Theo: New WRA president says group adjusting to ‘new realities’
By Brian E. Clark
During the peak of the real estate bubble during the last decade, the Wisconsin Realtors Association had 19,000 members.
Since that bubble popped, membership has fallen by nearly one-third.
And while Mike Theo, the new president of the WRA, acknowledges the “tremendous” decline has caused some budget problems for the organization, he says it has adjusted.
Theo, who took over from Bill Malkasian on Oct. 18, says he plans to “re-energize the organization” and raise the group's standards. He promised to push for changes in lending regulation, which he said are holding back real estate sales.
WisBusiness audioHe also says he wants to make sure the public sees the value of working with a WRA member.
“Not every real estate licensee belongs to our organization,” says Theo, a native Madisonian who has worked for the WRA for 27 years. The WRA has roughly 13,000 members while stats from the state Department of Safety and Professional Services show more than 59,000 people registered in real estate sales and more than 53,000 real estate brokers, although there is overlap between those two categories among people who are licensed in both areas.
“Those who choose to join have access to assets like the Multiple Listing Service and they also hold themselves out to a higher ethical standard. That is something that we need to recommit ourselves to because there have been a lot of changes in the real estate market.”
Theo said that when the real estate market recovers, it will be a different industry than it was in the past.
“And that will require the association to change to meet those new realities,” he says.
Theo says regulatory changes, including requiring borrowers to put down as much as 20 percent to secure a mortgage, have made buying and selling property more complex.
Theo says government over-reacted to abuses.
“It’s not unusual for government reaction to marketplace changes to over-reach,” he says. “Sometimes the regulators go too far, and now the pendulum needs to come back a bit.
“And there was a problem where people couldn’t sustain a mortgage after a balloon or some other adjustable rate mortgage. But that can be dealt with without Draconian measures placed on all buyers.”
Tighter lending rules has meant that some qualified buyers can't get mortgages, he says.
“And that means that they can’t take advantages of some of the values that are in the marketplace now,” he says, adding he's opposed to one-size-fits-all rules that require a borrower to put down a specific amount to get a mortgage.
“The rules shouldn’t be so harsh that you are keeping qualified buyers out. ... Just as every market is a little different, every buyer is different. The lending institutions and the real estate industry ought to be flexible enough to get those credit-worthy folks into a home.”
Though their numbers are down, he says Wisconsin Realtors are doing relatively well compared to the places like Nevada, Florida and Arizona.
“In Wisconsin, we didn’t go as wild as some of the other markets and thus did have as far to fall when the bubble burst, mainly because people here buy homes to live in. We didn’t have the wild speculation.”
Theo says other real estate fundamentals look good in the Badger State, including historically low interest rates, ample inventory and low prices.
“So there is a lot of selection for those who are credit-worthy to get into the marketplace,” he says.
In addition to lending difficulties, he says consumers currently lack confidence in the economy.
“If people are not secure in their jobs and have an overall shaky feeling about the economy, they are going to hold off buying major purchases like a home,” he says.
And until that changes, he says, real estate sales will remain flat. The key to a rebound, he says, is an improving jobs market.
“We watch unemployment numbers closely and Wisconsin is doing fairly well in relation to the rest of the country,” he says.
“But if we aren’t growing the economic pie both here in the state and nationally, there will be continue to be a crisis in confidence which will make some buyers reluctant.”
Here in Wisconsin, he says the WRA is pushing for regulatory reform, including changes in rules that limit building in wetlands.
“Hopefully, we can make some changes that would allow for both the protection of the environment and wetlands, but also expedite developments so we can bring in jobs to grow the economy.”
He says his group favors mitigation measures that would permit creation of new wetlands when others are destroyed. Critics, however, say man-made wetlands are often inferior.
“From a property owner and real estate perspective, we are at the vortex of a lot of competing interests that are emotional and high-charged. We want to protect the environment and private property rights, both of which are important to the real estate market.”
So goes the conflicts over taxes and support for education.
“The quality of a school district has a direct relationship to the value of a property and vice versa,” he said. “While we want great education, especially K-12, the state is dramatically over-reliant on property taxes to pay for those schools.
“We want to keep taxes down so our housing remains affordable.
“With the environment, taxes and education, we are in the middle of tough issues that require a delicate balance, and we will continue to focus on them to find the sweet spot where we can have both.”