World economy still in severe recession

Although there have certainly been some kernels of promising information lately about the housing market and economy, the fact is the most significant world-wide slowdown since WWII remains in a severe recession. From a Reuters story via Yahoo! Finance:

The International Monetary Fund on Wednesday slashed growth forecasts for every major country and urged governments to take forceful action to ensure the world economy's recovery from a severe recession.

In its latest World Economic Outlook, the IMF said the global economy would likely contract 1.3 percent this year in the deepest post-World War Two recession by far.

Growth is set to re-emerge at a sluggish 1.9 percent next year but the pick-up depends on aggressive measures to repair a poorly functioning financial system...

Just three months ago, the IMF had projected global growth of 0.5 percent, although last month it warned of a deep recession.

The Washington-based institution said it revised its forecasts downward because financial markets appear likely to take longer to stabilize than it had thought earlier...

The IMF said on Tuesday that banks and other financial institutions around the world faced losses which could amount to $4.1 trillion. It said banks would likely need to raise $875 billion in fresh capital.

In offering new economic projections, the IMF said government measures to battle recession should be sustained, if not increased, in 2010, warning that premature withdrawal of stimulus could set back a recovery.

It said interest rates in major advanced economies are likely to be lowered to or remain near zero, and said authorities should move quickly to cut interest rates where there was room for further easing...

The IMF said the United States remains at the epicenter of the crisis, and it said it now expected the U.S. economy to contract 2.8 percent this year.

It said while there were signs the U.S. recession might be easing, a recovery was unlikely to take hold until next year, which would leave 2010 gross domestic product flat...

What will the devastation to 401k balances mean for the housing market?

Although it's not technically a housing-related story, the collapse in the value of many people's 401k balances could have a large impact on their home purchasing decisions -- especially for those over age 50. About the time the market was starting to see-saw in late 2007, I moved my 401k balance over to a self-directed IRA, where it's mostly sat in cash ever since, but most others weren't so lucky. From a 60 minutes report:

Checked your 401k lately? The recent financial collapse has devastated this retirement resource. Older workers are hardest hit, as their financial futures may now be at risk. Steve Kroft reports.


Watch CBS Videos Online

Web site to find new homes launched

New home data provider Hanley Wood Market Intelligence and DataSphere Technologies have teamed up to launch www.newhomelistings.com to provide information on more than 14,000 new home communities. From the press release:

Today, Hanley Wood Market Intelligence, in partnership with DataSphere, launched www.NewHomeListings.com, a consumer focused website that will connect potential new home buyers to builders by featuring the most comprehensive database of new home community information available online.

The NewHomeListings.com approach offers several distinct advantages over other national and regional web sites with new home listings:

1) The site will be more compelling to consumers because of its unique and comprehensive content. With approximately 14,000 communities, NewHomeListings.com has twice as many communities as its competitors, covering national, regional and local builders.

2) Listings and leads are free. NewHomeListings.com does not charge builders for basic listings or to receive leads. This is a significant advancement from today’s business model for this service. Eventually builders will have the opportunity to upgrade their services levels for a fee.

3) The NewHomeListings.com platform will deliver greater traffic and actionable leads through its robust syndication network. This network was customized to maximize lead volume and lead quality from other online sites, including sites that currently have no new home content.

Introducing the Reverse Mortgage Adviser Blog

I wanted to introduce readers of Housing Chronicles to the blog at the Web site Reverse Mortgage Adviser. The main site was set up to provide people with information regarding the various types of reverse mortgages, which was something I covered in a feature story for the Los Angeles Times in February of 2008 (and which you can find here). I've added their related blog to my own blog roll.

Who We Are

Reverse Mortgage Adviser is a free service that was developed to assist seniors and their loved ones interested in a reverse mortgage. We are NOT a lender. Reverse Mortgage Adviser is constantly seeking out lenders with a consistent track record of reliability and commitment. In an effort to ensure that seniors seeking reverse mortgages receive objective information, free of fraudulence Reverse Mortgage Adviser is a member of NRMLA and adheres to its Code of Conduct and other Best Practices, in addition to holding a membership with the National Aging in Place Council (NAIPC).

