Two arrested after accepting FEMA money for 2nd homes

MIAMI – June 10, 2019 – Two Miami-Dade County residents were arrested this week on grand theft charges in separate cases where federal and state investigators accuse them of falsely claiming their Hurricane Irma-damaged mobile homes in the Keys were their primary residences, allowing them to collect thousands of dollars from the Federal Emergency Management Agency (FEMA).

Both people told investigators with the Monroe County State Attorney’s Office and the U.S. Department of Homeland Security Office of Inspector General that they were separated from their respective spouses around the time of the Sept. 10, 2017, storm and moved out of their homes on the mainland, according to their arrest affidavits.

Rick Hermida, attorney for Leisdany Lastro-Del Toro, 43, said his client “made an honest mistake in the wake of Hurricane Irma. She used the monies to repair her trailer. She intends to make full and immediate restitution.”

The other person arrested, Alfredo Latour, 54, could not be reached for comment.

Del Toro received $19,024 from FEMA after applying for disaster relief from the agency for her mobile home on Long Key. She stated on the application that the trailer was her primary residence, according to the affidavit.

However, she and her husband receive a homestead exemption on their property taxes for their home in Palmetto Bay, State Attorney’s Office Investigator Abraham Vallejo stated in his report.

This April, two Homeland Security agents questioned her about the application. She told them, according to the affidavit, that she separated from her husband in 2017 and moved to Long Key full time. While living on Long Key, she said she commuted to her job as a case manager for an immigration services non-profit on Northwest Seventh Street in Miami – a 93-mile, one-way trip.

“Del Toro stated that sometimes she would stay at her mother’s address in Miami,” Vallejo stated.

However, she could not offer agents other specific details about her supposed time living in the Keys full time.

“Del Toro was unable to recall when she moved to Long Key, how long she lived there, or when she left and moved back to Miami,” Vallejo stated. “Del Toro offered to return the funds to FEMA. After approximately 12 p.m., she asked if she could call her attorney.”

Her attorney told her to end the interview, according to the report.

In a May interview with the Homeland Security agents and Vallejo, this time with her attorney present, Del Toro said the Long Key trailer was not her primary address and that she and her husband were not separated at the time.

Del Toro turned herself in to the Monroe County Sheriff’s Office on Thursday morning in Plantation Key, where she was arrested, and was released later in the day on a $25,000 bond.

Latour was arrested Wednesday on a $5,000 bond. It wasn’t immediately clear if he’s been released. He received $3,363 from FEMA for damage done to his mobile home at the Calusa Campground Resort and Marina off mile marker 101.5 in Key Largo.

He also told investigators that although his primary home is on Northwest 79th Avenue in Miami, he separated from his wife in July 2017 and moved into his trailer, according to Vallejo’s report.

Latour told investigators that the storm made the trailer uninhabitable, so he moved back with his wife. However, on his FEMA application, he also stated that his wife and daughter lived with him at Calusa, according to the report.

He later told investigators that he only separated from his wife days before Irma hit and he spent a few nights at the trailer, returning home before the storm arrived.

“Latour additionally admitted that he realized at the time he made the FEMA application that the mobile home was not his primary address,” Vallejo stated.

© 2019 the Florida Keys Keynoter (Marathon, Fla.), David Goodhue. Distributed by Tribune Content Agency, LLC.


Florida Real Estate Sales Associate Test Results for May

2,738 tests graded for first time takers with a pass rate of 47%.

2,746 tests graded for repeat takers (people that have failed before) with a pass rate of 32%.


The essential guide to hurricane preparedness.

“Don’t Drink Tub Water.  That’s Gross” ~ Mike Lafferty

Every year this comes out like clockwork for all the people that have never been through a hurricane before.  Below is some very good information, but I have some additional tips that will really help before, during and after a hurricane.

  • Don’t get scared.  every year the media says we are all going to die.
  • When you see me putting up shutters you need to start right away.
  • Best hurricane food – Pop Tarts and beef jerky – don’t open until storm is over or you will eat your supply before the storm even hits.  Trust me on this one.
  • Duct tape – This is huge.  tape down anything outside that could break off your house like the plastic covers over the outlets. They will fly away.  Also put a piece of tape over the key hole in your doors.  Believe it or not water will come through and leave sand making it hard to use the key for months.
  • Gas grills will save your life.  you can cook every meal on a grill and make coffee. Have an extra tank.
  • Water – every year I see posts on social media saying stores are out of water we’re all going to die.  You don’t need bottled water.  Fill up everything that can hold water including tubs.  Tub water is good for the toilets(don’t drink tub water it’s gross).  Fill up every ziploc bag you have and put in freezer.  The frozen bags will keep freezer cold when electricity goes out and can be melted to drink.
  • After it’s all over your yard or street might be flooded.  Do not let your kids play in it unless they want a brain eating amoeba or to be bitten by a gator or cotton mouth.

see below for more traditional hurricane guide.

