|The Next Jobs Humans Lose to Robots: Real Estate Appraiser
Twenty-five years ago, Brian Weaver was told at a seminar that the real estate appraisal profession would be killed off by technology in five years. It didn’t happen. But he now thinks the forecast wasn’t exactly wrong — just early, according to Business Week.
Weaver works at the appraisal licensing board in Illinois. Appraisers size up the value of a home before a lender gives the buyer a mortgage. He says a reckoning has arrived for the industry, which employs about 73,000 mostly college-educated people in the U.S. “The future for appraisers specializing in residential mortgage work is coming to an end,” he wrote in a recent newsletter for peers. “No bang. Not even a whimper.”
That’s because the breakthroughs predicted at that seminar a quarter-century ago are finally happening. Advances in big data and computing are helping automation creep into knowledge-based professions, threatening to knock off jobs in much the same way robots have been doing at factories for decades.
“Technology is evolving so you need to evolve as well,” says The Collingwood Group Managing Director Tom Booker. “Information technologies have become better at making objective judgments based upon rules and data. In the real estate industry, there are many activities that fit that description. Tasks that are based on standardized data and judgments will be high-value targets for automation. The result will be humans taking on the tougher work and the more uniform tasks are performed by systems. This is not disruption but evolution … and it will move at a faster pace.”
Zillow Group Inc. says its algorithms are learning to capture not only the crude facts about values in the surrounding neighborhood but also more sophisticated price indicators, such as whether the living room has hardwood floors or the kitchen has granite countertops. While Zillow’s software isn’t used in appraisals — its numbers are available on its web site for free — lenders have long used internal and third-party computer models to help value homes.
And now mortgage companies such as Freddie Mac are starting to get more comfortable with transactions that require less involvement with a human appraiser.
“The Commercial Real Estate appraisal industry has been through many changes over the years,” says Situs RERC’s Assistant Vice President Jennifer Rasmussen. “This is one of the reasons why Situs RERC developed its industry-leading start-to-finish valuation management and support services.”
Rasmussen says people will still be important in the bigger picture. “While computers are certainly more efficient at standardized tasks, there are many ways that human, real estate professionals add alpha; appraisal is both an art and a science,” she says. “Robots have a tough time executing subjective tasks.”
Financial institutions seeking expanded insight into real property investment should consider engaging an SEC-registered independent specialist. Please visit Situs RERC to learn more about our real estate research and valuation advisory services.
We’ve Been Warning You: Here Comes AmazonInvestors in online real estate database specialist Zillow are on edge after it emerged that Amazon, the e-commerce behemoth responsible for forcing a number of companies out of business, might be about to launch a rival realtor hiring service.
According to multiple news outlets, at some point Wednesday, while Prime Day was breaking records, a “Hire a Relator” link suddenly appeared on Amazon’s website. The page, which was later taken down, was reportedly located in the Home and Business Services section, a part of Amazon’s website dedicated to connecting customers with experts in home improvement, electronics installation, and various other services.
The link asked users to enter their zip code. It also featured a “coming soon” message, together with the option to receive an email when the service is made fully available.
read more: Investopedia
Millennial, First-Time Home Buying: The Information Gap
A new study recently released by Bank of America has found that most first-time homebuyers are unaware of the potential uses of a home equity line of credit (HELOC).
According to the data, more than 36 percent of first-time homebuyers wouldn’t open a HELOC because of a lack of understanding as to how it works. Of those that would, the disparity on what they would use it for is evident between experienced homebuyers and first-time homebuyers.
Home improvements were the most popular use of HELOCs, with 58 percent of all homeowners noting that this was what they put their line of credit toward. Thirty-five percent said they used a HELOC to consolidate their debt, and only 11 percent said they would use it for emergency funds. Of those questioned for the survey, 10 percent of homeowners have yet to tap into their home equity line of credit.
Between experienced buyers and first-time buyers, 92 percent said home improvements was their goal, compared to 81 percent, respectively. Eighty-one percent of experienced buyers said they would use their HELOC to consolidate debt, while only 62 percent of first-time buyers would take out credit on their home to do the same. Only 61 percent of first-time homebuyers would use a HELOC for emergency funds, as opposed to 77 percent of experienced homeowners. Education expenses amounted to 74 percent for experienced buyers, and only 56 percent of first-time homebuyers.
