The Data and Analytics division of Black Knight Financial Services released its latest Home Price Index (HPI) report, based on May 2017 residential real estate transactions. The Black Knight HPI utilizes repeat sales data from the nation’s largest public records data set, as well as its market-leading, loan-level mortgage performance data, to produce one of the most complete and accurate measures of home prices available for both disclosure and non-disclosure states. Non-disclosure states do not include property sales price information as part of their publicly available county recorder data.- US Home Prices Hit Another New High with 0.9% Gain in June, Up 6.2% Year-Over-Year
– The national-level HPI hit a new peak in June, marking a 5.5% gain in home prices since the start of 2017
– Year-over-year price appreciation continued to accelerate, with a 6.2% rise in home prices as compared to the same time last year
– All 50 states saw monthly gains in home prices; Michigan and Wisconsin led with 1.9 and 1.8% appreciation, respectively
– For the second consecutive month, Carson City, Nev., saw the greatest appreciation of all metropolitan areas with home prices there gaining 2.2% in June
– Among the nation’s 40 largest metros, Las Vegas, Nev., Nashville, Tenn. and Seattle, Wash. have all seen year-over-year gains of 10% or higher
– 12 of the 20 largest states and 21 of the 40 largest metros hit new home price peaks in June
Gasoline soars and dollar dented as Tropical Storm Harvey rages
US gasoline futures jumped to two-year highs while an already weak dollar hit 16-month lows against a basket of currencies on Monday as Tropical Storm Harvey pummeled the heart of the US energy sector and raised concerns about the economy. The dollar index, on the defensive since US Federal Reserve Chair Janet Yellen failed to mention monetary policy in a closely watched speech at Jackson Hole on Friday, extended its falls as the most powerful storm to hit Texas in more than 50 years was seen as negative for economic growth. Weakness in the US currency helped the euro to its highest in two and a half years at close to $1.20, building on gains made on Friday after European Central Bank chief Mario Draghi refrained from talking down the strong currency. Renewed euro strength pushed down European stock markets, with Germany’s blue-chip index 0.5% lower and France’s CAC 40 slipping by 0.4%. Trade in general was subdued, with the London market closed for a public holiday. “The strong euro is weighing on European stock markets,” said London Capital Group analyst Ipek Ozkardeskaya. “Tapering talks could further demoralize stock traders in the run-up to the ECB verdict (next month). IT stocks are again on the chopping block.” US stock futures were also a touch lower, suggesting a softer opening on Wall Street later in the day. Gasoline futures soared as much as 6.8% as the storm, which came ashore on Friday, continued to batter the state. They were last up 4.5%.
The real estate industry has long had its issues with the “Zestimate,” the property value estimation tool that appears on every listing on Zillow. While Zillow describes the Zestimate as a “great starting point” for determining the value of a home, homebuyers and sellers often believe that the Zestimate listed on a home is the true market value of the home. And that causes issues when the true market value differs from the Zestimate’s projection. Just last week, a judge in Illinois dismissed a lawsuit brought by a number of homeowners who claimed that the Zestimate undervalued their homes and cost them money when they tried to sell their house. The suit claimed that home buyers read the estimate as an appraisal regardless of whether it was an official appraisal and expected to negotiate accordingly. Zillow, for its part, had stressed that the Illinois statute made clear that calculations formulated in the way that Zestimates are can’t be used as official appraisals. The judge, in dismissing the suit, agreed. “Zestimates are not false, misleading, or likely to confuse,” the ruling read. “The word ‘Zestimate — an obvious portmanteau of ‘Zillow’ and “estimate’ — itself indicates that Zestimates are merely an estimate of the market value of a property.” Zillow has consistently tinkered with the algorithm that powers the Zestimate over the years, improving its accuracy, measured by how close the Zestimate is to the eventual sale price of a home, from 14% in 2006 to 5% as of a few months ago. But a 5% error rate is still a 5% error rate, which leads to problems like lawsuits in Illinois.
Zillow wants so badly to make its Zestimate even more accurate that earlier this year, it launched a contest to improve the algorithm that powers the Zestimate, offering $1 million to anyone who could markedly improve the Zestimate’s accuracy. But Zillow isn’t sitting on its hands and waiting for someone else to improve the Zestimate. Its analysts are also still working to make the Zestimate more accurate. In fact, as part of an announcement about the Zestimate contest, Zillow said Friday that it just released a “major” update to the Zestimate that brings the error rate down from 5% to 4.3% nationwide. Zillow said that it accomplished this latest improvement by moving its data into the cloud. “To establish these new gains in home valuation accuracy, Zillow transitioned all its data to the cloud and can now compute the Zestimate in near-real time,” Zillow said. “Now, Zillow can process three times as much data as before, which allows its data scientists to experiment and iterate faster than ever, creating more accurate valuations.” As for the contest itself, Zillow said that it is very encouraged by the response. According to Zillow, more than 15,500 people have downloaded the competition dataset since the contest launched in late May. Additionally, more than 2,500 competitors from 76 countries have submitted an average of 350 entries a day to the contest. “The Zestimate is trying to answer an incredibly complex and important question, and with the strong contest submissions we’re already seeing, we are on pace to reach our goal of becoming one of the world’s most impactful machine learning competitions,” Stan Humphries, Zillow Group chief analytics officer, said. “In the meantime, we think homeowners will be pleased with the new enhancements we’ve made to ensure they have a trusted starting point when monitoring the value of what is often the largest purchase of their lifetime.” The contest runs through Jan. 15, 2019.
Hurricane Harvey much less damaging than Katrina, Sandy
Damages from Harvey, the hurricane and tropical storm ravaging Houston and the Texas Gulf Coast, are estimated to be well below those from major storms that have hit New Orleans and New York, according to Hannover Re on Monday. Hannover Re, one of the world’s largest reinsurers, said that insured losses for Katrina in 2005 were around $80 billion, while losses from Sandy in 2012 were $36 billion. “We are far from Katrina and Sandy in magnitude in the case of Hurricane Harvey,” a spokeswoman for the company said. Insured losses for Harvey are so far estimated at less than 3 billion, a person with knowledge of an early market estimate said on Monday. The person spoke on condition of anonymity because the industry is still assessing costs while the storm continues. Harvey was set to dump more rain on Houston on Monday, worsening flooding that has paralyzed the United States’ fourth-biggest city, forced thousands to flee and swollen rivers to levels not seen in centuries.