Tag Archives: Cross River NY Real Estate

Checking your zillow zestimate | Cross River Real Estate

Prospective home buyers often want to get pricing information for various properties without having to always rely on a real estate agent. This is where real estate sites like Zillow.com come in very handy. However, can you really rely on the site’s value estimates? Many have wondered whether Zillow provides accurate data with its Zestimate home price estimates.

Zillow is a business website, established to get eyeballs on a bunch of homes for sale and, in turn, to sell advertising to real estate professionals. It isn’t a real estate company with a group of agents.

Zillow bases many of its value conclusions on opinions formed by using algorithms that process data collected from various sources. No matter how great the algorithm is, opinions are not facts. If Zillow and similar sites truly had their finger on the pulse of the real estate market, any of these sites could’ve predicted the collapse of the housing market, which they did not.

Understanding Zillow’s Zestimate

Zillow acquires data by amalgamating all the information on housing it can gain access to. It mixes and merges data from various sources into one source. Many computerized programs exist that can forecast the value of a home. Even real estate agents use computerized programs, but the difference is real estate agents don’t rely on those programs alone like Zillow relies on the artificial intelligence used to assemble its Zillow Zestimates.

At least for now, Zillow can’t predict how a buyer will feel when she enters a home. Zillow can’t tell you whether the interior has been updated, if the workmanship is superior, whether the materials used are inferior, or whether a school around the corner has decreased the value of homes backing up to the football field or any other number of factors real estate agents and appraisers use when they know the neighborhood and have inspected the home in person.

How Agents Arrive at an Estimate of Value

When agents begin to assess a property, the first thing they typically do is study the home from an overhead, satellite view on Google. They note whether it backs up to a busy street, the proximity to commercial property or freeways, the size of other homes nearby, the vegetation and landscaping, its orientation to the sun and, if available, will view any photos of the exterior plus a street scene.

An agent might then run an automated valuation using specialized real estate software. One is Realist, a company owned by CoreLogic, that is data-centric for all sales, including non-MLS, and will take into consideration surrounding home sales varying 25 percent or less in configuration and type, including other parameters an agent can manually establish.

Another type of automated valuation is based on sales pulled directly from the MLS, and computed based on​ square footage, including high, low, median and average values of all sold, pending, and active listings. Those two types of automated valuations and the resulting values alone are often very different from each other but, used together, can provide a range of value, generally not more than a 5-percent difference. That process provides a lot of information but still is not nearly enough to establish a strong value conclusion.

Armed with that information, an agent would then inspect the home and look at it through the eyes of a buyer, how an appraiser will view it, and where it would be positioned against the competition to ​drive traffic to the home. It’s not unusual to enter a home with a prepared listing agreement in hand and end up manually changing the listing price after viewing the home. Automation, such as that used by Zillow, can never take the place of personal assessment.

The Zillow Zestimate of Value Accuracy

Zillow never claims to be 100 percent accurate all the time or even 80 percent accurate most of the time in all areas. If all the homes within a six-block radius are very similar to each other, in a suburban subdivision, filled with homes built around the same year, and about the same size and with identical amenities, a Zillow estimate will be much more accurate, perhaps within 10 percent, because there are not enough specific variances to throw it off. In other cases, such as for older neighborhoods with many homes that have been improved in different ways, it won’t be that close at all.

Real World: Zillow vs. Actual Sale Prices

The following four typical homes were actual home sales, and the price outcome is compared with their Zillow Zestimates at the point of sale, to highlight some of the variations in the two values.

One property is two houses on a lot in Midtown Sacramento, located on a busy street near the railroad tracks and close to freeway noise, across from a commercial property. Zillow estimated the value of that home at $380,733, but it sold at $349,000, after almost 6 months on the market, with plenty of exposure. In this case, the Zillow estimate was about 9 percent too high.

The second home was a custom waterfront property in the Pocket area of Sacramento. Zillow valued that home at $983,097, yet it sold at $1,085,000, which was 10 percent more than the Zillow estimate. If the sellers had relied on the Zillow estimate, they would have lost more than $100,000, which is no small change.

The third home was a reconstructed home in an exclusive area of Davis, California, near the University of California, Davis. Zillow valued that home at $1,230,563, but it sold for $1,495,000, and for cash, with no financing involved. That Zestimate was more than 20 percent too low.

