Incline Village at Lake Tahoe, Nevada Real Estate and Community News

Debunking Zillow’s Zestimate W hen looking to buy or sell a home, many turn to the Seattle-based website zillow.com as a place to start their home search or to look for comparison pricing. While Zillow has empowered buyers and sellers to gather basic information about their home and other homes for sale in their market, real estate professionals warn that the estimates on properties generated by Zillow, called Zestimates, are unofficial and should not be considered a reliable fair market value. When trying to uncover the Zillow mystery, global real estate advisor Brian Hopper of Seattle’s Realogics- Sotheby’s International Realty explains the impor - tance of using this tool appropriately. “Zillow is used as a conversation starter before my clients call for a more accurate evaluation of their property,” he said. Sites like Zillow only give consumers information about a property that may be obtained from publicly available sources. The system uses an automated valuation model which leaves out numerous impor - tant factors that should be considered when a home is being appraised. For example, the system only accounts for basic property details and characteristics without considering addi- tional information about the home or possible recent home improvements. Zillow captures square footage and number of bedrooms and bathrooms, for instance, and uses a proprietary formula to predict a value based on other available market data such as assessed value or most recent sale price. Hopper disapproves of this pricing method. “There are so many variables that make properties unique that it is essential for an actual person to walk through the house and spend time seeing exactly what the property offers,” he said. “Zillow’s system doesn’t factor in the details of a home that can’t be seen by a computer, including the actual condition of the property and improvements made to the home.” Often there are location advantages to a property, such as proximity to a great neighborhood or school. On the flip side, there might be a detrimental quality to the location or condition of the home. If these are not detected by the Zillow algorithm, the actual value of the home could be signifi- cantly higher or lower than that of the Zestimate. Zillow also doesn’t distinguish between types of home sales, such as short sales or foreclosures. “I encourage my clients to use Zillow for their initial research,” Hopper con- ceded. “Frankly, people love to do their research when buying a home and they are welcome to spend that time getting information before they contact me and my team for an actual compari- son of properties,” he said, adding that it is essential for any buyer or seller to work with a real estate agent who can pull an actual compara- tive market analysis using their local MLS system. Zillow is aware of inconsis- tencies in their data. Per an article published in the Seattle Times on May 26, 2017, Zestimate home val- ues in the city were off by as much as $40,000, according to Zillow’s own data. Zillow has reacted to this feedback by launching a contest offering a top prize of $1 million to the team capable of developing a new, more accurate home algorithm. Finalists for this contest will be chosen in January 2018, and prizes will be awarded by January 2019. While the error rate varies by location, the Seattle mar - ket is not the only region wrestling with Zestimate flaws. Realtors in the Lake Tahoe/Reno region have seen inconsistencies as well. “Even Zillow acknowledges that realtors are better equipped at predicting sales prices, and this is especially true in resort markets like Lake Tahoe and Truckee,” said Brit Crezee, director of marketing at Sierra Sotheby’s International Realty. “Important features like views, homeowner ameni- ties, and proximity to the lake, ski resorts, golf courses, and open space are things that the Zestimate can’t factor into a home’s value,” adds Tahoe City- based real estate advisor Neil Morse. “The system might work well in areas with lots of common tract housing, but Lake Tahoe is largely comprised of custom-built homes and incredibly diverse neighborhoods.” As buyers and sellers rou- tinely rely on Zestimates for true market value, the process of buying and selling in our market can become distorted. If a house for sale has a Zestimate of $375,000, a buyer might challenge the seller’s listing price of $450,000. Or conversely, the seller might question a potential listing broker’s proposed $795,000 sale price when Zillow shows a value of $950,000. “To overcome disparities like these we’ll often refer clients to the Zestimates section located in small type at the bottom of the Zillow homepage. This is where people can find valuation error rates by state and county,” Crezee said. As of August 2017, Zillow’s reported median error rate for California’s Placer and Nevada counties are 3.3 and 3.9 percent, respectively. “With second quarter median sales price for single family homes in Tahoe Donner reported at $693,000, for example, that translates to a significant $54,747 value discrepancy,” Crezee pointed out. Hopper summarizes the Zillow conundrum, stat- ing, “Zillow is one point of data of many needed to review before getting a true valuation of a home. But in addition to the computer, the human factor is critical to determine realistic pricing.”

