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This is what sells for $1.23 million in the San Francisco area

Think home prices in your area are unaffordable? If you live in California, especially the Bay Area, you might be right. For everyone else, reading this article might help you feel better about home prices in your area.

A home just sold in the Bay Area for $1.23 million. It was condemned, infested with mildew and has holes in the roof, according to a new report from Travis Fedschun for Fox News.

Don’t believe me? You don’t have to. Check out the picture of the home below.

Click to Enlarge

SF home

(Source: AP Photo/Ben Margot)

What’s more, the owners weren’t shocked at the price their home sold for, and even saying they originally wanted a little more than what it finally sold for.

From the article:

The home in Fremont was originally listed for $1 million but ended up closing at $230,000 over its asking price, listing agent Larry Gallegos told KTVU.

“We had a couple of offers that were very close. Actually, my client, when I first met them, wanted a little bit more than that with the price they had in their mind. But they ended up being happy with this one,” he said.

The home is about 35 miles southeast of San Francisco and has three bedrooms and two baths. It was condemned in 2013.

But the two investors that bought the property don’t care about that. Actually, they intend to tear it down and build a 4,000 square foot “masterpiece” on the lot. The investors explained they were impressed with the location, which could have a view of the bay from a second-story window.

The median home sale price was $920,000 with a $173,783 minimum salary needed to purchase a home in the San Francisco area, according to a report from the National Association of Realtors back in February.

The report also showed the San Francisco area was the second most expensive city in the U.S., beat out only by the San Jose, California, area.

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Construction sees most growth since first quarter of 2016

Construction growth saw a surge in the fourth quarter of 2017 to the highest level since the beginning of 2016, according to the latest release from the U.S. Bureau of Economic Analysis.

The report, Gross Domestic Product by Industry: Fourth Quarter and Annual 2017, shows which of the 22 different industry groups contributed to the 2.9% increase in GDP in the fourth quarter.

A total of 16 of the 22 groups, construction included, posted a positive contribution to GDP growth in the fourth quarter, the report showed.

After creating a pull against economic growth in the third quarter with its decrease of 1.2%, the chart below shows construction made a comeback, increasing a full 8.5% in the fourth quarter. This is the largest increase since the first quarter of 2016.

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GDP

(Source: BEA)

And real gross output, principally a measure of an industry’s sales or receipts including sales to final users in the economy and sales to other industries, increased in 18 of the 22 industry groups.

Once again, the construction industry saw a major reversal, as the chart below shows, with its turnaround from a decrease of 5.5% in the third quarter to a surge of 10.9% in the fourth quarter. This was also the largest increase since the first quarter of 2016.

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GDP

(Source: BEA)

For the real estate, rental and leasing industry, real value added increased 1.8% in 2017, after increasing 2.4% in 2016. This marked the eighth consecutive annual increase.

A recent analysis from First American Financial Corp. Chief Economist Mark Fleming shows that while housing inventory levels are low and new home starts have been a bit of a disappointment, that could soon turn around due to success in the construction industry.

“Two important trends signal that some modest relief for the housing supply shortage is on the way,” Fleming said. “The continued year-over-year growth in completions means more homes on the market in the short-term and the dramatic rise in construction employment this month indicates housing construction is likely to increase in the months ahead.”

Even as the number of new homes constructed continues to struggle, the increasing GDP within the construction industry gives hope that new home construction will soon see a surge.

In fact, at the beginning of 2018, new home sales gave the year an unexpectedly low start, however Freddie Mac explained in a report that it still believes new home sales will push the housing market forward in 2018.

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Altisource names Patrick McClain senior vice president, Hubzu Auction Services

Altisource, a provider of services and technologies to the mortgage and real estate industries, announced this week that it has named Patrick McClain as senior vice president, Hubzu Auction Services.

In his new role, McClain will be responsible for driving the growth of Hubzu’s residential online marketing and auction business. McClain will report to Joseph Davila, president of servicer solutions, the company said in a press release.

McClain will oversee product innovation for the company’s online auction, live auction, short sale, claims without conveyance of title and national brokerage services businesses along with Hubzu’s client management program and business development strategy, the company explained. 

“Patrick has deep and highly-relevant product expertise and a broad industry network,” said Davila. “Hubzu is one of the largest online real estate auction services platforms in the country. We welcome Patrick’s entrepreneurial approach, significant industry experience and demonstrated operational expertise as we look to substantially grow Hubzu and stay at the forefront in this market.”

McClain comes to Altisource from Auction.com, where he served as senior vice president, asset management. McClain oversaw operations of Auction.com’s REO business unit, which included company’s asset management, contracting, title and closing groups. During his 20-year tenure in the mortgage and real estate industry, McClain also held senior executive asset management roles at GMAC Mortgage and Atlas Nationwide.