Objective Information

We strive to provide the most up-to-date and honest information, including access to relevant articles, calculators, and analyses. We do all of this so that seniors and their loved ones can learn about the reverse mortgage process in a secure environment, without being hassled by high pressured salespeople.

Straightforward, Honest Help

Our counselors are here to answer all of your questions and help you determine whether a reverse mortgage is the right choice for YOU. We assist you with the research necessary to determine how much you are eligible for, as well as assisting you in finding a reputable and trusted lender. We encourage you to take advantage of our research and utilize our Reverse Mortgage Lender Network for qualified lender recommendations in your area. This is a FREE PUBLIC SERVICE provided by Reverse Mortgage Adviser and you are under no obligation to proceed.

Industry Compliancy

We believe in integrity and know that finding a lender you trust is important. Since dishonest brokers and lenders are a danger to consumers and the industry; we ensure that only the most reputable are included in our Reverse Mortgage Lender Network. Help us to maintain the integrity of Reverse Mortgage Adviser and the industry by reporting any consumer complaints through our Compliancy Center.

Know anyone who's looking into a reverse mortgage? This looks like it would be a good place to start.

Mortgage industry throws more hurdles onto borrowers

Although home prices continue to fall and mortgage rates are historically low, nervous lenders continue to pile on new fees and requirements for borrowers hoping to jump back into the market. From the "Nation's Housing" column in the L.A. Times:

Take Fannie Mae's and Freddie Mac's add-on fees for loans purchased after April 1. In some cases, applicants are being hit with extra fees of 3% to 5% because of the type of property they want to buy or refinance, their credit scores or the size of their down payment.

Some major lenders who sell loans to Fannie and Freddie are going further -- tightening underwriting rules beyond what either corporation requires...

Fannie Mae now has a mandatory fee of three-quarters of a percentage point on all condominium loans, no matter how high the applicant's credit score...

On top of these extra fees, borrowers are now starting to get hit with two sets of cost-raising appraisal rule changes. Fannie and Freddie have begun requiring all appraisers to complete an extra "market condition" report that includes detailed statistical analyses of local sales and pricing trends -- above and beyond the regular appraisal data. Many appraisers are charging an extra $45 to $50 for the time required to complete the form. Home buyers and refinancers can expect to pay the higher fees.

On top of that, beginning May 1, Fannie and Freddie are refusing to fund loans with appraisals that do not follow a set of new rules known as the Home Valuation Code of Conduct. Among the procedural changes: Mortgage brokers no longer can order appraisals directly, but instead must allow lenders or investors to use third-party "appraisal management companies" to assign the job to appraisers in their networks.

How does that affect the consumer? Consider the notification one Connecticut brokerage firm recently received from a major lending partner: Starting April 15, all good faith estimates provided to applicants must indicate a flat $455 charge for appraisals arranged through the appraisal management company. The broker previously charged $325. Consumers will now have to pay the appraisal fee upfront -- before any inspection or valuation is completed -- using a credit card, debit card or electronic fund transfer.

What happens if the appraisal comes in low and the applicants can't qualify for the refi or purchase program they sought? Tough luck: They'll have just two choices: Pay another $455 for a second appraisal -- with no assurance that it will solve the problem -- or cancel the application...

Click here for entire column.

How useful are economists?

First most of them missed the degree of the recession, and now they can't agree on what to do. Having missed lessons of the Great Depression, some would argue that they've let the economy spiral out of control due to bad forecasts, an unwillingness to admit mistakes and an arrogance which suggests they're quite confident that most people consider economics to be beyond their own comprehension or control.

Yes, I'm talking about economists, and they're the subject for a BusinessWeek magazine cover story entitled "What good are economists anyway?"

Of course many bloggers and a few economists -- such as Christopher Thornberg, a partner to MetroIntelligence -- were warning of a great housing bust and a recession to follow as early as 2004, but such voices were largely drowned out by a cheerleading press and a dishonest NAR economist named David Lereah, whose objectivity was rarely questioned.

