The Norfolk newspaper editorialized this morning on the demise of the E-Pass, the vile brainchild of the Real Estate Information Network, which controls Hampton Roads area home listings.
Under the E-Pass program, implemented about a year ago, consumers were required to pay a few dollars a month to see (that’s right, just see) details of real estate listings on line. To better understand the effect this had on consumers, imagine the next time you go to Pisces or one of Suffolk’s other fine eateries, that when your check comes there’s a $3 charge for looking at the menu. That’s what E-Pass was.
I remember the E-Pass’ arrival well. It drove my wife nuts. Her hobby is buying and selling houses. Not as an investment to make money like so many people do, but to live in. She, in effect, loses money on the deals. She did not like E-Pass. I welcomed it, on the other hand, hoping that having to pay to look at houses would force her to focus on other things.
The E-Pass was implemented when the local real estate market was sizzling hot, when houses stayed on the market only a few days; when people were making offers at more than the asking price; and when real estate agents were feeling cocky and many times being jerks (When we started to have second thoughts about going through with the purchase of house in 2003 our real estate agent (the one paid to represent us), actually threatened to sue us if we changed our mind. That’s a true story and I’ll tell you who it was and what firm they worked for if you call me.
The E-Pass was an on-line manifestation of this jerkdom.
Now, however, the real estate market has cooled considerably. Houses are not selling like they were (There have been several “For Rent” signs pop up in my neighborhood in front of houses that wouldn’t sell) and I’m sure the Real Estate Information Network is seeing the bottom fall out of its Web traffic. Who wants to pay to see a product they don’t want?
I must admit to a certain amount of Schadenfreude over the demise of the E-Pass and the cooling of the housing market, but it’s nonetheless a little scary.
Real estate, after all, has been driving our economy. One columnist wrote not to long ago that our entire economy is based on buying and selling each other’s homes, with money borrowed from Asians.
Housing values were rising so fast over the past few years that many people were able to regularly borrow against their rising equity, using their homes as ATM machines to finance lifestyles above what they could afford. The boom was financed by artificially low interest rates and when even that wasn’t enough to keep the buying boom going, the financial end of the industry devised various schemes like interest-only and zero down mortgages so that people could get in these homes.
The only jobs being generated by the private sector (outside of waitressing and bartending) have been in home construction. If those go away, we could be in for a world of hurt.
It’s been a classic “bubble,” and it was bound to pop. Hopefully, we’ll be able to weather it, but don’t be surprised if as interest rates rise and the bills come due on these risky mortgages, we see a wave of bankruptcies and foreclosures.
The real estate boom has also financed the local government spending spree of the past few years and the cooling of the market and the risky position so many people were in is the reason I’ve been arguing in favor a big rate cut. People just won’t be able to afford it, even if the increase is, as I heard one city official put it, “just a meal out.”
Granted, those who find themselves in precarious financial situations have only themselves to blame, but nobody wins if and when they go under.
Improved schools, wonderful parks and revitalized villages and neighborhoods are nice, but they don’t mean a heckuvalot to people who don’t have a roof over their heads.