Editors Note: This is the first part of a two-part series on how real estate investors are preparing for another potential downturn (or doomsday) in the housing market at some point in the future. The first part establishes the shifting market sands that investors are experiencing in various markets across the country. The second part in our July issue will provide a deeper dive into emerging opportunities and practical acquisition and exit strategies that investors can employ in this shifting market.

Leland DiMeco is making hay while the sun shines in the Boston real estate market.

But he knows that at some point in the not-too-distant future a real estate winter is coming that will cool off the

citys still red-hot housing market.

I think weve got another year before we see any leveling, said DiMeco, owner and principal broker at Boston Green Realty. Were going to enjoy whats going on in the next year make sure my investors Im working with have settled in by the end of next year. Theyre willing to hunker down for the next few years, whatever it is.History is going to repeat itself.

But in the meantime DiMeco said the hard literal winter in Boston created pent-up demand that is now hitting the local market with full force.

The market is still very strong right now. Im still seeing most of my clients losing an opportunity to buy, he said, noting

June 2015 volume 9 issue 6

CONTENTS

7 My Take by Dr. David M. Blitzer S&P Dow Jones Indices 10 News Briefs

11 Legal Briefs

12 Financial Briefs

13 State Spotlight:

21 Book Review: Big Data Revolution, By Rob Thomas and Patrick McSharry

Continued Next Page

By Daren Blomquist, Executive Editor

The Real Estate Doomsday PreppersNamed the Nations Best Newsletter by the National Association of Real Estate Editors

2June 2015

that he works with mostly investor clients, both international and domestic, and also invests himself. I get people banging down my door. Boston is very strong. Its a very good place to continue investing.

Some of DiMecos clients are getting priced out of the picked-over parts of the city and are starting to look for emerging neighborhoods where they can add value through rehab and then profit off an eventual flip.

For example East Boston right now is one of the neighborhoods in the city (that investors are targeting), he said, noting that it is a less expensive neighborhood that is still close to the city and has public transportation.

The only thing that is slowing down the flips now is the appraisals catching up, he said, noting that he sold a three-family property in East Boston last year that was the highest-grossing property in the area. The appraisal came in low, but the investor he was working with was willing to put in an extra $10,000 to cover the deficiency in the appraisal. He knows that this area is growing, and his property is doing very, very well. (He will) make some good cash flow and eventually sell at a profit.

Another $180,000 in Rental IncomeDiMeco provided another example of an investor hes working with who recently bought five three-family properties in East Boston. Each property was grossing $2,800 a month in cash flow from rents when the investor bought them, and after pretty modest renovation one of the five is now grossing $5,000 a month in rental income.

You think about it, you times it by five thats a pretty significant number, DiMeco said. Hes making another $180,000 a year on those five buildings by the time were done.

I like working with the investors who are buying these

properties that need the work, and doing the work and seeing the fruit of that labor, said DiMeco, adding that the city is still seeing a decent flow of foreclosures that can provide investors a healthy margin on the acquisition side, especially when the properties are in poor condition and not attracting the average buyer.

But when a bank-owned property is in good condition it may not always represent a good deal for investors, DiMeco noted.

Banks are really seeming to get the concept of the market, he said Now theyre coming on (the market) and theyre pretty close to market value.

Fighting a Foreclosure DroughtWhile Boston has seen a recent surge in foreclosure starts, with 15 consecutive months of annual increases, foreclosures have largely dried up in Southern California, according to RealtyTrac data. Overall foreclosure activity has been down on an annual basis in the Los Angeles metro area in nine of the last 12 months, and in May the metro areas foreclosure

rate ranked 110th out of the 214 metro areas tracked by RealtyTrac each month.

The resulting dearth of distressed properties along with hesitant homebuilders has led to a market that is still hallmarked by short supply despite the recent boom, according to Bruce Norris, founder of The Norris Group, a Southern California company that invests in real estate and also trains and lends money to real estate investors. Norris predicted the 2006 housing bubble burst in his report The California Crash.

Usually at the end of the boom you have this oversupply in the sense that it represents 20 percent of whats for sale, said Norris, who noted that at the beginning of 2015, the supply of new homes for sale in California only represented 1 percent of all homes for sale. Its so low

Continued Next Page

Leland DiMeco (right), owner and principal broker at Boston Green

Realty stands with real estate investor Rafael Luna of LPY Urban Development

in front of one of five three-family properties DiMeco helped Luna and a group of Latin real estate investors recently purchase. Now the group is renovating the properties and filling

them with new tenants before flipping them as turnkey rentals to other

investors. After the first property was renovated, the gross rental income

jumped from $2,800 a month to $5,000 a month, according to DiMeco.

3June 2015

its almost not worth mentioning.

Norris believes this low supply will provide continued steam for housing market growth over the next 18 months, but its also causing headaches for local real estate investors like Lin He, who recently exited the home flipping business because of too much competition and too little inventory.

I think in the next 18 months, depending on the inventory youre looking at, I think its going to be mildly up, Norris said of Southern California home prices. Its not up to the investor at this point. We seem to have done our job. Now the world of financing needs to get in there and get the owner-occupant in there.

