Welcome back to HomeLight’s Real Estate Recap, a monthly digest of the most relevant real estate news and trends! Each month, we scour the internet for the latest real estate news so that you don’t have to.
November is like December’s awkward little cousin. It’s one day shorter, has one holiday that people sometimes show up for, and let’s face it—everyone just wants to hang out with December.
But, in this limbo month, breaking news has been louder than ever. Amazon announced it’s locations for HQ2, wildfires blazed through California, and midterm elections brought out the most voters in decades.
Here’s how the news shook out for real estate in November:
1. Bezos Money Moves
+ There’s no doubt that the recent announcement of Amazon’s HQ2 locations (Long Island City, NY, and Arlington, VA) has sparked interest and concern for the housing market in these areas. In Long Island City alone, real estate agents saw a 794% increase in online views of homes for sale in November. News outlets are exploding with reports and op-eds on whether Amazon will help or harm people and businesses there now.
+ From Housing Wire: Amazon announces HQ2 locations in New York and Virginia.“‘Today’s announcement of HQ2 will likely have a quick impact on home prices and rents in Arlington, Virginia, and New York City. That’s because Amazon’s HQ2 is like nothing we’ve ever seen before,’ Hale said. Not only is it one of the largest company headquarters openings, but the amount of attention it’s received is unparalleled. There’s no doubt that investors and landlords in these areas have been following the news trying to get ahead of the Amazon housing boom.
Amazon’s HQ2 is expected to bring 50,000 jobs with an average salary of $100,000 over the next 15 years, plus more than $5 billion in investment over the span of 17 years.”
+ This move will cost local taxpayers a grand total of $3.4 billion. So, “the question is: Is Amazon’s new headquarters really worth the tax incentives paid to get them there, and the expected increase to the cost of living?” For many Queens residents, the answer is a flat no.
+ NY Times reports: Amazon’s HQ2 Will Benefit From New York City. But What Does New York Get? “‘What are they going to do for the community? Are they going to guarantee us employment opportunities?’ said April Simpson, the president of Queensbridge Tenants Association. ‘I’m worried about, when they come, they’re not going to have opportunities for people. Not just people from Queensbridge—but other lower- and middle-income people in this area.’”
“Between 2010 and 2016, LIC has seen a population growth of about 11 percent, which is more than double the rate of all of New York City, according to the American Community Survey. (The waterfront strip along Vernon Boulevard alone has nearly doubled its population from roughly 3,400 residents to 6,700.) A study last year found that LIC has outpaced the rest of the United States for new housing developments, and a local neighborhood development organization found that the area is on pace to grow from 80,000 residents to over 100,000 in the next three years.
Meanwhile, the income gap is continuing to widen: the median household income at Queensbridge Houses is $15,000, compared to $133,000 of those in the high-rise apartments in Hunters Point. Both those locations are within a 5-block radius of Amazon’s HQ2.
A spokesman for Amazon, Sam Kennedy, declined to comment on its plans in New York, but said that the company has a proven track record of funding and creating programs for the needy in Seattle, where Amazon has its main headquarters. This includes donating tens of millions of dollars, creating affordable housing, opening a shelter in its office complex for homeless families and creating a training program for the food service and culinary industries for less-advantaged residents.”
2. A Country Divided By Real Estate
+ Now, we can’t ignore the red elephant in the room—it’s been an intense rat race for both sides this past couple of months leading up to the midterm elections. The country is split, left and right, in its values and, consequently, voting. Real estate data can reveal what you believe in and predict how you vote.
“We found stark differences between America’s red and blue real estate—everything from the cost of homes, the number of places being built, even the credit scores it takes to buy a home. ‘Not only are people living in different political realities, but they’re contending with very different housing realities and paying different amounts for it,’ says Mark Muro, senior fellow in the metropolitan policy program at the Brookings Institution, a think tank based in Washington, D.C.
Where voters live may be the most crucial factor in what side of the political equation they’re on. Trump won 2,625 counties in the 2016 election compared with Clinton’s 487. But Clinton won the expensive, diverse, and crowded big cities while Trump swept the inexpensive, more sparsely populated rural America. That’s why she won the popular vote by nearly 2.9 million ballots. The suburbs remain the country’s battleground.