So where did these economists go wrong and what lessons should we learn from their profound mistakes? From the story:

Economists mostly failed to predict the worst economic crisis since the 1930s. Now they can't agree how to solve it. People are starting to wonder: What good are economists anyway?...

To be fair, economists can't be expected to predict the future with any kind of exactitude. The world is simply too complicated for that. But collectively, they should be able to warn of dangers ahead. And when disaster strikes, they ought to know what to do. Indeed, people pay attention to economists at times like this precisely because of their bold claim that they know how to prevent the economy from sliding into a repeat of the Great Depression. But seven decades after the Depression, economists still haven't reached consensus on its lessons. The debate has only intensified in recent weeks...

The rap on economists, only somewhat exaggerated, is that they are overconfident, unrealistic, and political. They claim a precision that neither their raw material nor their skill warrants. Too many assume that people behave like the mythical homo economicus, who is hyperrational and omniscient. And they take sides in quarrels that freeze the progress of research. Those few who defy the conventional wisdom are ignored...

Click here for full story.

San Diego Conference materials now online

If you missed the April 14th Economic Forecast Conference in San Diego, you can still review the speakers' presentations as well as download a copy of the 100-plus page book which was given to all attendees:

Click on the links below:

Conference Book

Christopher Thornberg Presentation

Brad Kemp Presentation

Gary London Presentation

The next forecast conference by Beacon Economics will cover the Inland Empire and take place on the morning of May 19th at the University of Redlands.

Click here for more information or to register!

Who are the buyers of land today?

Yesterday I spent the day in Orange County with G.U. Krueger, most recently the Chief Economist with Institutional Housing Partners, an adviser to CalPers. During the course of the day we met with a series of land brokers and Wall Street analysts in town to see how we might assist in their due diligence efforts, and this is pretty much where the market is today:

1. There are 3 types of buyers: builders, wholesalers and speculators, and each group is looking for different-sized deals in specific markets.

2. Most deals are small, often consisting of groups of finished lots (30-150) that wholesalers (often families or groups of friends) can then flip to builders when the market rebounds; given the past discounts on inventory, many builders are already starting to run out of such land but still prefer small, rolling take-downs that many banks aren't set up to provide.

3. Institutional money remains on the sidelines, waiting for other larger deals to happen before they jump in. Some hedge funds with longer time horizons (up to 10 years) are looking for more speculative plays, often in tertiary markets that could a higher reward given the greater risks, but these are still anecdotal.

4. Some opportunistic farmers are buying back land at agricultural values after having sold the same parcels to builders at inflated (residential land) prices.

Given some strands of good news, there are lots of buyers kicking tires, but deal flow is still very low due to sellers not yet capitulating on price. But as the FDIC continues to take over banks and put pressure on those still operating, you may see deal flow from banks increase over the next year as they're forced to get these non-performing assets off of their balance sheets.

Plunge in housing starts: good news or bad?

Lately, it seems that trying to figure out the health of the housing market from the most recent stats on starts, sales and prices is a lot like reading tea leaves. The latest bit of news is that housing starts fell sharply in March, although starts for single-family homes has remained constant. According to the L.A. Times, that could mean good news:

Groundbreakings on single-family homes held steady for the third month in a row in March, even as the number of condominium units and apartments under construction fell sharply, according to federal data released Thursday.

Economist Edward Leamer, director of UCLA's Anderson Forecast, said the stability in single-family home construction is a positive sign.

"The downward trend we've been seeing for a long time isn't evident anymore," Leamer said. "We won't know if we've really hit the bottom for a couple of months, but this is certainly consistent with being near the bottom."

But not all the news was good. Construction began on 152,000 apartment buildings nationwide in March, down nearly a third from the previous month and 51% from a year earlier. In the West, builders began work on just 10,000 multi-family buildings in March, a fourth of those that were started in February and down even more from the previous year.

That, along with the fact that there's still less construction going on now than there was last year, brought the overall numbers for new housing down 48% nationwide over the same month in 2008.