Investors Squeezed in Orange CountyInvestors are getting squeezed both on the front-end acquisition of properties and the back-end disposition of properties, according to He, who operates Rellion Inc., in Orange County, California.

On the front end buying, there are two problems here, he wrote in an email. One is the fact that in a normalized market, it is a challenge to find deals as there are so many regular home buyers out there and they dont need to remodel as I do, so their borrowing cost is lower, and they dont have to pay two more commissions to sell the property immediately. So there are a lot of seasoned investors now sitting on the sideline or do something else.

Two, here comes the newbie investors who have watched too many TV shows, continued He, referring to the second challenge he faces when acquiring properties, adding he is already seeing evidence that these newbie investors are getting burned by an overheated market. This year, I have had my hard money lender call me to talk over a property they foreclosed on. Another investor wanted to joint venture with me to buy a house at court house steps that an investor has abandoned. I also heard some investors wanted to do short-sale.

Continued Next Page

Bruce NorrisPresident

The Norris GroupRiverside, California

Its not up to the investor at this point. We seem to have done our job. Now the world of financing

needs to get in there and get the owner-occupant in

there.

4June 2015

He was first alerted to the shifting market when he had trouble selling some of his flips in 2014.

I had four flips sitting on the market for months last year. My flips typically carry a premium and go fast. Last year, however, I was either not getting offers or getting low ball offers except for one flip. So I was really puzzled, he wrote, noting his flips finally sold quickly after interest rates dropped near the end of the year. Fortunately three of the four went into escrow on the same day, in January! The other one went into escrow two weeks later.

That experience convinced him there is little margin for error in the high-priced Southern California market, and that he could be one of the flippers burned if interest rates go up again.

So I move on, he said, noting he is no longer flipping, but has moved into the home improvement business, leveraging his flip crews to efficiently remodel homes for homeowners. Instead of competing with homeowners, why not work with them?

Mark Hughes, chief operating officer at First Team Real Estate, one of the largest brokerages in Southern California, said hes hearing more investors thinking about moving on.

As institutional and small mom-and-pop investors try to gauge the top of the market, indications are that a growing number of them feel that after riding the wave up on the rebound, now is the time to divest and reallocate, he said. The chatter is growing louder and many think we are starting to price peak and will soon see an increase in inventory coming in the next few months coupled with possible rate hikes, both of which would tamp down continued rapid price growth.

Strength, Then WeaknessBut the Southern California market along with other markets across the country may get stronger before they get weaker, according to Robert Campbell, a real estate analyst and author of Timing the Real Estate Market. Despite the possibility of short-term strength, however, Campbell said hes still advising investors to

pull back on their purchases.

Its better to hold off right now. Dont buy, said Campbell, who publishes and sells detailed real estate reports on 17 housing markets across the nation. Keep your cash in as safe a place as you can, because the next downturn is looming. I think its sooner rather than later. Probably near the end of this year. Late 2015 or early 2016 I think the market is going turn.

Campbell said some markets are still strengthening in large part thanks to an influx of foreign buyers willing to pay more than local buyers constrained by local household incomes.

The market in California is seeing increased strength as opposed to increased weakness. Momentum is starting to strengthen again, he said, noting that the deepening crisis in Europe will push more money into U.S. real estate markets. With Europe on the ropes, and China looking kind of tough, there is a lot

of big money flowing into San Francisco its moving into the safest places they know. New York City, Manhattan, London and San Francisco.

Another market attracting European and Chinese money is Boston, according to DiMeco, broker/owner there.

We still get a lot of European investors. Some of the more aggressive investors we get are from China, he said, adding that neighborhoods close to the universities in the city are also attracting homegrown U.S. investors. Outside of Chinese investors Im getting parents whose kids are going to college here for four years.

Last Ponzi Scheme to Go BustCampbell said he believes the international influence could possibly push up California prices another 50 percent in the short term, but he cautioned that the forces driving that international influx are bigger economic dominoes that could eventually result in another U.S. housing crash.

Were probably going to be the last Ponzi scheme to go bust, he said of the U.S. real estate market. These are dangerous economic times right now if I had to guess

Continued Next Page

Mark HughesChief Operating Officer First Team Real Estate

Irvine, California

A growing number of (investors) feel that after riding the wave up on the rebound, now is the time to divest and reallocate.

5June 2015

where the economy is going I would guess that things are going to start going to hell late this year. Were seeing the early signs of that in Greece everyone knows that but everyone is trying to keep them alive.

While international investors and other cash buyers driving up prices wont likely result in another foreclosure crisis like that spawned by the last housing crash, the cash-buyer spigot can quickly shut down once perceptions of the market change, according to Jason Medley, a Tampa-based investor who also runs a mastermind of high-powered investors from across the country called The Collective Genius.

Whats driving this market is not crappy loans, its cash, he said, noting that a sharp drop in the stock market could foreshadow a drop in the real estate market. (Cash buyers) basic housing need is not being filled. Its discretionary. They can shut off those purchases in an instant.