Finally, the fourth home was a lakefront home in Elk Grove, California. Again, the Zillow estimate was too low, at $488,711, and it sold for 16 percent more, which included the buyer’s lender’s appraisal, at $565,500.

The Zestimate is formulated to give website visitors a range of value. It’s not meant to replace an appraisal nor a real estate professional’s opinion of value. Many agents might take a gander at Zillow values before visiting a seller because they know the seller is looking at those values, but not because there is value to the agent as a professional in the estimate. Real estate agents do not use Zillow to price a home.

Zillow as a Backup Value

In some cases, agents will tell their clients to look at a home’s price on Zillow to justify how good of a good deal they are getting when buying a home, providing the Zestimate is much higher than the actual sales price, of course. It’s a selective usage with agents. When the price is to their advantage, they might use it as evidence for their client. Even banks don’t know any better, so in a short sale situation for example, when the offer is more than a Zestimate, a short sale agent might point to the Zestimate when in negotiations with the short-sale bank.

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https://www.thebalance.com/how-accurate-are-zillow-home-estimates-1798268?utm_campaign=moneysl&utm_medium=email&utm_source=cn_nl&utm_content=14839109&utm_term=

Realtor confidence up while sales are down | Cross River Real Estate

Interest rates and low inventory caused home sales to fall in September, but Realtors expect housing conditions to improve over the next six months.

The Buyer Traffic Index decreased to 51 in September, down from 61 in September 2017, according to the National Association of Realtors Confidence Index.

The index gathers monthly information from Realtors about local real estate market conditions, characteristics of buyers and sellers and issues affecting homeownership and real estate transactions. An index of more than 50 indicates an expectation of improvement.

The Seller Traffic Index also decreased, falling to 41 in September, down from 45 in September 2017, according to NAR.

However, despite these decreases, Realtors expect that, over the next six months, conditions will improve for the single-family housing market. The Confidence Index – Six-Month Outlook Current Conditions came in at 53 in September.

The same can’t be said for other housing markets. For example, the index for townhomes came in at 44, and 43 for condominium properties.

When asked about major issues affecting housing transactions in September, Realtors answered that low inventory and interest rates were the most common issues.

But while Realtors may be optimistic about the future, some economists disagree.

“Our expectations for housing have become more pessimistic: Rising interest rates and declining housing sentiment from both consumers and lenders led us to lower our home sales forecast over the duration of 2018 and through 2019,” Fannie Mae Chief Economist Doug Duncan said.

Most experts expect one final rate hike in December 2018 and another two or three rate hikes in 2019. These rising rates will only continue to push potential homebuyers out of the market.

In fact, recent data from NAR showed that existing home sales hit their lowest level in three years, and Freddie Mac data shows interest rates are currently at a 10-year high. Now, these factors could be pushing more families to rent instead of buying a home.

Despite the difficult conditions, some home buyers managed to increase their share. First-time buyers accounted for 32% of sales in September, up from 29% in September last year.

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https://www.housingwire.com/articles/47188-chart-realtors-housing-market-will-improve-over-next-6-months?utm_campaign=Newsletter%20-%20HousingWire%20Daily&utm_source=hs_email&utm_medium=email&utm_content=66890016&_hsenc=p2ANqtz-8t6i9VZ3I3MVdJa1JORmuVSeCKil6UaVoR-ZhpPHbUb08m1PChrA4S19SXUbqrzH0-UP6U4KmrXc9sSvfl0wJM42SpwQ&_hsmi=66890016

House prices up 4.2% | Cross River Real Estate

Existing sales fall again

U.S. home sales fell in September by the most in over two years as the housing market continued to struggle despite strength across the broader economy.

The National Association of Realtors said on Friday that existing home sales dropped 3.4 percent to a seasonally adjusted annual rate of 5.15 million units last month.

Home sales have now fallen for six straight months. A dearth of properties for sale has pushed up prices, sidelining many would-be homeowners. Sales dropped the most in the South and the decline in the West left sales there down 12.2 percent from a year earlier.

NAR Chief Economist Lawrence Yun said the overall decline appeared related to a rise in interest rates.

Supply has also been constrained by rising building material costs as well as land and labor shortages, while rising mortgage rates are expected to slow demand.

The Federal Reserve raised borrowing costs in September for the third time this year and is widely expected to hike rates again in December.

