Inman https://www.inman.com Real Estate News for Realtors and Brokers Sat, 16 Feb 2019 15:49:21 +0000 en-US hourly 1 https://wordpress.org/?v=5.0.3 The Publisher of Inman News, Brad Inman, interviews real estate's best and brightest in his podcast. Inman clean Inman tech@inman.com tech@inman.com (Inman) Real Estate News for Realtors and Brokers Inman https://webassets.inman.com/wp-content/uploads/2015/09/1400x1400_UnlistedwithBradInman.jpg https://www.inman.com ‘People are afraid’: Agents worry wall will squeeze the local market https://www.inman.com/2019/02/16/people-are-afraid-agents-worry-wall-will-squeeze-the-local-market/ https://www.inman.com/2019/02/16/people-are-afraid-agents-worry-wall-will-squeeze-the-local-market/#respond Sat, 16 Feb 2019 14:19:39 +0000 https://www.inman.com/?p=720351 Nancy Velazquez works as a real estate agent in Hidalgo County, Texas, a place with big skies and big properties, some hugging the border with Mexico. And thanks to President Trump, those properties may soon hug a towering barrier as well.

“I know close to Rio Grande City there are some properties where you are literally standing in your kitchen and you can see the river,” she said, referring to the Rio Grande, which divides the U.S. and Mexico. “So now, you are going to see the wall.”

And for Velazquez and her clients, that wall could become a serious problem.

“Is it going to have an affect? Of course,” she told Inman. “I don’t think those properties are going to go up in value.”

The prospect of a wall along the U.S.-Mexico border became a national issue after Trump made it first a major part of his campaign platform, and then a pillar of his domestic policy. And though he originally promised that Mexico would foot the bill, Trump has since been trying to wrangle funding from the U.S. Congress — an effort that recently escalated into the longest government shutdown in the country’s history.

However, that process escalated even further Friday when Trump declared a national emergency, which he believes will unilaterally give him access to the border funding that congress denied him. The declaration faces a highly uncertain legal future, but already the heightened prospect of a wall is reverberating through border communities.

Linda Saldiver

“I believe people are afraid now more so than ever,” Linda Saldivar, an agent with the Three Americas Group, said. “What happens is we have a lot of people from Mexico who purchase over here. So does it affect us? Definitely.”

Saldivar works in McAllen, Texas. The city of nearly 150,000 people sits in the Rio Grande Valley just across the border from the Mexican city of Reynosa, home to more than 600,000. The entire area is a priority for the U.S. Border Patrol and is slated to get 55 miles of new barriers that Congress approved this week.

But in a conversation with Inman, Saldivar argued that there is a significant flow of capital between communities like hers that straddle the line between countries. People from Mexico come to the U.S. to shop and buy things, she said, and at times that includes real estate. The purchases are often made in cash and represent a significant source of volume for some agents in the area.

Policies like building a wall that discourage immigration could greatly reduce those types of deals.

“It would be a negative,” she added. “It would be negative because of the relationship we have with Mexico.”

Velazquez — the owner of Velazquez Realty Firm — raised a similar issue, though in her case the debate itself has already driven away clients.

“My Mexican national clientele literally dropped right after the new president took over,” she told Inman. “It went down 25 percent.”

Velazquez also described representing a Mexican woman — a doctor who specializes in treating skin cancers — who last year realized her visa might unexpectedly not be renewed. The woman opted to sell her U.S. property quickly.

“Sure enough we sold it and she called me two months later,” Velazquez said. “She didn’t get her visa.”

Velazquez described a similar situation playing out earlier this year with another client, and she expects foreclosures to tick up as Mexican nationals who borrowed money to get U.S. property have a more difficult time actually crossing the border — particularly if Trump does manage to build his wall.

“One thing that people may not be aware of is that not all Mexican nationals buy their houses with all cash,” she added. “A lot get loans with large down payments.”

Several other agents also said that money flows from Mexico into the U.S. real estate market, not just the other way around, but declined to be quoted saying they didn’t want to run the risk of alienating clients in a contentious political climate. And that contention, too, has become an issue amid the ongoing wall debate.

Sabita Mahtani

“There’s so many things that you might want to say, but you hold back because you don’t want to offend your client,” Sabita Mahtani, an agent with the HSRGV Group in McAllen, said. “You don’t know which way they’re leaning.”

Like everyone who spoke with Inman, Mahtani said the wall is an ever-present topic of conversation in the communities where she works, and passions run strong.

“It’s very torn down here,” she added of local sentiment about the wall.

Mahtani said that many of her clients also work for the U.S. Border Patrol or Immigration and Customs Enforcement (ICE). Opinion among those clients is “mixed” on whether a border wall would be effective, she said, though the recent shutdown — which, again, was due to a political fight over wall funding — actually nearly sank deals because those clients weren’t getting paid.

“We almost had deals fall apart recently because of the furlough,” she said. “I had two under contract and one of them was like, ‘I don’t know what I’m going to do.'”

Mahtani added that the political leadership in Washington, D.C., has “no clue” what is going on at the border.

“All the rhetoric,” she said, “the rhetoric’s going to hurt.”

A U.S. Border Patrol agent inspects the bank of the Rio Grande River near McAllen, Texas. Credit: Getty Images // John Moore

And of course there are concerns about property values.

Velazquez said that some of the areas where she practices have fencing along the border. But other parts are merely marked by a river and the people who own that riverfront property aren’t excited to suddenly be living beside what Velazquez described as a “physical reminder” of the border. Would-be buyers may also be repelled when they see the wall, mistakenly taking it as evidence that the area is dangerous.

“It’s an eyesore,” she said. “And it’s going to immediately affect those homeowners for resale purposes. I wouldn’t want to buy a property as a consumer where the wall is right there.”

Both Velazquez and another Hidalgo County agent, who asked not to be named, also pointed to eminent domain — which has been used in the past to construct a border fence — as a concern among property owners who fear their land could be seized so the wall can cross over it. The other agent noted that “land owners are outraged over” the prospect of losing property.

It remains to be seen if Trump, via his emergency declaration, will actually manage to get some or all of his wall built. In the meantime, though, Velazquez — who said she is not an especially political person — questioned whether a new barrier is actually going to do much.

“The hardest working people I know are usually the ones who are undocumented,” she said. “So these hombres and bad people that [Trump] talks about, I don’t see it.”