Such a shutoff in cash purchases could

result in a price drop, but it likely wont result in another bloodbath, according to Medley, who said hes starting to prepare for the next housing downturn nevertheless.

Ive actually just started to stock cash, he said. Im 43 years old. The first time the crash happened I was a victim. The next time it happens I want to play ball.

Campbell noted that the timing of the downturn when it comes will vary from a few mnths to a year depending on the local market.

All markets will turn at different times, he said. (But) no cities have gone against the major trend for too long.

Turning or Still Burning?Members of Medleys real estate mastermind group provide him with on-the-ground intelligence that some markets may be turning while others are still on fire.

Continued Next Page

Its better to hold off right now. Dont buy. Keep your cash in as safe a place as you can, because the next

downturn is looming. I think its sooner rather

than later.

Robert M. CampbellInvestor, Author

San Diego, California

6June 2015

In Houston, Medley said real estate investors who were willing to pay $300,000 for a property four months ago are now only willing to pay $260,000 even though sellers still think they can still get the $300,000.

Thats because their mentality has not caught up with the market, he said. That gap (between seller mentality and the market reality) is a painful place for investor. Because I know the property is worth 260, but if the sellers dont believe that I cant buy product, I cant make money.

But the reality is the market is falling because of the impact that the plummet in oil is having, he added.

Meanwhile, Medley said the Denver market is still going strong in terms of appreciation, and investors are adjusting to that as well.

A lot of my guys who were rehabbing in markets like Denver Denver is just hot are transitioning from rehab to wholesaling, he said, referring to an investor strategy where an investor acquires properties and quickly typically within days or even hours resells them to another investor who may not have the time to go out and find the properties but is focusing on adding value through rehab.

Investors may be shying away from the fix-and-flip strategy in Denver because low inventory and high

demand often result in low profit margins, according to David Powell, Managing Broker/Realtor for RE/MAX Alliance in Denver.

Investors arent shifting their strategies as much as deciding if they want to buy homes as some perceive at the top of the market in terms of pricing based on multiple offers and over-asking price offers, he wrote in an email. Now the investor is having to pay more upfront money initially for buying a home with the recent increase in appreciation.

And according to Powell, that upward trend will continue at least for the short term as builders continue to play catch-up with low inventory.

I think appreciation will be accelerating in the next 12 months based mostly on high demand, low inventory and investors still active in our market, he wrote.

But even as home price appreciation continues to accelerate in some markets, Medley urges investors to start applying the brakes.

I think were getting to the point where everybody is getting greedy, so I think Im going to be cautious. And it may cost me some money, he said, Rapid appreciation fixes a lot of mistakes, but when that appreciation stops, those mistakes hurt you.

Ginny Walker assisted with reporting for this article.

I think appreciation will be accelerating in the next 12 months based

mostly on high demand, low inventory and

investors still active in our market.

David PowellManaging Broker/Realtor

RE/MAX AllianceDenver, Colorado

Im 43 years old. The first time the crash happened I was a victim. The next

time it happens I want to play ball.

Jason MedleyFounder, Collective Genius

Investor MastermindTampa, Florida

7June 2015

MY TAKE By Dr. David M. Blitzer Managing Director & Chairman of the S&P Dow Jones Indices

The U.S. is witnessing a shift from single family homes to apartments and condominiums. This is most obvious in new construction where the share of housing starts that are multi-family rose from 19.8 percent during 2000 to 2004 to 35.2 percent in the 15 months through March, 2015. Home ownership peaked in 2004 and

has slipped since then, indicating both a move from owning to renting and also a move from single to multi-family housing. However, there are relatively few analyses of the housing boom, bust and recovery that focus on condominiums. The S&P/Case-Shiller Home Prices Indices cover condominiums in five major U.S.

cities: Los Angeles, San Francisco, Chicago, Boston and New York. This article uses these price indices, along with the corresponding single family home S&P/Case-Shiller Price Indices to compare the condo and single family patterns during and after the financial crisis.

Both the single family and the condominium S&P/Case-Shiller Indices cover entire metropolitan areas, not just the center city downtowns. New York City is one of a handful of internationally recognized cities attracting wealthy home owners globally. A weekly column in The New York Times real estate section reports the most expensive sale of the week; prices less than eight figures are rare and a few approach nine figures. Because the S&P/Case-Shiller Indices are repeat sales indices rather than averages or medians,

Condominium Price Trends

0

50

100

150

200

250

300

350

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

Condominium and Single Family Home Price Indices

Los Angeles San Francisco

Chicago Boston

New York LA-Home

SF-Home Ch-Home

Bos-Home NY-Home

Continued Next Page

8June 2015

these extreme values do not skew the data.

Condo prices after the financial crisis recovered more ground than single family homes. Three of the five cities San Francisco, Boston and New York have set new all-time price peaks for condos since the crisis. Among the 20 S&P/Case-Shiller cities tracking single family home prices, only two cities, Denver and Dallas, set new highs since the crisis. Condos in dense urban cities such as New York, Boston and San Francisco are staging strong recoveries.

