Case Shiller: Home prices continue to reach new highs

Case Shiller: Home prices continue to reach new highs

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Home prices reached an all new high across the U.S. in June, according to the latest index released from S&P Dow Jones and CoreLogic.

Nationally, home prices increased 5.8% from June 2016, up from May’s gain of 5.7%, to hit 192.6, an all new high, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine U.S. census divisions.

The 10-City Composite increased 4.9% annually, down from last month’s 5% annual increase, and the 20-City Composite increased 5.7% annually, the same as last month’s gain.

The chart below shows while the National Index reached a new high in June, the 10-City and 20-City Composites continue to rise, and are currently at their winter 2007 levels.

Case-Shiller

(Source: S&P Dow Jones, CoreLogic)

Seattle, Portland and Dallas reported the highest increases in June out of the nation’s top 20 cities with increases of 13.4%, 8.2% and 7.7% respectively. Overall, nine cities showed greater increases of the year ending in June versus the year ending in May.

“The trend of increasing home prices is continuing,” says David Blitzer, S&P Dow Jones Indices managing director and chairman of the index committee. “Price increases are supported by a tight housing market.”

“Both the number of homes for sale and the number of days a house is on the market have declined for four to five years,” Blitzer said. “Currently the months-supply of existing homes for sale is low, at 4.2 months. In addition, housing starts remain below their pre-financial crisis peak as new home sales have not recovered as fast as existing home sales.”

Before seasonal adjustment, the National Index increased 0.9% monthly in June, while the 10-City and 20-City Composites each increased by 0.7% in June. However, after seasonal adjustment, the National Index increased 0.4%, the 10-City Composite remained stagnant and the 10-City Composite increased just 0.1%. While all 20 cities saw a monthly increase before seasonal adjustment, after seasonal adjustment 14 cities increased.

“Rising prices are the principal factor driving affordability down,” Blitzer said. “However, other drivers of affordability are more favorable: the national unemployment rate is down, and the number of jobs created continues to grow at a robust pace, rising to close to 200,000 per month.”

“Wages and salaries are increasing, maintaining a growth rate a bit ahead of inflation,” he said. “Mortgage rates, up slightly since the end of 2016, are under 4%. Given current economic conditions and the tight housing market, an immediate reversal in home price trends appears unlikely.”

Check out this new mortgage tech conference just for women executives

Check out this new mortgage tech conference just for women executives

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NEXT Mortgage Events, a creator of events for women mortgage executives, revealed its conference: NEXT.

The newly created conference is a technology-centric conference and expo for women executives in the mortgage industry.

“With origination volume expected to decline in 2018, lenders need to know which technologies can help them grow and stay profitable—that’s exactly where NEXT comes in,” said Molly Dowdy, co-founder of NEXT. “NEXT’s goal is to position attendees as the ‘what’s NEXT’ experts inside their organizations. That’s particularly important in declining markets, like the one that’s predicted for 2018.”

The two-day event will take place from Jan. 18-19, 2018, at the Dallas InterContinental.

And as a media sponsor, HousingWire‘s people will be there to cover the event, which includes educational sessions, technology demonstrations, a product-focused exposition hall and networking meetings. So be sure to come out and say “Hello!”

The list of expert guest speakers includes: Tracy Stephan, director of enterprise innovation at Fannie Mae,Tiana Laurence, author of “Blockchain for Dummies” and co-founder and chief marketing officer of Factom, and Marcia Davies, chief operating officer at the Mortgage Bankers Association.

For attendees, the session topics will focus on tech-based solutions that address some of the biggest needs in the industry. This includes compliance, lower origination volumes, enhanced borrower experience, employee retention and sustained profitability.

“NEXT helps women executives stay on top of the tech innovations that impact the success and longevity of their businesses. NEXT delivers hard content in a thoughtfully designed, comfortable environment,” said Jeri Yoshida, co-founder of NEXT.

Amitree, maker of real estate email software Folio, raises $7 million to fund growth

Amitree, maker of real estate email software Folio, raises $7 million to fund growth

message tech

Folio, a Google Chrome extension that helps real estate agents manage all parts of a real estate deal from within their email, is currently used in approximately 5% of the nation’s real estate deals.

