NAR: Pending home sales jump 4.6% in January

 

WASHINGTON – Feb. 27, 2019 – Pending home sales rebounded strongly in January, according to the National Association of Realtors® (NAR). All four major regions saw month-to-month growth last month, including the largest surge in the South, an area that includes Florida.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 4.6 percent to 103.2 in January, up from 98.7 in December. Year-over-year contract signings, however, declined 2.3 percent, making January the thirteenth straight month of annual decreases.

Lawrence Yun, NAR chief economist, says he expected an increase in January home sales because a "change in Federal Reserve policy and the reopening of the government were very beneficial to the market."

Of the four major regions, three areas experienced a decline in a year-to-year comparison, however. Only the Northeast enjoyed a slight growth spurt.

Yun says higher rates discouraged many would-be buyers in 2018. "Homebuyers are now returning and taking advantage of lower interest rates, while a boost in inventory is also providing more choices for consumers."

Additionally, Yun says the inventory of for-sale homes has risen, which bodes well for increased pending sales going forward, and positive pending home sales figures in January will likely continue.

"Income is rising faster than home prices in many areas and mortgage rates look to remain steady," he says." Furthermore, job creation will help lift home buying."

January pending home sales regional breakdown

In 2019, Yun forecasts existing-home sales will be around 5.28 million – down 1.1 percent from 2018 (5.34 million). The national median existing-home price this year is expected to increase around 2.2 percent. In 2018, existing sales declined 3.1 percent and prices rose 4.9 percent.

Pending sales in the Northeast rose 1.6 percent to 94.0 in January and are now 7.6 percent above a year ago. In the Midwest, the index rose 2.8 percent to 100.2 in January – 0.3 percent lower than January 2018.

Pending home sales in the South jumped 8.9 percent to an index of 119.8 in January, which is 3.1 percent lower than this time last year. The index in the West increased 0.3 percent in January to 87.3 and fell 10.1 percent below a year ago.

© 2019 Florida Realtors®

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Advantages of buying young

Regulators ease flood-insurance rules for mortgage holders

 

WASHINGTON – Feb. 12, 2019 – A new regulation allows more homeowners with a mortgage to use private flood insurance coverage rather than only the national flood program.

On Jan. 25, federal banking regulators released a final regulation clarifying lender acceptance of private flood insurance; an unofficial copy of the rule is posted online. The regulation will soon appear in the Federal Register, and it goes into effect on July 1, 2019.

The new regulation generally requires lenders to accept private flood insurance policies that meet a strict statutory definition. Prior to the announcement, the National Flood Insurance Program (NFIP) was the gold-standard for lenders and not all lenders accepted private coverage.

The final regulation implements Section 239 of the Biggert-Waters Flood Insurance Reform Act of 2012 and:

• Adopts the same definition of private flood insurance as the statute; this definition has been a source of confusion, particularly for smaller lenders.
• Provides a compliance aid for lenders to determine whether a private policy meets the definition and must be accepted in satisfaction of federal flood insurance requirements.
• Clarifies that lenders also have broad discretion to accept private policies that don't meet the strict definition if the policy provides sufficient protection of the mortgage loan consistent with safety and soundness requirements.

The National Association of Realtors® (NAR) has been working with a broad coalition to make it easier for lenders to accept private flood insurance, which often offers better coverage at a lower cost than NFIP. The coalition's latest regulatory comment letter is posted online.

According to NAR, this new regulation includes "some important clarifications and compliance aid for lenders," but says it will continue to work with lawmakers to address some issues not covered by the new rules.

Continuous coverage still a concern

One issue not covered by the new rule is continuous coverage. One of NFIP's considerations when determining an individual homeowner's rate is whether or not they've had a gap in their flood insurance coverage. Since NFIP does not officially recognize private flood policies, it considers anyone who leaves the program uninsured even if they had a private policy.

This might be a problem for current Florida homeowners who choose to leave NFIP and go with a private flood policy that costs less. Should that policy's cost rise later, perhaps because it had a teaser rate for the first year, the homeowner could find it more expensive to return to NFIP. Since NFIP considered them uninsured, their earlier lower-cost, grandfathered insurance rate could rise significantly.