Figure 1 (below) shows the year-over-year percentage change in condo prices from January 1996 to February 2015 for the five cities. The experiences vary from city to city and the data highlight the way different cities reacted to economic events. The technology boom of the late 1990s and the collapse of many tech start-ups and the stock market in 2000 to 2002 are clearly seen in the San Francisco data. The growth of condo prices made a double peak in June 2000 and January 2001 and then reversed to bottom in February 2002 when

prices were falling at a then-surprising 10 percent pace. That rate of decline would seem mild a few years later. Although the tech bust was as much a Wall Street event as a Silicon Valley phenomenon, New York condo prices largely ignored changing tech fortunes.

In the Big Apple, condo prices saw solid gains through the entire technology boom and bust and then accelerated as the economy recovered from the brief 2001 recession and the financial services sector advanced in 2004 to 2006. Condo price gains peaked in March 2005 with a 20 percent year-over-year gain.

The hot performing condo market before the financial crisis period was Los Angeles where prices gained 35 percent in the 12 months ended with August 2004. Los Angeles has a diversified economy and tourism is a leading part of the economic base. These factors point to a strong response to gains in the U.S. economy in 2002 to 2004. Moreover, the rate of population growth in the Los Angeles area rose from 1995 to about 2003, adding to demand for housing. However, there is no

-30%

-20%

-10%

0%

10%

20%

30%

40%Condo Prices

Year-over-Year Percentage Change

Los Angeles San Francisco

Chicago Boston

New York

Source: S&P/Case-Shiller Home Price Indices. Monthly data 1995-February 2014

Continued Next Page

9June 2015

major development easily identified in Los Angeles like the tech boom-bust in San Francisco. Chicago and Boston saw condo price trends follow the other cities but without as sharp a pattern or peaks and troughs.

The performance in the run-up to the financial crisis in condos is similar to single family homes. The five condo series reached peak levels October 2005 and September 2007, roughly the same time period seen for single family homes. The condo peak index levels are similar to the single family home peaks; there is no clear pattern that peaks were higher, or lower, for homes or condo. Like single family homes, condo prices collapsed in the financial crisis. The bottom for condos was in February 2012 for four of the cities and in March 2012 for Chicago. The peak to trough declines in Los Angeles and Chicago were very close to those seen in single family homes; in the other cities condos experiences slightly smaller peak to trough declines. (See table below)

The table shows the maximum and minimum year-over-year percentage price changes for the condo price series and for the single family home series for the corresponding cities. Looking over the five cities discussed here, the price patterns among condos and single family homes are generally similar with some hints that condo prices may be slightly less volatile. The data do not support ideas that ownership in condos follows different patterns or is more transitive.

While the shift in consumer preferences for condos versus single family homes seen in the housing starts data may be a change in peoples housing preferences or housing affordability, it does not appear to be changing the patterns of price movement. Moreover, the shift to condominiums isnt likely to make homes prices more or less volatile than in the past. It certainly wont reduce the risk of another housing boombust cycle in the future.

David M. Blitzer is Managing Director & Chairman of the Index Committee for S&P Dow Jones, Indices, LLC (S&PDJI), a part of McGraw Hill Financial. The opinions and analysis discussed within are those of David Blitzer, are impersonal and are not tailored to the needs of any person, entity or group of persons and may not necessarily reflect the opinion of S&PDJI or any of its affiliates. This report is being provided for informational purposes only and should not be considered as a solicitation to buy, sell or hold any security. Neither SPDJI, any of its affiliates or David Blitzer guarantee the accuracy, completeness, timeliness or availability of any of the content provided herein, and none of these parties are responsible for any errors or omissions, regardless of the cause, for the results obtained from the use of the content. All content is provided on an as is basis, and all parties disclaim any express or implied warranties associated with this information.

Peaks, Troughs and Maximum and Minimum Price Changes Los Angeles San Francisco Chicago Boston New York Condominium Series Index Levels

Peak 287.12 201.84 160.98 183.68 229.64 Peak Date Jul-06 Oct-05 Sep-07 Oct-05 Sep-06

Trough 165.61 123.43 97.28 151.28 191.17

Trough Date Feb-12 Feb-12 Mar-12 Feb-12 Feb-12 Price Change

Maximum 35.9% 33.8% 18.5% 21.1% 21.0% Minimum -23.6% -27.5% -15.7% -7.1% -12.1%

Single Family Home Series Index Levels

Peak 273.94 218.37 168.60 182.45 215.83 Peak Date Sep-06 May-06 Sep-06 Sep-05 Jun-06

Trough 159.18 117.71 102.75 145.83 157.40

Trough Date May-09 Mar-09 Mar-12 Mar-09 Mar-12 Price Change

Maximum 33.3% 29.8% 11.6% 18.4% 17.5% Minimum -27.9% -32.3% -18.7% -8.0% -12.3%

Source: S&P/Case-Shiller Home Price Indices. Peaks values are pre-Financial Crisis.