Over at the New York Times, they're painting a slightly different picture:

“There’s still no clear indication that the construction market is coming back,” said Mike Larson, a housing analyst at Weiss Research. “Even if companies want to start projects, they’re having a harder time getting the money to do so. We’re being overwhelmed by distressed inventory as well as regular sellers trying to get out of their homes. There’s not a heck of a lot of incentive for builders to ramp up construction.”

Still, some housing experts say the decline in home building was a crucial step toward lowering the glut of unsold houses and condominiums on the market so that housing supply once again lines up with demand...

And what about foreclosures?

Also on Thursday, the data firm RealtyTrac reported that foreclosure filings surged 9 percent, to 803,489 properties, in the first quarter of 2009. RealtyTrac said that foreclosure notices increased 17 percent in March from February.

“We saw a record level of foreclosure activity,” James J. Saccacio, chief executive of RealtyTrac, said in a statement. He added that foreclosures would probably increase in the next months as temporary halts to foreclosures expired at banks and agencies like Freddie Mac and Fannie Mae.

The flood of cheap foreclosed homes and distressed properties has helped push home prices lower across the country, especially in areas hit hardest by the housing downturn, like Southern California, Arizona and Florida...

SoCal home prices stabilizing?

The latest numbers from MDA/Dataquick are out, and show that the median price for an existing home in Southern California remained stuck at $250,000. What makes this interesting is that this is the third month in a row that it's remained stable, although that's really due to the huge influence of foreclosures (mostly in the Inland Empire). So if one month does not make a trend, does three?

I discussed this subject for local station ABC7 on their 5:30pm newscast, and whereas prices for entry-level homes have already fallen by 40% to 50%, those for move-up and luxury homes have fallen by 30% to 40%, so I would expect to see further price declines throughout 2009 and into early 2010 for higher-priced homes. However, in terms of the level of overall median price declines, I think we're past the 7th inning stretch.

Also, from an L.A. Times story:

The median sale price for a Southern California home remained the same in March for the third consecutive month, indicating that the housing market may be stabilizing for at least starter housing.

The median price paid for a home in Los Angeles, Orange, Riverside, San Bernardino, Ventura and San Diego counties was $250,000, the same as it was in January and February, according to MDA/DataQuick information services in La Jolla.

The median sales price had not held steady for two straight months since it peaked in 2007, the firm's data shows. The March sales price median was down 35% from a year ago. The $250,000 median price is down 51% from the peak price of $505,000 in mid-2007.

Foreclosed homes accounted for 55% of homes sold during March...

But the robust sales activity has been concentrated on lower-priced homes, DataQuick said. The firm estimates homes in more costly neighborhoods have dropped in value by only half as much as homes in lower-priced areas.

Sales at the high end "are dormant right now," said DataQuick president John Walsh. The median sales price will rise if activity picks up in that segment. But mortgages of more than $417,000 -- even those that do not meet the definition of a jumbo loan in states like California -- remain more difficult to obtain, Walsh said. A jumbo loan is a mortgage that is too large to be backed by the federally chartered mortgage giants Fannie Mae and Freddie Mac.

For now, the median prices are "simply a reflection of what is selling -- mainly distressed properties in the more affordable neighborhoods," Walsh said.

San Diego Economic Forecast

Miss the San Diego Economic Forecast Conference on Tuesday, April 14th? Fear not, as you can still download the presentations by Beacon Economics' Christopher Thornberg and Brad Kemp. As soon as the .pdf is available online, you can also download a copy of the nearly 100-page conference book which accompanied the presentations.

Here are some excerpts from the residential section, written by MetroIntelligence as part of our partnership with Beacon Economics:

San Diego County closely followed statewide trends during the recent boom-and-bust cycle, with total new home sales (including homes that are not part of major subdivisions) reaching a nadir of over 4,200 units by the second quarter of 2005. Since then, however, sales have fallen steeply, declining by as much as 73 percent between the fourth quarters of 2006 and 2008.

Sales have also dropped faster than most experts anticipated, falling to 752 homes by the final quarter of 2008, representing a decline of 61 percent from a year earlier and 21 percent from even the third quarter of 2008. Projections are for continued declines in 2009, with fewer than 2,500 annual new home sales at major subdivisions.New home prices in San Diego, however, took a slightly different path than new home prices in California from 2003 to 2008. Whereas new home prices in California continued to rise through the first quarter of 2006, in San Diego County prices experienced several drips and rebounds.