ORLANDO, Fla. – June 5, 2019 – Until Hurricane Michael hit Florida’s Panhandle last year, that area of the state was considered less vulnerable than the eastward parts that jut out into the Atlantic Ocean’s preferred path for big storms.

Hurricane season begins on June 1st and lasts six months, with storm threats typically peaking in August and September. But a major storm can target any part of Florida at any time.

Hurricane knowledge

First, know your hurricane facts and understand common terms used during hurricane forecasts. Storm conditions can vary on the intensity, size and even angle.

Tropical depressions are cyclones with winds of 38 mph. Tropical storms vary in wind speeds from 39-73 mph while hurricanes have winds 74 mph and greater.

Storm terms

  • Tropical storm watch: Tropical storm conditions are possible in the area.
  • Hurricane watch: Hurricane conditions are possible in the area. Watches are issued 48 hours in advance of the anticipated onset of tropical storm force winds.
  • Tropical storm warning: Tropical storm conditions are expected in the area.
  • Hurricane warning: Hurricane conditions are expected in the area. Warnings are issued 36 hours in advance of tropical storm force winds.
  • Eye: Clear, sometimes well-defined center of the storm with calmer conditions.
  • Eye wall: Surrounding the eye, contains some of the most severe weather of the storm with the highest wind speed and largest precipitation.
  • Rain bands: Bands coming off the cyclone that produce severe weather conditions such as heavy rain, wind and tornadoes.
  • Storm surge: An often underestimated and deadly result of ocean water swelling as a result of a landfalling storm, and quickly flooding coastal and sometimes areas further inland.

Hurricane forecasts

Predicting a tropical cyclone’s path can be challenging – there are many global and local factors that come into play. Forecasters’ computers take huge amounts of data and try to predict where the storm will go and usually are 2-3 days out. This is where you hear the terms “computer models” and “spaghetti models” being used. Generally, the forecast track or path is given using the average consensus of these models.

The National Hurricane Center has the most up-to-date information on tropical cyclone developments, forecasts and weather alerts, discussions analyzing the data and more.

Hurricane kits

It’s important to create a kit of supplies you could take with you if forced to evacuate. This kit will also be useful if you are able to stay in your home but are affected by the storm, such as through a power loss. One common trend seen when hurricanes are approaching is a wide-spread panic. If you prepare a kit ahead of time, you can alleviate a lot of the potential stress of a very chaotic situation.

Recommended hurricane kit items

  • Non-perishable food (enough to last at least 3 days)
  • Water (enough to last at least 3 days)
  • First-aid kit (include prescription medication)
  • Personal hygiene items and sanitation items
  • Flashlights (have extra batteries)
  • Battery operated radio
  • Waterproof container with cash and important documents
  • Manual can opener
  • Lighter or matches
  • Books, magazines, games for recreation
  • Special needs items: pet supplies and baby supplies, if applicable
  • Cooler and ice packs
  • An evacuation plan

Securing a home

  • Cover all windows with hurricane shutters or wood. Note: While tape can prevent glass from shattering everywhere, it does not prevent the window from breaking
  • If possible, secure straps or clips to securely fasten your roof to the structure of your home.
  • Trim all trees and shrubs, and clear rain gutters.
  • Reinforce garage doors
  • Bring in outdoor furniture, garbage cans, decorations and anything else not tied down
  • If winds become strong, stay away from windows and doors, and close, secure and brace internal doors.

Power outages

In the event a storm leaves you without power, there are a few things to consider:

  • Gas: Make sure your car’s tank is full far in advance of an approaching storm. Most people wait until the last minute, rush to get extra gas for cars and generators, and gas stations can run out.
  • Money: ATMs can run out of money if everyone tries to use them quickly, and they can shut down completely if the power goes out.
  • Cell phones: Charge cell phones pre-storm and limit use if the power goes out.
  • A/C: Try to prevent as much light from entering and warming the house by covering up windows on the inside. If you have back-up or battery-operated fans, don’t run them unless you’re in the room.
  • Water: Fill bathtubs and large containers with water for washing and flushing only.
  • Food: Turn your fridge temperature down and/or freeze any food or drinking water that can be frozen if you expect a power outage.