Email Jim Dalrymple II

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https://www.inman.com/2019/02/16/people-are-afraid-agents-worry-wall-will-squeeze-the-local-market/feed/ 0 2019 Getty Images TIJUANA, MEXICO - JANUARY 11: A construction crew installs new sections of the U.S.-Mexico border barrier replacing smaller fences on January 11, 2019 as seen from Tijuana, Mexico. President Donald Trump is holding off from a threatened national emergency declaration to fund a border wall amidst the partial government shutdown. (Photo by Mario Tama/Getty Images)
WATCH: How iBuyer programs are changing your business https://www.inman.com/2019/02/16/watch-how-ibuyer-programs-are-changing-your-business/ https://www.inman.com/2019/02/16/watch-how-ibuyer-programs-are-changing-your-business/#respond Sat, 16 Feb 2019 08:55:26 +0000 https://www.inman.com/?p=719599 With everyone from tech startups to traditional brokerages diving into the fast-cash offer game known as iBuying, it can be tough to keep up with what strategies are working for whom.

Get a quick read on how iBuyers are changing the face of real estate and how it’s impacting agents’ bottom lines from this Inman Connect New York panel featuring Climb Real Estate’s Chris LimW+R Studios’ Katie Smithson, Zillow Group’s Matt HendricksColdwell Banker Texas’ Charles El-Moussa and Lamacchia Realty’s Anthony Lamacchia

Watch the full conversation now above on Inman Select.

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WATCH: 7 things agents need to change today https://www.inman.com/2019/02/16/watch-7-things-agents-need-to-change-today/ https://www.inman.com/2019/02/16/watch-7-things-agents-need-to-change-today/#respond Sat, 16 Feb 2019 08:37:15 +0000 https://www.inman.com/?p=719603 “We are no longer the gatekeepers of information for the sellers,” said Joseph Rand, managing partner and general counsel of Better Homes and Gardens Real Estate Rand Realty. “The problem is there are too many agents who haven’t really internalized that yet.”

Rand believes agents can differentiate themselves by expanding their notions of what consumers need, thinking smartly about how to meet their needs and executing with precision. He outlined seven things agents need to stop doing immediately to accomplish those objectives onstage at Inman Connect New York.

Watch the full conversation above on Inman Select.

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Compass nabs top Brooklyn producer from Douglas Elliman https://www.inman.com/2019/02/15/compass-nabs-top-brooklyn-producer-from-douglas-elliman/ https://www.inman.com/2019/02/15/compass-nabs-top-brooklyn-producer-from-douglas-elliman/#respond Fri, 15 Feb 2019 19:25:54 +0000 https://www.inman.com/?p=720220

Scott Klein | Credit: StreetEasy

Scott Klein and at least five members of his seven-person team are making the jump from Douglas Elliman to Compass. The move, first reported by The Real Deal, will boost the Brooklyn presence of the New York City-founded brokerage, which has experienced immense growth over the past year.

“We are honored to have [Klein] and his team join the Compass family,” Rory Golod, Compass’ general manager for the New York region, told Inman. “Brooklyn is one of the most important markets in the entire country for us and with Scott and his team joining we are continuing to build on our momentum within the community.”

While Compass has made headlines with its growth into new markets and with big acquisitions, on its home turf of New York City the company has also ballooned. Compass saw its New York City agent count grow by 72 percent in 2018 to 1,449 agents, according to an independent study by Space, a New York City-based real estate agent directory startup.

Klein’s team boasts of a combined 35 years of real estate experience. It ranked the 131st in New York State in 2017 in sales volume according to Real Trends, with nearly $50 million in transactions. According to The Real Deal, the team was the third most productive in sales in Brooklyn at Douglas Elliman in 2018.

A Compass source told Inman that the brokerage plans to expand its Brooklyn presence in 2019 with two new offices – one in Fort Greene near the Barclays Center and another in Bedford Stuyvesant. Compass currently has offices in the Brooklyn neighborhoods of Williamsburg, Park Slope and Cobble Hill.

The move to open more Brooklyn offices follows Compass CEO Robert Reffkin’s announcement at Inman Connect in New York that the company plans to grow in existing markets in 2019, rather than expand to new markets.

This is the third big agent or team that Compass has snagged from Douglas Elliman in the past year. In March 2018, Compass lured away David Dubin and in January 2019, Michael Graves jumped to Compass from Douglas Elliman.

It goes both ways, however, as Douglas Elliman snagged associate broker Lindsay Barton Barrett from Compass in December 2018.

A spokesperson for Douglas Elliman did not respond to a request for comment.

Email Patrick Kearns

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Engel & Völkers opens in Napa with Compass defectors https://www.inman.com/2019/02/15/engel-volkers-napa-compass-defectors/ https://www.inman.com/2019/02/15/engel-volkers-napa-compass-defectors/#respond Fri, 15 Feb 2019 19:07:01 +0000 https://www.inman.com/?p=719958 Engel & Völkers is bringing its global real estate brand to California’s wine country with agents defecting from Compass and Bradley Real Estate Group.

The new Napa and St. Helena offices, led by Paul Benson, will be part of Gestalt Group, Engel & Völkers’ largest brokerage in North America.

Joining Benson is Stefan Jezycki, Will Densberger, Agi Smith and Pavi Micheli, all of whom will join from Compass. They came to Compass when it acquired Pacific Union in September 2018.

Michael Muters and eight additional agents, all formerly of Bradley Real Estate Group, round out the rest of Engel & Völkers’ Napa and St. Helena presence. In total, the agents represent more than $200 million in annual sales volume.

Stefan Jezycki

Stefan Jezycki | Credit: Engel & Völkers

Jezycki and the agents that are joining from Compass all began the process of on-boarding at Compass before deciding to make the move. Jezycki said Compass is going to do great and that there’s a model for everyone, but Compass’ model just wasn’t right for him.

“For me, I thought that their focus and their push seemed to be a little bit misdirected for my value proposition,” Jezycki said, citing Compass’ focus on technology.

“I always think of it as a funnel: how much technology can I ingest?” Jezycki added. “Not because I’m not an early adopter, most people would let you know in working with me that I’m on top of the technology as it relates to the consumer.”

“Stefan and Agi are great agents and we wish them the best,” said Peter Jonas, Compass’s west region president, in a statement to Inman.

At Engel & Völkers, the vision is clear and the growth plan is different, according to Jezycki. Engel & Völkers grows organically where the clients ask them to grow, whereas Compass strategically identifies where they can disrupt, displace and capture market share, Jezycki said.

“[Engel & Völkers] have a very clear understanding of what their role with clients is,” Jezycki said. “And they’ve been doing that since 1977.”

“The size and the impact of what Compass can do and then what Compass will be in the future really confuses a lot of people,” Jezycki added. “There’s a lot of noise, there’s a lot of confusion, a lot of misdirection. What are they doing? How are they able to do it? What’s their end game?”

Engel & Völkers isn’t looking at world domination, according to Jezycki, they’re looking at taking care of their client.