But that percentage could soon grow, as the Amitree, the company that makes Folio, recently raised more than $7 million to fund the company’s growth.

Specifically, the company raised $7.128 million in its Series A round of funding.

According to the company, more than 200,000 real estate transactions have been managed through the Folio software to date, and according to Google Chrome Store stats, more than 30,000 agents have Folio installed.

The company wants to grow both of those numbers and will put its recently raised capital toward that goal.

“So much real-estate focused technology is about disrupting the market in some attempt to replace real-estate agents, yet homebuyers and sellers rely on these agents for their experience and expertise more than ever before,” Jonathan Aizen, founder and CEO of Amitree, said. “Our goal is to empower the real estate agent and give them tools that help them do more of what they do best: put people in their dream homes and help them through that huge transition in life.”

The company bills Folio as a “smart transaction assistant” for real estate agent. Here’s how the Folio works, directly from the company:

Folio uses machine learning to process millions of emails and understand what’s going on with every one of an agent’s transactions. Folio helps agents manage their workflow, creating smart folders for each transaction that automatically sort an agent’s emails, files, and contacts. When looking at an email related to a transaction, real estate agents see contextual information right inside their email client that contains the transaction timeline, files, contacts, and status.

The round of funding was led by Vertical Venture Partners, with participation from existing investors, including Accel Partners.

Also participating in the funding was Seven Peaks Ventures, led by Tom Gonser, a partner at Seven Peaks and the founder of DocuSign. Through the investment, Gonser joined the board of Amitree.

“Real estate is going through a shift toward more intelligent tools that help streamline the experience,” Gonser said. “Electronic signatures were the beginning of this wave, and tools like Folio are the next step in enabling the real estate agent to bring more efficiency to their business through machine learning and vertical-specific AI that’s built for them.”

HUD extends disaster relief to Hurricane Harvey victims

HUD extends disaster relief to Hurricane Harvey victims

Hurricane Harvey photo 2

The Houston area continues to see heavy rainfall due to Hurricane Harvey and the heaving flooding plaguing the city is only expected to worsen as rain continues to fall.

Some areas could eventually see up to 50 inches of rainfall, and five people have died due to the Category 4 hurricane with another 12 reported injured.

First responders are hard at work in the city, rescuing flood victims.

President Donald Trump issued a disaster declaration for 18 counties in the area including Aransas, Bee, Brazoria, Calhoun, Chambers, Fort Bend, Galveston, Goliad, Harris, Jackson, Kleberg, Liberty, Matagorda, Nueces, Refugio, San Patricio, Victoria and Wharton. The president may add more counties as more data becomes available.

Now, the U.S. Department of Housing and Urban Developmentannounced it is offering mortgage and foreclosure relief as well as other assistance to some families, including to the 200,000 FHA-insured homeowners, living in the impacted areas.

“Today, our thoughts and prayers are with those who are beginning the process of recovering from Hurricane Harvey,” HUD Secretary Ben Carson said. “As FEMA begins to assess the damage and respond to the immediate needs of residents, HUD will be there to offer assistance and support the longer-term housing recovery efforts.”

Carson urged the nation to put aside its differences, and focus all efforts on helping those affected by the hurricane.

Here is the disaster assistance HUD announced it is extending to the Houston area:

Assisting the state and local governments in re-allocating existing federal resources toward disaster relief – HUD’s Community Development Block Grant and HOME programs give the state and communities the flexibility to redirect millions of dollars in annual funding for critical needs, including housing and services for disaster victims. HUD is currently contacting state and local officials to explore streamlining the department’s CDBG and HOME programs in order to expedite the repair and replacement of damaged housing.

Granting immediate foreclosure relief – HUD is granting a 90-day moratorium on foreclosures and forbearance on foreclosures of Federal Housing Administration-insured home mortgages.

Making mortgage insurance available – One HUD program provides FHA insurance to disaster victims who have lost their homes and are forced to rebuild or buy another home. Borrowers from participating FHA-approved lenders may be eligible for 100% financing.

Making insurance available for both mortgages and home rehabilitation – Another HUD loan program enables the purchase or refinance of a house along with its repair through a single mortgage. It also allows homeowners who have damaged homes to finance the rehabilitation of their existing single-family home.