THE LATEST INDUSTRY NEWS AND TRENDS

www.RealtyTrac.com/Content

10

June 2015

House Limits Disparate Impact in Housing The U.S. House of Representatives passed a measure on June 3 that would bar the Department of Justice from using federal funds to apply a controversial legal theory on discrimination in housing litigation.

The amendment introduced by Rep. Scott Garrett, R-N.J. passed by a 232-196 vote. It is part of H.R. 2578, the Fiscal Year 2016 Commerce, Justice, and Science Appropriations Act. The amendment would bar the Department of Justice from using funds for litigation in which they seek to apply disparate impact theory.

In recent years, the Department of Justice has pursued and obtained large legal settlements from lenders, landlords and insurers in discrimination lawsuits using the disputed legal theory of disparate impact. Disparate impact liability allows the government to allege discrimination on the basis of race or other factors based solely on statistical analyses that find disproportionate results among different groups of people, regardless of evidence of actual discriminatory actions or intent.

Later this summer, the Supreme Court will decide whether the disparate impact standard will remain available to those complaining of housing discrimination under the Fair Housing Act.

Even if Garretts measure makes it through the U.S. Senate, it is likely to face opposition from the White House.

SOURCE: Rep. Scott Garrett, R-N.J.

Many Americans Have No Retirement Savings Nearly a third of working Americans have no retirement savings or pensions, according to a Federal Reserve 2014 survey.

Thirty-one percent of non-retirees have no retirement savings or pension, including nearly a quarter of those older than 45, the Fed said.

The Federal Reserves Report on the Economic Well-Being of U.S. Households in 2014 found that 38 percent of respondents have either no intention to retire or plan to keep working for as long as possible.

A survey of 5,800 adults, conducted in October and November of 2014, also found that the lower the income, the more likely people are to keep working: 55 percent of those making below $40,000 a year plan to work as long as possible.

Sixty-five percent of respondents viewed their families to be either doing okay or living comfortably financially, a 3 percentage points increase from the 2013 survey.

SOURCE: Federal Reserve

Standard Pacific and Ryland Merge Two California homebuilders Standard Pacific Corp. and Ryland Group Inc. announced on June 14 a $5.2 billion merger of equals to create the nations fourth largest new home builder with operations in 17 states.

The companies, which sold a combined 12,600 houses last year, own or control 74,000 home sites. The combined company plans to operate under one brand and will announce the new name before the deal closes in the early fall.

Combining two industry leaders with nearly 100 years of homebuilding experience between them puts us in a strong position to benefit from the continued housing market recovery, Scott Stowell, president and chief executive of Standard Pacific said in a news release. With this merger we gain both geographic and product diversification, expanding our reach and enhancing our growth prospects in the entry level, move-up and luxury market segments.

Ryland, based in Westlake Village, builds mostly lower priced homes in states such as California, Georgia, Pennsylvania, New Jersey and Texas. Irvine-based Standard Pacific builds mainly upscale homes in California, the Carolinas, Florida and Texas.

SOURCE: Standard Pacific Corp.

NEWS BRIEFS

11

June 2015

Supreme Court Protects Junior LiensThe U.S. Supreme Court ruled unanimously on June 1 that bankruptcy courts cannot void a second mortgage because it exceeds the value of the home.

In a pair of cases Bank of America v. Caulkett and Bank of America v. Toledo-Cardona the Supreme Court reversed a lower court ruling in favor of two homeowners, David Caulkett and Edelmiro Toledo-Cardona, in Florida, where many homeowners have struggled to pay their mortgages following the recent housing crisis.

Caulkett and Toledo-Cardona had won their appeals cases in the 11th U.S. Circuit Court of Appeals, claiming that homeowners in Chapter 7 bankruptcy can void a junior mortgage lien when the debt owed to the holder of the first mortgage is more than the propertys current value.

In reversing the 11th Circuits earlier decision, the Court found that declaring bankruptcy does not void second mortgages. The Court ruled 9-0 that bankruptcy could not allow homeowners with first underwater mortgages to simply invalidate second mortgages taken on the same homes.

SOURCE: U.S. Supreme Court

Quicken Wins First Round Against DOJ, HUDA Washington, D.C. federal judge ruled a False Claims Act accusing Quicken Loans of improperly underwriting mortgages will be heard first in the U.S. District court in Detroit.

Quicken Loans secured the first victory in its battle against the U.S. Department of Justice and Department of Housing and Urban Development when Washington, D.C. District Judge Reggie B. Walton delayed further action in the governments case against Quicken, arguing he first wants to see how U.S. District Judge Mark Goldsmith rules on a motion in Quickens case in Detroit, which was filed first.

On April 23, the federal government sued Quicken in Washington, D.C., alleging the lender knowingly submitted false claims for hundreds of improperly underwritten Federal Housing Administration-insured loans.

Days before the federal government filed those charges in the nations capital, Quicken sued the federal government

in Detroit on April 17, claiming that the DOJ and HUD were trying to force the nations second-largest lender into a costly settlement.

Judge Walton said he consulted with his counterpart in the related case, U.S. District Judge Goldsmith of the Eastern District of Michigan, and stayed the D.C. suit until Judge Goldsmith ruled on a pending dismissal motion.