Jezycki told Inman that, over the years, he’s talked to his clients and asked why they chose to work with him. And the biggest thing he always hears is that it’s his passion.

“Engel & Völkers, they have a value proposition triangle, and one of the things they talk about is passion,” Jezycki said. “And technology doesn’t represent anything that says anything about passion”

Jezycki is also excited about the opportunity to build something from the ground up. While Engel & Völkers is an established brand, this will be a new, smaller boutique presence, which is different from his time with Pacific Union and Compass.

“We want to stay smaller, we want to stay boutique and we don’t need world domination to be successful,” Jezycki said. “I have the clients I work with, I am most committed to them.”

The agents leaving Compass aren’t the first to flee to new brokerages after the Pacific Union deal was announced, which left many agents stunned. Geoffrey and Slava Nelson left Pacific Union to join Coldwell Banker in December and Tracy McLaughlin left Compass for The Agency in January.

Jezycki and Muters will oversee the brand’s Napa presence, while Densberger, who is a leader in Napa’s Up Valley market for vineyard acquisitions and sales, will oversee St. Helena operations.

Paul Benson | Credit: Engel & Völkers

Paul Benson, a license partner with Engel & Völkers since 2014, will oversee the new offices. Benson, in his own right, has been a top agent in Utah and sold more in volume than any other Engel & Völkers agent in 2017, in addition to owning the brand’s largest North American brokerage.

Benson, in 2017, finished 139 on the Real Trends “Thousand” list of top agents by sales volume, closing more than $100 million in sales.

“With a boutique feel backed by a global infrastructure and network, the Napa and St. Helena real estate markets will greatly benefit from a brand that values local community in every region it represents worldwide,” Benson said in a statement. “The exceptional market expertise and talent this announcement entails sets an entirely new level of service standard in these key California markets. It’s just the beginning.”

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Ben Kinney Companies scoops up 2 real estate tech businesses https://www.inman.com/2019/02/15/ben-kinney-companies-scoops-up-2-real-estate-tech-businesses/ https://www.inman.com/2019/02/15/ben-kinney-companies-scoops-up-2-real-estate-tech-businesses/#respond Fri, 15 Feb 2019 18:56:25 +0000 https://www.inman.com/?p=720218 Ben Kinney Companies, a collection of brokerages and other real estate service enterprises, announced Friday it has acquired a pair of Canadian businesses that specialize in artificial intelligence and website creation.

Ben Kinney

In a statement, Ben Kinney — founder and CEO of his eponymous companies — revealed that he had scooped up Gabbi.ai and Redman Tech. He said the acquisition should bolster his companies’ mission of cutting down the daily tasks of brokers and agents by as much as 75 percent, and added that owning the tech businesses “is consistent with our vision to keep the real estate agent relevant in every transaction.”

Gabbi.ai bills itself as an artificial intelligence-powered virtual assistant that “never sleeps.” It was built by real estate agents and is optimized to work on mobile devices. The company also promises to help eliminate “tedious” tasks and convert more leads for users.

Gabbi.ai’s homepage | Credit: BKC

According to a statement from Ben Kinney Companies (BKC), Gabbi.ai also “supports agents by helping book showings, manage client follow-up, task management as well as email, text and phone communications.”

Redman Tech, an IDX website provider, promises to set up “high-converting real estate websites” for agents. The sites can be branded, are mobile friendly, and integrate with multiple listing services.

An image of Redman Tech’s homepage | Credit: BKC

Both Gabbi.ai and Redman Tech are based in Edmonton, Canada, which Kinney described in his statement as “an international hub of artificial intelligence and machine learning development.” BKC said in its statement that both companies are also a natural compliment to its existing software suite.

The financial details of the acquisitions were not made public.

Washington state-based BKC includes Keller Williams brokerages in Washington state, Colorado, Texas, California, Idaho and the U.K. It also employs sales teams, offers training resources and has a tech platform, among other products and services.

The company also has a track record of buying up real estate-focused tech businesses. In early 2017, for example, BKC acquired real estate software provider Blueroof360, its fifth tech company. Later that year, BKC also picked up a chatbot technology company as well.

Kinney on Friday touted the addition of Gabbi.ai and Redman Tech to this growing real estate empire.

“We are excited about the new technology and strong customer base both Gabbi.ai and Redman bring to the table,” he said in his statement, “however not as excited as we are that the entire staff and leadership team have agreed to stay with [BKC] and become a part of our future growth and opportunities.”

Email Jim Dalrymple II

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Timothy Leary’s trippy LSD den hits the market for $1.5M https://www.inman.com/2019/02/15/timothy-learys-trippy-lsd-den-hits-the-market-for-1-5-million/ https://www.inman.com/2019/02/15/timothy-learys-trippy-lsd-den-hits-the-market-for-1-5-million/#respond Fri, 15 Feb 2019 17:33:27 +0000 https://www.inman.com/?p=719994 The California house that famed psychologist and drug proponent Timothy Leary once used to manufacture LSD is for sale, with a $1.495 million price tag.

Courtesy of Sotheby’s International Realty.

Located at 55101 State Highway 74 in the San Jacinto Mountains, Fobes Ranch sits on almost 80 acres of land.

Leary, who first achieved fame for the Concord Prison Experiment, was an avid proponent of recreational LSD. Along with the Hitchcock Estate in upstate New York, Leary and his followers used the California property to create and take LSD, worship nature and otherwise engage in a hippie lifestyle during the 1960s.

Courtesy of Sotheby’s International Realty.

The underground LSD operation was known as the Brotherhood of Eternal Love. The property itself has three bedrooms, three bathrooms, a two-car garage and a guesthouse. In total, the new owner will acquire over 2,450 square feet of property.

Timothy McTavish of Pacific Sotheby’s International Realty is the listing agent overseeing the sale. He has not shied away from the Leary link when advertising the property — although the listing specifies that the LSD connection happened a long time ago.

Courtesy of Sotheby’s International Realty.

“Ranch in the late sixties with what was referred to as The Brotherhood of Eternal Love – essentially, Leary admitted, just a group of Laguna Beach surfers,” reads a post describing the listing. “Together, they inhabited a lifestyle committed to indulging in the drug while practicing their preferred religion – hiking deep into the mountains while celebrating the beauty and wonderment of nature.”

Leary, who passed away in 1996, is still seen as a pioneer in certain spiritual, off-the-grid and drug enthusiast circles.

Courtesy of Sotheby’s International Realty.