The continuous coverage issue is a "separate regulatory matter and another top priority," NAR says.

© 2019 Florida Realtors®  

Fla. PSC says it won’t regulate Tesla’s solar leases

 

TALLAHASSEE, Fla. – Feb. 11, 2019 – The Florida Public Service Commission (PSC) issued a declaratory statement that affirms Tesla, LLC (Tesla) can offer residential solar equipment leases in Florida with fears that it will be regulated as if it's a utility.

The declaration removes a cloud hanging over Tesla's solar-power expansion in Florida, and those homeowners considering the energy-efficient upgrade. As a result, more homes could be sporting solar panels as the company kicks expansion plans into high gear.

PSC rules allow leasing of renewable energy equipment as long as it doesn't involve selling electricity to customers, although they can benefit from net metering with their utilities. In its declaratory statement, the PSC found that:

• Tesla's residential solar equipment lease, through Tesla's SolarLease, does not constitute a sale of electricity
• Offering its solar equipment lease to Florida consumers will not cause Tesla to be a public utility under Florida law
• The residential solar equipment lease will not subject Tesla or its customer lessees to PSC regulations

PSC rules have long allowed leasing of renewable energy equipment, as long as the lessor is not effectively selling electricity to the customer. Homeowners can purchase or lease equipment to generate electricity for personal use and also benefit from interconnection and net metering with their local utility.

In its decision, PSC commissioners agreed for the third time in the past year that a solar equipment lease is not a retail sale of electricity. In 2018, the PSC issued similar declaratory statements for Sunrun Inc., and Vivint Solar Developer Inc.

PSC approval isn't required for a company to lease solar equipment to Florida residents.

"While today's declaration is limited to the facts in Tesla's petition, companies operating under the same facts can rely upon this declaration as well," says PSC Chairman Art Graham.

© 2019 Florida Realtors®

The fight over beach access – past, present and future

 

WALTON COUNTY, Fla. – Feb. 11, 2019 – For years wealthy Walton County beach property owners have found ways to build big homes or sprawling condominiums on sand-covered lots that gave them an unimpeded view of the Gulf of Mexico.

Some, like massive Sandestin, obtained what is known as Development of Regional Impact status, with permitting that included ownership of all the beach behind its entire complex.

Others, including former Arkansas governor and presidential candidate Mike Huckabee, would follow up on their home purchase by hiring an attorney to obtain "quiet title," a court judgment extending their property lines from the toe of the dune where their house had been built to the mean high water line – effectively the Gulf itself.

Today, 64 percent, or 16.4 miles of Walton County's nearly 26 miles of coastline is considered private property. That compares to about 5.4 percent, or 1.38 miles of county-owned beach.

These figures haven't fluctuated much in several years, but the mood of the county and its residents has, particularly following last year's passage of controversial House Bill 631, which made coastal property rights a priority for homeowners and beachgoers alike, and resulted in a long hot summer of squabbling about them.

The battle is far from over. The Walton County Commission unanimously decreed in December that it wants to make all of the county's beaches accessible to the public and has requested a Circuit Court declaration that customary use exists on the dry sand areas behind 1,194 private beachfront properties.

Customary use relies on the argument that the county's beaches have been open and accessible to everyone since mankind first began using them. Under that premise, they should remain open to the public regardless of what is written on a property deed.

"Ownership of the dirt, and the fact that a plat line or a survey line was drawn to the mean high water line, is irrelevant from our perspective," said David Theriaque, the attorney who will represent Walton County in its customary use effort. "Customary use is not dependent on where somebody draws a line."

If the county gets its declaration, it could re-establish a customary use ordinance that was wiped out last year when Gov. Rick Scott signed HB 631 into law.

A group of attorneys has lined up to represent the private property owners.

How did we get here?

Attorney Dana Matthews, whose clients include Sandestin, said that for years no one had trouble with the public traversing the beach on their property. Beachgoers mostly respected the private resorts' status and homeowners didn't put up signs or fencing to keep people off their land.

Ed and Delanie Goodwin of Fort Panic in South Walton might have been the first to try to erect privacy fencing along the beach using poles and plastic chains, claiming they were tired of people behaving badly in their backyard.