Consumers weren't afraid to spend in September after holding back in August.

Folks were spending in September, according to the most recent Retail Sales report issued by the Commerce Department. This was welcome news, as consumer spending makes up about two-thirds of the U.S. economy. Sales were up 1.6 percent from August, just below expectations, and up 4.4 percent from September 2016. Increases in gas, auto and building material sales led the way due to hurricane-related boosts. When stripping out autos, sales rose a solid 1 percent in September from August.

The Bureau of Labor Statistics reported that consumer inflation via the Consumer Price Index (CPI) jumped 0.5 percent in September from August, though this was softer than expected. However, the more closely watched Core CPI, which excludes volatile food and energy, was up just a meager 0.1 percent in September. This left year-over-year Core CPI at 1.7 percent for the fifth month in a row, meaning it still remains below the Fed's inflation target of 2.0 percent.

Wholesale inflation also ticked up in September as energy prices rose following Hurricane Harvey. The Producer Price Index (PPI) rose 0.4 percent from August, in line with estimates, while annual PPI jumped 2.6 percent, the biggest gain since February 2012. Core PPI, which strips out volatile food and energy, rose 0.2 percent as expected from August to September, while the annual Core PPI was up 2.1 percent.

The Federal Open Market Committee meeting minutes from August revealed the Fed said the economy is strong enough to withstand an increase to the Fed Funds Rate later this year. This is the rate banks lend to one another overnight. However, the Fed will be closely watching inflation readings and other key economic reports in the coming weeks and months, and it remains to be seen if any data will impact this decision.

At this time, home loan rates remain historically attractive.

If you or someone you know has questions about home financing or home loan rates please contact me. I'd be happy to help.

Forecast for the Week

Manufacturing and housing data dominate the week.

Regional manufacturing data from the Empire State Index will be released on Monday, followed by the Philadelphia Fed Index on Thursday.

Look for housing numbers on Wednesday with the release of Building Permits and Housing Starts.

The Fed's Beige Book will also be delivered on Wednesday.

As usual, weekly Initial Jobless Claims will be released on Thursday.

Existing Home Sales close out the week on Friday.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices got a boost in the second half of the week. Home loan rates remain near historic lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Oct 13, 2017)

3rd Quarter | Lake Tahoe, Truckee & Surrounding Areas

The Tahoe Sierra MLS reported a historic Third Quarter 2017 with more units sold than any other quarter on record for the Lake Tahoe / Truckee market.

Spanning a collection of diverse resort communities from the shores of Lake Tahoe to Reno and the surrounding foothills, these market trends can vary dramatically from neighborhood to neighborhood. Sierra Sotheby’s International Realty compiles quarterly micro market statistics from four different multiple listing services to help you better understand values, identify opportunities and make informed real estate decisions.

Follow the links below to review regional micro-market reports drilled down by neighborhood. If your community is not listed or you’re unsure what the data means for your situation, please don't hesitate to contact me. CLICK ON THE LINKS BELOW TO ACCESS DATA FOR YOUR AREA OF INTEREST

EAST SHORE | INCLINE VILLAGE | NORTH & WEST SHORE | RENO | SOUTH LAKE | TRUCKEE

Tree trimming on U.S. National Forest Service lands above Incline Village resumed last week, as workers aimed to remove excess vegetation that can feed wildfires and improve forest health.

The forest service said the thinning operations are expected to continue throughout fall until winter weather sets in for the season.

“(Mechanical cut-to-length) thinning involves using a harvester to cut the tree down, remove the limbs and cut the tree into sections in the cutting area,” the forest service said in a statement on Friday, Oct. 6.

The public is asked to avoid the area because of hazards posed by heavy equipment and falling trees.

“This forest thinning is part of the Incline Hazardous Fuels Reduction and Healthy Forest Restoration Project, which aims to treat nearly 4,000 acres on North Shore of Lake Tahoe to reduce the risk of severe wildfire, improved forest health, and provide defensible space to neighboring communities,” the forest service said.

Job growth plunged in September due to Hurricanes Harvey and Irma.