The full complaint from Quicken against the Justice Department is Quicken Loans Inc. v. United States.

SOURCE: Detroit Free Press

San Francisco D.A. Sues LandlordSan Francisco has filed a lawsuit against a property owner, claiming she has been harassing and intimidating her rent-controlled tenants to force them from their apartments.

The lawsuit filed June 4 came as rents in the city have climbed past $3,000 a month for one-bedroom apartments and $5,000 a month for two bedrooms in some areas.

San Francisco City Attorney Dennis Herrera said property owner Anne Kihagi used strong arm and unlawful tactics to force rent-controlled tenants out so she could raise rents on her rentals.

Anne Kihagi is among the most abusive and lawless landlords Ive encountered in my tenure as City Attorney and Ive gone after a lot of lawlessness by landlords, Herrera said in a statement. It takes breathtaking cruelty to so aggressively bully and displace even elderly and disabled tenants from their rent-controlled homes, especially in the midst of our severe housing crisis.

Kihagi and her associates own at least nine multi-unit residential properties in the city and have more than 50 rent-controlled apartments, according to the city attorneys office.

The case is: City and County of San Francisco and People of the State of California v. Anne Kihagi et al.

SOURCE: San Francisco City Attorney

LEGAL BRIEFS

12

June 2015

Mortgages: Down Payments DropIn the first quarter of 2015, homebuyers on average put down 14.8 percent of their homes purchase price compared to 15.2 percent in the fourth quarter of 2014 and 15.5 percent a year earlier, according to RealtyTrac. This was the lowest average percentage for a down payment since the first quarter of 2012. The average dollar amount put down was $57,710 compared to $57,618 in the previous quarter and a slightly higher 57,992 in the first quarter of 2014. RealtyTrac pointed to several trends through the quarter. First, FHA loans represented a larger share in each month of the quarter, rising from 21 percent in January to 25 percent in March. Second, while overall low down payment loans increased as a share of originations through the quarter the low down payment share of conventional loans moved in the opposite direction, from 11 percent in January and February to 10 percent in March while the share of FHA loans that were low down payment loans increased throughout the quarter, from 83 percent in both January and February to 84 percent in March.

Homeownership: Keeps DecliningNew renters will outpace new homeowners in the next decade and a half and the homeownership rate will decline even though there will be more homeowners than renters, thus creating intense competition for rental housing, according to a new study by the Urban Institute. Overall, from 2010 to 2030, UI estimates there will be 4 million more renters than homeowners while the homeownership rate falls from 65.1

percent down to 61.3 percent during that 20-year period. In that time, 22 million new households will need homes to rent or buy; UI estimates that 13 million of those will rent while 9 million will buy. Additionally, between 2010 and 2030, the number of senior households will expand dramatically and new homeowners will be disproportionately minority, especially Hispanic.

Survey: Housing Crisis Isnt OverA majority of Americans believe the country is still in the midst of the housing crisis, according to a new study from the MacArthur Foundation. According to the survey, three in five Americans (61 percent) believe the country is either still in the middle of the housing crisis (41 percent) or believe the worst is yet to come (20 percent). The surveys results are based on 1,401 interviews conducted by Hart Research Associates on behalf of the MacArthur Foundation between April 27 and May 5. According to the survey, more than half of the population (55 percent) said they had to make at least one sacrifice or tradeoff in the past three years in order to cover their rent or mortgage. Additionally, one in five (21 percent) reports having to get an additional job or work more, 17 percent stopped saving for retirement, 14 percent accumulated credit card debt, and 12 percent cut back on healthy nutritious foods.

Report: Home Prices Will Fall in 2017Home prices are on the rise across the U.S., but in a few years, the U.S. will witness a modest decline in house prices, according to a new report from one of Americas biggest mortgage lenders. Bank of America analyst Chris Flanagan wrote that the prices will start to dip in 2017 and will continue on that trajectory until the end of the decade. He acknowledges that his outlook flies in the face of popular opinion but he cites continued low wage growth against increasing house prices for his reasoning. Bloomberg reported that Flanagan expects prices to rise by 3.7 percent this year, then 0.8 percent in 2016 before reversing with a 1.7 percent decline in 2017, 2.1 percent in 2018 and 0.8 per cent in 2019. Flanagan, who in 2007 offered prescient warnings over the very bleak conditions in the subprime mortgage market, said that the downward path of prices would depress housing activity, the economy, and interest rates.

FINANCIAL BRIEFS

13

June 2015

By Octavio Nuiry, Managing Editor

Detroit Comeback? Investors Drive Motor City Real Estate Revival

Rebirth, like decay, comes in many forms.

For Detroit, despite bankruptcy and a declining population, some parts of the citys real estate market are bouncing back, as pioneering real estate investors remake the Motor City. Progress is slow, with false starts and setbacks, but there is hope that over time that this once great city will reclaim some of its former glory.

Nowhere is this urban revival more apparent than in downtown and Midtown Detroit.