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She collected rent from tenants but never delivered it to landlords. Now she could lose her license https://www.inman.com/2019/02/15/she-collected-rent-from-tenants-but-never-delivered-it-to-landlords-now-she-could-face-prison-time/ https://www.inman.com/2019/02/15/she-collected-rent-from-tenants-but-never-delivered-it-to-landlords-now-she-could-face-prison-time/#respond Fri, 15 Feb 2019 17:12:43 +0000 https://www.inman.com/?p=719661 The proprietor of two Tennessee real estate management companies has been accused of collecting rent from tenants and failing to deliver the money to landlords, a charge that could result in the revocation of her license and potential legal trouble.

Marlene McGhee, the proprietor of Eagle Lane Realty and Eagle Lane Properties Management, has been accused of siphoning more than $30,000 from tenants and failing to deliver the rent to landlords who use her services, according to the Tennessee Real Estate Commission.

The commission has suspended the licenses associated with McGhee’s companies due to an insurance lapse unrelated to charges waged by her landlord clients and has been investigating multiple customer complaints, the agency told local media outlets this week.

“We trusted her to manage our properties,” said Sandra Meabon, the owner of a rental property in Memphis managed by McGhee, and one of at least four property owners currently lobbing complaints against the two companies. “We paid her. She was paid and she didn’t do that,” Meabon, who was only recently able to go inside her property, told WREG in Tennessee.

Meabon, who used Eagle Lane Realty to manage her Memphis property, said that McGhee collected over $30,000 in rent from her property over the course of a year but did not deliver rent from tenants for July and August of 2018.

TREC told Inman that its board unanimously voted to send McGhee an order giving her the chance to voluntarily revoke her real estate license, along with the licenses of her two companies. If McGhee does not comply, the board will have another meeting in 30 days.

It is unclear how many property owners McGhee may have duped, how much money she failed to deliver or how many buildings are involved in the investigation. McGhee did not immediately respond to Inman’s request for comment. At least two other property owners have been involved.

TREC also would not say whether the complaints would be passed on to local law enforcement.

According to Tennessee law, theft of between $1,000 and $10,000 can be charged as a Class D felony, punishable by between two and 12 years in prison and a fine of up to $5,000. It was unclear on Friday if any local law enforcement agencies have begun an investigation.

In the meantime, the Better Business Bureau also revoked Eagle’s accreditation and lowered the companies’ ratings to a D+.

“She basically stated that she wasn’t going to pay me anything until she heard the decision from the real estate commission,” Meabon said.

Local media, meanwhile, also uncovered that McGhee had filed for bankruptcy six times sine 2008. Along with the commission’s investigation, she is also being sued by several contractors and faces eviction from the home she currently rents.

Email Veronika Bondarenko

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A look at the homes of the Real Housewives of Beverly Hills https://www.inman.com/2019/02/15/a-look-at-the-homes-of-the-real-housewives-of-beverly-hills/ https://www.inman.com/2019/02/15/a-look-at-the-homes-of-the-real-housewives-of-beverly-hills/#respond Fri, 15 Feb 2019 17:08:18 +0000 https://www.inman.com/?p=719792 Sales, robberies and rentals due to inability to sell — it’s been a big year for the socialites on the latest season of Bravo’s Real Housewives of Beverly Hills.

Some housewives have had a particularly rough time when it came to real estate — Dorit Kemsley was robbed and had to lower the price of her family’s luxury mansion by more than $4 million in an effort to sell it.

Kyle Richards, meanwhile, was renting out her estate after struggling to find a buyer and being robbed.

Dorit Kemsley’s House | Courtesy of Zillow.

If anything, these stories show that even the uber-rich are not immune from bad real estate moves.

Here are the biggest real estate stories to hit the RHOBH stars this year:

Struggling to sell

Dorit and her husband, property developer PK Kemsley, have been struggling to sell their Beverly Hills mansion since 2017. After first putting it on the market for $12.75 million, the couple has lowered the price five times, most recently this January, to $7.995 million.

The property, while nice, is clearly not $13-million-nice — it sits atop a hill and overlooks the City of Angels.

Dorit and PK Kemsley’s Mansion | Courtesy of Zillow.

Robbery at the Kemsley’s

Courtesy of Associated Press

Earlier this year, a man made the news for allegedly posing as a real estate agent to rob the homes of numerous celebrities in Los Angeles.

Along with singers Jason Derulo and Usher, Dorit Kemsley was one of the victims — police suspect that Benjamin Eitan Ackerman took over 2,000 stolen items of jewelry, rare art and fine wine from 13 houses.

Rent a RHOBH manse 

Richards, the former Little House on the Prairie child actress and RHOBH star, has also struggled to sell. After buying a Beverly Hills estate for $8.2 million in 2017, Richards and her husband, Mauricio Umansky, founder and CEO of The Agency, have had to lower the price and even list it as a rental for the hefty price of $30,000 a night.

Kyle Richards’ house | Courtesy of realtor.com.

The same house was burglarized at the start of 2018.

Kyle Richards’ House | Courtesy of Zillow

Teddi Jo Mellencamp buys

Teddi Jo Mellencamp, RHOBH star and daughter of iconic singer John Mellencamp, might be the show’s younger star, but she’s quickly falling into the luxury lifestyle.

Teddi Jo Mellencamp’s House | Courtesy of realtor.com

Mellencamp and her husband, Edwin Arroyave, recently bought a $4.07 million house in Beverly Hills. The property, which has sprawling rooms and large decks overlooking the ocean, was originally listed for $5.495 million.

Teddi Jo Mellencamp’s House | Courtesy of realtor.com

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Major mudslide in California prompts evacuations https://www.inman.com/2019/02/15/major-mudslide-in-california-prompts-evacuations/ https://www.inman.com/2019/02/15/major-mudslide-in-california-prompts-evacuations/#respond Fri, 15 Feb 2019 16:42:17 +0000 https://www.inman.com/?p=720164 More than 50 families were evacuated from their homes after a storm caused a major mudslide and flooding in Sausalito, California.

The storm, which had been battering California since Tuesday night, has caused mudslides, flooding and water streams by Friday. While the storm can be felt across the entire state, areas by the coast were hit particularly hard.

In Sausalito, entires homes could be seen sliding down hills as heavy flooding brought them down along with the current. Located just 10 miles north of San Francisco, Sausalito is known for its views of the Golden Gate Bridge. It is an affluent part of the state – the median home currently sells for $1,397,000, according to Zillow.

According to the latest numbers from ABC and KRON4, two homes were destroyed and 50 were evacuated from the area due to the ongoing risks of damage.

Meteorologists say it is still unclear whether the storm has hit its peak or will continue to wreak further damage. In total, parts of California are seeing 3 to 8 inches of rain a day while 30 million people from California to Arizona are under flood warning.

“A lot of rain out there this morning, so be careful out there,” Lori Burress, a Realtor in Arizona wrote on Facebook.