© 2019 Florida Realtors


Related Topics: Hurricanes

The American dream makes a comeback

CELEBRATION, Fla. – June 3, 2019 – After Teresa and Mark Taunton short sold their $535,000 four-bedroom dream home in Celebration, Florida, at the end of the real estate meltdown in 2011, buying another house was the last thing on their minds.

“It makes you feel you could somehow end up in the same position,” says Teresa, 57, describing the anxiety the couple experienced after selling their house for less than what they owed the bank. “We were just so leery of everything.”

But in late February, five years after they were officially allowed to make another home purchase, they closed on a modest ranch house for less than half the price of their former Orlando-area unit and just minutes away.

“We were really tired of renting,” Teresa says. Of their new house, she adds, “It’s comfortable. It’s home.”

With rent, “You’re looking at (shelling out) $20,000 to $30,000 a year, and you have nothing in return,” Mark adds.

There are signs that a growing number of Americans who lost homes to foreclosure or a short sale during the housing crisis are emerging from their post-crisis bunkers and buying again or planning to do so in the near future.

The trend could allow millions of so-called boomerang buyers to build wealth again through homeownership. It also could provide support to a housing market that has sputtered lately. Existing home sales are down 6.6% so far this year compared with the year-ago period, according to the National Association of Realtors® (NAR).

“I think the next phase of the housing recovery will be partly driven by people in the prime age group” of 35 to 64 that have been hesitant to buy again after losing homes in the crisis, says Kwame Donaldson, an economist with Moody’s Analytics.

Young people largely have fueled the housing recovery so far. In March, first-time home buyers made up 33% of all existing home sales, up from 30% a year earlier, according to NAR. But from the fourth quarter of 2017 to the fourth quarter of 2018, the homeownership rate jumped from 58.9% to 61.1% for 35 to 44-year-olds, the largest increase on record for any age group, and from 69.5% to 70.1% for 45 to 54-year-olds, Census Bureau figures show.

Donaldson says he believes the leap for 35- to 44-year-olds was largely spurred by boomerang buyers who were 27 to 36 during the depths of the crisis.

Housing crisis hit less qualified

The housing bust was caused by lenders who doled out subprime mortgages to Americans who couldn’t qualify for conventional loans. Many of the mortgages required low interest-only payments initially that ballooned after a few years. The model worked as long as home prices kept soaring, allowing homeowners to refinance. It unraveled when prices plunged and the Great Recession caused millions of people to lose their jobs and fall behind on their mortgage payments.

From 2006 to 2014, there were 7.3 million housing foreclosures and 1.9 million short sales, according to CoreLogic, a housing research firm. After a foreclosure, a prospective buyer must typically wait seven years to qualify for a mortgage guaranteed by Fannie Mae or Freddie Mac. The wait can be three years in certain circumstances, or for a Federal Housing Administration loan, but people who wait seven years generally benefit from higher credit scores and lower interest rates.

A short seller generally must wait three years to buy again.

Of 2.8 million former homeowners whose foreclosures, short sales or bankruptcies dropped off their credit reports from January 2016 to November 2018, 11.5% have obtained a new mortgage, according to a study by credit rating agency Experian for USA Today.

Fifty-three percent of the remaining 2.5 million had prime or super-prime credit scores in November, notes Experian Vice President Michelle Raneri. “That’s 1.3 million people who have really good credit,” she says. “Maybe they don’t realize they would qualify now.”

Some economists say many of those affected who wanted to become homeowners again already have done so. “I’m less convinced this is going to move the market,” says Ralph McLaughlin, deputy chief economist of CoreLogic.

Michael Fratantoni, chief economist of the Mortgage Bankers Association, says young people will be a far greater force in the housing market than prime-age boomerang buyers the next few years. There are about 31.7 million 24- to 38-year-old renters in the U.S., according to CoreLogic.

But Moodys’ Donaldson notes that the typical pay of middle-aged Americans is 14% higher than the U.S. average, making them particularly good candidates to buy homes. Those who lost houses were financially and psychologically scarred, he says, and many could take longer than three- or seven-year waiting periods before feeling comfortable enough to make a purchase.

In the Denver area, some boomerang buyers tour homes but then get cold feet and pull back before reentering the market months later and finally buying, says Jessica Reinhardt, a broker at RE/MAX Alliance.

A NerdWallet survey, conducted for USA TODAY in January, found that 6% of Americans who lost a home due to a financial event the past decade plan to buy one this year. But a whopping 39% intend to buy over the next three years and 58% say they’ll purchase within five years. Nearly one-third said they’re afraid to own a home again.