Economists polled by Reuters had forecast existing home sales falling to 5.30 million from a previously reported 5.34 million. Existing home sales make up about 90 percent of U.S. home sales.

There were 1.88 million homes on the market in September, an increase of 1.1 percent from a year ago.

At September’s sales pace, it would take 4.4 months to clear the current inventory. A supply of six to seven months is viewed as a healthy balance between supply and demand.

The median house price increased 4.2 percent from one year ago to $258,100 in September.

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https://www.reuters.com/article/us-usa-economy-housing/u-s-existing-home-sales-fall-for-sixth-straight-month-idUSKCN1MT21P

Yardi reports average US rent drops | Cross River Real Estate

September 2018 marked the first time in eight months that U.S. multifamily rents did not increase. The $1,412 national average for the month represented a $1 drop from August and a 3.1% year-to-date increase; year-over-year rent growth remained unchanged at 3%, according to a survey of 127 markets by Yardi® Matrix.

The report presents an overall bright outlook for the multifamily sector. A slight decline in rents is normal at the start of fall, it says, “When rent growth traditionally begins to hibernate for winter.” Strong demand countering the steady wave of new supply is another positive sign. “Long-term demand for rentals is likely to remain high for a variety of demographic and social reasons,” the report notes.

Year-over-year rent growth leaders for September were Orlando, Fla.; Las Vegas; Phoenix; Tampa, Fla.; and California’sInland Empire.

View the full Yardi Matrix Multifamily National Report for September 2018 for additional detail and insight into 127 major U.S. real estate markets.

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Mortgage applications fall | Cross River Real Estate

Higher rates lead to less mortgage applications

Mortgage applications decreased 1.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 7, 2018. This week’s results include an adjustment for the Labor Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 13 percent compared with the previous week. The Refinance Index decreased six percent from the previous week to the lowest level since December 2000. The seasonally adjusted Purchase Index increased one percent from one week earlier. The unadjusted Purchase Index decreased 11 percent compared with the previous week and was four percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 37.8 percent of total applications from 38.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.4 percent of total applications.

The FHA share of total applications increased to 10.4 percent from 10.2 percent the week prior. The VA share of total applications increased to 10.5 percent from 10.0 percent the week prior. The USDA share of total applications remained unchanged at 0.8 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased to 4.84 percent from 4.80 percent, with points increasing to 0.46 from 0.43 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to 4.72 percent from 4.67 percent, with points increasing to 0.47 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.84 percent from 4.79 percent, with points decreasing to 0.51 from 0.69 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages increased to 4.28 percent from 4.23 percent, with points increasing to 0.47 from 0.45 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

 

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mba.org

In Four Southern States, Nearly 90 Percent of New Homes Have Porches | Cross River Real Estate

Among other things, the SOC data show that, over the period when single-family starts were declining (from 1.7 million in 2005 to 430,000 in 2011), the share of new homes built with porches was increasing (from 54.1 percent in 2005 to 65.7 percent in 2011).

Since 2009, the share of new homes with porches has been relatively stable, staying between 63 and 65 percent most years.  However, the new-home porch share has broken above the 65 percent barrier twice.  The first time was the record high of 65.7 percent for new homes started in 2011.  The second time was the 65.1 percent of homes started in 2016.   Although the share declined slightly to 64.7 percent in 2017, that still represents the third highest percentage on record.

The Census Bureau generally publishes characteristics of new housing only for the four principal Census regions, but the underlying data can be tabulated down to the nine Census divisions.  There turns out to be substantial variation across divisions in the share of new homes built with porches.  Sometimes, the difference is substantial even between neighboring divisions.  The low extreme is the 52 percent of new homes with porches in the West North Central divison, as well as in the West South Central that neighbors the West North Central to the south.  At the high end of the scale, however, 89 percent of homes started in 2017 were built with porches in the four states that make up the East South Central division, which lies adjacent to the West South Central, on its eastern border.

While the SOC shows how many new single-family homes are built with porches, it doesn’t provide much information about the nature of the porches.  Information on that, however, is available from the Annual Builder Practices Survey (BPS) conducted by Home Innovation Research Labs.  The preliminary 2018 BPS report shows that front porches were far more common than side or rear porches on single-family homes built in 2017.

The BPS also shows that the average size of a front porch on a new home is roughly 100 square feet.  Measured by square footage, the material most commonly used to build new home porches is concrete, followed by treated wood.  Many species of wood used in home building, like southern yellow pine, don’t withstand outdoor use unless pressure treated with preservative chemicals.

