever pay for themselves. You say --
Mark Killian: I'm saying this project will pay for itself. It's a track record, and if we can do it for McDonald Douglas, we can do it for the Cubs.
Ted Simons: OK. Last question for you -- is Mesa a better place without the Cubs, without this deal?
Bob Kammrath: No. Mesa isn't a better place any more than Glendale would be a better place without the White Sox and the Dodgers. But Glendale is horribly in the hole on their project to the tune of $435 million according to the last report.
>> But the fact is, this is the deal. This is what's on the table. This is the vote yes, vote no. If you're saying vote no, you're saying losing the Cubs.
Bob Kammrath: I don't think that's necessarily true, Ted. I think what we're saying is, this deal has sort of gotten to the point it's at today because it's been rushed. By a number of factors that have been out of the control of any of the parties involved. We're saying, let's sit back and reanalyze this and bring some other people in here and do the deal.
Ted Simons: OK. Good point. Last question, can you do that? Has it been rushed?
Mark Killian: I don't think it's been rushed. I think the circumstances are as that we know Florida is trying to steal our teams. And we've got to do the best deal we can, and this deal makes sense. It really does. It's unique, it's different than it's ever been done before, and actually, I think it's a model that other cities ought to follow.
Ted Simons: All right. Great discussion. Gentlemen, thank you so much for joining us.
Mark Killian: Thank you.
Bob Kammrath: Good night.
Public Opinion Polls
- Pollsters are the soothsayers of the election season. Arizona State University Pollster Dr. Bruce Merrill tells us all we need to know about polling in this election season.
Ted Simons: Polling ramps up during the election season. But how do you know which polls to trust? Recently I spoke to Arizona State University Pollster Bruce Merrill, who says that one thing's for sure -- we're seeing fewer polls.
Dr. Merrill: We are seeing fewer polls this year. Number one, polls have become very expensive if they're done right. And there's been some tremendous problems with polling. They have just developed in the last few years, frankly. For instance, about almost one out of every five people now are using their cell phones for their only means of communication. We do not have access to those numbers. And so we're less and less likely each year to get a representative sampling of, for instance, all registered voters, because if you're using your cell phone only, we can't get you.
Ted Simons: So you've got a pretty good sample of folks who still have land lines.
Dr. Merrill: That's it. And we know there are some biases. People that are young, young married people, both working, are people that are much more likely to use only cell phones.
Ted Simons: You mentioned fewer polls because of the expense. Why is it so expensive?
Dr. Merrill: Well, again, what happened in the past is you would draw a random sample, say 400 people in Arizona, and if you can't get them, you have to call back and call back and call back. And so what is happening now is there's, for instance, the two major polls that you've even seen in the last couple months here, are the Rasmussen poll, which is a ROBO poll. It isn't even a phone call where people are talking to them. We know very little about the methodology. Or the Morrison institute, for instance, at ASU has published a couple of polls, but those are polls where you have to have access to the internet to even be interviewed. And my concern with both of those is that there's a tendency for instance, with calls based on the internet, for lower socioeconomic and minorities to not have access to that technology.
Ted Simons: So the best way to do a poll, as you've described it, is to have a bunch of folks with a bunch of phones and just repeatedly call. In the perfect world, you'd also have people calling cell phones as well. Is that feasible anymore?
Dr. Merrill: No. It really isn't. And in fact, polls have been remarkably accurate in the last 50 years. Particularly the national polls. The average error in a national poll predicting the presidency since -- in the 1940s has been less than 1%. So based on good scientific academic sampling methods, polls have been very, very accurate. But the demographics of America are changing, technology is affecting polling, I have some real concerns about the accuracy of polls because it may be that polls create public opinion as well as measure.
Ted Simons: And I want to get to that in a second, but back to the academic sampling aspect, and not get doing deeply involved into that, people will say, no one ever calls me. I saw the sample size, there's only a few hundred, how can they get an accurate representation? No one talks to me about this. How do you respond when people say that?
Dr. Merrill: Well, it isn't intuitively obvious, but what happens is once you have a population over 2500 people, 2500 adults, 2500 registered voters, 2500 most likely to vote, you only need a random sample, according to probability theory, of 400 to generalize that population with plus or minus 5% accuracy. So it doesn't matter. With 400, I can do a statewide poll or a national poll with the same degree of accuracy.
Ted Simons: And it still works, doesn't it?