"Most owner problems come with the bad eggs," Matthews said.

After the county ordered the fencing removed, the Goodwins sued and won, and the impetus to create a county customary use ordinance to force owners to open their beaches was born.

From Matthews' perspective, the county's stance on customary use has forced the owners' hands, and HB 631 has freed them to post no trespassing signs and order passers-by to traverse their property only in wet sand areas. Some have hired security guards and several have demanded the county cease all public works activity on their sections of beach.

"Anybody that owns private property on the beach is coming to lawyers asking, 'What do we do to protect ourselves from a claim of customary use or some other easement near the mean high water line?' " Matthews said. "It's a funny balance the private property owners find themselves in now. All of a sudden you've changed the rules of engagement."

Quiet title

On Aug. 23, 2012, Huckabee and his wife, Janet, along with their good friend and next door neighbor David Haak, obtained "fee simple ownership" to property "lying adjacent and to the south of their lot to the mean high water line of the Gulf of Mexico."

Quiet title was granted through a summary judgment issued by acting Walton County Judge David Green. The ruling actually gave the beach behind the Huckabees' 10,000-square-foot house on Blue Mountain Beach Road to the Angus B. Wiles Trust.

The trust was headed by Huckabee accountant Bryan S. Jeffrey. The Huckabees would take over management of it the following December.

While perhaps cloaked in greater secrecy than others, the Huckabees' transaction was hardly the only instance in which homeowners on Blue Mountain Beach Road asked for and received quiet title from the original southern border of their home to the mean high tide line.

The Northwest Florida Daily News found 13 lots in the same subdivision that had secured title declarations in the five years before the Huckabees did and seven others who have done so since.

To obtain the title declaration, Huckabee and his neighbors were required to pay a $400 filing fee and $3 for every summons issued to resolve the matter, according to Walton County Clerk of Courts Alex Alford.

And while Huckabee has said more than once that he pays exorbitant property taxes to live where he does, he pays no more to own down to the mean high water line than he did before he secured title to that slab of beach.

Beach property, while fine for recreation, holds no taxable value because it can't be built on. The value, Matthews said, is in the having.

"That's your beach. You own to the mean high water line. People pay crazy prices for that," he said.

Matthews assisted residents in the Beach Highlands community in their 2015 effort to obtain quiet title to the mean high water line. He said he has found historic precedent that proves property owners are entitled to possess the dry sand between their homes and the Gulf.

He has sifted through property records dating almost to 1842 – the year Florida became a state – to find the first land surveys conducted in Walton County.

What he's discovered, Matthews said, is the property lines along the county's coastline have been drawn to the mean high water mark since the federal government owned the land in the 1800s, and Department of the Interior documents from 100 years later verify the finding.

"Government patent lines were used to lay out the land in this part of the state, and all of the land on the beach in Walton County were patent lots," Matthews said. "The government patent maps show all the property sold by the government was sold to the mean high water line."

In the Beach Highland case, Matthews said, the subdivision's developer drew lot lines that actually stopped before they reached the beach proper, then labeled the area between the lots and the Gulf as simply "beach" on the development map.

"We found the original developer had never conveyed title to the beach. It was pretty evident to me that the developer intended the beach to be available for the homeowners, so I filed for quiet title," he said.

"In Blue Mountain Beach, the developers planned something, except the developer gave the beach to all the owners within the plat. The owners would have the right to use the beach but not the public. The other owners can use that beach," Matthews added. "When it comes to platting your property and saying how you use it, that right belongs to the owner."

Customary use

Theriaque, representing the county in its fight for the customary use declaration, said property lines established in 1845, or in 2012, are meaningless under his interpretation of land use law.

"(County-hired historian) Dr. James Miller researched all the way back to 2000 B.C.," he said, and has built a case that the public has used Walton County's beaches since that time.

The question Theriaque said will ultimately have to be answered by the Circuit Court is whether "there has been a historical pattern of use on the beach that satisfies the criteria for customary use." Florida's Supreme Court defines the criteria as a public use that has been ancient, reasonable, without interruption, and free from dispute.