The Labor Department reported that payroll growth declined by 33,000 jobs versus the 75,000 increase in new jobs expected. July job growth was revised lower by 51,000 to 138,000, while August was revised higher by 13,000 to 169,000 new jobs. This was the first negative reading in seven years, but the numbers will most likely reverse higher in the coming months as Americans rebuild after the devastation in the hurricane-impacted areas.

All was not lost within the report, though. Hourly earnings surged by 0.5 percent from August to September versus the 0.2 percent expected. Earnings are up 2.9 percent year over year. In addition, the Unemployment Rate fell to 4.2 percent, the lowest level in 16 years.

Home prices continued to heat up right through summer. Data analytics firm CoreLogic reported that home prices, including distressed sales, rose 6.9 percent from August 2016 to August 2017, up from a gain of 6.7 percent annually in July. On a monthly basis, prices rose 0.9 percent from July to August. Looking ahead, prices are expected to rise 4.7 percent from August 2017 to August 2018.

At this time, home loan rates remain historically attractive.

If you or someone you know has questions about home financing or home loan rates please contact me. I'd be happy to help.

Forecast for the Week

Wholesale and consumer inflation and Retail Sales will capture attention at week's end. Bond markets are closed Monday in observance of Columbus Day.

The light economic calendar begins on Thursday with the Producer Price Index and weekly Initial Jobless Claims.

On Friday, Retail Sales, the Consumer Price Index and the Consumer Sentiment Index will be released.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices stumbled recently as Stocks rallied. Home loan rates remain attractive and near historic lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Oct 06, 2017)

Existing Home Sales and Housing Starts declined while the Fed announced plans to unwind.

High prices and low inventories curtailed Existing Home Sales in August. The National Association of REALTORS® (NAR) reported that Existing Home Sales fell 1.7 percent from July to an annual rate of 5.35 million units versus the 5.42 million expected. NAR said that gains in the Northeast and Midwest were outpaced by declines in the South and West. From August 2016 to August 2017, sales were up just 0.2 percent.

The median existing home price in August was also up 5.6 percent from August 2016, marking the 66th straight month of year-over-year gains.

New construction may still encourage buyers yet this fall, but the numbers weren't favorable in August. The Commerce Department reported that Housing Starts fell for the second straight month, slipping 0.8 percent from July to an annual rate of 1.18 million units. On a positive note, year-over-year Housing Starts rose 1.4 percent. Single-family starts, which make up the biggest share of the housing market, rose 1.6 percent. Multi-family dwellings fell 5.8 percent from July and are down 23 percent from August 2016. Building Permits, a sign of future construction, rose 5.7 percent from July, hitting their highest level since January.

Finally, Mortgage Bonds fell modestly after the Federal Reserve announced it will begin to unwind its massive $4.5 trillion balance sheet starting on the ninth business day of October and continuing every ninth business day of the month thereafter. The balance sheet is made up of Mortgage Backed Securities and Treasury Bonds. The plan is designed to have little disruption to the market. Seeing that this has never been done before, it remains to be seen what happens to Mortgage Bond prices and the home loan rates tied to them over time.

For now, home loan rates remain near historic lows.

If you or someone you know has questions about home financing or home loan rates please contact me. I'd be happy to help.

Forecast for the Week

Will the mystery of low inflation creep up on the Federal Reserve? No spoiler here. Stay tuned for Friday's release of the Fed's favorite inflation gauge.

Housing data will come from Tuesday's S&P/Case-Shiller Home Price Index and New Home Sales, followed by Pending Home Sales on Wednesday.

Consumer Confidence also will be released on Tuesday, followed by the Consumer Sentiment Index on Friday.

Durable Goods Orders will be released on Wednesday.

On Thursday, the third reading on second quarter Gross Domestic Product will be shared along with weekly Initial Jobless Claims.

On Friday, the Fed's favorite inflation gauge, Core Personal Consumption Expenditures, will be delivered along with Personal Income, Personal Spending and regional manufacturing data via the Chicago PMI.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices dropped recently. Home loan rates are still in attractive territory.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Sep 22, 2017)

Retail Sales dropped in August while higher fuel prices revved up consumer inflation.