Opportunity DetroitThanks to a small group of investors, downtown Detroit is experiencing a renaissance unlike anything it has seen in decades. And real estate mogul Dan Gilbert, the owner of Quicken Loans and the N.B.A.s Cleveland Cavaliers, is leading the charge of Rust Belt fronteir optimism.

Gilbert, a billionaire and downtowns most prominent real estate investor, has been snapping up shuttered skyscrapers and downtown office buildings for the past four years. In 2011, Gilbert founded Bedrock

Continued Next Page

STATE SPOTLIGHT

GILBERTVILLE: Dan Gilbert plans to breath new life into Brush Park near downtown Detroit, a historic neighborhood that has fallen on tough times near Comerica Park (the open-air ballpark of the Detroit Tigers) and the soon-to-be-built Detroit Red Wings hockey arena. This is going to be a place that people want to live, said Mayor Mike Duggan at a news conference unveiling plans for a $70 million planned development of Brush Park.

SOURCE: City of Detroit

14

June 2015Real Estate Services, his newly formed real estate arm, and it now owns or controls a constellation of 70 properties mostly high-rise skyscrapers in Detroit totaling over 11 million square feet of space and worth $1.7 billion in the citys central business district, according to Crains Detroit Business. Most of his properties are clustered within Detroits 2.9 mile People Mover elevated rail loop in the central business district along the citys main drag, Woodward Avenue.

Gilberts genius is to see Detroit the most dilapidated, forlorn urban environment in North America not as a hindrance but rather as a unique opportunity to build the kind of place that Millennial workers crave: authentic, inspiring, edgy and cheap, wrote Forbes staff writer Joann Muller, referring to No. 117 on Forbes list of the worlds richest people, who is worth $4.1 billion.

Where most see ruins, Gilbert sees opportunity.

Gilbertville: New Brush Park HousingIn May, Detroit Mayor Mike Duggan and Gilberts real estate arm unveiled a $70 million planned development to build 337 residential units and retail space in Detroits historic Brush Park neighborhood, a sparsely populated area northeast of downtown that thrived in the 19th century but has fallen on rough

times recently. Currently, the Brush Park neighborhood is a beleaguered mixture of blighted 19th century red brick mansions, vacant homes, empty lots and pockets of occupied residences. The neighborhood sits in the shadows of downtown Detroits Art Deco skyscrapers, built largely in the 1920s during the citys golden age.

Gilbert is partnering with the City of Detroit to revamp 8.4 acres of the Brush Park neighborhood, considered one of Detroits oldest neighborhoods and bound by Mack on the north, Beaubien on the east, the I-75 freeway on the south and Woodward Avenue on the west. Bedrock is amassing a real estate empire anchored along Woodward Avenue, which is experiencing a phenomenal rebirth of mixed-use residential and commercial development.

Additionally, a new $180 million light rail system the M-1 Rail line is being built along Woodward Avenue, the main axis of Detroits planned redevelopment. It stretches 3.3 miles from the Detroit River to 8 Mile Road.

Nicole Curtis, the Lake Orion native and host of Rehab Addict on the HGTV cable network, is slated to rehab one of four Brush Park mansions. The red brick Ransom Gillis House is a two-story mansion that built in 1876

Continued Next Page

Nicole Curtis Realtor, Rehabber, Host

Rehab Addict

We have been staring down Brush Park for

a long time. I think we finally found a way

to make the numbers work. We hope to get it started this summer.

RANSOM GILLIS HOUSE: Built in 1876, the Ran-som Gillis house in Brush Park.

SOURCE: HistoricDetroit.org

REHABBERS DELIGHT: Nicole Curtis of the HGTV show Rehab Addict announced that she would spruce up the Gillis House.

SOURCE: HistoricDetroit.org

15

June 2015for Ransom Gillis, a dry goods merchant. It was designed by architect Henry T. Brush and his assistant George D. Mason, according to HistoricDetroit.org. The home is near the Detroit Tigers open-air ballpark Comerica Park and the soon-to-be-built Detroit Red Wings hockey arena.

We have been staring down Brush Park for a long time, said Curtis in a WXYZ interview . I think we finally found a way to make the numbers work. We hope to get it started this summer.

Slowly, after a half century of decline, Gilbert and a team of entrepreneurs are celebrating something the city hasnt embraced in a long time: entrepreneurship. The planned fulcrum of Gilberts Detroit comeback is his Detroit 2.0 initiative to rebrand the city as a Midwestern hub of tech-savvy entrepreneurs clustered in downtown Detroit.

Outside of downtown Detroit, micro-moguls like Albert Hakim, broker/owner of City Management Group in Detroit, are rebuilding Detroits sprawling suburban housing market one transaction at a time.

Hakim runs one of Michigans busiest real estate brokerages and property management firms. Although Detroit still faces many infrastructure problems, including a lack of police and firefighters, Hakim said Detroits residential real estate was improving, with prices rising, inventory tight and investor activity surging.

Do I see Detroit coming back, asks Hakim. Yes. But its not going to be what it was?

The residential market will slowly stabilize at the $60,000 to $80,000 price range.