Offering Section 108 loan guarantee assistance – HUD will offer state and local governments federally guaranteed loans for housing rehabilitation, economic development and repair of public infrastructure.

The extent of the damage could take some time, possibly even years, to repair, one expert explained.

“The effects of Hurricane Harvey on south Texas have been tragic and devastating,” BTIG homebuilding analyst Carl Reichardt said. “It is likely that homebuilders in the region will be negatively impacted as well.”

“Clean-up and repair in affected areas will take time and resources that might otherwise be focused on new construction, especially as subcontractor labor is tight,” Reichardt said.

Wells Fargo and JPMorgan Chase each donate $1 million for Hurricane Harvey relief efforts

Wells Fargo and JPMorgan Chase each donate $1 million for Hurricane Harvey relief efforts

Hurricane Harvey photo 1

In light of the devastating destruction from Hurricane Harvey, Wells Fargo and JPMorgan Chase are donating $1 million each to support those affected by the hurricane and the relief efforts.

And beyond the initial $1 million donation, both banks also included options for their customers to get involved in relief efforts.

Wells Fargo is donating $500,000 to the American Red Cross Disaster Relief Fund, and an additional $500,000 to local nonprofits focused on recovery and relief efforts in Texas in the coming days and weeks.

Wells Fargo is also waiving ATM fees for customers in the affected areas, as well as reversing other fees – such as late fees – for all of its consumer products, including credit cards and checking accounts.

Wells Fargo announced a way for its customers to help as well, giving the following two options:

  • Wells Fargo customers across the country may donate to the American Red Cross’ hurricane relief efforts at Wells Fargo ATMs nationwide, beginning Aug. 29. Customers will not be charged a fee for using this service, and 100% of the donations will be sent to the American Red Cross.
  • Beginning Aug. 29, Wells Fargo’s Go Far TM Rewards customers nationwide can begin to redeem any amount of their available rewards and donate to the American Red Cross Disaster Relief Fund through Tuesday, Sept. 12.

“Wells Fargo is deeply concerned for all of those affected by the devastating flooding in Texas, and we’re committed to helping our customers, neighbors, team members and communities get through this,” said David Miree, lead region bank president. “With forecasts calling for more rain and potentially more flooding, we will continue to work with nonprofits and those focused on relief efforts, as we determine any additional assistance and support Wells Fargo may be able to provide.”

Once the situation there is stabilized, Wells Fargo’s mobile response unit also will enter the affected areas to help customers receive and process insurance checks.

Similarly, JPMorgan Chase said it is donating $1 million to the American Red Cross and other nonprofit organizations working to provide immediate relief.

On top of this, JPMorgan Chase said it will match employee donations to these organizations.

In addition, Chase said it will automatically waive or refund the following fees through Sept. 10 for its customers in the Houston metro area and other areas severely affected by the hurricane:

  • Late fees for mortgage, credit card, business banking and auto loans
  • Overdraft, monthly service and ATM fees on deposit accounts

JPMogan Chase noted that it has about 6,400 employees in the Houston area. It also serves more than 1 million local customers.

“We’re here to help our neighbors as we face the relentless rain and flooding,” said Harman Johal, who manages the more than 200 Chase branches in the Houston area.

For those who want to help the victims of the storm, the Houston Chronicle has details on how to donate to the Red Cross and other information.

And as Kelsey Ramírez reported on Friday, both Fannie Mae and Freddie Mac issued bulletins late in the week, reminding mortgage servicers and homeowners of the government-sponsored enterprises’ disaster relief policies.

Also aiding in relief efforts, BB&T Corporation is contributing $100,000 to the American Red Cross of Greater Houston to help support disaster relief, along with sending shipments of humanitarian supplies.

While many branches and offices in the greater Houston area are currently closed, BB&T is standing by to assist clients.

The bank noted that clients who may have incurred storm-related overdraft, returned item, negative account balance or late loan payment fees are encouraged to contact BB&T at 800-BANK-BBT (800-226-5228) for assistance.

“The unprecedented flooding resulting from Hurricane Harvey is causing hardships for many of our associates and clients in the greater Houston region,” said Chairman and CEO Kelly S. King. “Our hearts go out to everyone affected by this storm, and we’re hopeful this donation will help begin the rebuilding process.”