For example, according to DataQuick, after rising to nearly $488,000 at the end of 2005, median sales prices fell steadily to $415,000 in the beginning of 2007 before rising again to exceed $530,000 in the first quarter of 2008. Consequently, new home prices rose by 6 percent over the past year and have changed by little more than 1 percent between the third and fourth quarters of 2008.

According to new home data provider Hanley Wood Market Intelligence, new home prices at the subdivisions they track have also risen. Between the fourth quarters of 2007 and 2008, median minimum asking prices rose by 20 percent, to $560,000, although not all sectors performed the same. For example, median asking prices for condominiums rose by 52 percent, to $479,000 (a rise that probably stems from the conversion of more affordable developments to rental stock), while median asking prices for single-family homes fell by 2 percent, to $725,490, and prices for townhomes and duplexes fell by over 8 percent ,to $348,686.

At the same time, new home sales tracked by Hanley Wood fell by 78 percent during the fourth quarter, to just 197 homes, with condominium sales falling to almost zero. Sales of single-family homes closely tracked the overall market, showing a decline of 57 percent. The decline in net sales activity occurred in part because of the sharp rise in the cancellation rate, which more than doubled at 44 percent. For condominiums, the cancellation rate soared to 103 percent, indicating that nothing is moving. For all of 2008, cancellation rates rose from 13.6 percent to 18.6 percent, with cancellation rates for condominiums doubling from 14.5 percent to 30.2 percent

The absorption of new homes, or the rate at which new home communities sell their inventory, fell by nearly 70 percent, to just .31 units per month per development during the fourth quarter, although absorption rates for single-family homes remained slightly healthier at .47 sales per month. For all of 2008, monthly absorption rates fell by 46 percent, to .90 homes per project.

Even though builders are pulling back on new building permits, in some cases existing phases of active developments must be built out, especially for large attached projects which are built all at once. Consequently, although the number of new homes that are under construction but unsold fell by 36 percent, to 1,321 units by the end of 2008, the level of standing inventory rose by 6 percent, to 1,262 homes. Of these unsold units that have been completed, most are condominiums. At current net sales rates, these unsold homes would take 19 months to sell for standing inventory and 13 months for homes still under construction.

Housing Chronicles in this month's NewsTex Blogger Spotlight

In early 2008, I signed up with a blog syndication service called Newstex, and they regularly feed my blog posts to LexisNexis, Thomson Reuters, CanMedia West and, most recently, the Amazon Kindle. This month they asked me to participate in their monthly "Blogger in the Spotlight" interview series, in which they inquire why I started blogging, my plans for the future and what I think about the media landscape and where blogs fit in that universe. You can read that interview here, but for now here are some excerpts:

Newstex: How did you get started writing your current blog?

Patrick Duffy: I started my blog in November of 2007 after noticing that almost all of the housing blogs online were focused only on the housing bubble as well as to promote my company, MetroIntelligence Real Estate Advisors. Many didn’t even pretend to be objective, only focusing on the bad news that would help the authors substantiate their theory that the housing market was certainly doomed. Since I wanted to create a blog for the long term, I specifically avoided any reference to a housing ‘bubble’ or ‘crisis,’ and instead chose the very generic term ‘Housing Chronicles.’ Over time, I’ve expanded it to include coverage not just on housing, but also on commercial development...

Newstex: What makes your blog unique?

I write my blog from the perspective of a consultant to the building industry for over 20 years who has already been through one of these boom-and-bust cycles. My regular reading list is pretty comprehensive, including most major newspapers and a variety of magazine titles related to current events, politics, general business as well as real estate development...

Newstex: What is the best thing that has happened to you as a result of your work on your blog?

I’d say definitely the new blogger friends I’ve made online as well as new clients I probably wouldn’t have met through traditional networking. For example, last week a reporter and blogger for the Orange County Register interviewed me for his BlogTalkRadio show, and I was so impressed with the technology and the final product that I’ve signed up for my own show and will be interviewing the authors of the real estate books I review. Another blogger with traffic exponentially greater than mine became a fan of my writing, so now he features some of his favorite posts for a weekend thread, which in turn has helped build my traffic...

