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If the title of this post sounds vaguely familiar, it’s because it’s from a song in the 1958 Broadway musical Flower Drum Song. It predates “Kids” from Bye Bye Birdie, but had the same sentiments.

However, I’m not complaining about the younger generation; I’m worrying about them. Not surprisingly, these concerns blossomed after a call this morning from my 33-year-old daughter. She lives with her spouse and two children in a two-bedroom rented duet home (one that has one common wall). With housing prices potentially bottoming out, she was asking about her options in terms of moving into home ownership.

This got me thinking about all the post-Boomer generation, colloquially known as Generation X (or the “baby bust” for their lower numbers), born between 1961 and 1981. My daughter was born in 1976. What are her peers’ options for home ownership, especially in light of so many economic shifts? For example:

Down payments. Because of new qualification criteria, it takes a lot bigger down payment to get into property these days.

Employment issues. The downturn has impacted employment in a devastating way. Families that used to have two incomes are down to one. For the most part, people are making do, but are not saving a lot. Plus acceptable forms and proof of what income they have has gotten more difficult to produce.

Parental problems. Down payments in the past used to come from what were jokingly called “GI loans,” where GI stood for “generous in-laws.” But now many parents, having lost their nest eggs in the stock market or declining real estate values, are in no position to help out.

Aggravating the situation is the fact that (my daughter excepted, of course) we have raised a generation of kids accustomed to instant gratification. The idea of saving for something and going without is as foreign to them as Studebakers.

The outlook is not completely grim. As with most difficult situations, I believe we’ll come up with creative solutions.

Rent. This may be the simplest option. With more single-family homes sitting empty, housing rental (as opposed to apartments) may increase. If the federal government rescinds the mortgage deduction to boost tax revenues, this option may become even more attractive.

Lease or co-ownership options. Lease options or rent-to-own options popped up in the 1980s when interest rates were appallingly high. Essentially, you rented the property with an option to buy, and the cost of the option was computed into your rental payments. At the end of say, three years, assuming you’d made all the payments, your option was converted into a down payment.

This arrangement has its drawbacks, of course — you end up with a higher monthly payment than if you’re simply renting; you have to be confident that the place you’re in is the one you want to buy; you have to be confident that your employment will stay in that area; and it’s not always easy to know what the value of a home might be three years hence.

Equity sharing. This is akin to co-ownership, where somebody owns the house and you set up an agreement with them that you’ll eventually share ownership as well. This probably works best between family members; otherwise, it’s a partnership, and in my mind, those are the only ships guaranteed to sink.

Regardless of what happens, I have one strong recommendation for Generation X: stop spending what you don’t have and start saving what you do. You don’t know the economic future, but I maintain that it’s always better to be master of your real-estate destiny.

A Catch-22, as defined by author Joseph Heller in his famous novel, is an unsolvable paradox of logic. As we approach the 50^th anniversary of Heller’s novel in 2011, those paradoxes show no sign of abating.

For example, consider the number of people with underwater mortgages. These are not necessarily people in danger of being foreclosed; they are simply people who bought at the wrong time for the wrong amount, whose houses are worth considerably less than the mortgage being serviced.

According to a February 3, 2010 article in The New York Times http://www.nytimes.com/2010/02/03/business/03walk.html, more people are ignoring both the potential impact on their credit scores and the possibility of a market turnaround, and simply walking away from their homes. They’re asking, why should I keep paying for an asset that’s worth less than I paid for it? If this trend continues, there’s going to be a second disastrous wave of empty homes, creating problems for banks and municipalities alike.

However, this is America, and in America, we like solving problems. Here at DBNR, we’ve become affiliated with a company called RescueRefi. Let’s look at how it works, using the example of one of my clients who has three rental properties, all of which are underwater. For one of them, in Riverside, Calif., he paid $637,000, but it’s now only worth $325,000. His remaining mortgage: $560,000.

The goal of RescueRefi is to reduce the principal of the loan, which in this case would be a $290,000 loan; it charges interest rates of prime + 3 percent (+ 4 percent for people with poorer credit ratings). RescueRefi charges a non-refundable fee of $1600.