It is undisputed that what the county intends to do is encumber land that is owned by private entities in some locations, Theriaque said.

"Our position is that before folks started purchasing property that the property, the dirt, was already encumbered with the doctrine of customary use and it gives them (property owners and beachgoers) co-equal rights. One right doesn't trump the other," he said. "But it's separate from ownership, and that's why we also dispute (the other side's) contention that this is a taking."

Homeowners and their lawyers "can't allege something has been taken when the owner of that property never had the right to (prevent access) in the first place because of the doctrine of customary use," Theriaque said.

"The legal ownership question to me is really a non-factor, because everybody concedes we are applying customary use to privately owned lands. We wouldn't be having the dispute if we weren't applying it to privately owned lands," he said.

Although the legal definition of fee simple ownership states such ownership is the "most complete," Theriaque said that obtaining fee simple possession of property through quiet title is not a defense against customary use doctrine.

"Quiet title goes to who owns the dirt, customary use goes to who has the right to use the dirt for recreational purposes and doesn't dispute the private ownership," he said. "Quiet title converts something public to private, and then you have the dispute about whether the privately owned property is subject to the customary recreational use."

Horrible, unintended consequences

Should Walton County prevail and all of its beaches be declared public through customary use, Matthews said he envisions "horrible unintended consequences."

"What will happen to the value of that property when customary use becomes law?" he asked. "The land we can't do anything with now, what if we can't even recreate on it without sharing it with the public?

He said under a customary use doctrine, property owners might have no control over what happens on their property, and even conceivably be held liable if someone gets hurt while recreating on their property.

And why, Matthews asked, does the county want to drag the Developments of Regional Impact into the customary use battle.

"They're the biggest ad valorem taxpayers," he said. "We wouldn't have the services we do without them."

© 2019 the Northwest Florida Daily News (Fort Walton Beach, Fla.), Tom McLaughlin

Tax reform nixed some popular business tax breaks

 

NEW YORK (AP) – Feb. 7, 2019 – As small business owners compile their income tax returns, they may have an unpleasant surprise – some popular business deductions have disappeared or been reduced under the new tax law.

While the law gave small business owners new tax breaks including a 20 percent deduction in income for many sole proprietors, partners and owners of S corporations, Congress took back deductions for entertainment expenses, employee transit benefits and what are called net operating loss carrybacks. It also put ceilings on interest deductions for some businesses. Accountants and tax attorneys suspect small business clients will especially miss the break for entertaining clients and customers.

"I think they're going to be shocked at how much more they didn't get as a deduction," says Joseph Perry, a certified public accountant with Marcum in Melville, New York.

A look at the disappearing deductions:

Interest

There is now a limit on how much interest businesses can deduct on their loans and credit lines. While the smallest businesses, those with up to $25 million in average annual revenue over the previous three years, have no ceiling on the interest they can deduct, there are many small businesses above that threshold that are being affected. IRS regulations limit the deduction to 30 percent of a company's adjusted taxable income plus its interest income, if it has any. A motor vehicle dealer can also deduct its borrowing costs for the vehicles it buys and then sells – what's known as floor plan financing interest.

But interest expenses that are above the limit can be carried over and deducted the next year; they will count toward that year's ceiling.

Real property businesses, including landlords, developers and real estate managers and brokers, can choose to be exempt from the deduction if they follow rules on depreciation of their property.

Entertainment

Owners who take customers to sporting events or the theater or treat them to a round of golf will have to foot the entire bill for those activities. The new law has done away with the entertainment deduction for businesses. Many owners use entertainment as a key part of building and maintaining relationships with clients.

But owners can still deduct the cost of taking a client out for breakfast, lunch or dinner; half the amount spent for a business meal is deductible. The IRS also says owners can buy food for a customer at an entertainment event as long as the food is paid for separately. In a notice about meals and entertainment expenses issued in October, the agency used hot dogs at a baseball game as an example. The food is deductible; the tickets are not.

Owners can also deduct 100 percent of the cost of food at parties or picnics for employees.

