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February 2015

Gloria, Housing stats and more in this week's Markets in a Minute!


> The Fed's January minutes affirm patience with policy rate increases. Foreign events, low inflation and soft wage growth could delay changes. Analysts say rate hikes probably will not come before June and will likely be gradual.
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> Supporting Fed delays, January's Producer Price Index fell. Lower energy prices contribute to producer inflation levels that are lower than the goal.
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> Industrial production's sluggish but upward trend also supports Fed delays. January's numbers increased, but December's were revised downward.
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> January housing starts dropped after a December boost. Housing starts are higher year-over-year.
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> Home builders are still feeling positive overall, with sales expectations fueling the good mood. They predict more sales in 2015 and a bigger surge next year.
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> Freddie Mac's February Outlook revises upward the forecast for house price increases in 2015. The change is due to strong price growth plus tight inventory.
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> After a particularly stressful day, the telemarketer was relieved when a very friendly lady answered his call. After pleasant small talk, he asked for Mr. Smith. Explaining that Mr. Smith no longer lived at that address, the lady kindly offered his new number and assured the telemarketer he would find Mr. Smith there. The telemarketer called the number right away and was surprised to hear a recording:
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> "Thank you for calling Green Acres Cemetery..."
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> Rate movements and volatility are based on published, aggregate national averages and measured from the previous to the most recent midweek daily reporting period. These rate trends can differ from our own and are subject to change at any time.
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> Sincerely,
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> Frank Monetti
> Mortgage Capital Partners, Inc
> Vice President - Sales
> NMLS 263724
> (732) 972-8800
> fmonetti@mortgcap.com
> www.frankmonetti.com
>


Inaccurate Zillow 'Zestimates' a source of conflict over home prices


> When "CBS This Morning" co-host Norah O'Donnell asked the chief executive of Zillow recently about the accuracy of the website's automated property value estimates — known as Zestimates — she touched on one of the most sensitive perception gaps in American real estate.
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> Millennials are finally entering home-buying market
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> Zillow is the most popular online real estate information site, with 73 million unique visitors in December. Along with active listings of properties for sale, it also provides information on houses that are not on the market. You can enter the address or general location in a database of millions of homes and probably pull up key information — square footage, lot size, number of bedrooms and baths, photos, taxes — plus a Zestimate.
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> Shoppers, sellers and buyers routinely quote Zestimates to realty agents — and to one another — as gauges of market value. If a house for sale has a Zestimate of $350,000, a buyer might challenge the sellers' list price of $425,000. Or a seller might demand to know from potential listing brokers why they say a property should sell for just $595,000 when Zillow has it at $685,000.
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> Disparities like these are daily occurrences and, in the words of one realty agent who posted on the industry blog ActiveRain, they are "the bane of my existence." Consumers often take Zestimates "as gospel," said Tim Freund, an agent with Dilbeck Real Estate in Westlake Village. If either the buyer or the seller won't budge off Zillow's estimated value, he told me, "that will kill a deal."
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> Back to the question posed by O'Donnell: Are Zestimates accurate? And if they're off the mark, how far off? Zillow CEO Spencer Rascoff answered that they're "a good starting point" but that nationwide Zestimates have a "median error rate" of about 8%.
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> Homeowners underestimate their property values 1.6%, research says
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> Whoa. That sounds high. On a $500,000 house, that would be a $40,000 disparity — a lot of money on the table — and could create problems. But here's something Rascoff was not asked about: Localized median error rates on Zestimates sometimes far exceed the national median, which raises the odds that sellers and buyers will have conflicts over pricing. Though it's not prominently featured on the website, at the bottom of Zillow's home page in small type is the word "Zestimates." This section provides helpful background information along with valuation error rates by state and county — some of which are stunners.
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> For example, in New York County — Manhattan — the median valuation error rate is 19.9%. In Brooklyn, it's 12.9%. In Somerset County, Md., the rate is an astounding 42%. In some rural counties in California, error rates range as high as 26%. In San Francisco it's 11.6%. With a median home value of $1,000,800 in San Francisco, according to Zillow estimates as of December, a median error rate at this level translates into a price disparity of $116,093.
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> Some real estate agents have done their own studies of accuracy levels of Zillow in their local markets.
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> Last July, Robert Earl, an agent with Choice Homes Team in the Charlottesville, Va., area, examined selling prices and Zestimates of all 21 homes sold that month in the nearby community of Lake Monticello. On 17 sales Zillow overestimated values, including two houses that sold for 61% below the Zestimate.
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> In Carlsbad, Calif., Jeff Dowler, an agent with Solutions Real Estate, did a similar analysis on sales in two ZIP Codes. He found that Zestimates came in below the selling price 70% of the time, with disparities ranging as high as $70,000. In 25% of the sales, Zestimates were higher than the contract price. In 95% of the cases, he said, "Zestimates were wrong. That does not inspire a lot of confidence, at least not for me." In a second ZIP Code, Dowler found that 100% of Zestimates were inaccurate and that disparities were as large as $190,000.
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> So what do you do now that you've got the scoop on Zestimate accuracy? Most important, take Rascoff's advice: Look at them as no more than starting points in pricing discussions with the real authorities on local real estate values — experienced agents and appraisers. Zestimates are hardly gospel — often far from it.

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CoreLogic HPI December 2014 Update















Home Prices Rose by 5 Percent Year Over Year

in December















On a Month-Over-Month Basis, Home Prices Decreased by
0.1 Percent in December.








CoreLogicĀ® HPI Forecast Projects
an Increase of 0.1 Percent
Month-Over-Month in January.
















HOME PRICES INCREASED

HPI FORECAST PROJECTS


5.0%

4.8%


NATIONWIDE COMPARED

TO DECEMBER 2013


FROM DECEMBER 2014

TO DECEMBER 2015

















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