Newstex: What effects do you think blogging will have on traditional media? How about on your industry?

I think that blogging is already having a tremendous impact on traditional media, and I’m not sure that attacking bloggers who use material from AP is going to save their business models; what the industry needs to do is come up with a ‘fair use’ policy, so bloggers can cite a maximum number of words from an original article and must provide a link as well as appropriate credit.

From the very beginning of Housing Chronicles, I’ve made it a policy to cite my sources at least two to three times in a post. In order for traditional papers to survive, they’re going to have to make it palatable to charge users for content (either through micropayments or subscription models), reduce their cost structures and see bloggers as alliance partners rather than enemies.

Last call for San Diego Economic Forecast Conference

Last call for the next Beacon Economics Forecast Conference in San Diego at the Hyatt Regency at Aventine in La Jolla tomorrow morning (Tuesday), April 14th! Click here for more information on how to sign up:

Get answers to 2009's burning questions...

• Are fears of depression realistic or just hype?
• Will the Federal stimulus plan help?
• Will California be the first or last to emerge from the darkness?
• What does it all mean for the "finest city in America"?

All conference attendees receive Beacon's new San Diego Economic Forecast Book - an unprecedented overview of the region's current economic conditions and analysis of what the near future holds.

Hyatt Regency La Jolla at Aventine

3777 La Jolla Village Drive
San Diego, California

Tuesday, April 14, 2009

Registration and Breakfast 8:00 AM
Program: 8:30-11:00 AM

Recession or Depression in 2009? How bad is it really going to get? On Tuesday, April 14, 2009, Beacon Economics will present their second annual San Diego Economic Forecast Event.

Printable Brochure

FEATURED SPEAKERS
Christopher Thornberg Principal Beacon Economics	Brad Kemp Director of Regional Research Beacon Economics	Gary London President The London Group Realty Advisors

When will the housing market rebound?

I was recently asked by Beacon Economics and the State of California Controller's Office to write an article on the timing of a housing rebound for their monthly Summary Analysis Report, a .pdf of which you can find here. Here are some excerpts:

Following multiple months of dire news on California’s housing market, more recently a combination of factors are starting to show the beginning of stabilization in the state which has practically defined sub-prime lending gone sour and greedy speculators reaching beyond their means. While the real estate market is certainly still bad – and is likely to remain so through the end of 2009 – there are some definite signs of hope for 2010 and beyond.

First, the bad news. After a temporary dip in foreclosures during the last quarter of 2008 due to moratoriums and procedural changes in the way lenders handled loan defaults, by February of 2009 the combination of default notices, auction sale notices and bank repossessions in California rose to nearly 81,000 properties – the most of any state and representing a 5% increase from January.

When compared with February of 2007, foreclosure activity spiked up by 51%, with auction sale notices alone skyrocketing by nearly 180%. And, whereas the percentage of loans in California entering foreclosure had been far less than those for the overall country as recently as the first quarter of 2007, by the end of 2008 the ratio had flipped, or 1.36% (California) versus 1.01% (U.S.). Furthermore, the ratio for loans already in foreclosure in California leapt from just 0.17% in the middle of 2005 to 4.19% by the end of 2008 – nearly 100 basis points above that of the U.S. (3.3%)...

At the same time, no matter how many incentives home builders pile onto sales contracts – estimated by one of the country’s largest public builders to exceed $50,000 – they’re still finding it almost impossible to compete against substantially discounted existing homes, over half of which are foreclosures...

Even with pricing declines of $100,000 from the 2006 peak to under $350,000 for a new home by the end of 2008, that median sales price was still nearly $100,000 higher than for both existing single-family homes and condominiums. Consequently, sales of new homes have continued to steadily decline, reaching just over 10,000 units in the fourth quarter of 2008 – a drop of 73% since the peak reached during the second quarter of 2006...

