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Howard Hanna chairman sees market share grow as sales drop
By Jim Mackinnon
Beacon Journal business writer
Published on Wednesday, Jul 09, 2008
The head of one of the nation's largest real estate firms said while housing sales are down in the greater Akron area, his company remains healthy and is growing market share.
Howard ''Hoddy'' W. Hanna III, chairman and chief executive officer of Pittsburgh-based Howard Hanna Real Estate Services Inc., visited Tuesday with Howard Hanna real estate professionals in the firm's West Market Street offices.
In a wide-ranging interview afterward, he touched on the current financial and housing price crises and the local real estate market. He even gave tips on how to make a home sell more quickly than others in the same price range and neighborhood.
Hanna also talked about his insights into the Federal Reserve — he is a member of the Cleveland Fed's advisory Pittsburgh Board of Directors.
''Clearly, the Federal Reserve in the last six months has gone into waters that they've not gone in before,'' he said, referring to the Fed getting involved in overseeing investment banking.
Most people believe that if the Fed had not dropped interest rates as much as it has in the past year, the rocky economy would be in worse shape than it is now, he said.
''And it is rocky out there,'' Hanna said.
There are critics inside and outside the Fed who are unhappy with the rate cuts and believe the Fed's actions will fuel inflation, he said.
''I thought the cuts had to take place,'' Hanna said. ''I think it does bode that we have some inflationary problems ahead of us. . . . The credit crisis we have right now is real. It's worldwide. And if we didn't have these cuts, it would be dramatic, it would be astronomical.''
His company, founded by his father, Howard Jr., in 1957, describes itself now as the fifth largest full-service real estate company and the third largest privately held real estate company in the U.S., with 122 offices and 3,600 sales associates and staff in Pennsylvania, Ohio, New York and West Virginia.
Hanna said the current real estate market climate is unprecedented in his experience.
''We really have not seen [a real estate market] anything quite like this,'' he said. ''You have low interest rates, you have got a decent supply of housing, you have 95 percent of the people working, yet you have nobody buying houses.''
Hanna said he is still trying to get his hand on how much of the problem has been fueled by subprime loans and predatory lending.
''I think a lot of people are at fault,'' he said. That includes lenders, mortgage brokers and others who approved and made loans for unqualified buyers in recent years, he said.
''There was so much rush to do these loans, you wonder what due diligence on a case-by-case basis there was and how much fraud was put into it,'' he said. ''I think there was a lot of fraud put into the thing.''
A number of factors began coming together that fueled the current crisis, including restrictions in how financial giants Fannie Mae and Freddie Mac were allowed to handle mortgages, the boom in the real estate market, low mortgage rates, and federal government policies aimed at promoting home ownership, Hanna said.
''The Clinton administration and the Bush administration said they wanted everyone to buy a house. . . . Let's get everybody into the housing market and create financing vehicles and create housing to make everybody a homeowner,'' he said.
The climate allowed more people to get into the mortgage business, in large part because Fannie Mae and Freddie Mac had restrictions placed on them after accounting scandals at the institutions, he said. The mortgage business also became globalized, with loans packaged, sliced up and sold to investors, he said.
In previous years, most lenders never would have approved mortgages for buyers who received subprime loans, Hanna said.
''A lot of it was predatory lending,'' he said.
Now problems with the second and third mortgages — home equity loans — might become a factor in the ongoing crisis, he said.
Not all the news in housing and real estate is bad, Hanna said.
''The positive is that there's plenty of mortgage money available in today's market,'' Hanna said.
West Akron-area sales volume is down 30 percent year to date, but the Howard Hanna strategy has been to increase market share at the expense of the competition, Hanna and another of the firm's executives said.
''We're growing our company,'' Hanna said. The firm continues to look to buy other real estate companies, he said.
Sales in the first quarter of the year in the Akron area were tough, although ''the second quarter actually came back,'' said Bill Askin, regional vice president. ''We still see a very strong market in first-time buyers. We're selling a lot of houses in all price ranges.''
The houses that are most saleable are, to be blunt, the ones that look the most saleable, Hanna said. The homes that sell the fastest typically have been decluttered and cleaned up, painted and repaired, with new carpeting replacing worn-out floor coverings, he said.
That kind of pre-sale work is important, he said.
People looking to buy a home, particularly working couples and singles, have the money to buy, but typically do not have the time to redo a newly bought house, he said.
More than half of Howard Hanna's typical buyers are working couples, with the second largest buying segment being single, working women, he said.
''So the best conditioned houses are the ones that are selling,'' he said.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
The head of one of the nation's largest real estate firms said while housing sales are down in the greater Akron area, his company remains healthy and is growing market share.
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