First American: Home prices keep rising, though affordability also improved in June

First American: Home prices keep rising, though affordability also improved in June

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Home prices increased once again in June, however affordability did not take a hit, in fact, it improved, according to the latest Real House Price Index from First American Financial Corp.

The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time and across the United States at national, state and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability. 

Consumer buying power, how much they can buy based on changes in income and the interest rate, increased 1.3% in June, and 3.5% from June 2016.

First American’s index points to signs of increasing affordability in the housing market. The index showed real home prices actually decreased 1.3% monthly in June, but increased 9.3% from last year.

“On a month-over-month basis, affordability improved slightly thanks to the seventh straight month of falling rates for 30-year, fixed-rate mortgages and modest wage gains,” First American Chief Economist Mark Fleming said.

“The increase in consumer purchasing power offset the gains in unadjusted house prices,” Fleming said. “However, on a year-over-year basis, with rates still higher than a year ago, affordability declined 9.3%.”

While real home prices are up more than 9% from last year, this is still down significantly, 34.8%, from the housing boom peak in July 2006 and even down 12.3% from January 2000 price levels.

First American measured unadjusted home prices rose 5.4% annually in June. However, this prediction is slightly lower than other home price measures, such as Black Knight’s report which showed home prices increased 6.2% annually to a new peak.

“The underlying fundamental issue is an overwhelming lack of supply,” Fleming said. “With current homeowners facing a prisoner’s dilemma and unwilling to list their homes for sale, little relief is expected in the supply of existing homes.”

“The supply of newly constructed homes is also sagging, adding to the supply challenges,” he said. “Over the last eight years, housing demand has increased by 5.9 million, but the net new number of housing units has only increased by 3.5 million. This supply shortage will continue to put pressure on affordability and strain first-time home buyers entering the market.”

Black Knight: Home prices hit yet another new high in June

Black Knight: Home prices hit yet another new high in June

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Home prices increased from last month, reaching another all-new high, according to the monthly Home Price Index released by Black Knight Financial Services.

Home prices increased 0.9% from May to $281,000 in June, setting yet another all-new peak for home prices. This represents an increase of 6.2% from last year, according to the report.

The Black Knight HPI uses repeat sales data from its records data set and its loan-level mortgage performance data to produce home prices for disclosure and non-disclosure states.

Home price increases spread to all 50 states in June, and among the nation’s 40 largest metros, Las Vegas, Nevada, Nashville, Tennessee, and Seattle, Washington, all grew by 10% or more annually.

Here are the top six metros with the highest increase from last month:

6. Racine, Wisconsin – 1.9%

5. Buffalo, New York – 2%

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4. Milwaukee, Wisconsin – 2%

Median home price: $212,000

Increase from last year: 6%

3. Ithaca, New York – 2%

2. Detroit, Michigan – 2.1%

Median home price: $178,000

Increase from last year: 8.1%

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1. Carson City, Nevada – 2.2%

Similar to last month, the majority of the growth continues to occur outside of major cities. Only two of the top six cities, Detroit and Milwaukee, appeared in Black Knight’s list of the U.S.’ top 40 largest metros.

Overworked and underpaid: Here are the challenges facing appraisers next year

It’s been an interesting year, 2017.

This is partly due to the unexpected good fortune that lenders enjoyed in 2016. Loan volumes were high last year, higher than many expected. It was good for lenders, but it took a hard toll on the industry and its suppliers. The result has been a number of unexpected challenges for the industry this year and, perhaps, some more to come.

While most sectors of the industry managed the increased demand with few hiccups, the appraisal services segment of the industry did not fare as well. The uninterrupted appraisal demand throughout 2016 and into the first quarter of this year led to chronic fatigue that spread throughout the appraiser population.

This led to a number of service level issues, including missed deadlines, longer than customary turn-times, increased revision rates, unresponsiveness and higher appraiser fee demands, to name a few.

These appraisal report quality and service level issues created friction between the appraiser population and lenders, real estate agents and homeowners. Some worried that we were beginning to see a new set of norms for appraisers, work quality and service levels. A closer look at the challenges appraisers faced will be revealing.

