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SXSW: Mayors address using data to solve housing challenges

(REAL ESTATE NEWS) At SXSW, three mayors on stage address the challenges of housing and how data can be used to solve the multi-pronged crises.

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The critical nature of data

We all know that data collection is at an all-time high. Facebook knows what to sell you based on your browsing history since you’re logged in, your smart thermostat knows when you’re home and when you’re away regularly, your phone knows everywhere you’ve been, and companies are tapping into this data every microsecond.

But what about city governments? How are they tapping into the available data, and further, how are they using it to solve local housing challenges?

Short answer: They’ve just scratched the surface.

SXSW panel on housing challenges

At South By Southwest (SXSW), Denver Mayor, Michael Hancock, Milwaukee Mayor, Tom Barrett, and Cambridge Mayor, Denise Simmons all spoke about current and future initiatives they’re working on to address housing demands.

On stage, Mayor Simmons focused extensively on Cambridge’s inclusionary zoning efforts and Mayor Hancock acknowledged that Denver can’t build their way out of their 35,000 unit deficit (despite many initiatives to do just that). Both Cambridge and Denver are dynamically different than Milwaukee which has battled a long population decline and is finally growing but has a more intense focus on lower income families with strong actions against bad landlords and blight homes.

Mayor Simmons uses available studies to address tensions with developers who fight the city’s increases in requirements for portions of properties to meet affordable housing standards.

But when pressed, all three danced around questions of using the data for more granular specifics than affordable housing units, population growth, and transportation challenges. This again reiterates that city governments have barely scratched the surface and while not addressed during the panel, we would note that data collection and good data analysis can be extremely expensive and when a government is trying to squeeze money from the budget already, it’s still not a reality.

Politics and housing

But people are working on to make it a reality. In the halls of SXSW you’ll hear buzzing about government data hackathons and it’s not about hacking into the government, rather private citizens taking the endless public data and turning it into something useful for citizens and governments. You’ll also hear a considerable anti-Trump sentiment, as is common among people at massive tech conferences.

And as you’d guess, three politicians on stage took the opportunity to sidenote their fears about the federal budget squeeze. Although HUD Secretary Ben Carson vowed to protect lower income neighborhoods during his confirmation hearing, there is a potential $6B HUD budget cut on the horizon.

All three mayors expressed that they already struggle with their current funding and that stripping federal funding, particularly community development block grants (CDBGs), would be devastating to their efforts.

Affordability, front and center

The National Association of Realtors (NAR) has continued to note with urgency that affordability is one of the most pressing issues on the housing industry, and all three mayors are using available data to implement initiatives to help their local citizens.

There is massive opportunity for local and state governments to use available data to do so much more than just push back on developers – data can transform sustainability efforts, how healthy we are as communities, and how we connect.

We asked Mayor Barrett how they were partnering with the Realtor community on affordability and he noted they were working with the Wisconsin Realtors Association but didn’t dive into details.

Again, this is where we see another tremendous opportunity – for brokerages, local boards, and state associations to partner with mayors to offer their data to local governments, to lend their time and talent to tackle affordability challenges.

While housing is so much more than affordability, with populations shifting in and out of urban and suburban areas, it is currently a core theme when talking to anyone in a position to impact the future of housing. Particularly mayors.

Let’s talk again in 10 years

When we have this discussion again 10 years from now, you’ll hear more about data being used to track upward mobility of residents, sustainability as part of housing requirements, new ways of meshing private and public dollars, and much more.

The NAR Center for Realtor Technology (NAR CRT) has been partnering with universities, private companies, and taking other creative measures to study how data can be used. For example, they’ve asserted that some day all smart thermostat data could be collected and become a line item in the MLS so that you can search for a home or eventually a neighborhood based on air quality. And based on discussions with them, even that is just scratching the surface of what’s possible.

City governments will catch up to the CRT model of constantly digging, theorizing, and partnering to research without having to blow the entire city budget on a data firm. So let’s talk again in a decade – I can’t wait!

#SXSWhousing

Lani is the Chief Operating Officer at The Real Daily and sister news outlet, The American Genius, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

Real Estate Big Data

Supply crisis hits housing – starts and permits fell in September

(REAL ESTATE) New data from the Commerce Department shows a dip in permits and starts, but if you look closely, multifamily is carrying that weight, so how is single family production going?

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housing starts

Last month, housing starts fell 1.6%, which is only a slight dip, but permits fell 7.7%, and the gap between units completed and those still under construction is the largest on record, according to reporting from the U.S. Commerce Department.

While starts and permits hit a year low and while labor shortages, supply chain issues, and rising prices of raw materials, it should be noted that single-family starts actually remained unchanged, and permits for single family homes only fell 0.9%, so what we’re looking at here is a slowdown in the multifamily sector as sales heat up in single family housing..

Another factor at play here regarding still-tight inventory levels is the federal mortgage forbearance program as a response to the pandemic. As the program wraps up, more inventory will come online.

Dr. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR) explains: “The current mortgage default rate of at least three months is running high at 3.5% compared to less than 1% before the pandemic. However, foreclosures have been at historic lows so far due to the forbearance support. The default rate will certainly fall as long as the economy continues to generate jobs, but the end of the federal support program inevitably means some homeowners will need to sell. This will be another source of housing inventory.”