‘You’re seeing the Democrats become more and more of an urban party and the Republicans become more of a rural or exurban party,’ says Kyle Kondik, managing editor of Sabato’s Crystal Ball, a newsletter from the University of Virginia Center for Politics. ‘As you get farther out from the city, it gets more Republican.'”
+ Then, what does it look like for the real estate market with our newly elected congress? What does this look like for home buyers and sellers? From Inman.com: What the new Congress means for real estate. “For one the housing market, unlike the stock market, does not make sudden moves based on events like elections. Buyers will still purchase homes and sellers will still list their houses.
However, longer-term public policy can play an important role, as we have learned with actions by the Federal Reserve, starting three years ago when it began raising interest rates. Plus, tax reform has played a role — good and bad — with the real estate scene.”
3. Camp Fire to Thousand Oaks
+ Camp Fire tops the list for most destructive wildfires in California. Though it’s now 100% contained, the wildfires left a trail of flattened towns and destroyed homes (unless you hired private firefighters like the Kardashian-Wests).
+ This map of Camp Fire Structure Status shows just how damaging the fires were in this area, with the majority of homes destroyed more than 50%.
+ HomeLight: Firestorms in Northern California Cause Unchartered Territory in the Real Estate Market. HomeLight analyzed the effects of the 2017 wildfires in Sonoma and Santa Rosa, CA— “According to HomeLight data, the real estate market in Sonoma county took a steep dip at the start of the fires, but in days after the containment began, sales crawled back up.
In fact, sales are creeping back to the level they were at this time last year, despite fire cleanup and aftermath. Instead of overpriced homes sitting on the market, they’re selling right away. As soon as a listing hits, buyers come in with their best offer.”
+ It’s a bit too soon to forecast the housing and real estate status of these areas, with damage inspectors and cadaver dogs still on the field, and a disheartening missing persons list.
+ Business Insider: Wildfires in California have destroyed thousands of homes, and the devastating pattern is making fire insurance more expensive and complicated than ever “Thanks to heightened wildfire activity across the state, it’s becoming harder than ever for California homeowners to obtain and keep fire insurance, reported the Associated Press.
‘As California wildfires grow larger and more intense, an increasing number of insurance companies are not renewing policies for customers who live in areas they deem too risky to cover,’ wrote Laura Newberry of the Los Angeles Times.
‘The state estimates that more than one million California homes are considered at high risk for wildfires.’ California homeowner complaints about being dropped from their plans increased threefold from 2010 to 2016, and complaints about premium hikes increased by 217%, reported Newberry, citing a California Department of Insurance report.
Wildfires are potentially devastating to property owners and community members; they can lead to massive changes in the real estate marketplace. Property owners will face the decision whether to stay and rebuild or leave to start fresh, the decision is situational. It is important for property owners to listen to their community leaders, talk to their neighbors and get a feel for where they would like their future to lie.
After detrimental events, such as a wildfire, we have found that property owners will either ‘dive, survive or thrive.’ Wildfires can be an opportunity to paint a fresh picture and thrive. While it is never easy to deal with life-altering devastation, being aware of what is going on around you will help promote a positive rebuilding process.” Forbes.com: The Impact of Wildfires on The Future of California Real Estate.
“FEMA, a government entity, does not accept donations, but they are working closely with non-profits that are relying on donations. Hart urges people who want to donate to make sure that whichever charity you choose has been approved by National Voluntary Organizations Active in Disaster (VOAD).
Here’s a list of some organizations working closely with survivors:
- California Fire Foundation
- United Way (Greater Los Angeles) and United Way of Northern California
- California Community Foundation
- North Valley Community Foundation
- Ventura County Community Foundation
- AirBNB Open Homes program
“Volunteering in the affected areas is another great way to help. Anthony C. Tornetta, spokesperson for the Red Cross, reminds us that the Red Cross is 90-percent volunteer based.
‘Right now best thing is to go on the Red Cross site and sign up to volunteer,’ says Tornetta. ‘Whatever time you can commit, whether it’s a week or eight hours — we will welcome your support. Please sign up and call first, as we can’t necessarily stop in the middle of an operation if you just show up.'”