While the loss of the entertainment deduction may discourage some owners from treating customers to tickets or a golf game, others will decide that paying for entertainment is a worthwhile investment in their companies' future because of the goodwill it creates. That's good business sense, says Ken Rubin, a CPA with Rubin Brown in St. Louis.

"Normally, our general statement is, don't let tax considerations drive the business decisions," Rubin says. Or, as tax advisers sometimes tell their clients: Don't let the tax tail wag the dog.

Employee expenses

The law also eliminated the deduction owners could take for subsidizing their employees' commuting costs. Similar to their decisions about entertainment expenses, owners must decide whether they want to continue giving employees money toward their mass transit fares or parking tabs; given the tight labor market, owners might want to continue providing the benefits to make their companies better able to compete for talented workers. And taking the benefit away could be a morale-buster, says Leon Dutkiewicz, a CPA with Citrin Cooperman in Philadelphia.

"When you run the math, you're going to lose more in goodwill than you would from losing the deduction," he says.

Employees also lost a popular deduction – for job-related expenses like the cost of tools, uniforms and publications related to their work. Owners who want to give their staffers a break might want to take on those expenses and deduct the costs.

Net operating losses

Businesses that lose money no longer have the ability to "carry back" their losses to offset earnings in previous years and get refunds on taxes they paid. The law does allow companies to carry losses forward to an unlimited number of future years, helping them reduce taxes during profitable times.

Although the absence of carrybacks takes away some flexibility for businesses, it isn't likely to be an issue for companies in a strong economy when businesses are doing well, Rubin says. It can, however, be an issue for companies like restaurants and retailers.

"It's a bigger deal for cyclical-type businesses that will make money one year, lose money the next," Rubin says.

 Copyright © 2019 The Associated Press, Joyce M. Rosenberg. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.  

Florida's First Time Home Buyers Program

Buying a home before age 35 worth it now – and later

 

NEW YORK – Feb. 4, 2019 – Nicole Christianson, a 26-year-old sales rep, was tired of writing big checks for tiny apartments. And she wanted to do more with her cash than stash it in a savings account.

One night, she and her husband Thure, 28, took a look at their newly combined finances and uncovered a pleasant surprise: Together, they had saved enough for a 5 percent down payment on the affordable fixer-upper right across the street from their Milwaukee apartment. They closed in December 2017, and Nicole Christianson says they're happy to finally be "making something that's ours."

Millennials' homeownership goals

Many in Christianson's age group are chasing that feeling. Eighty-two percent of young adults say owning a home is a priority, according to NerdWallet's 2018 Home Buyer Report. If they can make it happen, most will be first-time homebuyers, but that 'if' looms large.

Millennials (those born from 1981 to 1997) are buying houses at lower rates than when previous generations were the same age, and it's not hard to see why. Saving up for a down payment and qualifying for a mortgage can feel like pipe dreams for young adults grappling with student debt, underemployment and high rent costs.

Still, millennials are an optimistic lot, and research shows there are big rewards in store for those who find a way to buy their first home sooner rather than later.

How buying young can pay off later

Of today's older adults, those who bought their first home from ages 25 to 34 accumulated the most housing wealth by their 60s – a median of around $150,000, according to a report by the Urban Institute, a nonprofit research organization.

In contrast, the median housing wealth for those in their early 60s who bought later (ages 35 to 44), was about half as much, at $76,000. Homeowners who bought after they were 45 had about $44,000 in housing wealth by their 60s.

"Housing wealth" is another term for equity, which is the difference between the home's market value and an owner's mortgage balance. Equity becomes profit when a home is sold or refinanced, and it's more likely to grow the longer one owns the home.

The takeaway for millennials? Buy a home as early as you can feasibly do so, says Laurie Goodman, vice president of housing finance policy at the Urban Institute.

Paying rent to yourself is a top perk of homeownership, Goodman says. "It's also forced savings in the sense that you're paying down a mortgage each month. Yes, you could put away the same amount of money in a savings plan, but people don't."

Thinking about homeownership as part of retirement planning is important for millennials, says Jung Hyun Choi, a research associate at the Urban Institute.

"People are living longer and job stability has declined," she says. These circumstances make housing wealth even more essential.

