Real Estate News July 2019
"The Kiplinger Letter" from May 2019 praises the U.S. economy citing GDP up more than expected however as it relates to real estate, they are suggesting, "Many first-time homebuyers will have a tougher time getting a mortgage." About 83% of FHA loans go to first time home buyers. Also noted in Kiplinger's letter is that "investment in multifamily housing is quickly rising in "opportunity zones," the 8,700 economically distressed areas in the U.S. designated by the 2017 tax law where funds can qualify for deferred capital gains taxes for economic development."
In the business of house flipping, a June issue of Bloomberg points out some concerns as the number of hard money (private capital) lenders approach 8,300 nationwide, up almost 40% since 2016. This comes at the same time as Attom Data Solutions data shows "the surge in housing prices drove down flippers' average gross return on investment - before renovation and other expenses - to 39% in the first quarter, an eight-year low."
The Week, dated June 14, 2019, wrote that L.A. has too many dream houses. With the steady flow of real estate loans, there's about 50 ultra-high-end L.A. area spec homes and not enough buyers to go around. Says one agent, "We have an enormous oversupply of these white boxes." Sellers are creating themed bashes instead of typical open houses. One developer is offering Andy Warhol's 1974 Rolls-Royce with a $15.6 million dollar home.
The folks over at Zillow said they have improved its home price estimates. An article in Kiplinger's Personal Finance dated May 2019 wrote, "In response to complaints that it's estimates gave homeowners unrealistic expectations, Zillow, conducted a competition to improve its accuracy." 4,000 teams of data scientists and engineers in 91 countries participated. Skylar Olsen, director of economic research at Zillow said, "When Zillow launched the Zestimate in 2006, its margin of error for home price estimates was about 14% nationally. That improved to 4.5% by early 2019." Kiplingers ends the article with the following paragraph: "Even with the improvements, Zillow says, homeowners should supplement the Zestimate with comparative market analysis from real estate agents or a professional appraisal."
Chris Whittaker is a real estate agent in Northern San Diego County with over 19 years of residential real estate experience working in all types of market conditions. He is SFR certified (short sales and foreclosure resource). CA DRE# 01895376