4. DIY a Christmas Gift, Not Your Home Sale
+ Realtor Magazine: FSBO Transactions Hit New Record Low “The number of For Sale by Owner transactions fell to a record low of 7 percent of all home sales in 2018, down from 8 percent last year, according to the National Association of REALTORS®’ 2018 Profile of Home Buyers and Sellers. FSBOs—homeowners who try to sell their properties themselves without a real estate agent—have decreased dramatically since 1981, when they accounted for 15 percent of all home sales.”
+ What does this mean for home buyers and sellers? Chances are, you can’t compete with the chops of top real estate agents who have been in the business for years—they know the right people and the practices to get you the most for your money.
Find a top real estate agent in your area
We analyze millions of home sales to find top real estate agents
+ So, as we head into the holiday seasons and you’re thinking about selling or buying a home, take into account these five trends for the 2019 housing market.
+ From Caroline Feeney, Forbes: Real Estate Markets Cooling Across The Country, And It’s Not Just The Winter Effect
“1. Mortgage rates will continue to rise and hit 5.5% in 2019.
2. Homebuyers will have more negotiating power, and sellers will need to make more compromises.
3. As price gains slow, home values will still appreciate at a 2-3% clip.
4. Markets will cool faster or slower depending on local conditions and tax burdens.
5. Upper-tier markets will soften while demand for entry-level housing remains high.”
+ Work with the top real estate agent in your area to navigate the rest of the year and 2019.
5. The Wells Fargo wagon is not coming to town
+ “Wells Fargo acknowledged Tuesday that, because of a calculation error, it had improperly foreclosed on 545 distressed homeowners after they asked for help with their mortgages. Overall, 870 homeowners were denied help for which they qualified — with more than half losing their homes afterward, Wells Fargo said.” Washington Post: Wells Fargo admits it incorrectly foreclosed on 545 homeowners it should have helped
+ ‘Wells Fargo initially disclosed the problem in August and said it would set aside $8 million, or about $12,800 per customer, to address the problem. But on Tuesday it increased the number of people it believes were affected after conducting an expanded review. A ‘substantial majority’ of the borrowers have already been contacted and will be offered “remediation,’ the bank said.
The bank did not say how much more money, if any, it expects to set aside to compensate the additional borrowers.
+ ‘This effort to identify other instances in which customers may have experienced harm is ongoing, and it is possible that we may identify other areas of potential concern,’ the bank said in its SEC filing.”
+ One word: Yikes. Calculation errors… isn’t their job to do, well, calculations? Some owners decided to take action against their wrongful disclosure. Market Watch: Longtime Sacramento Restaurant Owner Files Wrongful Foreclosure Lawsuit Against Wells Fargo.
+ CBS News: How to fight a wrongful foreclosure.
6. Cash or coin?
+ Blockchain is taking on a new frontier: real estate. But, it’s premature to think that young tech billionaires are now purchasing homes with Dogecoins.
As it stands, most real estate transactions that involve cryptocurrency require the parties to transfer their assets into fiat cash – although experiments involving direct crypto to crypto transfers are ongoing.
While blockchain is forecast to turn into a billion-dollar industry in the next few years, growing to $9.7 billion by 2021, the report states that adoption in the commercial real estate markets is limited. To date, only a handful of single-family sales have taken place using cryptocurrency.”
+ For more literature: The Blockchain for Real Estate, Explained (Forbes)
+ If Bitcoin isn’t your thing, what about cold hard cash? Housing Wire: Feds significantly expand investigation into all cash real estate deals
“Title insurance companies in 12 of the nation’s largest markets will now have to provide federal authorities with substantial details on all real estate deals of $300,000 or more if the buyer is paying all cash. The requirement comes at the hands of the Treasury Department’s Financial Crimes Enforcement Network, which is significantly expanding its investigation into whether foreign buyers are using shell companies to buy U.S. real estate in order to launder money.
The results of that initial investigation showed more than 25% of transactions covered in the initial inquiry involved a “beneficial owner” who is also the subject of a “suspicious activity report,” which is an indication of possible criminal activity.
But now, FinCEN is dramatically lowering the reporting threshold and expanding the investigation to several new cities.