Families may have pulled back on back-to-school shopping, but Hurricane Harvey played a role too. The Commerce Department reported that consumers pulled back on spending in August due in part to a drop in car sales attributed to Hurricane Harvey in southern Texas. Retail Sales fell 0.2 percent versus the 0.1 percent increase expected, while July's sales figures were revised lower to 0.3 percent from 0.6 percent. Retailers have been suffering a bit with in-store traffic, but sales at online retailers declined 1.1 percent in August too, the biggest drop since April 2014.

On the inflation front, the Consumer Price Index (CPI) had its largest month-over-month increase in seven months, rising 0.4 percent from July to August. But one month does not make a trend; the increase was due in part to a spike in gasoline prices that posted the biggest jump since January. Core CPI, which excludes volatile energy and food prices, was in line with expectations at 0.2 percent. The Producer Price Index (PPI), which measures wholesale inflation, came in just below expectations in August. But on an annual basis, PPI rose 2.4 percent after increasing 1.9 percent in July.

Any signs of ongoing inflationary pressure are bad for fixed investments, like Mortgage Bonds, so inflation is an important metric to watch. When Mortgage Bond prices worsen, the home loan rates tied to them can worsen as well.

At this time, home loan rates remain near historic lows.

If you or someone you know has questions about home financing or home loan rates, please contact me. I'd be happy to help.

Forecast for the Week

Fed Chair Janet Yellen and the Fed's monetary policy statement will capture attention midweek.

Housing Starts and Building Permits will be released on Tuesday, followed by Existing Home Sales on Wednesday.

The Fed's monetary policy statement also will be released Wednesday, and it could be a market mover.

Thursday brings weekly Initial Jobless Claims and regional manufacturing data in the Philadelphia Fed Index.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Bonds have been trading in a sideways pattern after recent declines. Home loan rates are still near historic lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Sep 15, 2017)

While home prices continued to rise, it was headline news that boiled Bond prices.

Home prices continued to heat up in July, and the heat wave is expected to last. CoreLogic, a leading provider of data and analytics, reported that home prices, including distressed sales, rose 6.7 percent from July 2016 to July 2017. From June to July, home prices increased 0.9 percent. CoreLogic says the "combination of steadily rising prices along with very tight inventory of unsold homes should keep upward pressure on home prices for the remainder of the year."

Also of note, the second read on second quarter Productivity rose to 1.5 percent from the first read of 0.9 percent. However, within the report it showed that the inflation reading unit labor costs declined to 0.2 percent from 0.6 percent, further signs of lower inflation. Low inflation is typically good news for fixed assets like Mortgage Bonds and the home loan rates tied to them.

The week's other economic reports had little impact on markets, but the news headlines about Hurricanes Harvey and Irma, the debt ceiling and North Korea had people on edge, including investors.

The uncertainty surrounding these events pushed Bond prices up, keeping home loan rates near historic lows.

If you or someone you know has questions about home financing or home loan rates please contact me. I'd be happy to help.

Forecast for the Week

Fed members will keep a watchful eye on inflation.

Economic data releases begin on Wednesday with wholesale inflation numbers from the Producer Price Index, followed by the Consumer Price Index on Thursday.

Weekly Initial Jobless Claims also will be released on Thursday.

On Friday, Retail Sales will be delivered along with the Consumer Sentiment Index and the Empire State Index, which provides a look at regional manufacturing.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices have hovered near 2017 highs, leaving home loan rates near historic lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Sep 08, 2017)

INFO THAT HITS US WHERE WE LIVE... Our thoughts remain with the people of Texas recovering from Hurricane Harvey's dramatic devastation and tragic loss of life. Their acts of heroism have touched us all. Damage is estimated to be at least $35 billion, with much of it outside the Special Flood Hazard Areas identified by the Federal Emergency Management Agency (FEMA). This means only about 20% of affected homeowners are expected to have FEMA flood insurance. But the outpouring of help from across the country has been phenomenal. And relief is being offered to homeowners from Fannie Mae, Freddie Mac, FHA and mortgage servicers. Good stuff.

Pending Home Sales dipped just 0.8% in July, their fourth slip in five months. This National Association of Realtors (NAR) measure of contracts signed on existing homes is currently suffering from tight supply, not weak demand. The NAR chief economist explained, "The pace of new listings is not catching up with what's being sold at an astonishingly fast pace." He added, "the typical listing has gone under contract within a month since April." Some say rising prices are diminishing affordability, but First American's Real House Price Index reported increased affordability, thanks to "falling rates for 30-year, fixed-rate mortgages and modest wage gains."