Dr. Merrill: It could if you're able to get the people that you've randomly drawn, and that's where we're get nothing trouble.
Ted Simons: OK. I just want to mention, that because we get that a lot, how can we get that, I don't know anyone who has answered a poll! You mentioned the fact that polling -- the impact of polling on campaigns and how they could provide narratives or other aspects of pushing the electorate in a certain direction. Talk more about that.
Dr. Merrill: Well, basically the biggest use much polls is probably raising money, for instance. So the indirect effect of polling can be enormous. Let's say you have a candidate and do you a poll and their -- and they're slightly behind. That person can take the poll and go to their supporters and say, I'm behind, I need your money. So really, the decision whether or not to run is generally based on polling. In raising money is a big factor. The other major roll the polls have is actually kind of determining what the message is that resonate with the public. For instance, 1070, you do a poll, we know that about 60% of the people support 1070. Well, if you happen to support it, you're going to run on that issue, which reinforces the 1070 in the public.
Ted Simons: I know that many critics out there of the Rasmussen poll, which seems it's taken on a life of its own the past couple of campaign seasons, some are suggesting it's actually pro-Republican. Has the GOP tries to set the narrative and takes it from there. Is that a valid criticism?
Dr. Merrill: Well, I don't know, because the Rasmussen poll rarely gives you any methodological way that they've done the poll. For instance, the only way you can tell if a poll is valid is we know that about 32% of the registered voters in Arizona are Republican. So you should be able to look at the poll and it should have 32% Republican. If it has 50%, it's biased. So the problem is with many polls, they should tell you who paid for the poll because people release polls if they're supportive of their position. So the public should know who paid for it, when it was conducted, what the actual wording of the question is, what the population was, and what the sampling error was. And frankly it will media rarely reports any of that.
Ted Simons: Indeed, and the wording of the question can be huge, can't it?
Dr. Merrill: It can -- the outcome of a poll is more than anything else determined by the way the questions are worded. You can get a poll to come out any way you want based upon the questions that you ask.
Ted Simons: So how do you know, you see a poll, it says something, and you're kind of going, I don't know from up or down on this thing. How do you know whether that poll is something you should question or something you should look at and go "interesting"?
Dr. Merrill: Well, the most important thing is to look at the credibility and the credentials of the people doing the polling. If you see a Gallup poll, the people that do Gallup polling are very well trained. Here in Arizona, you have some very good pollsters. Have you Michael Neil, who is a Ph.D. in survey research, they're very credible, they've been doing polls for a long time. We used to do a poll at the University that was a University neutral-based poll that is a shame we don't have that frankly, because it's very important not to have ties to anything. So I think for the average person, look at the people conducting the polls, what are their qualifications, and their credibility.
Ted Simons: And we've talked about polling here, and you've mentioned how it can shape a race and these things. But in the long run, how much influence do polls have and does that influence change as the campaign goes on?
Dr. Merrill: Well, clearly it does. And basically if you have the media publishing polls that show a particular candidate ahead, whether or not they're ahead or not, but let's say have you a poll with 10 days to go, showing somebody ahead, there is a tendency for people in our society to want to be with the winners. We put a lot of emphasis on being the winner. And so my concern is, if the poll is accurate, then that's legitimate. But what if the person really isn't ahead, but the poll shows they are? Could that influence in a very close election the outcome of an election? It potentially could.
Ted Simons: But real quickly, aren't we talking about an enterprise that is -- we're talking free market to the bone here. You get it wrong, no one wants you anymore because most folks want to you get it right.
Dr. Merrill: Well, that's exactly right. And we can't go night here, but with probability theory, a pollster can never be wrong. Because one of the interesting things, whatever a pollster tells you, they only have a 95% probability that they're even close to the true population parameter. So in other words, if I'm wrong in a poll, I can just say, gee, that's one of the 5% of the times I'd get a sample that was more than 5% from the real estimate.
Ted Simons: Interesting. Kind of like a weather caster. You got all bases covered.
Dr. Merrill: Well, absolutely. And we do a lot of it in politics. We just join with the politicians. Absolutely.
Ted Simons: So keep an eye on the polls, but also keep an eye on what they're asking, how they're asking and it always keep another eye out for other things.
Dr. Merrill: Absolutely.
Ted Simons: Very good. Good to see you again.
Dr. Merrill: Good to see you, Ted.