Going forward, title companies in Boston; Chicago; Dallas-Fort Worth; Honolulu; Las Vegas; Los Angeles; Miami; New York City; San Antonio; San Diego; San Francisco; and Seattle will all be required to report on the person behind shell companies on all-cash deals of $300,000 or more.”
7. Mr. Robot, the Realtor
+ “Home buyers have reported losses totaling $1 billion to the FBI since 2015” reports NBCNews Bay Area (“They Failed to Protect My Money”: Home Buyers Demand Answers, Accountability After Fraud). “Among the latest victims is Maria Lopez, a Napa retiree. She now finds herself caught up in a costly home purchase gone awry.‘ I have absolutely no savings,’ Maria said. ‘So, if something happens, like if my car breaks down, I have no money to pay for that.” Maria did have savings — until someone stole it…Internet thieves spoofed her real estate agent’s email account, and took every penny.”
+ The FBI issued a public service announcement just last year, warning against electronic money wiring and email fraud. How can you prevent this from happening to you?
+ Realtor Magazine: Housing is the second highest industry for cyber attacks
“Be particularly vigilant Tuesday through Thursday. Cyberattacks can happen at any time, but businesses were found to be 2.5 times more likely to fall victim to a phishing attack between Tuesdays and Thursdays.
Watch for fake invoices. The most common way to disguise malware for businesses is through an ‘invoice.’
Don’t be ignorant. For every 33 employees, you can expect one phishing attack per quarter, the report finds.
Don’t believe software will always protect you. Antivirus software usually lags 30 days behind evolving malware in detecting it.”
8. Flash sale! This Thanksgiving only—ish!
+ 70% off flatscreen TVs, buy one get one 50%—Black Friday is any shopper’s Holy day. Now, what about housing? Do “hot deals, act now!” exist in the real estate industry?
+ Kind of… (Bloomberg: Black Friday Comes to London Apartments With $64,000 Discounts), but for real estate in the U.S., the best time to buy isn’t necessarily on the day after Macy’s Thanksgiving Parade. What you can do is time your sale or purchase like a Black Friday deal.
+ Find out the best time to sell your house with HomeLight’s Best Time To Sell tool.
+ “Over the last 5 years, we’ve compiled the most comprehensive dataset on real estate transactions nationwide. Each month, we add new information to our database to better match homeowners with the top real estate agents in their areas. This same data can be used to see the best time to put your house on the market.”
+ Attom Data: Top 10 days of the year to buy a home “ATTOM Data Solutions, curator of the nation’s premier property database, today released an analysis of the best days of the year to buy a home, which shows that only 10 days of the year offer discounts below estimated market value — seven in December, and one each in October, November, and February.
According to the analysis, buyers willing to close on a home purchase the day after Christmas realize the biggest discounts below full market of any day in the year. This analysis of more than 18 million single-family home and condo sales over the past five years is evidence of the hot sellers’ market of the past five years.”
9. Rodgers and Hammerstein’s Tulsa, Oklahoma!—remote
+ Cheaper housing and a growing tech community: sounds like the perfect hipster hub for millennials, and you’re right! If you’re over 18 and willing to relocate, Tulsa, OK will pay you to live in their city. To be exact: a $2,500 relocation cash gift, $500 monthly stipend, and $1,500 bonus after 12 months of living in the city.
“Another big plus is that Tulsa is much, much cheaper to live in than New York City. The median home price here is about $120,000, not nearly $700,000. And, for about 25 lucky telecommuters looking for a change of scenery, it’s about to get even more affordable.”
“Eligible workers receive access to additional benefits, including a co-working space that comes with complimentary snacks and beverages, as well as monthly meetups and workshops with fellow members and Tulsa entrepreneurs.
Program participants will also have the option of living in a new, fully-furnished apartment for a discounted rent, plus free utilities for the first three months.”
+ This isn’t the first city offering straight up cash for you to move in with them. Newton, Iowa revitalized their dwindling population with a $10,000 subsidy, Vermont is offering $10,000 in tax breaks, and Maine expanded a local program to offer student loan forgiveness for recent grads.
+ In an effort to compete with coastal migrations, the Midwest is laying it all on the line, “Love Actually”-style. But, with a $10,000 bag of money.