Losing the ‘American dream’

The Tauntons, of Celebration, could have bought another house in 2014 when the three-year waiting period after their short sale ended. But, “the memory was still sore,” Mark says. “You’re still in the middle of what you lost.”

They lost the house they bought in 2005 in which they raised the five children of their blended family and that symbolized their attainment of “the American dream,” as Mark puts it. They had their own pool and the Disney-owned community sported a movie theater and spa, among other amenities.

They kept current on their mortgage even after Mark lost his job as manager of an exclusive men’s designer clothing store in the depths of the recession in 2008. But when their monthly payment jumped from $2,300 to $3,500 in 2010, they were on the verge of falling behind. Their lender advised them to stop making payments so they could get a loan modification, but it never came.

“We did everything right,” Mark says, noting they had never missed a payment. “It was traumatic.”

While they rented four apartments and homes, they squirreled money away and started thinking about buying again last November. Besides wanting to amass a retirement nest egg, they grew weary of renting because “you didn’t get to know your neighbors,” Teresa says.

This time, they resolved to spend no more than $250,000, rejecting several of the more lavish houses they visited. “You never want to go through that again,” says Mark, who is now a high school teacher.

Teresa, an accountant, asked lots of questions and took meticulous notes, and the couple provided extensive documentation. Last time, “The mortgage company made it so easy,” she says.

The couple, who used most of their savings to buy their previous house, “qualified for much more than the home” they purchased this time, says their Redfin agent, Mike Moore.

They made a down payment of 5% on the $247,000 house, giving them a monthly payment of $1,640. While they worry about getting hurt by another crash, “I feel a whole lot better about a $240,000 house than a $535,000 house,” Mark says. “I feel like I can still control it.”

Economy, wage growth aid buyers

There are concerns for boomerang buyers. Nationally, home prices have climbed 53% since their 2012 bottom and are now 11% above their 2006 peak, according to the S&P CoreLogic Case-Shiller index. That raises worries about another potential bubble and could keep already-wary former homeowners from making a purchase. But credit standards are much tighter now, “so there are fewer risky loans out there,” says Skylar Olsen, director of economic research for real estate site Zillow. “The national market is not headed towards a bubble popping,” she says.

In fact, home price increases have moderated since last year and mortgage rates have fallen even as wage growth has accelerated, creating a positive backdrop for boomerang and other buyers, Fratantoni says.

The economy’s steady recovery the past nine years has been a godsend for Art Fernandez, of Davie, Florida. In 2007, he and his wife Leanette leveraged an interest-only mortgage to buy a 10,000-square-foot house around the corner from their more modest home, seeking both their dream house and a sure-fire investment in the go-go years. They bought even before selling their existing house.

But the housing market seemed to crash the week they closed, Fernandez says, leaving them owing more on both homes than they were worth. Soon, Leanette had to leave her job as a mortgage broker and Art, a retail theft prevention manager, was laid off. They lost the first house through foreclosure and the second in a short sale. “It was very, very difficult,” Fernandez, 42, says.

But while they rented for three years, he got another theft-prevention job, as well as a part-time gig as a real estate broker. Leanette became a travel and lifestyle blogger.

When they decided to buy a 2,200-square-foot house in 2017 for $355,000, “It was like we had three full-time jobs,” Fernandez says. “We were confident and ready to find our ‘forever home.'”

In some areas hit hardest by the housing crisis, boomerang purchases are picking up, brokers say. In Las Vegas, Thomas Blanchard, managing broker of Orange Realty Group, estimates that 15% to 20% of sales handled by his firm are to boomerang buyers, up from 1% to 2% a few years ago.

In the Miami area, boomerang buyers make up four in 10 purchases, estimates Sonia “Gaby” Martinez, broker and owner of Xtreme International Realty. Sharply rising rents in Las Vegas and Miami are prodding more ex-homeowners to buy again, the brokers say.

Some want to do so before climbing prices make it impossible.

Kimberly Velasquez, 43, of Parker, Colorado, lost her four-bedroom, $320,000 house to foreclosure in 2011. After renting and going through a divorce, she decided to buy a $380,000 townhouse last August as soon as the foreclosure came off her credit report. Denver-area home prices have more than doubled since 2011.

“I decided I needed to do it now,” she says, “or it would be to the point where I’d be priced out of ever being able to buy a home.”

© 2019 South Bergenite, North Jersey Media Group, Inc. All rights reserved.