Challenge 1: Appraisal turn times

Whether purchase or refinance, historically speaking, real estate loans are expected to close and fund within 30 to 45 days of loan application. Purchase transactions usually depend upon a pipeline of settlements prior to and after a respective borrower’s loan settlement. Most sales contracts are written based on Buyer, Seller and Real Estate Agent expectations, which typically demand loan closing within 30 to 45 days of contract acceptance.

The increased workflow we saw in 2016 overwhelmed even the most seasoned appraiser professionals, causing them to continually miss deadlines without time to give warning or notification. Lenders and AMC’s alike made ceaseless attempts to communicate with and extract order status updates from appraisers with very little success. Mass disregard for communication and falling service levels caused delayed settlements, excessive revisions, extension rate lock fees and increasing frustrations across the industry.

As a result, lenders attempted to increase appraisal turn-time and fee expectations among members of the real estate community, as well as buyers and sellers with no success. This attempt at open communication with all parties was the right course of action and it might have worked if all lenders had been working in the same direction.

Unfortunately, some competing lenders were promising agents unreasonable turn-times in an attempt to win their business, even though they knew they could not deliver on their promises and offer a settlement to meet the sales contract demands. We could write volumes about business ethics between competing lenders and loan officers, but we will reserve that for another day. Notwithstanding the real estate demands, turn-times were extended out to accommodate the slowing appraisal deliveries.

Typically, as a result of vacation season, the summer market is known to lead to a reduction in loan volume, which would have given appraisers a welcome respite. But as if to compound the problem, interest rates declined leading into the summer which caused loan volume to remain constant, adding to the pressure on the appraiser community.

Consider also that the GSE’s had introduced their UCDP/UAD and appraiser were attempting to deal with the dataset findings and warnings without the benefit of sufficient training. It’s not that the appraiser community was unable or unwilling to adapt to the new requirements, but they had been improperly prepared. The GSE’s expected the lenders to communicate and train appraisers about the new system, datasets and warnings. This did not happen which forced appraisers to learn on their own. The GSE’s have since caught up with the training materials but a little too late.

Unfortunately for the industry, the appraiser community also vacations during the summer months, which pushed the due date on current orders out even further than anticipated. Where the appraisers seemed eager to manage their way through the increased volume of the 2016 spring market, their tune changed drastically when vacation season arrived.

Their message was unified, clear and concise: They were no longer willing to cater to their loyal client base.

Challenge 2: Appraisal fees

Appraisal fees are an enigma that leaves all parties feeling as if they are staring into a black hole looking for answers. This is not, however, a new challenge. Appraisers have been demanding higher fees for years with no consideration.

Part of the reason appraisers haven’t been more successful in achieving higher fee levels is that appraisers are unwilling to unite and work together through an organization or association. We have seen some very weak grass roots efforts to create this unity but with no success. Where many appraisers demand higher fees and are willing to band together to get them, there is still a community of appraisers in the marketplace that are willing to work for reduced fees.

High volume lenders and AMC’s are preying on these low fee appraisers in an attempt to generate higher profits from their services. It is not uncommon for a high volume lender or AMC to charge a borrower $500 for an appraisal report but pay the appraiser only $250. As long as appraisers are willing to work for these lower fees, the appraiser community as a whole is going to struggle with their cause to increase fees. Ironically, the lending community only hurts itself by promoting the lower quality work of a poorly compensated appraiser.

As a result of the continued outcry from the appraiser community regarding low fees, the interagency regulators established a rule that required lenders to pay appraisers a fee that is considered “reasonable and customary.” Typical for the federal government, regulators left a great deal of room for interpretation of the terms “reasonable” and “customary.”

Of course, we cannot fault the government for the vague language of its rule as it is not the duty of the government to establish the actual fees that are reasonable and customary in any jurisdiction. The government’s role is but to demand that they are paid accordingly. Many states have since taken the reasonable and customary fee rule to task and established minimum fees to be paid to appraisers for different appraisal report and assignment types. This is, in general, how it’s supposed to work.

Unfortunately, in some states, regulators seem to consider survey results an acceptable means of identifying reasonable and customary appraisal fees. Many of the surveys polled appraisers in an attempt to discover how much appraisers are being compensated for different appraisal report types and assignment conditions without the involvement of an AMC.