When considering what type of home to buy, first-time homebuyers were more willing to consider a home that they could fix up themselves. Seventeen percent of first-time homebuyers said they wanted a home they could make major renovations to, as opposed to 10 percent of people who had already owned at least one home. Thirty-nine percent of first-time homebuyers said they wanted a house that they could make small cosmetic changes to. Experienced homebuyers were almost equally as willing to settle for a house with small changes, at 31 percent.
read more: MReport
Cohn Reportedly Trump’s Top Candidate to Replace Yellen at Fed
President Donald Trump is increasingly unlikely to nominate Federal Reserve Chair Janet Yellen next year for a second term, four people close to the process said.
National Economic Council Director Gary Cohn is now the leading candidate to succeed Yellen as the world’s most important central banker, these people said. Yellen begins two days of congressional testimony on Wednesday, and her own future in the job may come up in questioning.
If Trump taps Cohn for the Fed, it could enrage economic nationalists in the White House and some staunchly conservative Republicans on Capitol Hill who don’t like the former Goldman Sachs president’s background as a Democrat who generally favors free trade.
And it would spur a backlash from progressive lawmakers who have blasted the president for picking multiple Goldman alums to run economic policy.
But sources on Capitol Hill and inside the White House and the Treasury Department said that, at least as of now, if Cohn decides he wants the job, he is likely to get it.
read more: Politco
Yellen’s Dovish Forecast
Federal Reserve Chair Janet Yellen tells Congress the central bank is likely to reduce stimulus later this year.
The Fed accumulated its $4.5 trillion balance sheet as it sought to stimulate the economy during and after the financial crisis. The expansion came largely through the purchase of Treasurys and mortgage-backed securities.
She also said the balance sheet reduction and rate increases would be gradual. Yellen also noted rates won’t have to rise as much to get to neutral, as in previous decades.Yellen says “the evolution of the economy will warrant gradual increases in the federal-funds rate over time to achieve and maintain maximum employment and stable prices.”
BOOM: $35 Million Home Hits Market in Hamptons
The largest home being sold in the Hamptons, a 23,000-square-foot estate, hit the market for $34.95 million.
The newly built home in Southampton, located at 6 Olde Town, is bigger than the next-largest, La Dune, which is being marketed for $145 million, by 1,000 square feet.
The pristine home, or Summerhouse, as it is called, was designed for the “modernist buyer,” said Harold Grant, listing agent for this property.
The outside is very traditional. As you drive up to a classic New England shingle-style home, you notice the quintessential beach-home exterior. The inside, meanwhile, is fitted with state-of-the-art modern amenities like a chef’s kitchen with industrial appliances and five custom stone fireplaces. The contrast between the interior and exterior adds a refreshing touch to the nine-bedroom, nine-full- and four-half-bathroom house, according to the listing.
read more: NY Post
Nashville is Top Summer Housing Market
The home of country music tops Ten-X’s Single-Family Housing Markets Report for the Summer.
Among the 50 largest US markets, the top five (in order) are Nashville, Orlando, Fort Worth, Dallas and San Antonio.
“This quarter’s housing report continues to show that the housing market recovery varies greatly by region,” said Ten-X Executive Vice President Rick Sharga. “Markets in the South and Southeast with strong job and population growth – notably Texas and Florida – continue to have a much stronger outlook than much of the Midwest and Northeast. Markets in California and the Pacific Northwest appear to be cooling down a bit as home prices have risen to levels unaffordable for many prospective buyers.”
Nashville endured a modest downturn in existing-home prices after the 2008 housing crash, but since then, prices in the metro have surged well beyond their prior peak. Orlando’s ranking reflects the continued opportunity for continued growth amid the protracted recovery seen across many Florida metros. Meanwhile, Texas emerged as a prominent force this quarter. Despite cooling somewhat with the onset of lower oil prices, the Dallas, Fort Worth and San Antonio markets have been resilient, with prices surging well beyond previous highs.