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In Four Southern States, Nearly 90 Percent of New Homes Have Porches

New home sales plummet more than 11% in April | Cross River Real Estate

New home sales plummeted from last month, however the level of housing inventory showed improvement, according to a joint release from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

Sales of new single-family homes in April came in at a seasonally adjusted rate of 569,000 sales, a decrease of 11.4% from last month’s 642,000 sales. However, this is up 0.5% from last year’s 566,000 sales.

Brent Nyitray, iServe Residential Lending director of capital markets, pointed out in his note to clients that new home sales are still lagging behind population growth.

Surprisingly, the median sales price dropped to $309,200, down from last month’s $315,100.

The seasonally adjusted estimate of new homes for sale at the end of April remained steady at 268,000 homes. But with the lower rate of sales, this represents a 5.7-month supply of homes, up from 5.4 months in March.

While falling home prices and an increase in inventory could show a cooling housing market, time will tell if this was a one-month drop or a new trend.

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http://www.housingwire.com/articles/40189-new-home-sales-plummet-more-than-11-in-april?eid=311691494&bid=1763675

Americans Move Less and Impact the Economy Less | Cross River Real Estate

The median tenure homeowners plan to stay in their homes soared with the housing recession in 2008 for good reasons. Millions of owners were underwater and millions more lacked the 20 percent equity need to sell their home.  Many facing the need to move for job or space reasons found it easier to move and keep their old home to rent out.  Thus was born the phenomenon of “accidental landlording”.

The housing economy has changed dramatically.  Values have almost regained their peaks at the top of the housing boom, far above the levels of 2008.  Yet owner tenure has not changed and repeat buyers’ expectations today are twice as long as actual tenure ten years ago.  Are longer tenures now locked in stone?

One of the leading motivations to move—change in employment—is also changing. Workers stick with the same job longer today than they did 10, 20, and 30 years ago.  U.S. workers had an average job tenure of 4.6 years in 2012, the last year for which figures are available—that’s up from 3.7 years in 2002 and 3.5 in 1983, according to the Bureau of Labor Statistics. The trend holds up within almost every age and gender category—so it cannot be explained away by women’s increased presence in the workplace, or people working past traditional retirement age.

First-time buyers now expect to live in their homes 15 years or longer 2016-10-27_9-19-07

Another contributing factor could be the popularity of “aging in place” among the Boomer generation.  More and more elderly are staying in their family homes rather than downsizing, or moving to retirement communities or rentals.  According to AARP, 87 percent of adults age 65 plus want to stay in their current home and community as they age. Among people age 50 to 64, 71 percent of people want to age in place.

The Recession Changed Ownership Patterns

According to a new analysis by economists at the National Association of Realtors, in 1985, the median tenure for sellers remaining in their home was five years, the lowest in since NAR started tracking the data in the 30-year period. From 1987 to 2008, the median tenure for sellers was a steady six years throughout the course of about a 20-year period. The only exception was in 1997 when the median tenure jumped up one year to seven years for sellers.

As the U.S. housing market entered the recession, the median tenure for sellers began to rise—seven years in 2009, eight in 2010, and to nine years in 2011 where it has remained steady through 2015. The only exception is in 2014 when the median tenure for sellers reached an all-time high at 10 years, but came back down to nine last year. Thus market changes in the last decade have caused sellers to remain in their homes longer, increasing the median number of years in the home by 50 percent more than they did 20-30 years prior.

In 2006, first-time buyers reported that their median expected tenure was just six years and nine years for repeat buyers, the lowest since we started collecting the data for both buyer types. For repeat buyers, that bumped up to 10 years in 2007, 12 years in 2009, and then up to 15 years in 2010 where it has remained steady for the past six years. For first-time buyers, the median expected tenure in the home jumped to 10 years in 2008 where it has remained ever since.

It is no surprise that repeat buyers expect to remain in their home longer than first-time buyers. It is interesting, however, to see that first-time buyers in 2006 expected to sell in just six years. Fast forward a decade to 2015 and first-time buyers expect to sell in almost double the amount of time.