What happens? The homeowner lowers his loan amount and his payment, the city of Riverside has to lower his taxes, and he now has 10% equity in the property. RescueRefi pays off the old mortgage at a significantly reduced rate, and gets the income from the new mortgage payments. The original lender avoids having to foreclose and resell a property with significantly reduced value.

Back to the Catch-22. The first problem is that RescueRefi is managed by a hedge fund, and many people blame the derivative-happy hedge funds for causing parts of this financial crisis in the first place. The second problem is that the hedge fund is a private company; there are no SEC statements or reports available to confirm its funding, its validity, or even the identify of its executives (to do this, one would have to hire someone to check its Certificate of Incorporation in its home state). As an affiliate of theirs, I can only conduct so much due diligence in order to convince my client that they’re legitimate. Their name is beginning to show up on sites devoted to scams, but only in the context of people asking if anyone else knows who they are. There are testimonials on its Web site, but anyone can write a testimonial.

This is the sad state we have arrived at in this crisis. Hank Paulson and Alan Greenspan have gone on Meet The Press and said that the government can’t make any further financial commitments to solve the housing crisis; it’s in the hands of the private sector. A lot of people are in need of assistance to reduce their expenses and the threat of foreclosure. A company in the private sector has stepped up, but no one knows whether they’re trustworthy or not. We have reached a point where an industry that thrives on trust no longer has any.

With apologies to William Shakespeare, a recurring suggestion for solving the real estate crisis seems to be eliminating commissions for real-estate agents. Firms like Help-U-Sell and Zip Realty offer either reduced commissions, or services for fees, as opposed to commissions. For people who have a high level of comfort with their own understanding of the legal and ethical pitfalls of real-estate transactions, these are acceptable options.

The latest salvo in the commission war was a recent article [http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/02/02/ED4C1BP3O5.DTL] in the San Francisco Chronicle by Al Lewis, author of OOBonomics: 12 ‘Outside Of the box’ Ideas to Improve the Economy. He’s promoting the idea that buyers should get a $1,000 tax credit, which they can use to pay a real estate agent (even though the commission on a house with a median price in the San Francisco Bay Area would be about $15,000). Sellers would apparently still pay their 3% commission.

The fact is, commissions frequently depend on the Realtor. One of our first DBNR sales was through a Realtor. She listed the property and found the buyer, and she had no qualms about insisting on both commissions (the price was so low that we ended up compensating her more than appropriately). A friend of ours was able to get more cash out of the sale of her townhouse recently because both Realtors kicked in $1,000 from their commissions.

It’s not clear what Lewis’ qualifications are to talk about the real estate industry, since his primary job is in the health care industry (he’s in disease management, which has something to do with chronic care on a grand level). Admittedly, he speaks the truth when he says the real estate industry is a cartel, but there are multiple reasons why you hire a real estate agent for a fee, and not by the hour.

The old saw about airline pilots comes to mind. Pilots aren’t paid to fly the plane; that’s a fairly simple process. They’re paid to fly the plane when something goes wrong. Granted, there are too many rules and regulations around real estate these days (and the deluge isn’t stopping), but are consumers going to know enough to protect themselves during transactions they may make only once every few years, if that? Probably not.

Furthermore, there are a lot of activities a Realtor does that are transparent to the buyer, such as coordinating the result of a multitude of service providers in a transaction. In that way, they’re like actors. If they’re good, you don’t see the mechanics behind what they’re doing.

A few years ago, during the technology revolution, there was a lot of talk about the Web enabling buyers and sellers to get rid of the middle man. Well, guess what — there was a reason the middle man was in there. He was a trusted intermediary that had, through experience, gained insight into the pitfalls of the sales process. Realtors have the same kind of insight plus enormous local area knowledge.

More recently, CNBC broadcast a report about the current administration vilifying people who fly private airlines as being elitist. That’s one way of looking at it, but the people who do it (notwithstanding their carbon footprint) can bypass the mess at our nation’s airports and be much more efficient, effective, and productive in their work.

The point is, it depends on your perspective. From my perspective, Realtors earn their money. This is one part of the real estate structure that we shouldn’t be tinkering with.