NYC Airbnb Battle Targets Landlords
In its running battle to stem the tide of illegal Airbnb listings, New York City has been alienating a powerful ally: landlords.
Building owners often have detailed knowledge of what is happening at their properties, information they might be happy to share with the de Blasio administration as it seeks to oust problematic tenants who operate de facto hotels out of their apartments.
But several landlords who have reported illegal home sharing to the Mayor’s Office of Special Enforcement have themselves been slapped with violations. “If you want us to cooperate with you, you have to stop fining us,” said Jeffrey Goldman, a partner at Belkin Burden Wenig & Goldman who specializes in representing landlords.
read more: Crain’s NY
How About an Apocalypse-Safe Bunker?
The super-rich and ultra-paranoid are preparing for the breakup of civilization by purchasing apocalypse-safe bunkers worth millions of pounds.
The 15-story underground luxury compounds are said by the sellers to be able to withstand everything from extreme weather like tornadoes, to a full-blown nuclear attack.
But in 2008 Larry Hall bought the decommissioned site and has subsequently spent $20m (£15.5m) converting it into luxury apartments.
His company, Survival Condo, is now selling them for prices ranging from $1.5m (£1.2m) to $4m (£3.1m). Buyers can purchase a half-floor or full-floor unit.
Unlike most flats, the bunkers come with concrete walls which are 9 feet thick.
The silo cap is also able to withstand winds in excess of 500 miles per hour, far greater than the winds of F-5 Tornadoes, which have winds of up to 300 miles per hour.
Each facility has more than 54,000 square feet of protected space, and are able to sustain 75 people for upwards of five years.
Survival Condo claims that they “have the highest level of military grade security that offers both lethal and non-lethal measures in order [to] protect our residents.”
Additionally, the apartments have a full fibre optic intranet, data-streaming capabilities for education, information, and entertainment, as well as silo-to-silo network links and communications.
Not only are these compounds ready for any fathomable disaster, they are fully decked out in amenities designed to appeal to Survival Condo’s customer base. The compounds consist of a cinema, indoor pool and spa, medical first aid centre, bar, rock climbing wall, and gym.
Survival Condo claims to have customers all over America, and because of this, each has in place a plan to reach their bunker in case of a major catastrophe.
read more: The Independent
How to Swap Your Vacation Home Tax Free
Say you own a vacation home that you’ve rented out most of the time and also used as your personal residence some of the time.
Now you would like to unload this property and acquire another one that you would also rent out most of the time. With real-estate prices surging in many areas, your current property may be worth far more than your tax basis (generally the purchase price plus the cost of improvements minus any depreciation deductions you’ve claimed for rental periods). If so, selling could trigger a big taxable gain (the difference between the net sale price and the property’s tax basis). Not good — especially if you want to use the sales proceeds to buy another vacation property. But there’s a way to avoid the unwelcome tax hit.
Instead of selling, you could swap your vacation home for another one in a tax-deferred exchange under Section 1031 of our Internal Revenue Code. In fact, the IRS has even supplied the recipe for how to exchange mixed-use vacation properties, meaning those that are rented out part of the time and also used for the owner’s personal purposes part of the time. Here’s what you need to know.
When available, a tax-deferred Section 1031 exchange is a great tool for real estate owners. It allows you to unload one property (the relinquished property) and acquire another one (the replacement property) without triggering a current income tax bill on the relinquished property’s appreciation (the difference between its fair market value and its tax basis).
The untaxed gain gets rolled over into the replacement property where it remains untaxed until you sell the replacement property in a taxable transaction. But if you still own the property when you die, any taxable gain may be completely washed away under the current tax rules, thanks to another favorable provision that steps up the tax basis of a deceased person’s property to its date-of-death value. Under this deal, taxable gains can be postponed indefinitely, or even eliminated altogether if you die while still owning the property. Real estate fortunes have been made in this fashion without sharing much with Uncle Sam.
read more: MarketWatch
TGIF! Have a prosperous day and a great weekend at your summer home or wherever life takes you.
Please TIP ME to any news your company is making for inclusion in future updates and let me know if you want to subscribe to this three-day a week newsletter .
Senior Media Consultant