“The real estate auction space is dynamic and continues to evolve,” said Altisource Chief Revenue Officer John Vella. “Adding talent like Patrick, along with our scale and innovative solutions, positions Hubzu as the leading provider of real estate auction services for home buyers and sellers and an indispensable partner for our clients.”

mcclain altisource headshot

Looking for the next great opportunity? Visit HousingJobs, the most comprehensive mortgage finance jobs database — powered by your friends at HousingWire.

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New construction surges – but not for single-family

New construction surged in March, however the increase did not carry over into the single-family sector, according to the latest report from the U.S. Census Bureau.

Privately owned housing starts increased to a seasonally adjusted annual rate of 1.32 million in March. This is up 1.9% from February’s 1.3 million in February and up a full 10.9% from 1.19 million starts in March 2017.

However, these increases did not transfer over to single-family housing starts, which decreased 3.7% from 900,000 in February to 867,000 in March, according to the report.

“Total housing starts are important for economic growth, but single-family starts are the key to replenishing our severely depleted housing inventory,” realtor.com Chief Economist Danielle Hale said. “In March, while the total number of starts grew to 1.32 million we saw single-family housing starts slip to 867,000, behind where we should be.”

“Last month’s single family starts are less than half of what we saw during the peak in early 2006 and roughly 30% below normal,” Hale said.

Privately owned housing units authorized by building permits increased 2.5% from 1.32 million in February and 7.5% from 1.26 million in March 2017 to 1.35 million in March this year.

However, once again, these increases were all in the multifamily sector. Single-family authorizations decreased 5.5% from 889,000 in February to 840,000 authorizations in March.

“The change towards multi-family could be the initial signs that affordability is starting to impact the mix of construction,” LendingTree Chief Economist Tendayi Kapfidze said. “Multifamily units are at lower price points and include significant rental units.”

Privately owned housing completions decreased 5.1% from February’s 1.28 million completions to 1.22 million in March, the report showed. However, this is still up 1.9% from 1.19 million completions in March 2017.

Single-family housing completions decreased 4.7% in March to 840,000 completions, down from 881,000 completions in February.

But some experts saw March’s report as good news.

“Results for housing starts and permits released this morning reflect a double dose of good news,” PwC Principal Scott Volling said. “First, the disappointing February numbers for starts were revised upward almost 5% from 1,236,000 to 1,295,000, while permits were also revised upward almost 2% from 1,298,000 to 1,321,000. The upward revisions bring February results closer to original expectations after a strong January.”

“Second, March results improved over February’s revised numbers, with starts increasing 1.9% to 1,319,000 while permits grew 2.5% to 1,354,000,” Volling said. “Impressively, both starts and permits showed sizable gains when compared to March of last year, with starts higher by 10.9% and permits higher by 7.5%.”

And another expert explained that the housing market could soon see an increase in home inventory.

“Two important trends signal that some modest relief for the housing supply shortage is on the way,” said Mark Fleming, First American Financial Corp. chief economist. “The continued year-over-year growth in completions means more homes on the market in the short-term and the dramatic rise in construction employment this month indicates housing construction is likely to increase in the months ahead.”

The chart below from First American shows the correlation between housing starts and construction employment.

Click to Enlarge

starts

(Source: First American)

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Mile-high appreciation

Whether it’s ranking America’s highest rates of real estate appreciation or just its highest real estate, Washington and Colorado are top of the heap.

Those states, which coincidentally have eight of the 10 highest peaks in the continental U.S., have six of the 10 Metropolitan Statistical Areas topping the recent March 1, 2018 VeroFORECAST projections from Veros Real Estate Solutions.

This is the 15th year that VeroFORECAST has provided these data-rich projections to help U.S. lenders anticipate risk and facilitate loan portfolio management. This most recent report is based on data from single-family residences, condos and townhouses in 342 MSAs. That equates to nearly 1,000 counties, over 13,600 ZIP codes, and approximately 82% of the nation’s population.

In last week’s column I drilled down into what is driving Seattle’s long run of property value appreciation. This week, we upturn our gaze to the mile-high city of Denver and the high-performing Denver-Aurora-Broomfield, Colorado metro area.

As I detailed in my first column for this HousingWire series, four of the five MSAs with the highest projected appreciation over the next 12 months are in Washington State. Ranked fourth for projected appreciation at 9.9%, Colorado’s Denver-Aurora-Broomfield MSA rounds out the top five.