Still, there do remain a couple of wrinkles for a sustained housing rebound. One is that banks, wanting to avoid further depressing prices, have been sitting on foreclosures and only doling them out to the marketplace in small amounts. Should they release a larger group of properties at once, prices could fall further – although that could encourage even more buyers to snap up the new discounts...

Another concern is the much-heralded S&P/Case-Shiller Index, whose primary flaw (like all housing indices) is its inability to accurately gauge the quality of its paired home transactions. For example, if a home that sold at the peak of 2006 sells again as a gutted, semi-destroyed foreclosure in 2009, the decline in value speaks more to structural changes in the home itself than an accurate reading of the local marketplace. Consequently, some critics contend that this index can over-state swings in the marketplace -- especially price declines -- and magnify equity losses in areas with greater foreclosures...

Yet even the Case-Shiller Index is showing a flattening of price declines, and that’s because buyers are starting to show up with visions of low mortgage rates and potential positive cash flow. Finally, as the programs initiated by Realtor groups, home builders, and the federal government begin to gain traction -- and as lenders have learned which loan modifications work best --we may see a slowing of foreclosure activity and a rebound to a more market-based housing market sooner rather than later. But patience is still warranted.

Staffing up for the (eventual) rebound

Back in the early 1990s, I once interviewed for a market research job with a public home builder for which I knew I was perfect. With multiple recommendations from industry contacts as well as from the person who currently had the job but was leaving the company, I figured I was a shoo-in for the position. But I wasn’t. In fact, the job went to a guy who had worked for a well-known accounting firm which focused on real estate. Yet something in my gut told me this guy wouldn’t last because the job was much more than simply figuring out spreadsheets: it also involved the sort of qualitative experience that allows an experienced consultant to identify what makes a community, floor plan or marketing strategy better than the competition’s.

Less than a year later, the winning applicant had moved on, probably to another accounting firm, thus leaving the builder to replace the same position twice in as many years. So what went wrong in the hiring process? I’d say it was because the person making the decision made the very common mistake of hiring the resume, and not the person behind it.

With that experience behind me, I had the chance during the recent boom years to hire a consultant to work with other members of a well-entrenched team. For someone focused too much on the resume, he certainly wasn’t a shoo-in, either, having hopscotched for years between new home consulting and selling existing homes. But I was still impressed with his reasons for trying out new positions in real estate, his easy-going nature and thought that both existing staff and clients would like working with him.

The kicker, of course, was whether or not he could write with the clarity and vocabulary required of the position, so I asked for a writing sample. And not only was he a gifted writer, but he turned out to be a tremendous asset to the team – all because I considered his resume merely a starting point and nothing more. In fact, it was his varied experiences which made him even more qualified for the position, because we could then take on a greater variety of assignments as opposed to the limited menu that had been typical in the past.

I bring this up because sometime over the next 18 months, builders and developers will again be staffing up to fill various positions, and yet on social networking sites such as LinkedIn, I see people with 15 to 20 years of doing the exact same thing with different companies. Perhaps they’re good at some specific task, but for the next stage of real estate development, I think hiring people with multiple skill sets will ultimately separate the winners from the laggards.

Being brave enough to try out new things -- whether it’s striking out on your own or switching to an entirely new department – also shows the type of leadership qualities which help mold future executives. In many cases, those hints of future brilliance often occur in places far outside of the building industry, such as volunteering for a local political race, coaching a soccer team or organizing a church event, all of which reveal skills essential for any workplace.

My own resume still lists some of my own volunteer work from five to ten years ago, and I know some well-meaning experts might declare such things irrelevant. But I think it’s still quite relevant how I managed -- through sheer force of will and preparation -- to convince a nationally known charity, a top television network, a major studio and one of the most successful sitcoms on the air to take a chance on an unproven idea that had never been done in the history of the medium.

In August of 1999, “An Evening With Frasier” was the first of five charity fund-raisers set around a live taping of a top TV show, and that experience taught me that in any business, success is achieved by assembling the right team, constantly leaning into your own zone of discomfort and having the willingness to respectfully ask for the moon but remaining flexible enough to deal with ‘no,’ And you’ll never find those qualities if you simply skim through resumes looking for specific code words.