$4.4T plan could make mortgages more affordable – or less

NEW YORK – June 3, 2019 – Few homeowners or real estate agents worry about mortgage-backed securities (MBS) – a Wall Street concern – but a change in MBS rules could have a big impact on future homebuyers.

In the mortgage industry, banks and other companies lend money to people who want to buy a home. They then take that mortgage and sell it to entities, though Fannie Mae and Freddie Mac are the biggest players and guarantee nearly half of U.S. residential mortgages. Once sold, the banks have more money to lend to more homebuyers.

Fannie and Freddie, in turn, turn the loans into mortgage-backed securities, which operate similarly to stocks in which individual investors buy them in exchange for an expected return. After this happens, Fannie and Freddie have more money to buy mortgages from banks.

But a new rule for mortgage-backed securities will virtually eliminate the distinction between bonds issued by Fannie Mae and Freddie Mac. It allows market participants putting mortgage bonds together to deliver loans backed by Fannie Mae, Freddie Mac or both when they settle trades in what the industry calls the to-be-announced (TBA) market.

The aim is to improve market liquidity, mitigate investor risk, and potentially make home loans more affordable nationwide. The TBA market is the most liquid of the MBS markets and second only to Treasuries in daily volume. In fact, volume in 30-year Fannie Mae TBAs this year through April averaged about $150 billion a day, the most since 2012.

Traditionally, Freddie Mac bonds have traded at a discount compared to Fannie Mae securities, but the Federal Housing Finance Agency (FHFA) says that by allowing both Fannie Mae and Freddie Mac TBA eligible pools to be delivered into the new uniform MBS, the trading value disparity between the securities will decrease while the overall liquidity of the TBA market is enhanced.

Skeptics, however, worry that the change could actually increase mortgage rates rather than lower them.

Two securities with broadly similar characteristics – such as the same coupon, average credit score and maturity, for instance – may be valued at vastly different prices if the prepayment speeds on the underlying mortgages turn out to be dissimilar. Should speeds diverge, critics suggest that investors may start to favor either Fannie’s or Freddie’s mortgages over the other and begin trading them separately again. That would result in a three-way split of the market among Fannie Mae, Freddie Mac and uniform securities, reducing overall liquidity of the mortgage market in the process.

To prevent problems, FHFA is releasing quarterly prepayment monitoring reports and has established so-called CPR bands that Fannie Mae and Freddie Mac pools must fall within to be considered in alignment.

On the other hand, perhaps both skeptics and proponents are both wrong and, once the dust settles, mortgage borrowers won’t see much difference at all.

Source: Bloomberg (05/30/19) Maloney, Christopher; Boston, Claire; Gillen, David

© Copyright 2019 INFORMATION INC., Bethesda, MD (301) 215-4688

Listing price drops don’t reignite number of online views

“As Realtors we have to stop over pricing our listings. Know your market and know your absorption rate for the listing neighborhood.” – Mike Lafferty The Real Estate Guru (yes, I added my own quote to this article.)

SEATTLE – May 29, 2019 – Homes get 3.4 times more online views the day they’re listed than they do on the day the seller drops the price, according to a new report.

The analysis looked at more than 1.2 million listings’ daily page views by potential buyers relative to the listing date and the date of the first price drop.

“It’s critical to price your home to sell from the start,” says Redfin Chief Economist Daryl Fairweather who conducted the study. “Fair or not, buyers judge a home by how many days it has been on the market. A home that has been on the market for more than a few weeks has a scarlet letter on it, and buyers will wonder why no one else wanted to buy it. Dropping the price can help get your home onto the radar of some buyers who are searching for homes priced just below the original price, but you likely won’t be able to regain the appeal of a newly listed home.”

A home listing viewed by 100 buyers online on its first day receives an average of just 17 daily views after 30 days on the market. Dropping the price boosts that to 29 views, but the bump only lasts a single day. The day after a price drop, the home’s views fall back down to 18 per day.

Online views of home listings drop off steeply after the first day, with half as many visits on day two and a quarter as many after a week on the market.

During the four-week period ending May 19, nearly a quarter (24.2%) of homes for sale had a price drop, up from 21% a year earlier but down from the 30% record high posted last October.

It’s increasingly important to make a home as appealing as possible to the most serious buyers, who often receive alerts when a home is first listed.

“It can be tempting for a seller to price their home a little high to avoid leaving money on the table,” says Seattle Realtor Dorothee Graham. “If we have to drop the price, I’ll run a new comparative market analysis (CMA) so the seller can see how much similar homes nearby are listing and selling for. Then I offer to take them in person to tour those properties so they understand where their home should be priced.”

