Monthly Archives: March 2017

House Canary as executive vice president of analytics

House Canary as executive vice president of analytics

Modern data analytics company and 2017 HW Tech100 winner HouseCanary has brought on Alex Villacorta as executive vice president of analytics.

Villacorta, who holds a Ph.D in statistics and applied probability, comes to HouseCanary from Clear Capital, where he created and led the research and housing analytics team. At HouseCanary, he will be joining its predictive analytics team.

“Having gotten to know the HouseCanary team over the last three years, it’s been exciting to watch their growth and vision for redefining real estate data and analytics and transforming the industry,” said Villacorta.

During the last 15 years, Villacorta, who is a 2014 HW Rising Star, has developed and led teams in advanced statistics applied to housing, media, and educational data streams.

“Alex’s energy, vision, and knowledge are a perfect complement to HouseCanary’s dynamic group,” explained Jeremy Sicklick, CEO and co-founder of HouseCanary. “His addition rounds out a team ready to turn residential real estate on its head.”

“The residential market is critically important to everyday homeowners and to the national economy, and HouseCanary’s genuine passion to make valuation and risk assessment consistent and reliable for all market players has been inspiring — I’m beyond excited to be joining a group of true innovators,” Villacorta added.


Real Estate Appraisal Board fights back against FTC price

Real Estate Appraisal Board fights back against FTC price

Last month, the Federal Trade Commission filed a complaint against the Louisiana Real Estate Appraisal Board, accusing the regulatory body that oversees property appraisals in the state of stifling price competition by requiring appraisal management companies to follow the state’s established polices for the fees that AMCs pay to appraisers.

At the time, the Louisiana Real Estate Appraisers Board denied the FTC’s allegations, stating that any accusations that it operates beyond its rights are “ludicrous” and without merit.

“To now suggest that LREAB’s good faith efforts to comply with federal law is some sort of shadowy price-fixing conspiracy is ludicrous. Congress and six financial regulatory agencies in Washington have directed Louisiana to do exactly what the FTC is now alleging is an antitrust violation,” Bruce Unangst, executive director of the Louisiana Real Estate Appraisers Board, said in a statement at the time.

Unangst also said that the board planned to fight the FTC, and that’s exactly what the board is doing.

Earlier this week, the Louisiana Real Estate Appraisers Board filed a response to the FTC’s allegations, in which the group repeatedly denies the FTC’s numerous allegations.

“The LREAB categorically and vociferously denies these allegations as factually false and politically wrong-headed,” the board said in its response. “The State of Louisiana and the LREAB diligently implemented and followed the Dodd-Frank federal mandates so as to protect the greater public interest in a financially sound home real estate market.”

The board also states that the FTC has “no cause, legal or factual, to punish the LREAB for acting in good faith” to implement the appraisal laws laid out by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

“LREAB’s actions throughout the rule-making process — tracking the express language of Dodd-Frank and allowing extensive public comment on its proposed rules — demonstrate LREAB’s painstaking efforts both to be consistent with federal law and responsive to public and industry concerns,” the board’s response states. “The FTC has no cause, legal or factual, to punish the LREAB for acting in good faith to implement federal laws and policies designed to serve the public interest by ensuring the integrity of the residential mortgage appraisal process.”

Those rules stipulate that appraisal management companies should pay “a rate that is customary and reasonable for appraisal services performed in the market area of the property being appraised.”

In its complaint, the FTC alleges that the board required that appraisal fees are equal to or greater than the median fees established in survey reports commissioned and published by the board.

Additionally, the FTC claimed that the board exceeded its authority by investigating and sanctioning companies that paid fees below the levels specified in those reports.

The FTC’s complaint alleges that Dodd-Frank “neither requires nor authorizes the restrictions that the board placed on appraisal fees.” And according to the FTC, the state’s rules and the board’s insistence on enforcing them limits the freedom of appraisers and their customers to engage in “bona fide negotiations” to set appraisal fees for real estate appraisals in the state.

