MarketGraphics head pitched for HUD post
Nashville Business Journal - by Jenny Burns Nashville Business Journal
A Nashville housing analyst is being pushed as a candidate for President-elect Barack Obama’s cabinet.
Some State Democratic leaders are backing Edsel Charles for the nation’s top housing job as secretary of Housing and Urban Development. Charles’ MarketGraphics Research Group tracks the new home market in 21 cities.
“He is a professional housing market analyst. That’s what we need now,” says Bill Owen, a member of the Democratic National Committee and a former state senator from Knoxville. “Obama talked about getting away from partisanship and going for what’s good for the entire country. We are all in the leaking boat together.”
Charles has gathered more than 100 recommendation letters from bankers and builders — including an endorsement from the Tennessee Bankers Association — to prepare a portfolio for consideration.
Owen and other state leaders approached Charles about the opportunity. Owen says Charles has a broad base of support, and his appointment would be professional, not political.
“He has pioneered a method of bringing transparency to the housing market that is desperately needed,” Owen says. “What Edsel does is physically go into neighborhoods and look at what’s being sold and what’s being bought. This is the type of information that an efficient market needs in order to make intelligent decisions.”
Several names have been floated nationally as potential candidates for HUD secretary, including Rep. James Clyburn of South Carolina and Atlanta Mayor Shirley Franklin. It’s unclear what Charles’ chances are or whether he’ll get a serious look.
Obama’s representatives could not be reached for comment.
Charles started MarketGraphics in 1988 after building more than $100 million worth of single-family homes in the late 1970s and 1980s. He retired from Radnor Homes, which is now Pulte Homes, and started researching the new home market in Nashville.
He’s since expanded into 21 markets, now tracking 13.5 percent of all housing starts in the nation, which includes 25,000 subdivisions and 2.4 million homes and lots. The firm also tracks employment and economic data in those markets.
MarketGraphic’s clients include builders, developers, banks, utility companies, real estate agents, appraisers and city governments.
“I am extremely grateful to have started as a tradesman, to have experienced almost every aspect of the housing industry and to now be recognized as one of the leading housing research specialists and forecasters in the United States,” Charles says of his nomination.
Dale Floyd, senior vice president at Pinnacle Financial Partners, says Charles would be a great fit for HUD secretary, as someone who would be focused on the country’s needs and not his own political ambition.
“I don’t know anybody that touches as many markets as he does,” Floyd says. “Edsel counseled our builders a couple years ago to cut back on speculative building. If they’d all listened to him, we wouldn’t be in the mess we have now.”
Charles is now concerned about a potential string of builder bankruptcies and foreclosures. He describes a situation playing out around the country:
A financially solvent builder in the Nashville area had loans for vacant lots come due from the bank. The builder had 58 lots, orginially valued at $45,000, that were reappraised at $35,000 because of falling values. So the builder had to come up with cash to cover the difference, about $9,750 for each lot for a total of $565,500.
The builder also had to refinance eight of his 26 speculative homes, which costs another $312,000.
“Remaining current on payments and slow sales have drained the builder of a lot of his liquid cash,” says Charles, who estimates that 30 of the nation’s builders could eventually go out of business.
“This is a potential devaluation crisis,” he says.
Charles says the solution is to apply strict regulation to future starts, but not on homes currently in progress. Charles says banks also need to conduct a case-by-case builder review, and bank regulators need to allow time and space for this review without mandating the sale of construction and land loans.
Cabinet Candidates
Several names are being floated as potential candidates for President-elect Obama’s Secretary of Housing and Urban Development.The Associated Press reports “Obama friend” Valerie Jarrett and Rep. James Clyburn of South Carolina.
The Washington Post reports Miami Mayor Manny Diaz and Saul Ramirez Jr., a deputy HUD secretary under
Clinton, could be contenders.
Other media reports include Atlanta Mayor Shirley Franklin.
jburns@bizjournals.com | 615-846-4276
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