Graham says she also pulls a list of everything available in the seller’s price range. “I’m recommending so they can see what else is out there, regardless of property type, size and condition, because this is how buyers are searching,” adds Graham. “A seller might want to reduce their price by just $10,000 to $15,000, but I advise that this won’t work unless it puts them in a different price bracket. When you do a price drop, it has to be meaningful.”

© 2019 Florida Realtors

NAR: Realtors remain positive on commercial market

WASHINGTON – May 24, 2019 – While challenges remain, Realtors specializing in the commercial real estate sector should have confidence that growth will continue in the marketplace, according to speakers at the Commercial Economic Issues and Trends forum at the National Association of Realtors® (NAR) Legislative Meetings & Trade Expo.

NAR Chief Economist Dr. Lawrence Yun led a panel discussion about the economic forces shaping commercial real estate markets and how high-tech company expansions, such as Amazon, will have a significant effect on regions across the country. During the session, Yun and fellow panelist Virginia Secretary of Commerce Brian Ball agreed that as a result of the current strong economy and other influential market factors, the commercial real estate market will continue to be robust.

“We may see commercial real estate prices rise for the next year, but I expect them to even out in 2020. Capital gain returns have grown from 90% with the rise in property prices. We can attribute the growth in commercial building investment spending to job additions and rising occupancy of buildings,” Yun said.

The biggest challenges facing the industry continue to be the lack of inventory, the cost and regulation of construction and at least for the retail sector, to the effects of growing e-commerce.

“I do not foresee any economic recession in the short-term, with gross domestic product expected to grow 2.5% in 2019 and with the unemployment rate at 4.0%. A strong economy will continue to reinforce the growth in commercial real estate, particularly the multifamily and industrial real estate markets,” said Yun.

The multifamily and industrial properties continue to be the best performing asset classes, given the low apartment vacancy rates in many metropolitan areas and with e-commerce driving the demand for industrial real estate. Cap rates for multifamily and industrial properties are trending at five to six percent, while hotel cap rates are at eight percent.

Apartment vacancy rates are very low in many metro areas such as Boston (2.9%), Denver (3.4%), San Jose (3.4%) and Los Angeles (3.8%), pushing up rents in areas like Los Angeles and Atlanta by 5 to 6%.

The growth of e-commerce, which now accounts for about 10% of retail sales (from less than 1% in 2000), continues to drive up the demand for industrial real estate, for warehouses and last-mile distribution centers.

Transportation and warehousing jobs rose 176,000 in April 2019 from one year ago, while the retail sector lost 49,000 jobs.

Commerce and Trade Secretary Brian Ball highlighted the economic impact of Amazon locating their second headquarters to Virginia and the effect the company will have on commercial real estate in the state. “The arrival of Amazon’s headquarters in Virginia will bring over two billion dollars to the state’s economy along with more than 25,000 jobs. This economic spike will position all aspects of the state’s commerce for success, and the commercial real estate market should expect vast growth,” Secretary Ball stated.

© 2019 Florida Realtors®

Online estimates more accurate but still just estimates

NEW YORK – May 21, 2019 – The conversation happens almost every day. And it often starts the same way.

“‘Zillow says,’ ‘Trulia says,'” Re-Max real estate agent Mike Bernadyn hears from clients trying to settle on a listing price. “It’s almost nails on a chalkboard for us.”

Because one way or another, there’s usually a disappointment – at first.

In the information-overload age, the proliferation of online estimates of millions of homes both on and off market puts the real estate agent in a variety of awkward or advantageous positions, depending on one’s perspective. It’s a key to an educated public, a tool in the agent’s trade, or the thorn in their side that makes them justify their own estimates.

In Bernadyn’s experience, online estimates from listing sites often value homes too high.

“Folks are like, ‘Are you kidding me, that’s it?'” when he tells them his suggested price, he said.

There’s no choice but to make light of the situation, even laugh it off, he said. It’s now a fact of a real estate agent’s life.

A generation ago, the Multiple Listing Service – the holy grail of data on home listings, market trends and forecasts – came in a thick three-ring binder exclusively to the offices of real estate brokers, sending agents in a mad dash about every two weeks between the massive catalog and the copy machine.

They held the key to that information. Now, thanks to websites such as Zillow, Redfin and Trulia, everyone has a copy.

“They do the industry a big favor by helping us distribute that information out there more effectively than we could before,” said Craig Sachse, a Keller Williams real estate agent in Allentown, Pennsylvania. “But like any great thing, it’s a double-sided coin.”