THE NUMBERS ON DENVER-AURORA BROOMFIELD

The 12-month projected appreciation rate of 9.9% for the Denver-Aurora-Broomfield metro area puts it fourth among the 342 MSAs included in the March Q1 2018 VeroFORECAST report. This shows a half-percent rise in the projected appreciation rate from the previous report in December 2017, when this MSA was the sixth highest (behind a solid top five in Washington State) at 9.4%. By comparison, three years earlier, in the December 2014 report, the Denver-Aurora-Broomfield MSA was 17th on the list at just 6.9%.

This is one of the strongest markets in the country, with an extremely tight supply of homes at approximately 1.4 months and a population, currently at 2.81 million, that continues to grow rapidly. Its impressively low unemployment rate is 2.9% and, according to DataUSA, the median household income grew 5.1% between 2014 and 2015.

Charting Colorado home price fluctuations, since the beginning of this century, alongside those in New York, California and the nation, shows that the Centennial State took the shallowest dip as a result of the financial crisis beginning in late 2007. Even with that relatively mild depression, the state is now enjoying property appreciation rates that rival California’s. And, as our newest VeroFORECAST shows, no California metro is projected to outpace Denver-Aurora-Broomfield over the next 12 months.

co home price
(Click to enlarge, source: U.S. Federal Housing Finance Agency)

According to the National Association of Realtors, the median property value in the Denver-Aurora-Broomfield MSA, which includes Denver County, Arapahoe County, and Jefferson County is $414,700. DataUSA’s most recent home ownership figure was over 62%. With extremely limited inventory, it’s a seller’s market. According to Apartmentlist.com, there isn’t any relief in the rental market, either. Denver rents are 12.6% above the national average and the statewide median monthly rate has risen more than 20% since 2014.

THE VIEW FROM THE FIELD

“In Denver’s scorching-hot real estate market, the supply of homes is no longer measured by traditional standards such as months of inventory, but in numbers of days,” said Anthony Rael, a RE/MAX Alliance broker in Arvada, Colorado. “Currently we are at ten days for homes priced from $200,000 to $399,999 and three weeks for homes priced between $400,000 and $499,999. The scarcity of available inventory is turning potential buyers into MMA fighters as they savagely negotiate to purchase a single property. In the higher priced Luxury Market, year-to-date sales of million-dollar plus homes have tripled during the last four years, which is a contributing factor in the latest record-setting average sales price for the Denver metro area.”

Rael added, in regard to his MMA reference, that buyers in his market have been offering “seller assurances” to guarantee a certain cash out-of-pocket amount if the property appraisal comes in short. So in the case of a property listed at $300,000 that gets pushed to $350,000 with an appraisal at $325,000, the buyer is now contractually obligated to make up the $25,000 difference, guaranteeing the seller the $350,000.

“Additional pot-sweeteners buyers have used to sway sellers,” Rael said, “are offers of tickets to Hamilton and Broncos games, expensive dinners, weekend getaways and so on…”

GET ALL THE DATA

Additional forecasts and infographics for U.S. markets are available for download and upon request. Visit Veros.com for the full VeroFORECAST report. Real estate and mortgage professionals and those in the financial services sector who wish to receive either the complete quarterly reports or regional reports as they are released can subscribe. For more information email communications@veros.com or call 714.415.6300, option 6.

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Auction.com adds Min Alexander as chief operating officer

Auction.com, a real estate marketplace and a recent honoree as member of the HousingWire Magazine HW Tech100, announced this week that it is naming Min Alexander as its new chief operating officer.

As Auction.com’s COO, Alexander will lead a team of 800 employees who manage the sale of over 140,000 listings annually. Alexander’s team will include the more than 500 remote Auction.com auctioneers and local market real estate specialists that host over 16,000 auctions annually.

Additionally, Alexander will be a “key influencer of the strategic development of Auction.com’s marketing, data science and technology initiatives,” the company said in a release.

Alexander will replace Javid Jaberi, who is retiring as COO of Auction.com.Min Alexander

“Javid has been instrumental for the growth and success of Auction.com, as well as a mentor to me,” Jason Allnutt, general manager of Auction.com, said. “He will hold a special place in the hearts and minds of our teams, and will forever be an important part of the Auction.com story.”

According to Allnut, Jaberi will stay with the company through the end of the year, serving as an advisor to ease the transition to Alexander.

Alexander brings more than 18 years of real estate experience to Auction.com. Prior to joining the company, Alexander served as senior vice president of real estate services for Altisource Portfolio Solutions, where she oversaw the business’ real estate portfolio and auction services.

During her time at Altisource, Alexander was named one of HousingWire Magazine’s Women of Influence in 2017.