“The Board adopted a regulation, effective as of Nov. 20, 2013, purportedly implementing a requirement under federal and Louisiana law that AMCs pay appraisers a ‘customary and reasonable’ fee for real estate appraisal services,” the FTC said in its complaint. “In both promulgating and subsequently enforcing that regulation, the Board has unlawfully restrained price competition.”

In its 15-page response, the board denies all of those allegations. In fact, the board’s response goes through each paragraph of the FTC’s allegations individually and denies each one in turn.

The board’s response also lays out a series of defenses to the FTC’s charges, stating the following:

  • The FTC’s complaint fails adequately to allege that the Board has a controlling number of active participants in the relevant residential appraisal market (emphasis included in board’s response)
  • LREAB has acted in good faith to comply with a federal regulatory mandates
  • The Complaint fails to allege any plausible harm to competition
  • The Complaint fails to allege any plausible harm to consumers or consumer welfare
  • The alleged potential harm to competition is not actionable

Rental occupancy rates flatten

Rental occupancy rates flatten

Americans are shifting their preferences from renting to home buying, an analysis by TransUnion for the first quarter of 2017 showed.

The study showed 55% of those who shopped for a mortgage in the first quarter of 2017 were non-homeowners, most of whom were renters. This is a significant increase from the first quarter of 2016 when that number was 50% and from the first quarter of 2016 when it sat at 45%.

“The rental market has seen sustained growth for the last several years, but occupancy rates have flattened from their peak in the second quarter of 2016,” said Mike Doherty, senior vice president of TransUnion’s rental screening solutions group.

“This new uptick in mortgage shopping could be a precursor to further declines in occupancy, which would impact rent growth, and ultimately, revenue, for multifamily property owners,” Doherty said. “In anticipation of this potential shift, owners and property managers should be offering the right amenities and programs designed to attract renters.”

Millennial interest in homeownership has been steadily growing, the TransUnion study showed. In 2017, 29% of non-homeowners who shopped for mortgages were Millennials. This is up slightly from 28% in 2016 and 27% in 2015.

“Property management companies should consider new services such as rental payment reporting to credit bureaus to entice renters into their multifamily properties,” Doherty said.

“In many cases, renters are more likely to choose a unit if their property manager reports their rental payments,” he said. “Our survey data show that most renters prioritize their rental payments and want their payment reported.”

Previously, TransUnion found 51% of renters were more likely to choose a property if they knew their landlord would report their payments to credit bureaus, and 79% of respondents said they prioritize rental payments above all other monthly bills.

Median home price hits new high

Median home price hits new high

Existing home sales rebounded in May as low inventory levels pushed median home prices to a new high, according to the latest report from the National Association of Realtors.

And as competition increased, the median days a home is on a market sank to a new low, the report showed.

Total existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 1.1% to a seasonally adjusted annual rate of 5.62 million in May. This is down from a downwardly revised 5.56 million in April.

This sales pace is an increase of 2.7% from last year, and the third highest pace over the past year, the report showed.

“The job market in most of the country is healthy and the recent downward trend in mortgage rates continues to keep buyer interest at a robust level,” NAR Chief Economist Lawrence Yun said. “Those able to close on a home last month are probably feeling both happy and relieved.”

“Listings in the affordable price range are scarce, homes are coming off the market at an extremely fast pace and the prevalence of multiple offers in some markets are pushing prices higher,” Yun said.

The median existing home price for all housing types increased to $252,800 in May, passing up last June’s $247,600 as the new peak median sales price, and increasing 5.8% from May last year. This marks the 63rd straight month of year-over-year gains.

Total housing inventory rose 2.1% at the end of May to 1.96 million existing homes available for sale, but is still 8.4% lower than last year’s 2.14 million. Unsold inventory rests at a 4.2-month supply at the current sales pace, down from 4.7 months last year.

“Home prices keep chugging along at a pace that is not sustainable in the long run,” Yun said. “Current demand levels indicate sales should be stronger, but it’s clear some would-be buyers are having to delay or postpone their home search because low supply is leading to worsening affordability conditions.”

Properties stayed on the market an average of 27 days in May, down from 29 days the month before and 32 days last year to the shortest timeframe since NAR began tracking in May 2011. Short sales were on the market the longest at a median 94 days in May, while foreclosures sold in 48 days and non-distressed homes took 27 days.