Because tight inventory levels have kept the market restricted and sales below what demand is, the residential real estate sector should see hope in this analysis.

But there is no sector safe from the supply chain crisis or prices rising again on raw materials. Reuters reports that many materials like windows and breaker boxes are in short supplies while the cost of building materials have surged, like copper which is up 16%, and lumber prices are jumping back up to record highs set in May.

Homebuilder confidence is up, according to the National Association of Home Builders (NAHB), but their most recent survey also indicates that “builders continue to grapple with ongoing supply chain disruptions and labor shortages that are delaying completion times.”

The Mortgage Bankers Association (MBA) reported today that mortgage applications for new home purchases are down 16.2% compared to September 2020, and applications are down 4% compared to August. It is notable that the average loan size hit $408,522, the highest on record, and another indicator of increasing construction costs.

Going forward, analysts expect the backlog of starts to continue as labor and supply chain issues persist. And although the news isn’t overtly positive, single family housing on its own is actually performing better than in 2020. There is light at the end of the tunnel for hopeful homebuyers.

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Real Estate Big Data

A ridiculously easy way to combat bad reviews from non-customers

(MARKETING) Some ratings and review sites don’t verify reviewers, so what happens when a nasty comment about you is left on a ratings site?

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reviews Woman seated on ground writing cold email to clients.

Have you ever found a business through Yelp that you wanted to like but just couldn’t make up your mind about because of the contrasting reviews of the place? Like a restaurant with the best service but had cold soup and an unresponsive hostess, or a B&B that was warm and clean but had an owner who did not provide the second B come morning time?

Some of these outlying negative reviews can be telling of the business, and I always make sure to read them in case I set my expectations too high (like I did for the eggs benedict from that diner up north).

However, while most reviews do reflect a genuine experience and are useful to would-be customers, others can be exaggerated or even outright falsified.

One such encounter one of our team members had was when searching for a private firearms trainer. Her online search had taken her to a trainer she liked. However, the comments on Yelp for the trainer were horrible.

Before she ran the other way, she saw comments from the trainer that simply said, “This person is not a verified client of [Company Name].” Apparently, he made a tv news appearance advocating for a specific gun right, and people from all over the globe made negative comments.

The fact that they weren’t his clients made her totally disregard their comments, because those reviews weren’t based on his professional performance. Guess who she hired?

Sites that allow anyone to review an unlimited number of businesses naturally risk exploitation. Such review sites make it possible to communicate quick, personal experiences about any business out there, and that also means an easy dig from a disgruntled customer to the place that hurts a company most.

It is up to the business to stay vigilant about what is being said out there and seek out ratings and review platforms that verify customers.

Since customers rely on sites like Yelp, businesses need to maintain their profile in the same way they would maintain their storefront. Just as they would fix the broken lighting in their lobby, they need to acknowledge any unreliable reviews a cranky customer may write about them. By having a human presence on these sites, businesses can breed a sense of integrity and accountability that others will pick up on.

If those scathing and seemingly random reviews had been acknowledged by the supposed perpetrators, I would have had an easier time overlooking the more exaggerated claims, just like my team member did.

By responding, the business provides context for the incident, but more importantly, it shows that they care.

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Real Estate Big Data

Global market panic over Chinese real estate bubble subsides slightly

(REAL ESTATE) Chinese real estate bubble fears shook markets last week, but Evergrande made a big move today to temper the panic.

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Last week, stock markets internationally plunged due to fears of a real estate bubble in China as their largest real estate developer, Evergrande struggled to make their interest payments on their outstanding bank loans as well as their bonds.

Analysts pointed to the interconnected nature of markets, reminding people that when the housing market crashed in the U.S. back in 2008, all global markets were impacted.

We asserted that the panic was overblown given that Evergrande has a tremendous amount of physical assets ($340 billion to be more precise), and that a restructure was possible which could put them back on track (rather than crumble – which was what markets seemed to imagine last week).

There has been a lot of speculation that the CCP (Chinese Communist Party) would begin pressuring state-owned businesses to prop up the developer.

Today, Evergrande’s stock is actually up as they have raised $1.5 billion in cash to meet their financial obligations.

How did they accomplish this? By selling their 20% stake in Shengjing Bank to the state-owned Shenyang Shengjing Finance Investment Group.

The money will only be applicable to their outstanding interest payments that are past due, and the Chinese government has not made any statement to the effect that they applied pressure or intervened.

The government has been pouring cash into the financial system to assuage fears, adding $15.5 billion to keep liquidity moving.

In a statement this week, the People’s Bank of China said they would “maintain the healthy development of the real estate market and safeguard the legitimate rights and interests of housing consumers.” The statement did not specifically reference Evergrande.

It is important that real estate practitioners keep their eye on this story as it has stoked consumers’ fears, especially when people don’t read beyond a headline.

There won’t be a pop quiz on how much cash Evergrande has on hand, but consumers may mention the Chinese real estate bubble elbowing markets here as a factor in their decision making. Understanding the bird’s eye view of what is going on will help Realtors better address the topic while in the field.

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