Economic Implications of Longer Tenure

Significantly longer ownership tenure means that homes will change hands less frequently, which hasmajor economic implications:

  • Volumes of transactions will fall for real estate brokers and lenders.  The coming of age of the Millennial generation could theoretically offset the effects of longer tenure except that the first symptom of extended tenure could be the chronic shortage of inventories over the last two years that has plagued home sales and limited opportunities for Millennials to buy;
  • Demand for remodeling and renovation will increase as owners choose to fix up their current homes rather than sell them.  Increased home repair will create new business for Home Depot and hardware stores.

 

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http://www.realestateeconomywatch.com/2016/10/americans-move-less-and-impact-the-economy/

Why Foreclosures are Never-ending Credit Nightmares | Cross River Real Estate

The popular belief that the seven million Americans who lost their homes to foreclosure during the Housing Crash are healed, whole and forgiven of their debts after seven years have passed is only partly true.

For foreclosures, Fannie Mae and Freddie Mac set a seven-year waiting period before defaulters can apply for a mortgage, measured from the completion date of the foreclosure action.  With time foreclosures, bankruptcy filings and tax liens disappear from credit records but the impact of their misfortune lingers for years in the form of substandard credit ratings and scores.

A new study from the Urban institute, The Lasting Impact of Foreclosures and Negative Public Records, corrects the conventional wisdom by chronicling the painful punishment suffered by victims of the foreclosure floods and the Great Recession that began in earnest a decade ago and the impact not just upon individual families but on the economy as a whole.

The researchers found that It takes a long time for a consumer’s credit score to recover from the impact of a foreclosure—far longer than the seven years the foreclosure remains on the credit report.

 

2016-11-18_14-39-13

From 2004 through 2015, 7.1 million borrowers experienced a foreclosure filing, and 34.4 million consumers acquired an adverse public record other than foreclosure. Altogether, 41.5 million people, or 16 percent of the 264 million US consumers with credit records, experienced a financial crisis that impacted their credit.

“We believe this extended impact at least partially explains the slow recovery after 2010, the study found,” wrote the authors, Wei Li, Laurie Goodman and Denise Bonsu.

More than 60 percent of consumers with these negative financial events still had VantageScore credit scores below 620 in 2015. More than 60 percent of them had delinquent debt in 2015, and only 8 percent of them were able to obtain new mortgages as of 2015. And, more than 70 percent of them were the age that preferred homeowning (between 29 and 59 years old) in 2015; this large group of potential borrowers with negative financial events profoundly affects the homeownership rate.

At least at the peak of crisis, when the spike in foreclosure filings jammed up judicial foreclosures, the long judicial foreclosure process might have prevented foreclosed-upon borrowers from moving on.

A large number of consumers will retain adverse events on their records for a considerable time, making it hard for many of them to borrow again. At the end of 2018, 22.8 million consumers—almost 9 percent of the adult consumer population—will still have a foreclosure or adverse public record.

Middle-aged consumers were hit hardest by these credit blemishes. Seventy-three percent of consumers (30 million) who experienced foreclosure or other adverse public records were between 29 and 59 years old in 2015, yet this age group accounts for only 53 percent of adult consumers. The middle-aged consumers hit hardest by these adverse credit events have had a profound impact on the homeownership rate because their age group has the strongest preference for homeownership.

 

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http://www.realestateeconomywatch.com/2016/11/why-foreclosures-are-never-ending-credit-nightmares/

New Home Sales in September – Continuing Gains, Continuing Headwinds | Cross River Real Estate

The US Census Bureau and Department of Housing and Urban Development in a joint release reported that newly constructed single family homes sold at a seasonally adjusted annual pace of 593 thousand in September, up 3.1% from a downwardly revised August figure, and up 29.8% from September 2015. However, note the monthly data is volatile and September was the lowest point in 2015 and the second highest point in 2016. Year over year growth in the trend in sales was 9.4%. Downward revisions to the July and August figures in no way diminish the upward trend that continues with the September figures.

The inventory of new single family homes for sale was 235 thousand, essentially flat in recent months after modest gains earlier in the year. Prices for new homes rose 3.5% from August and 1.9% from last September. A flat inventory in an environment of rising sales has put upward pressure on prices but expanding inventory has been a challenge given shortages of developed lots and skilled labor (NAHB). Both sales and inventories remain depressed by historical standards but the level of inventory given the pace of sales is in line with historical norms as builders balance caution and available resources in their efforts to meet expanding demand.

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http://eyeonhousing.org/2016/10/new-home-sales-in-september-continuing-gains-continuing-headwinds/