Loans and programs that boost affordability

Certain mortgage options can reduce the upfront costs of buying a home, allowing younger borrowers to qualify with far less than the traditional 20 percent down payment.

"We wanted to go with a VA lender," says Marissa Avila, 33, a self-employed small-business consultant in Norfolk, Virginia. Her husband Greg, 36, is in the Navy, so they were eligible for a loan guaranteed by the Department of Veterans Affairs. The VA loan helped the Avilas buy their colonial-style house with no down payment.

Low down payment loans aren't just for borrowers in uniform: Some conventional loans require just 3 percent down, the minimum for a Federal Housing Administration mortgage is 3.5 percent and eligible borrowers can get a Department of Agriculture, or USDA, loan with nothing down.

Goodman recommends first-time homebuyers investigate down payment assistance programs. State housing agencies often offer mortgage, down payment and closing-cost assistance. These programs may allow millennials to buy a home sooner than if they try to build savings, she says.

Talking to a lender can be a good first step if you're not sure that you're ready, Avila says.

"The worst that someone is going to say is 'No, you need to save a little bit more money,' and then you know where you stand," she says. "It's so much easier once you finally start that conversation."

Zillow spends $1M trying to improve its ‘Zestimates’

 

SEATTLE – Feb. 4, 2019 – Zillow's estimate of a home's value, called the Zestimate, can be powerful: Some homeowners track them like a stock, and when it gets to a certain point, they may decide to sell. Home shoppers gauge the estimate against the list price of a home. Others use it just to gawk at their neighbor's home values.

But it's far from perfect: In Seattle, the Zestimate is off by a median of 4.7 percent compared to the actual sale price, according to the company – a $35,000 difference on the typical house. Real-estate brokers have long complained that the numbers give sellers, in particular, a distorted view of their home's true worth.

Now the Zestimate, that little number that appears at the top of every home's Zillow page and updates daily, is in line to get more accurate.

On Wednesday, the Seattle-based company awarded a $1 million prize to the winners of a public contest to improve its algorithm. The winning team, three guys from Raleigh, Toronto and Morocco who teamed up despite never having met in person, came up with a way to beat Zillow's own data scientists to a better estimate.

The contest started a year and a half ago with 3,800 teams from 91 countries and was narrowed down to 100 finalists last year. The teams were given seven years' worth of data on a sample of millions of homes across the country, and were tested to see how closely their estimated values for each home matched up with the actual sale prices of homes that sold in the ensuing months.

Jordan Meyer, the American on the winning team, reduced his workload at his day job as CTO of an analytics company and poured about six hours a day into the contest, communicating with his teammates, Moroccan computer science professor Chahhou Mohamed and Canadian artificial intelligence startup founder Nima Shahbazi, on the messaging application Slack.

Meyer started by finding every data source he could – the exact longitude and latitude of houses could be used to determine the proximity to streets and therefore determine noise near the house. Slight differences in distance from a body of water could influence a home price by thousands of dollars. In the end each home had hundreds of different data points.

But the strategy that set them apart was trying wildly different algorithms and merging the ones that worked together to get the best blended average.

"It was extremely hard," Meyer said in an interview. He called the process "relentless experimentation" and echoed Shahbazi, who said in a statement: "For every idea that worked, there were a hundred that didn't work. But we kept going."

Zillow has slowly improved its Zestimate from a median error rate of 14 percent when it started in 2006 to 5.7 percent when the contest began in mid-2017. It's now down to 4.5 percent nationally (it's higher in some cities and lower in others), and once the winners' tweaks to the algorithm are incorporated, the company expects the error rate to dip to about 4 percent.

"We're happy with the progress we're making." said Stan Humphries, Zillow's chief analytics officer. "You're going to get some way off. We do 115 million of these every day," referring to the number of homes on Zillow with a Zestimate, "so yes, we get concerned when we're off, and we're committed to making them even more accurate. This is an important number. The implications of getting it right are really important."

Humans are still better than machines

Homes nationally sell on average for about 2 percent less than the list price set by brokers, according to data from Redfin. Brokers have access to information that an algorithm often doesn't – the Zestimate relies on publicly available data and voluntary input from homeowners, which can give an incomplete picture of a house.