The problem with this approach is that the survey identified current appraisal fees, which from a historically perspective are deflated. For instance, in 2003 an appraiser in the Washington D.C. market charged $350 – $400 for a typical non-complex, non-FHA assignment, which consumed approximately 3 to 4 labor hours. As a result of increasing regulatory and industry demands, today in the same market an appraiser can expect to spend approximately 6 to 7 labor hours for a non-complex, non-FHA assignment for which they are compensated $375 to $450, on average.

Labor demands have increased by 100% and fees have increased by only 12%. Forgetting about cost of living increases, trainee appraiser limitations, overhead or other expenses, given the above scenario, appraiser compensation has declined by approximately 77% since 2003.

It seems that appraisers are on board with the reasonable and customary fee rule and the respective states’ approach to defining minimum appraisal fees. However, the states grossly missed the mark by setting the minimum fees incredibly low, thereby established a new normal appraisal fee. Now that these new normal fees have been established, appraisers will find it very difficult to increase their fees beyond state mandated minimums. It appears the appraiser community has been sold a 1972 Ford Pinto dressed as a 2017 Lamborghini.

Challenge 3: What’s coming next

If the challenges appraisers and the industry they serve were grueling in 2016, they could get even worse in the future. There are a number of risks appraisers are facing.

The appraisal-related issues the industry experienced in 2016 convinced lenders, policy makers, regulators and legislators of the need for change. Today, we find these decision makers analyzing the real value of the appraisal process and considering alternative solutions.

Industry complaints surrounding the appraisal issues of 2016 were taken seriously on Capitol Hill, causing politicians to demand explanations and solutions to the problem. If one thinks politicians will have no impact on the appraisal industry, think again. Remember back to 2009 when Congress and the POTUS restructured the automobile industry and fired the President of General Motors. Those actions changed the automobile world forever, leading to the collapse of Buick and Pontiac and leaving shareholders in the poorhouse.

GSE executives, for their part, have frequently denied allegations that they would approve an alternative to the real estate appraisal. Even so, they rolled out their revised Home Value Explorer and the Appraisal Waiver Programs in 2017. Where the terms have been in existence for some time, the programs have recently been refurbished to permit as many as 25% of refinance transactions to close without an appraisal report as opposed to less than 2% in prior years.

Another challenge, though there is some question as to how serious it is, is the shortage of new appraisers entering the business. Where there may be a shortage of appraisers during peak times, during normal business cycles under normal business conditions, appraiser turn-times return to reasonable tempos and fee increase requests recede in most markets, which leads one to conclude that the shortage may be somewhat overstated. That said, we cannot ignore the fact that the average age of a real estate appraiser is approximately 53 years old. Regulators are in the process of addressing the aging appraiser population and believe they have a remedy close at hand.

Despite all of these challenges, most markets are now seeing appraisal turn-times returning to more reasonable timeframes and service levels normalizing. For reasons outlined above, appraisal fees will continue to be an issue while the mortgage lending industry as a whole attempts to establish an appraisal fee equilibrium. We will still experience slower turn-times and higher fees during peak times in the business cycle, which is normal, historically speaking.

Appraisers ability to deal with these challenges in 2017 will impact the business environment in 2018 as surely as the events of 2016 have impacted this year. Understanding the business cycle and establishing business cycle expectations at the front end of the transaction across all parties will go a long way toward smoothing out the process for everyone and ultimately ensuring better borrower satisfaction.

Monday Morning Cup of Coffee: Zillow claims Zestimates now more accurate than ever

Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on larger issues.

First and foremost, our thoughts are with all those affected by Hurricane Harvey. The hurricane made landfall on Friday evening, stalling over parts of Southeast Texas, just hours away from HousingWire’s headquarters outside of Dallas.

A report issued Friday by CoreLogic suggested that wind and storm surge from Harvey could cause insured property losses of between $1 billion and $2 billion for both residential and commercial properties.

The report, based on the storm’s projected path as of 10:00 a.m. Central on Friday, does not include projected insured losses related to additional flooding, business interruption or contents, because the rainfall is expect to last for several days.