“Stay away!” Cynthia Fleming, a Laguna Beach Realtor posted on Facebook, along with a video of flooded streets.

Yikes! It’s spilling over now. Stay away from Downtown Laguna as the streets are closed, no parking, and some flooding. This goes underground, under Whole Foods, straight to the ocean.

Posted by Heidi Miller on Thursday, February 14, 2019

Email Veronika Bondarenko

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The Inman Weekender: Yelp! Where are Opendoor’s and Offerpad’s reviews? https://www.inman.com/2019/02/15/the-inman-weekender-yelp-where-are-opendoors-and-offerpads-reviews/ https://www.inman.com/2019/02/15/the-inman-weekender-yelp-where-are-opendoors-and-offerpads-reviews/#respond Fri, 15 Feb 2019 15:43:42 +0000 https://www.inman.com/?p=720033  

What To Read This Weekend

5 immutable laws of real estate
BY JAY THOMPSON | FEB 13

In Case You Missed It: Inman Connect New York

 

What would you like to see in The Weekender? Sound off in the comments, or let us know.

 

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Mortgage originations sink to 4-year low: New York Fed https://www.inman.com/2019/02/15/mortgage-originations-sink-to-4-year-low-new-york-fed/ https://www.inman.com/2019/02/15/mortgage-originations-sink-to-4-year-low-new-york-fed/#respond Fri, 15 Feb 2019 14:35:07 +0000 https://www.inman.com/?p=719831 Mortgage originations sunk to a four-year low in 2018, according to the Federal Reserve Bank of New York’s quarterly household debt report released Tuesday.

In Q4 2018, originations clocked in at $401 billion — the lowest level seen since the fourth quarter of 2014 ($278 billion).  Meanwhile, mortgage balances on consumer credit reports remained unchanged at $9.1 trillion, and balances on home equity lines of credit (HELOC) slid to $412 billion — a $10 billion decline from the previous quarter.

Mortgage delinquencies remained flat at 1.1 percent with only 14.8 percent of early delinquency mortgages (30 to 60 days) transitioning to serious delinquency (90+ days).

Although mortgage originations took a major hit in 2019, Freddie Mac’s latest report signals that a turnaround may be on the horizon as mortgage rates drop in response to the Fed’s decision to interest rate hikes on hold, thanks to a strong economy.

“The combination of cooling inflation and slower global economic growth led mortgage rates to drift down to the lowest levels in a year,” said Freddie Mac of the results.

“While housing activity has clearly softened over the last nine months and the lingering effects of higher rates from last year are still being felt, lower mortgage rates and a strong job market should rekindle demand for the spring home-buying season.”

As of Feb. 14, a 30-year fixed-rate mortgage averaged 4.37 percent, down from last week when it averaged 4.41 percent. A 15-year fixed-rate mortgage averaged 3.81 percent, down from last week’s 3.84 percent. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.88 percent, down from last week’s 3.91 percent.

Realtor.com chief economist Danielle Hale says the positive impact of lower mortgage rates won’t be immediate, but the spring home-buying season should lift slumping sales.

“In fact, this week we saw rates fall to 4.37 percent, just below where they were last year, welcome news for buyers who are also benefiting from more homes on the market,” Hale said in an emailed statement.

“Although a reduction in rates may not translate into more sales right away, paired with more inventory we should eventually see a lift.”

Email Marian McPherson.

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The 5 V’s trending in 2019 https://www.inman.com/2019/02/15/the-5-vs-trending-in-2019/ https://www.inman.com/2019/02/15/the-5-vs-trending-in-2019/#respond Fri, 15 Feb 2019 11:00:39 +0000 https://www.inman.com/?p=719617 There were five major trends consistently identified by a range of speakers across many panels at Inman Connect New York this year. Some of these trends have been around for a while, but others — like the rise and acceleration of artificial intelligence (AI); technology becoming faster, easier and more automated; and the strong emphasis on relationships — are giving everything new context.

Here are five of those trends:

1. Voice

The rise of Google Home and Amazon’s Alexa has made voice activation the hottest tech trend in real estate now and for the foreseeable future.

Voice commanded technology should honestly be a relief for all of us who have squinted and crouched over mobile screens, cursing at fat thumbs and poor UX that makes it difficult to find what you want.

Voice democratizes technology, expanding its use to the very young, who can’t spell, and the very old, who may struggle to see.

More than 40 percent of the population listens to podcasts, and this year, Google is intending to launch audio searches, just as it did video searches a few years ago, so you can find the answers within recordings.

With voice, you state your question, and the machine replies. It’s helpful! So much so that 91 million people are now using voice search and growing, according to Google’s Dan Siegler, who says it is enabling “the age of assistance.”

And the ease of voice means that consumers experience it, find it easy, see what’s possible and embrace it further. It creates a new benchmark, makes us more curious and then a network effect pushes the AI to learn even more.

Voice poses some unique challenges to real estate agents. It calls upon us to become genuinely helpful — the emptiness of scripted sales patter is instantly revealed as insincere when spoken by a bot.

The ascendancy of voice compels us to orientate our businesses toward helpful relationships that are of service to our clients and away from the hard-sell.

2. Vision

The listing photos that are the lifeblood of the real estate industry are about to get a second amazing life. For years, photos have been “black boxes” of information that only the human eye could deduce. Now they’re becoming a rich vein of gold that has only just started to be mined.

The rise of AI and machine learning is revolutionizing the type of information we can now pull from photos and the speed with which it can be turned around.

See that picture of a house? It shows a brick house, a two-story with a tiled roof, bay windows and a chimney. It’s built like a 1940s bungalow. That kitchen has marble countertops, an island bench, a Miele dishwasher, a wine fridge and an induction stove with open floor plan living that looks out to the garden.

From something that was previously “unstructured data” — and usually an unnamed JPEG file — photos are about to deliver unheard of levels of “structured data.” This means data that can go into a database, and as a result, be searched, saved and reused again.

Think about how this is going to revolutionize how we search, sort and consider properties. You’ll now be able to filter your search for renovated 1940s cottages with marble kitchens — as well as the usual three- or four-bedroom homes.

And as the AI realizes that the three- or four-bedroom homes include particular features and styles, well, it will start to serve more up for you. Just as Netflix uses past clicks to refine and reference new suggestions, the rise of visual data mining will start to recognize our preferences faster than we do and make recommendations as a result.

If you’re sitting on a large database of listing photos, rejoice. That data is likely to be a valuable asset that can mined and sold to data gatherers.

3. Video

Inman has been calling video a real estate trend for five years. It’s pretty safe to say that this is now truly mainstream — or it should be.