On the other side is a clientele armed with computer-generated estimates: prebaked expectations of what their homes should sell for put up against their local agent’s calculation, which is almost always different.

The developers of these tools call them a conversation starter. Real estate agents have mixed feelings about the conversation.

Origins of the online estimate

Power to the people – that’s Zillow’s whole shtick, company senior economist Skylar Olsen says.

The Zestimate – an estimate of a home’s market value based on data points encompassing the home’s dimensions and its neighbors, among hundreds of others – predates the Zillow of today, where agents pay top dollar to advertise listings or snag potential clients. It was born in 2006 on the premise of the democratization of previously protected MLS data, Olsen said. That it ruffles feathers comes as no surprise.

“We were aware it would be provocative,” she said.

In the early days, it was a hurdle to overcome in a new agent-homeowner relationship, said Sean LaSalle, an associate broker with Berkshire Hathaway. People took the website estimates as gold.

“In the beginning it was, ‘This is what my house is worth,'” he said.

In reality, home value estimations that appear on these websites are automated valuation models: computer-generated formulas based on data from the MLS. The floodgates opened after a 2014 decision by the National Association of Realtors® to require Multiple Listing Services to make their data available to any broker that wants to use it to create an automated valuation model, which provides property values using comparable properties, through a third party.

Redfin, which started as a brokerage, jumped in on the action and created the Redfin Estimate in 2015. The extent of what Redfin spokeswoman Rachel Musiker can say about the Redfin Estimate is that it takes into account hundreds of data points, including data it collects from its local real estate agents.

Plenty of brokers run their own automated valuation models. LaSalle uses his as a launching point before going on a listing appointment. The tough part of the conversation is urging the client away from basing their offers solely on them.

“Under no circumstances do I look at them and say this is the value of a house,” LaSalle said.

The box conundrum

Zillow thinks of homes as boxes, Olsen explains: boxes with three bedrooms, two bathrooms and 1,600 square feet.

That’s the sticking point for local agents: The computer models cannot look inside a home. A finished basement, for example, could add $12,000 to $15,000 to the value of a home, LaSalle said. Or the neighbor down the street with a nearly identical exterior and floor plan could have foreclosed.

The box paradigm is less of a problem in cookie-cutter neighborhoods where Zillow can draw data from transactions happening at neighbors’ similar houses. But the fewer neighbors one has, the tougher a job the algorithm has.

In the Lehigh Valley, which has a mixture of densely and not-so-densely populated areas, agents say it is not uncommon for online estimates from a host of websites to be 10-20% off.

Take Bernadyn’s former listing on Newport Avenue in Northampton, for example. Zillow places it at $123,000. Redfin is even higher: Its estimate is $129,000, but its estimated range goes up to $136,000.

The house sold for $116,000.

Even smaller disparities in price throw off the marketing of the home, particularly when it’s priced too high, he said.

In Emmaus, LaSalle listed a five-bedroom house on Westminster Drive a month ago for $740,000. In those 30 days, the Zestimate increased by more than $32,000, landing at $761,000 and moving further away from the target.

The larger the list price, typically, the larger the estimated range online platforms provide. The Westminster Drive home could be anywhere between $715,000 and $799,000, according to Zillow.

“If I provided that kind of range, no one would list with me,” LaSalle said.

And then there’s the rare case that defies explanation, like Sachse’s $6 million listing overlooking Hawk Mountain, a 13,800-square-foot mansion dubbed Blue Mountain Estate.

Zillow’s estimate of $424,000 even has its own robot confused. The listing notes: “The list price and Zestimate for this home are very different, so we might be missing something.”

“It certainly doesn’t help to have an estimate up there one-12th of what you’re asking,” Sachse said.

Secluded and “unique” homes like the Blue Mountain Estate are prone to inaccuracies in the Zestimate, Zillow acknowledges in its online FAQ.

For these homes, Olsen said, “a box doesn’t cut it.”

Hitting the mark

Zillow’s first sample of 75 million homes carried a median error rate of 13%, meaning half of Zestimates came within 13% of what the homes actually sold for, and half landed outside the 13% window, Olsen said. Now, with 110 million homes assessed, that window has closed to 4.5%, she said.

The Redfin Estimate launched in 2015 with a median error rate of nearly 2% for homes on the market and just over 6% for homes off the market, according to the company. It says the current median error rate for homes for sale is 1.73%.

Zillow also breaks down its error rate by city and county. Lehigh County’s is 4.7%; Northampton’s is 5.2%.