“With new and existing supply failing to catch up with demand, several markets this summer will continue to see homes going under contract at this remarkably fast pace of under a month,” Yun said.

Forestar as battle with D.R. Horton intensifies

Forestar as battle with D.R. Horton intensifies

There’s a battle brewing between two real estate titans as Starwood Capital Group and D.R. Horton are both angling to acquire Forestar Group, a residential and mixed-use real estate developer.

Last month, Forestar and Starwood announced that the companies reached a merger agreement, which would see Starwood acquire all of Forestar’s outstanding shares for $14.25 per share in cash.

The total purchase price would be approximately $605 million.

But, D.R. Horton attempted to swoop in with a superior offer. After the details of the Forestar-Starwood merger were announced, the homebuilder announced that it was submitting a proposal to acquire 75% of Forestar’s outstanding shares.

The difference? D.R. Horton was offering $16.25 per share, two dollars more per share than Starwood was offering.

“We believe that D.R. Horton is uniquely positioned to make Forestar the country’s leading residential land development company,” Donald Horton, D.R. Horton’s chairman of the board, said at the time. “Together, we can grow Forestar into a much more significant and valuable company for all of its stockholders.”

D.R. Horton’s offer would total somewhere in the neighborhood of $520 million.

At the time, Forestar acknowledged that it received D.R. Horton’s proposal, but said that its board continued to recommend that Forestar’s stockholders vote to accept the Starwood merger agreement.

But Thursday, Starwood upped the ante by raising its offer for Forestar.

Forestar announced Thursday that Starwood is now offering $15.50 for each of its outstanding shares, which would raise the total purchase price from $605 million to approximately $658 million.

The two companies amended their merger agreement to reflect the increased offer, but Forestar said that its board is considering D.R. Horton’s offer as well.

“Forestar’s board of directors has determined that the unsolicited, nonbinding proposal from D.R. Horton continues to be a proposal that could reasonably be expected to lead to a ‘Superior Proposal,’ as defined in Forestar’s amended merger agreement with Starwood,” Forestar said in a release.

Forestar said that its board is not taking any action related to either offer beyond considering each offer’s merits.

“Forestar’s board of directors is not modifying, withdrawing, amending or qualifying its recommendation in favor of the Starwood merger agreement and the merger contemplated thereby, or proposing to do so, and is not making any recommendation with respect to the D.R. Horton proposal,” the company said.

D.R. Horton, on the other hand, appears unwilling to acquiesce to Starwood and its increased offer.

In a separate announcement, D.R. Horton said Thursday that it still believes its offer is superior and suggests that a partnership with Forestar will allow Forestar to grow into a “leading publicly traded national land developer.”

In a statement, Donald Horton, D.R. Horton’s chairman of the board, said that the deal would present a “significant growth opportunity” for both companies.

“We are confident that our proposal is superior to the amended agreement with Starwood and remain fully committed to closing a Forestar transaction in the best interests of both companies’ shareholders,” Horton said.

Desperate to get a home

Desperate to get a home

Existing home sales increased in May, a sign some experts say shows the strength of homebuyer demand.

One expert explained that buying conditions in many markets have put sellers in complete control and buyers are forced to contend with rising competition.

“The fact that sales of existing homes rose in May, despite incredibly limited selection, shrinking times on market and rapidly rising prices, is a testament to just how strong the draw to homeownership is right now for millions of Americans,” Zillow Chief Economist Svenja Gudell said. “It’s no exaggeration to say that current buying conditions in many markets are terrible, with sellers in complete control and buyers forced to contend with cutthroat competition and intense pressure to make a deal.”

“Still, despite these notable challenges, buyers are finding ways to make things work and continue to come out in droves,” Gudell said. “As long as the economy continues to chug along as it has, I see no reason for this widespread demand to fall off, nor for the pendulum to meaningfully swing back in favor of buyers, any time soon.”

Other experts agree the rate of housing inventory is holding back home sales. As the demand for housing grows each month, inventory becomes even more limited.

“Persistently low inventory continues to dominate the sluggish existing home sales narrative,” Trulia Senior Economist Cheryl Young said. “The rate of existing home sales, however, is one of the highest since the crisis.”