But it’s pretty ironic that an industry known for its flash and smartly turned out image-conscious individuals has struggled to embrace the camera as much as we have.

If it’s because of how we appear on camera, or the risk of potential embarrassment, we need to get over ourselves.

As Katie Lance advises, that’s just how you look. God gave you that face!

But more importantly, I think we don’t like how we sound because we don’t really know what story we should be telling. And it sounds false, even to our own ears.

Video has put a huge emphasis onto that narrative of agents, and as a profession, we are really struggling. But “listing for sale” just doesn’t cut it as a content strategy, and deep down, I think we all know that it’s shouting into the wind.

We are the ones who need to bend.

There’s no silver bullet for video. Create a video strategy and content calendar that’s diverse with different types of coverage for different days of the week and different customers.

Experiment with Facebook Live and Instagram stories, together with HomePrezzo market report videos, video comparative market analyses (CMAs), interviewing locals in your community as well as more structured and scripted formats.

Remember to caption as much as possible using apps like Rev.com that can do it cheaply and in a fraction of the traditional time.

4. Virtual

Virtual is no longer a gaming fad or some cool tech that helps you inspect a property in 3D. It’s the rise of the bots in real estate encompassing artificial intelligence, machine learning and real-time analytics to dramatically improve data capture, analysis, accuracy and consistency.

Since Inman Connect in San Francisco last September, the number of bots and AI now servicing real estate agents and brokerages has increased. There are virtual employees, virtual assistants, virtual help desks — the list goes on.

There’s even avatar-styled guiding occurring within new customer relationship managers (CRMs), nudging, reminding and even guiding and training staff when tasks remain incomplete. Check out Gabbi.ai, Rita from Aire, Jane.ai and even CRMs that use AI to prompt, such as AgentBright.

These bots are relentless in how they approach a task — they don’t take sick days, they’ll work all weekend without complaint and they’re able to take on utterly soul-destroying details and repetitive tasks.

They crunch data at speeds faster than humans can read and provide insights in real time that help us make better decisions.

Brad Inman said “Human beings will beat the machines if they do the right thing by their clients,” but the point is really that there are many things we don’t want to beat them on.

The new ever-increasing range of algorithms and bots are starting to take the “busy-ness” out of our world, crunching back-end tasks that allow us to focus on building relationships. And the more they take on, the more we find we can give them.

5. Value

In this new digital world, the value-add to educated clients has never been more important. This is blowing up the reality of those agents who just want to focus on the transaction.

With the promise of the grunt work of real estate becoming easier, relationships can be rethought, and the shifting market is reminding us who we are accountable to — not just sellers and landlords, but buyers and tenants too.

Clients do not want to be sold to — they want guidance. They’re no longer asking us what they should do. Instead they’re looking to us to explain why they should do it. Customers are telling agents: “So here’s what I know. What have I missed, or why is that happening? Or what is the best thing to do?”

The fact that we’re only able to charge half of them a commission currently is our problem, not theirs. And discriminating your helpfulness based on an imagined ROI will only bite you at review time.

Our counsel is far more valuable than our sales figures, and it’s up to us to look at clients as people, not categories. In the relationships come the referrals, but only to those who provide genuine connection, empathy, support and white-glove service.

Kylie Davis is the CEO of Real Content based in Sydney, Australia. She was a speaker on robots and automation at Inman Connect San Francisco 2018. Connect with her on Facebook and LinkedIn.

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6 ICNY takeaways this KW broker took to heart https://www.inman.com/2019/02/15/6-icny-takeaways-this-kw-broker-took-to-heart/ https://www.inman.com/2019/02/15/6-icny-takeaways-this-kw-broker-took-to-heart/#respond Fri, 15 Feb 2019 10:46:11 +0000 https://www.inman.com/?p=719497 Last week, I attended my first Inman Connect event in New York City — and it was an experience. All experiences (good or bad) are good in my book. And my first Inman Connect wasn’t half bad! When you put 4,000 marketing and tech experts, agents and real estate industry leaders in one hotel for more than 5 days, ideas are generated, connections are made and differences of opinion are exposed.

For me, one of the most interesting parts was hearing the innovation and various perspectives from national franchises, independent brokerages, individual agents and team leaders. It was clear that people were passionate about the brand they either created or decided to align themselves with. It was also evident that one size does not fit all and there is plenty of opportunity for us all to succeed — at least for those who are willing to adopt technology and adapt to change.

Here are six key things I learned from my first time at Inman Connect:

1. Tech is here to stay, but we can’t lose human touch

Automation and technology are here, and it’s now a consumer expectation that things are done instantaneously at the touch of a button from their mobile device. Are you able to deliver?

What technology and apps are you implementing in your business in order to streamline the homebuying, selling, building, investing and renting experience? Here’s the caveat: As much as consumers and agents are relying on technology, we can not allow apps, texting, chatbots and video to replace the human experience.

Sure, consumers are going to be checking out properties online, getting their questions answered via chat and doing their research on mortgage, insurance and repairs. But when they are ready to make a move — to check out that property, to write that offer, to get financing advice — they are going to be looking for an expert to talk to.

Will that be you?

2. The new agent is a fiduciary

Being a part of the real estate industry for over a decade, I think it is easy to forget that buying or selling a home is one of the most transformational experiences of an individual’s life, not to mention most likely the most expensive transaction they’ll ever make. Consumers want an expert by their side to advise them on the next best course of action for them, their family and their financial future.

Homeownership is a wealth determiner. We need to train ourselves and our agents to understand the financial implications in relation to our client’s overall goals. It’s not about getting the deal done today; it’s about creating a relationship for life. I guarantee when you act with integrity, even if it means losing a sale today, it will come back ten fold. Being a fiduciary is a long game.

3. Engagement and relationships are everything

It is all about the client. Engaging consumers before, during and after the transaction is the name of the game. As technology becomes the norm — dare I say, even overused — the pendulum is swinging back to a new normal.

People are craving strong connections and lasting relationships beyond the screen. Industry events like Inman Connect are happening more frequently, as are community seminars, client events, live masterminds and experiential training events. Again, this engagement goes far beyond the transaction. I’m talking about agents providing recommendations for all home-related services, staffing their team with concierges, hosting yoga nights and dinner parties and creating memorable experiences where clients come together with their friends and families.

Get creative and get engaged. Technology will continue to streamline systems and processes to allow agents to do what they do best: connect.

4. Focus on emotional intelligence

Emotional intelligence (EI) refers to someone’s ability to perceive, understand and manage their own feelings and emotions. EI is a way of understanding and choosing how we think, act and feel. It’s an important skill to have and hone in this new tech-enabled, consumer-centric world we live in.