But the damage likely far worse than CoreLogic’s report suggested, as the early projection of the storm showed that Houston would avoid much of the heaviest rain.

But that’s not the case.

The storm settled over Houston over the weekend, creating flooding of “historic proportions” in the nation’s fourth largest city. The images emerging on Sunday from Houston are horrifying and tragic.

In some areas, waters rose to nearly 20 feet.

From the National Weather Service, issued on Sunday morning:

If you want to help the victims of the storm, the Houston Chronicle has details on how to donate to the Red Cross and other information.

As our Kelsey Ramírez reported on Friday, both Fannie Mae and Freddie Mac issued bulletins late in the week, reminding mortgage servicers and homeowners of the government-sponsored enterprises’ disaster relief policies.

“Relief, including forbearance on mortgage payments for up to one year, may be available if their mortgage is owned or guaranteed by Freddie Mac,” Yvette Gilmore, vice president of single-family servicer performance management at Freddie Mac, said.

Fannie Mae has similar disaster relief policies. Click here for more on the housing industry’s response to Harvey.

On Saturday, the Board of Governors of the Federal Reserve System, the Conference of State Bank Supervisors, the Federal Deposit Insurance Corporation, and the Office of Comptroller of the Currency issued a statement providing financial institutions with some guidelines about how to handle the aftermath of Harvey.

The agencies said that they “recognize the serious impact of Hurricane Harvey on the customers and operations of many financial institutions and will provide regulatory assistance to affected institutions subject to their supervision.”

Click here for the full bulletin from the agencies.

In other news, the real estate industry has long had its issues with the “Zestimate,” the property value estimation tool that appears on every listing on Zillow.

While Zillow describes the Zestimate as a “great starting point” for determining the value of a home, homebuyers and sellers often believe that the Zestimate listed on a home is the true market value of the home.

And that causes issues when the true market value differs from the Zestimate’s projection.

Just last week, a judge in Illinois dismissed a lawsuit brought by a number of homeowners who claimed that the Zestimate undervalued their homes and cost them money when they tried to sell their house.

MarketWatch’s Andrea Riquier gives us more details:

The suit claimed that home buyers read the estimate as an appraisal regardless of whether it was an official appraisal and expected to negotiate accordingly. Zillow, for its part, had stressed that the Illinois statute made clear that calculations formulated in the way that Zestimates are can’t be used as official appraisals.

The judge, in dismissing the suit, agreed. “Zestimates are not false, misleading, or likely to confuse,” the ruling read. “The word ‘Zestimate — an obvious portmanteau of ‘Zillow’ and “estimate’ — itself indicates that Zestimates are merely an estimate of the market value of a property.”

Zillow has consistently tinkered with the algorithm that powers the Zestimate over the years, improving its accuracy, measured by how close the Zestimate is to the eventual sale price of a home, from 14% in 2006 to 5% as of a few months ago.

But a 5% error rate is still a 5% error rate, which leads to problems like lawsuits in Illinois.

Zillow wants so badly to make its Zestimate even more accurate that earlier this year, it launched a contest to improve the algorithm that powers the Zestimate, offering $1 million to anyone who could markedly improve the Zestimate’s accuracy.

But Zillow isn’t sitting on its hands and waiting for someone else to improve the Zestimate. Its analysts are also still working to make the Zestimate more accurate.

In fact, as part of an announcement about the Zestimate contest, Zillow said Friday that it just released a “major” update to the Zestimate that brings the error rate down from 5% to 4.3% nationwide.

Zillow said that it accomplished this latest improvement by moving its data into the cloud.

“To establish these new gains in home valuation accuracy, Zillow transitioned all its data to the cloud and can now compute the Zestimate in near-real time,” Zillow said. “Now, Zillow can process three times as much data as before, which allows its data scientists to experiment and iterate faster than ever, creating more accurate valuations.”

As for the contest itself, Zillow said that it is very encouraged by the response.

According to Zillow, more than 15,500 people have downloaded the competition dataset since the contest launched in late May. Additionally, more than 2,500 competitors from 76 countries have submitted an average of 350 entries a day to the contest.