"There are way too many factors for a certain algorithm to work," said Sam Mansour, a managing broker with John L. Scott in Lynnwood. He said he constantly has to battle with clients who cling to their Zestimate. "I've been to homes and people say 'my Zestimate is worth X amount,' and I'm like, 'no, no.'"

He said he's also heard of homeowners who use their Zestimate, and the company's one-year forecast of their home value, to justify how much they'd like to borrow against their home. (Zestimates aren't used in official proceedings, like a home appraisal or a home-equity loan.)

Mansour said the biggest factor a computer can't track is the emotional appeal of a home, which can vary wildly from buyer to buyer and is a primary driver in how much people offer. And certain attributes that get plugged into algorithms are going to be weighed differently by various buyers – a large lot might appeal to some, but to others, it just means extra yard work.

Sometimes Zillow is really off – the median error rate of 4.5 percent nationally means half of home values are wrong by more than 4.5 percent.

Zillow says about 1 in 8 Zestimates winds up being wrong by at least 20 percent. That includes the 2016 home sale made by Zillow CEO Spencer Rascoff – who sold his Seattle home for 40 percent less than his Zestimate. In some counties where public data isn't great or there aren't many homes, Zestimates don't exist, or the median error rate can be above 10 percent.

Zillow is the most-clicked real estate site in the nation and was the first to offer a home-value estimator, but these days other websites like Redfin and realtor.com also offer their own home-value estimates.

The winners of the prize agreed to split their $1 million share evenly. As for what Meyer will do with his cut?

"I'll be investing in real estate for sure," he said.

© 2019 The Seattle Times, Mike Rosenberg. Distributed by Tribune Content Agency, LLC.

How To Value Your Home

Fed agencies propose private flood insurance fix

 

WASHINGTON – Jan. 31, 2019 – The National Flood Insurance Program (NFIP) is in trouble. Thanks in part to a multitude of national disasters, the program has paid out far more money than it's taken in by way of premiums but hopes of a federal fix through legislation has been delayed so far. Instead, Congress has authorized a series of short-term delays rather than tackling a broader reform package.

A move by the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency late last week could be the first step in attacking the problem from a different direction, though.

The rule proposal would make private flood insurance more available in flood zones, but it's not official yet – it still needs three other federal regulators, including the Federal Reserve, to sign off on it. It also doesn't tackle all the important issues for homeowners and buyers.

"It appears that regulators are attempting to adopt, by rule, a portion of what was contained in an earlier bill (Ross-Murphy)," says Trey Goldman, Florida Realtors® legislative counsel in the Office of Public Policy. "Under this proposal, banks must recognize and accept private flood coverage. But the bill's 'continuous coverage' language is just as important to homeowners, and the proposed regulations really don't address that. Without continuous coverage, policyholders who leave the NFIP and later come back could be subject to a full risk rate instead of their previous subsidized rate."

Under the FDIC/Comptroller proposal, lenders would have to accept private flood insurance policies if they offer coverage at least as comprehensive as NFIP. Lenders would also have an option to accept private flood insurance policies that don't offer as much coverage as NFIP, which the insurance industry and others want.

Still, any increase in private policy acceptance by lenders offers a ray of hope for homeowners and buyers, in part because a private policy often costs less.

"This ruling has the potential to open up the private insurance market," Michael Barry, a spokesman at the industry-funded Insurance Information Institute told The Wall Street Journal.

Federal law doesn't generally recognize private flood policies. Owners who leave NFIP and return – perhaps because their new cheaper coverage suddenly becomes more expensive later – can lose their grandfathered status under "continuous coverage" if they return to NFIP. If that happens, they often find themselves stuck with two bad choices: Stick with their current private policy that now has a higher premium or return to NFIP and also pay a higher premium because their coverage is no longer subsidized.

Another problem: Some lenders will accept private flood insurance coverage but some do not. For the latter, a homebuyer only has two choices – take out NFIP coverage or find another lender.

Ideally, Congress will address the "continuous coverage" risk when it updates NFIP, which now expires on May 31, 2019.

Source: The Wall Street Journal, Lalita Clozel