I recently read that a skill acquired today will be obsolete in five years or less. But not EI — it is timeless and universal. By focusing on leadership, communication, collaboration and community building skills (all bolstered by emotional intelligence), agents will thrive.

5. Talent is everywhere

Between the Inman Ambassadors, CEOs, economists, Realtors, attorneys, product officers, reporters and sales professionals, the conference was packed with talented individuals who were all great at what they do. As someone who is constantly scouting for talent and building a bench, I found Inman Connect to be a gold mine.

Talented, learning-based individuals like to hang out with other talented and growth-minded people. Conferences and live events are a great place to meet people to join your organization, find the perfect product solution to a current challenge, or create future business partnerships. Opportunity is everywhere and it all starts with people.

6. There’s more than one way to succeed

When leaders get on stage and disagree, challenge each other’s thinking, question each other’s decisions and defend their respective positions, it makes for good entertainment. Controversy is great for headlines, yet if you look below the surface of the assumptive questions and sometimes contradictory answers, one thing emerges: There is no one right way to succeed in this business, or any business.

Different brokerage (and business) models work. Different technology works. Different financial structures work. Different company cultures and missions and values work. The key for agents and consumers is to choose a model that aligns with their goals and values — and then go all in.

A few themes emerged while at Inman Connect, all centered around the customer experience — from emotional intelligence and training an agent to be a fiduciary, to creating technology that enhances the agent’s ability to engage with their customers and clients, not replace them. I’ve said it before and I’ll say it again, it is an exciting time to be a part of the real estate industry!

Adam Hergenrother is the Founder and CEO of Adam Hergenrother Companies, which includes KW Vermont, Hergenrother Realty Group, BlackRock Construction, Adam Hergenrother Training, and Adam Hergenrother Foundation. Follow him on Instagram.

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The Real Word: Agents react to Gary Vaynerchuk’s comments https://www.inman.com/2019/02/15/the-real-word-agents-react-to-gary-vaynerchuks-comments/ https://www.inman.com/2019/02/15/the-real-word-agents-react-to-gary-vaynerchuks-comments/#respond Fri, 15 Feb 2019 10:33:25 +0000 https://www.inman.com/?p=719914 Byron Lazine and Nicole White are two agents in Connecticut who give us their thoughts on the week’s news every Friday in “The Real Word,” a weekly video column on Inman.

Watch Byron Lazine and Nicole White give a real estate agent’s perspective on industry-related topics. This week, from Tom Ferry’s reaction to the Twittersphere’s, they talk out different perspectives on Gary Vaynerchuk’s interview.

This week on “The Racket”:

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Trying to boost your listing’s value? Add a garden https://www.inman.com/2019/02/15/trying-to-boost-your-listings-value-add-a-garden/ https://www.inman.com/2019/02/15/trying-to-boost-your-listings-value-add-a-garden/#respond Fri, 15 Feb 2019 10:07:49 +0000 https://www.inman.com/?p=719620 Adding a garden can help increase not only a home’s value, but also the value of a neighborhood, which can help a home sell for more. According to Zillow, curb appeal is one of five of the most important factors to consider when selling a home.

Great landscaping will guarantee a positive first impression for potential buyers, and landscaping investments could see returns of up to 215 percent, making them one of the most valuable home improvements your clients can invest in. This is one of many reasons it’s important to add and maintain a home garden before getting ready to sell a property.

If your sellers are considering adding a garden to their property, don’t let them miss out on these three nuggets of wisdom:

1. Make maintenance easy on the buyer

Photo credit: Eco Warrior Princess | Unsplash

Always consider the city’s local habitat when choosing plants. Adding native plants and trees to a garden will benefit the environment and make the garden (and entire yard) easier to maintain — and easy upkeep can attract a bigger pool of buyers. Potential buyers might consider it a drawback to have to maintain a difficult, albeit beautiful, home garden.

It’s also important to consider the environmentally conscious homebuyer who is likely to lose interest if landscaping requires a lot of water or harmful pesticides.

Many homeowners spend a considerable amount of time and money maintaining their property, so adding low-maintenance landscaping could be a big selling point for buyers who are able to see the long-term savings potential of low-maintenance landscaping — and it might help them reason with a higher closing cost.

2. Increasing neighborhood value

Photo credit: Iriana Shiyan | Shutterstock.com

Because gardens increase the value of a home, they can also help add value to a neighborhood — and when the value of a neighborhood goes up, the amount a home will sell for also goes up.

Homes in desirable neighborhoods sell for much more than homes in undesirable neighborhoods. There has also been research completed that suggests communities with gardens experience a decrease in crime; and homes in neighborhoods with less crime will also sell for more.

When communities make their neighborhoods more appealing to live in, the buyer market for homes will increase. Many buyers prefer to purchase homes in neighborhoods where there is a strong sense of community. When buyers find the right home in the right neighborhood, they’ll be willing to pay a lot more than they would for the right home in the wrong neighborhood. This is a good reason to complete the landscaping a considerable amount of time ahead of selling — your neighbors might even follow suit!

3. Quality of life

Photo credit: Flash Alexander | Unsplash

Most buyers think about how a home is going to affect their quality of life — so if an interested buyer imagines a happier life in a home with a garden, they might be inclined to pay more for the property.

Adding a garden to a home will increase its value not only because of visual appeal but also because the potential buyer might see their quality of life improving.

Despite the initial investment, sellers will see a big return. This addition can benefit the local community, improve a new homeowner’s quality of life and add overall value to a property — all leading up to an increase in the dollar amount a home will sell for.

 Matt Edstrom is chief marketing officer at GoodLife Home Loans based in Laguna Hills, California. Follow him on Twitter and connect with him on LinkedIn.

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Redfin Now’s all-cash homebuying offers are usually rejected https://www.inman.com/2019/02/14/redfin-ibuyer-offers-usually-rejected-redfin-chief-executive/ https://www.inman.com/2019/02/14/redfin-ibuyer-offers-usually-rejected-redfin-chief-executive/#respond Fri, 15 Feb 2019 00:38:43 +0000 https://www.inman.com/?p=720005 Redfin CEO Glenn Kelman said Thursday that most people who receive offers from his company’s iBuyer program ultimately reject those offers, though he argued that the program still helps sell more houses.

Kelman made the comments during an earnings call Thursday, during which he repeatedly stressed the importance of Redfin Now, which buys houses for cash. However, when asked about specifics on the program, Kelman revealed that most home sellers don’t actually accept the cash offers.

“Most customers who get a Redfin Now offer don’t take it,” he said.

He also said that the program’s pricing “approaches a 10 percent discount once you include all the costs and fees. But there are many customers who want to see that, and we believe that offering that choice increases the total number of homes that we sell.”