“The Zestimate is trying to answer an incredibly complex and important question, and with the strong contest submissions we’re already seeing, we are on pace to reach our goal of becoming one of the world’s most impactful machine learning competitions,” Stan Humphries, Zillow Group chief analytics officer, said. “In the meantime, we think homeowners will be pleased with the new enhancements we’ve made to ensure they have a trusted starting point when monitoring the value of what is often the largest purchase of their lifetime.”

The contest runs through Jan. 15, 2019.

And in other online real estate news, it’s been fascinating to watch investors’ response to Redfin, which went public one month ago.

The online real estate brokerage, which also recently expanded into mortgage lending and buying homes directly from homeowners, priced its initial public offering at $15 per share. Investors loved the stock in early trading, pushing Redfin above $20 per share in its first day of trading.

Since then, Redfin’s stock has continued to climb, closing Friday’s trading at $24.89 per share, an increase of nearly 66% from where the stock opened back in July.

And while the company’s executives were, shall we say, rather pleasedwith the results on that first day, the fun part for the rest of us starts very soon, because Redfin is about to have to start revealing its quarterly financial results.

In fact, Redfin announced Friday that it will report its second quarter financial results on Sept. 7, 2017 after the stock market closes. That means investors and the rest of the housing industry will soon get a good look at what Redfin’s got going on under the hood.

Should be interesting.

And with that, have a great week everyone!

Housing industry gears up to face Hurricane Harvey

Housing industry gears up to face Hurricane Harvey

Flood street sign

The housing industry is gearing up for Hurricane Harvey, which made landfall on the coast of Texas late Friday night.

The hurricane is expected to increase to a category three storm by the time it hits the coast, according to an article by Nicole Chavez, Eric Levenson and Joe Sterling for CNN.

This life-threatening storm could leave parts of south Texas uninhabitable for months, according the National Weather Service in Houston. The CNN article explained this type of language hasn’t been used since Hurricane Katrina.

Freddie Mac sent out a reminder of its disaster relief policies Friday, urging families affected by the storm to contact their mortgage servicer.

“We strongly encourage the many American families whose homes or businesses are being impacted by Hurricane Harvey to call their mortgage servicer if the Federal Emergency Management Agency’s declaration is announced,” said Yvette Gilmore, vice president of single-family servicer performance management at Freddie Mac. “Relief, including forbearance on mortgage payments for up to one year, may be available if their mortgage is owned or guaranteed by Freddie Mac.”

Here are some of the disaster relief policies Freddie Mac offers:

  • Suspending foreclosures by providing forbearance for up to 12 months
  • Waiving assessments of penalties or late fees against borrowers with disaster-damaged homes.
  • Not reporting forbearance or delinquencies caused by the disaster to the nation’s credit bureaus

Fannie Mae also sent out a reminder for servicers and homeowners, encouraging them to stay safe and take advantage of Fannie’s disaster relief policies.

“At this time, it is important for those in the path of the storm to focus on their safety as they deal with the damage caused by Hurricane Harvey,” said Carlos Perez, Fannie Mae senior vice president and chief credit officer.  “The primary focus of Fannie Mae and our servicers continues to be with the homeowners who have been impacted by this disaster and to ensure assistance is offered to borrowers and communities in need.”

Fannie Mae’s disaster relief guidelines allow servicers to suspend or reduce a homeowner’s mortgage payment for up to 90 days if the servicer believes a natural disaster brought down the value or habitability of the property or if the natural disaster temporarily impacted the homeowner’s ability to make payments on their mortgage.

Servicers do not need to contact homeowners in order to suspend payments for 90 days, but after contacting the homeowner, they can offer forbearance for up to six months, which can be extended an additional six months as needed for homeowners that were current or less than 90-days delinquent at the time of the storm.

But the GSEs aren’t the only ones stepping up in the wake of the storm. Short-term rental site Airbnb announced it launched its Disaster Rental Program to help Texans evacuate from Hurricane Harvey.

This program offers evacuees housing in major emergency events, and encourages its hosts to offer their homes up for free.

“We encourage hosts in safe, inland areas to aid in this effort by listing their available rooms or homes on the platform to help the growing number of evacuees,” said Kellie Bentz, Airbnb head of global disaster response and relief. “Our thoughts continue to be with everyone in the path of the storm, and we thank the dedicated government and emergency response personnel who are keeping our communities safe.”