“As we continue to drive innovation and optimize real estate disposition, we rely on the best and brightest minds in the industry to steer our teams, buyers and sellers in the right direction,” Allnutt said. “Min’s proven leadership, knowledge and experience aligns her with our company’s culture and will keep us moving ‘Beyond the Bid.’ I look forward working with Min and witnessing the success she brings to Auction.com.”

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HUD awards record $28 billion to help states recover from major disasters

The U.S. Department of Housing and Urban Development announced it is awarding a record $28 billion to help nine states, Puerto Rico and the U.S. Virgin Islands recover from major disasters.

Tuesday, HUD awarded $28 billion to support long-term disaster recovery. The funds are provided through the department’s Community Development Block Grant – Disaster Recovery Program.

HUD explained it will address seriously damaged housing, businesses and infrastructure from major disasters that occurred since 2015.

The amount represents the largest single amount of disaster recovery assistance in HUD’s history and includes more than $12 billion for major disasters that occurred in 2017 and nearly $16 billion to support mitigation activities in areas that experienced major presidentially declared disasters since 2015.

Mitigation can broadly be described as actions taken to protect communities from the predictable damage from future events.

“It’s clear that a number of states and local communities are still struggling to recover from a variety of natural disasters that occurred in the past three years,” HUD Secretary Ben Carson said. “These grants will help rebuild communities impacted by past disasters and will also protect them from major disasters in the future.”

The chart below shows how the funds will be distributed, by both location and by the year the disaster occurred.

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disaster funds

(Source: HUD)

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Property taxes on single-family homes increase 6% in 2017

Property taxes increased across the U.S. in 2017 by an average 6%, according to the latest report from ATTOM Data Solutions, a national property database.

The analysis, which looked at property taxes on more than 86 million single-family homes, shows that property taxes totaled $293.4 billion across the U.S. in 2017. This is up 6% from $277.7 billion in 2016 and an average $3,399 per home – an effective tax rate of 1.17%.

The average property tax per home increased 3% in 2017, up from the average $3,296 per single-family home in 2016, the report showed.

The map below shows the highest tax rates were the highest in Texas, the Northeast and some central northern states.

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taxes

(Source: ATTOM Data Solutions)

The states with the highest effective property tax rates were New Jersey with 2.28%, Illinois with 2.22%, Vermont with 2.19%, Texas with 2.15% and New Hampshire with 2.06%.

Dallas saw the fastest increase in 2017 as it rose 11%. Another Texas metro, Houston, also saw a significant increase at 10%, followed by Los Angeles with 7%, San Francisco with 6% and Seattle with 6%.

“Across California, it’s not the percentage of property tax increase that is as concerning to consumers, as it is the net effect to cash flow, especially for an aging population on fixed incomes,” said Michael Mahon, president at First Team Real Estate, which covers Southern California. “This erosion of disposable income for many homeowners coupled with an aging housing inventory stock in need of repair across many areas of the state puts some homeowners in a difficult position where they have ample housing equity on paper but aren’t able to realize home value gains until a future sale of the property.”

And tax rates aside, obviously homeowners in states with higher home values will pay a higher dollar amount in taxes. Counties with the highest average property taxes were all in the New York metro area, led by Westchester County at $17,179 per year, followed by Rockland County with $12,924, Essex County with $11,878, Bergen Country with $11,585 and Nassau County with $11,415.

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2018 HW Tech100 Winner: Simplifile

Tech100 Logo

Lending, Real Estate

Simplifile has partnered with Docutech to combine Docutech’s Solex eClosing solution with Simplifile’s services. As a result, Simplifile helps deliver the superior functionality of a digitally streamlined eSign, eNotarization and e-recording to settlement agents, lenders and borrowers.

In addition to e-recording, Simplifile has also developed collaboration and post closing tools to facilitate a more seamless solution experience of eClosing and beyond for agents, lenders and borrowers. Using Simplifile Collaboration, lenders and settlement agents can securely share, receive, track, validate, and communicate on documents and fees  to reduce  the risk of errors on closing documents, ensure a seamless closing process and create an audit trail for compliance.

simplifile.com

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2018 HW Tech100 Winner: SimpleNexus

Tech100 Logo

Lending, Real Estate

The company offers a private-label solution that connects lenders with its borrowers and Realtors to a single, branded solution to easily exchange data and documents throughout the entire loan lifecycle. Borrowers are able to search for homes, apply for a mortgage, run calculations, upload documents and see real-time status of their loan progress.

With SimpleNexus, a loan officer is now a mobile originator. Through the smartphone app, LOs are able to view new loan applications the second they come in, pull and view credit reports, run live pricing scenarios via Optimal Blue, see a live CRM feed and send approval letters. All of this from the palm of their hand, as the app connects real-time with their LOS.

simplenexus.com