Kelman also seemed to acknowledge during the call that Redfin faces challenges when it comes to figuring out how to make cash offers both profitable for his company and worthwhile for consumers.

“Of course what we can pay for a home, and whether it’s a good deal for both the owner and Redfin Now, is still a tricky business,” he said. “In the fourth quarter, for example, a worrisome end-of-year market limited the number of homes we bought and increased the number we sold.”

The comments underly the highly competitive, and still somewhat unpredictable, iBuying model that is currently sweeping through various U.S. metro areas. In addition to Redfin Now, other prominent players include Zillow’s Instant Offers, as well as dedicated iBuyers such as OpendoorOfferpad and Knock.

While these iBuyers have garnered headlines and investment in recent years, numerous open questions remain about how they might fare in a market downturn. Most iBuyers also limit their offers to a relatively narrow class of properties — typically newer homes in relatively affordable cities — and it remains to be seen if the model can grow beyond a niche product.

The iBuying sector also raises questions about how many sellers are actually willing to slash the price of their home in order to sell it quickly. Kelman’s comments seem to suggest that at least in Redfin’s case, the answer is, not enough.

Still, Kelman said that Redfin plans to continue investment in its iBuyer program, which currently operates across most of Southern California as well as in Dallas, Texas. Kelman said Redfin Now will likely expand to as many as five new markets in 2019, and that agents have been “clamoring” for it.

“Giving customers the option of an instant offer seems here to stay,” Kelman said.

Email Jim Dalrymple II

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NAR tells Congress tax reform is hurting homeowners https://www.inman.com/2019/02/14/nar-tells-congress-tax-reform-is-hurting-homeowners/ https://www.inman.com/2019/02/14/nar-tells-congress-tax-reform-is-hurting-homeowners/#respond Thu, 14 Feb 2019 22:06:47 +0000 https://www.inman.com/?p=719733 The nation’s largest real estate trade group, the National Association of Realtors (NAR) went before a U.S. House of Representatives subcommittee on Wednesday to lament the negative effect of tax reform on homeownership.

NAR, which has more than 1.3 million members nationwide, has not hidden its dissatisfaction with the Trump administration’s tax reform law, the Tax Cuts and Jobs Act, which cut several homeowner deductions. The law, passed by Congress at the end of 2017, capped mortgage interest deductions (MID) for primary and secondary residences at $750,000 (down from $1 million), while capping state and local tax deductions (SALT) at $10,000 (there was no cap previously).

On Wednesday, NAR director Kevin Brown, former president of the California Association of Realtors, testified on NAR’s behalf before the Select Revenue Measures Subcommittee of the House Ways and Means Committee at a hearing called “How Middle Class Families Are Faring In Today’s Economy.”

Brown noted, in generations past, federal tax policies had helped make homeownership possible for tens of millions of Americans.

But Brown went on to say the new tax reform law passed in 2017 had “undermined significantly” the incentive to move from renting to owning a home, particularly in high-cost states where home prices and taxes exceed the caps in the law.

“While federal tax policies designed to reduce the cost of purchasing and owning a home by making that home more affordable are still present in the current law, they have been significantly reduced and are a fraction of what they were just one year before. Such policies can still be considered benefits for those who are fortunate enough to still be able to enjoy them,” Brown said.

“However, for the large number of current and would-be middle-class homeowners who are no longer able to claim these benefits, the changes in the Tax Cuts and Jobs Act amounts to a significant barrier to homeownership.”

Brown talked up the benefits of homeownership to communities, household wealth and the economy and said the federal government had historically supported these benefits, but that the new law “punched a huge hole in the amount of federal tax dollars being steered toward incentivizing homeownership.”

Brown noted the barriers to homeownership seem to be growing. Home prices continue to outstrip wage growth, making homes more and more unaffordable, and student debt has grown to $1.4 trillion, which is 10 percent of all outstanding debt in the country, he said. More than 8 in 10 (83 percent) of non-homeowners say student loan debt is a factor in delaying them from buying a home because it made it impossible for them to save for a down payment, he added.

NAR’s housing shortage tracker, which is an index that compares how many building permits are issued relative to the number of new jobs, has found that a single-family permit is issued for every three new jobs across the country when historically the average has been one such permit for every two new jobs. The shortage is much higher in certain metro areas, particularly those in California.

Given these factors, the tax law has made it even more challenging for middle-class families to afford a home, according to Brown.

While the MID cap does not affect most homebuyers — the average price of a single-family home was $256,400 in December — there are some areas where home prices are much higher. Home prices in populated metros in California and New York state, for instance, routinely exceed the $750,000 cap.

“[I]n areas where the home prices were much higher, the lower limit had an immediate and negative effect for those who borrowed more than $750,000 to purchase their home,” Brown said.

“For example, for someone in the new 24 percent tax bracket, the first-year reduction in the tax benefit from the MID was about $2,300, assuming a mortgage of at least $1 million financed with a 3.9 percent 30-year loan.”

The same is true for the SALT deduction. While most homeowners are not affected by the cap, those in a handful of states are and because the cap is not indexed to inflation, more and more will be affected over time, according to Brown.

“Despite the situation that most of the nation is not immediately affected by the new and direct changes of the TCJA on MID and the property tax deduction, the fact remains that millions of homeowners in the higher housing-cost areas of the nation will be negatively impacted by the changes,” he said. “And many of these will be members of the middle-class living in homes that are far from large and lavish.”

Brown also bemoaned the indirect effect that the new law’s doubling of the standard deduction to $24,000 for a couple would have on encouraging the purchase of homes.

That part of the law means that fewer homeowners will itemize deductions, making it so couples have “the same tax liability whether they rent or own their home because the MID and SALT deductions have no effect because the standard deduction was higher than their itemized deductions,” he said.

In 2017, about 32 percent of tax filers itemized their deductions, but only about 13 percent of tax filers are expected to itemize for 2018, according to Brown.

“This means, of course, that seven of eight taxpayers will claim the standard deduction and will find no incentive effect of the MID and property tax deduction,” he said.

“While some few of these who are not homeowners will find that purchasing a home would increase their itemized deductions to a level higher than the standard deduction and thus enter the range where the MID and property tax could lower their tax liability vis-à-vis renting, the numbers who do so will be very low as compared to those who could enjoy these incentives before the tax reform law changes went into effect.”

NAR expects the number of tax filers claiming the MID to fall by 20 million people, or 60 percent, and anticipates the amount of the deduction will decline by almost $40 billion, or 62 percent.

Meanwhile, the trade group predicts the number of SALT deduction claimants will fall by almost 27 million (a 62 percent drop) and the amount of the deduction will decrease by nearly $50 billion, down 71 percent.

Email Andrea V. Brambila.

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