“Facing low inventory and high prices but strong demand, homebuyers are leaving a smaller share of existing home inventory on the market each month,” Young said.

Best and worst at paying their mortgage

Best and worst at paying their mortgage

Delinquencies and foreclosure rates dropped in May, partially reversing the sudden increase in April, according to Black Knight Financial Services’ First Look report.

After rising 13% in April, the largest monthly increase since November 2008, delinquencies saw a partial reversal in May with a drop of 7%.

The inventory of loans that are either seriously delinquent, 90 days or more past due or in active foreclosure continued to improve, hitting a 10-year low in May. The number of loans in foreclosure hit 421,000 in May, a drop of 12,000 loans from April and 153,000 loans from last year.

However, foreclosure starts increased slightly by 55,800 loans, up 5.7% from April. However, this is the second-lowest number of monthly starts since 2005.

Here are the five states with the lowest percentage of non-current loans, the combined foreclosures and delinquencies as a percentage of active loans in the state:

  • Colorado: 2.12%
  • North Dakota: 2.26%
  • Minnesota: 2.51%
  • Idaho: 2.69%
  • Oregon: 2.7%

And here are the states where homeowners struggle the most to keep up with their mortgage payment and hold the highest non-current percentage:

  • Maine: 6.6%
  • West Virginia: 6.83%
  • Alabama: 7.13%
  • Louisiana: 8.68%
  • Mississippi: 10.16%

In a separate announcement, D.R. Horton said Thursday that it still believes its offer is superior and suggests that a partnership with Forestar will allow Forestar to grow into a “leading publicly traded national land developer.”

In a statement, Donald Horton, D.R. Horton’s chairman of the board, said that the deal would present a “significant growth opportunity” for both companies.

“We are confident that our proposal is superior to the amended agreement with Starwood and remain fully committed to closing a Forestar transaction in the best interests of both companies’ shareholders,” Horton said.

“We have completed our due diligence and have submitted a fully negotiated Merger Agreement, Master Supply Agreement and Stockholder Agreement to the Forestar Board of Directors,” Horton continued. “We urge the Forestar Board to formally declare our proposal to be a ‘Superior Proposal,’ and to proceed to a definitive agreement with D.R. Horton and postpone the shareholder meeting scheduled for July 7, 2017.”

In its release, Forestar cautioned that there is no assurance that either deal will be completed.

Refinance demand drives uptick in mortgage applications

Refinance demand drives uptick in mortgage applications

Mortgage applications continued to rise (albeit slightly) in the last week, with refinance applications driving the increase again, according to the latest data from the Mortgage Bankers Association.

According to the data from the MBA’s Weekly Mortgage Applications Survey for the week ending June 16, mortgage applications increased 0.6% from one week earlier.

Last week’s report showed that mortgage applications increased 2.8% from the week earlier, which included an adjustment for the Memorial Day holiday. That followed the previous week’s increase of 7.1% from the week before that.

As with last week’s report, the increase came from refinances.

Overall, the Market Composite Index, a measure of mortgage loan application volume, increased 0.6% on a seasonally adjusted basis from one week ago.

The Refinance Index rose 2% from the previous week to its highest level since November 2016, while the seasonally adjusted Purchase Index decreased 1% from one week earlier.

Additionally, the MBA report showed that the refinance share of mortgage activity increased from 45.4% of total applications last week to 46.6% this week. The adjustable-rate mortgage share of activity increased to 7.5% of total applications from 7.4% last week.

The report also showed that the Federal Housing Administration’s share of total applications fell to 10.1% from 11.2% last week, while the Veterans Affairs’ share of total applications fell from 11.1% to 10.4%.

The Department of Agriculture’s share of total applications fell slightly, from 0.8% to 0.7%.

Finally, the report showed that the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) remained at 4.13%, while the average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100) increased from 4.06% to 4.08%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased from 4% to 4.04%.

The average contract interest rate for 15-year fixed-rate mortgages increased from 3.37% to 3.4%, and the average contract interest rate for 5/1 ARMs remained at 3.26%.