With the improvements in the algorithm and the gift of time, LaSalle said, public understanding that the estimate is just that – an estimate – has also mildly improved.

Though the exact formula for its estimates are trade secrets, Zillow has made public its efforts to expand it.

The company has crowd-sourced ideas for data points over the last couple years, Olsen said, including road noise, rent data and a factor called “view shed”: how much of a view your home has and how many nice things are in it.

And they may soon fight back against the adage that they do not consider the inside feel of a home. Zillow is testing algorithms for predicting quality from indoor photos posted to its website.

“That’s not yet – that’s down the road,” Olsen said.

Zillow and Redfin emphasize in their online materials that their estimates are not appraisals, but starting points, dedicating FAQ entries that defer to the local knowledge of a real estate agent.

“As with most fine print, consumers don’t always look at it that way,” Sachse said. “People put a lot of faith in those models.”

In many cases, the public has the freedom to help change estimates on their homes. On both Zillow and Redfin, a homeowner or their agent can update the facts on their home and request the companies consider these updated facts in a recalculation of the estimate. Last year, Redfin launched an “owner estimate” tool for homeowners to come up with their own estimation to display alongside Redfin’s estimation.

On Redfin, only the owners or agents of homes for sale can request the estimate be taken down, Musiker said. The Zestimate never gets taken down, Olsen said, but her team constantly uses feedback to adjust the algorithm.

That’s tough, Bernadyn says, when small subdivisions can behave like entirely different neighborhoods.

Andy Santana, a Keller Williams agent serving the Lehigh Valley, said he uses the conversation about online estimates as an opportunity to gain rapport with his clients and show the more nuanced aspects of the pricing that only he knows. This, Olsen says, would be the ideal outcome.

“Democratizing this information changes the value proposition of an agent, but I don’t think we’re removing the value of the agent,” she said.

Not even for the senior economist at Zillow, who said when she’s ready to sell, she calls her agent.

© 2019 The Morning Call (Allentown, Pa.), Kayla Dwyer, The Morning Call (Allentown, Pa.). Distributed by Tribune Content Agency, LLC.

Census Bureau: City growth once hot – now not so much

ORLANDO, Fla. (AP) – May 23, 2019 – Big cities in the U.S. aren’t growing like they used to.

Most of the nation’s largest cities last year grew by a fraction of the numbers they did earlier in the decade, according to population and housing unit estimates released Thursday by the U.S. Census Bureau.

The previous growth big cities had experienced in the first half of the decade was fueled by millennials who delayed home-buying in the suburbs after the recession and stuck it out in large cities, said William Frey, a senior fellow at The Brooking Institution’s Metropolitan Policy Program.

The recession’s aftermath “stranded a lot of millennials in cities rather than their moving off to the suburbs,” Frey said.

The Census data released Thursday looked at changes in cities and towns from mid-2017 to mid-2018. The data don’t reflect changes in metropolitan areas comprising multiple cities, towns, suburbs and counties.

The weakening in growth appears to have started two years ago and accelerated last year.

Perhaps no other city offers as stark an example of the trend than New York City, the nation’s most populous city with just under 8.4 million residents last year. Even though the city has grown by 223,000 residents since 2010, the most of any city over the past eight years except Houston, most of the growth was in the early part of the decade. At its height, New York City grew by more than 82,000 residents in 2011, but it lost 39,000 residents last year.

Last month, when the U.S. Census Bureau released county-level data that showed identical population loss, New York City’s planners took umbrage with the federal agency’s methodology, saying international migrants were undercounted.

“While population growth has likely slowed, the Census Bureau’s methodology is not robust enough to precisely quantify the magnitude of these year-to-year changes,” the planners said on the city website.

With the exceptions of Phoenix and San Antonio, the phenomenon of slowing growth in the nation’s largest cities also has hit Sunbelt cities including Los Angeles, Houston and Dallas, where the populations grew, but at a fraction of their growth six years ago. San Jose, California, lost more than 2,000 residents last year.

“There is a growing moving away from cities,” Frey said. “The first part of the decade was an aberration. Cities were growing faster than suburbs. That is starting to turn around.”

AP Logo Copyright 2019 The Associated Press, Mike Schneider. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

April Sales Numbers

April sales stats are here:

Sales are up 7.8% to 333 units with an increase in median sales price of 8.5% to $255,000.  Time to contract increased from 49 days to 59 days.

To see full 10 page click AprilSebastian-Vero_Beach_MSA_Single_Family_Homes_2019-04_Detail