BUSINESS TIP OF THE WEEK... Never lose sight of where you're headed. Start every project keeping in mind your overall goals--for your work, and life! Keep those goals in mind, fitting today's to-do list into your long-term plans.

>> Review of Last Week

BACK TO BREAKING RECORDS... The stock market moved up again for another week, as investors felt good enough about our economic prospects to buy up some of the bargains created by the mid-August dip from previous record levels. Spurred on by decent economic data, investors pushed all three major stock indexes up for the week, with the tech-heavy Nasdaq reaching an new all-time high. The GDP-2nd Estimate for Q2 showed the economy growing at an unexpected 3.0%. And the ISM Manufacturing index came in with a strong 58.8 growth reading for July, its highest level in more than six years.

This good news could have made Wall Street, and us, fearful the Fed would go for another rate hike. But those fears were calmed when Core PCE Prices showed inflation decelerated in July to 1.4% annually, far below the Fed's 2% target for boosting rates. August jobs data also helped, with 156,000 new Nonfarm Payrolls. This was seen by many as a "Goldilocks" report, strong enough to advance the economy but weak enough to check the Fed. Meanwhile, Consumer Confidence stays near its 16-year high, and Michigan Consumer Sentiment's chief economist reports that index "has been higher during the first eight months of 2017 than in any year since 2000."

The week ended with the Dow UP 0.8%, to 21988; the S&P 500 UP 1.4%, to 2477; and the Nasdaq UP 2.7%, to 6435.

Bond investors had a more negative take on August jobs than equity traders and pushed prices up. The 30YR FNMA 4.0% bond we watch finished the week UP .10, at $105.55. In Freddie Mac's Primary Mortgage Market Survey for the week ending August 31, national average 30-year fixed mortgage rates fell again, to a new yearly low. But the chief economist cautioned: "recent releases of positive economic data could halt the downward trend." Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up-to-the-minute information.

DID YOU KNOW?... Experts predict that by 2025, there will be 5.2 million more homeowners in the U.S. Not surprisingly, Millennials born in the 1980's and 1990's will dominate the market

Consumers had no problem ringing up sales in July (and June, it turns out!), while new construction ground down.

July Retail Sales rose 0.6 percent from June versus the 0.3 percent expected, while June was revised higher to 0.3 percent from -0.2 percent. It was the largest increase in seven months as consumers spent on autos and discretionary items. When stripping out autos, sales rose 0.5 percent in July, also above expectations. Consumer spending makes up about two-thirds of the U.S. economy, so this report was welcome news.

New construction ground down in July with Housing Starts falling 4.8 percent from June to an annual rate of 1.155 million units, below the 1.217 million expected. Homebuilders cite many reasons for the decline, including a lack of skilled labor, lack of lots to build on and higher costs for materials. Single-family starts, which make up the biggest share of the housing market, fell 0.5 percent. Starts on multi-family dwellings with five or more units plunged 17.1 percent from June to July. Year over year, Housing Starts were down 5.6 percent.

Building Permits, a sign of future construction, also fell in July, down 4.1 percent from June to an annual rate of 1.223 million annualized units. This was just below the 1.247 million expected.

Meanwhile, minutes released from the July Federal Open Market Committee meeting revealed some Fed members are concerned about low inflation and expect it to remain below the Fed's target 2 percent objective longer than previously expected. Also, no indication was given as to a start date for the reduction in the Fed's $4.5 trillion balance sheet.

The dovish Fed minutes coupled with weaker-than-expected construction data lifted Bond prices. At this time, home loan rates remain near historic lows.

If you or someone you know has questions about home loan products or current rates please contact me. I'd be happy to help.

Forecast for the Week

Find out if July home sales sizzled or fizzled.

Housing data kicks off Wednesday with New Home Sales followed by Existing Home Sales on Thursday.

Also on Thursday, weekly Initial Jobless Claims will be released.

On Friday, Durable Goods Orders will be shared.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.

To go one step further, a red "candle" means that MBS worsened during the day, while a green "candle" means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bond prices improved recently, lifted by economic news in addition to geopolitical events at home and abroad. Home loan rates remain near historic lows.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Aug 18, 2017)