Hakim said Detroits residential real estate market is changing. He said locals

Eighty-five percent of our business comes from overseas or out-of-town

investors. The buyers come from everywhere: Ireland, Austria, Dubai, Kuwait, England, China,

India and Singapore. You name it.

Albert HakimBroker/Owner

City Management Group Detroit, Michigan

Own this two-story Detroit home for only $325. Located in northeast De-troit, this 1,456 square foot brick home has three bedrooms and 2 bathrooms. Agent: Albert Hakim, City Management Group, Inc. (313) 886-8888, http://www.alwayssold.com/about_me.asp

WHAT: 3-bedroom homeHOW MUCH: $325

Live in one unit and rent out the other. This multifamily brick home has two be-dooms and one bath in each unit. Agent: Albert Hakim, City Management Group, Inc. (313) 886-8888, http://www.always-sold.com/about_me.asp

WHAT: 4-bedroom MulitfamilyHOW MUCH: $21,600

This two-story colonial brick home in De-troit has six bedrooms, two bathrooms, a dinning room, a breakfast nook, a li-brary, a basement and a two car garage. Agent: Albert Hakim, City Management Group, Inc. (313) 886-8888, http://www.alwayssold.com/about_me.asp

WHAT: 6-bedroom homeHOW MUCH: $60,000

Detroit, Michigan

THREE FOR SALE Continued Next Page

16

June 2015

are starting to get more active in the market. Our property management business is getting huge, said Hakim, who manages a growing portfolio of rental properties for international clients, investors, Fannie Mae, local banks and hedge funds. We went from managing 15 properties last year to over 600 today. Eighty-five percent of our business comes from overseas or out-of-town investors. The buyers come from everywhere: Ireland, Austria, Dubai, Kuwait, England, China, India and Singapore. You name it.

Not only does Hakims firm manage hundreds of investor rentals, but his 12 agents are actively marketing 380 Detroit listings.

Im selling about 25 to 40 properties a month, said Hakim, who closes over 250 transactions a year.

While Hakim said its still possible to buy a house for $1.00, its nearly impossible to get a loan in Detroit. The biggest factor why Detroits real estate is not improving is that banks wont lend in Detroit, said Hakim, a 15-year veteran broker.

Rehabbers: Building Blocks of RebirthRehabbing is on the uptick in metro Detroit. In the first four months of 2015, 532 homes were rehabbed and flipped in Detroit, Warren and Livonia, according to RealtyTrac. Although flipping in Detroit is down 19 percent from a year ago, its up 13 percent from the previous quarter. The average purchase price was just over $117,530. But the flip price was $185,996.

Hakim said theres no shortage of properties for rehabbers. The city has a staggering 85,600 blighted properties and vacant lots, and half should be demolished, at a cost of $2 billion,

Continued Next Page

Darren JohnsonBroker/Owner

Johnson Premier RealtyWest Bloomfield, Miichigan

Our market is being dictated on what Wall Street hedge funds do. Wall Street controls our

real estate market. I dont know if its good or bad.

But they play a major role.

This newly constructed West Bloomfield home has five bedroom and six and half bathrooms. The home is 70 percent complete. The 7,167 suare foot luxury home ioverlooks a private pond. Agent: Darren Johnson, Johnson Premier Re-alty Co., (313) 506-8861, www.johnson-premierrealty.com

WHAT: 5-bedroom homeHOW MUCH: $699,000

With approximately 4,000 square feet of living space, this four bedroom, four bathroom home is located Bloomfield Hills. This unfinished newly constructed luxury home is waiting to be customized. Agent: Darren Johnson, Johnson Premier Realty Co., (313) 506-8861, www.john-sonpremierrealty.com

WHAT: 4-bedroom houseHOW MUCH: $599,000

Located in the Rosedale Park neigh-borhood, this nearly 1,585 square foot home features three bedrooms and one and half bathrooms. This two-story brick home has an open floor plan and a custom kitchen. Agent: Darren Johnson, Johnson Premier Realty Co., (313) 506-8861, www.johnsonpremierrealty.com

WHAT: 3-bedroom homeHOW MUCH: $90,000

THREE FOR SALE Detroit, Michigan

17

June 2015

according to the Detroit Blight Removal Task Force. Indeed, the precipitous depopulation had left huge swaths of the citys 139 square miles poised on the cusp of returning to nature. It also has the highest property tax rates in Michigan, but half the Detroits property owners dont pay taxes, according to The Detroit News.

Every day, the Detroit Land Bank auctions off three properties, said Hakim, referring to the citys online auction. Bidding starts at $1,000 and goes up by increments of $100. This week, a guy bid a home up to $20,100. A second sold for $19,000 and a third property went for $16,000.

Detroit has tens of thousands of abandoned homes. There are so many vacant properties the city owns one-quarter of all properties that the city has three land banks: the Detroit Land Bank Authority (DLBA), the Michigan Land Bank Fast Track Authority (MLBA) and the Wayne County Land Bank Corporation (WCLBC). Tax Foreclosure Deluge Foreclosures are still a problem in Detroit. This year, 16 percent of all Detroit property owners are not paying real estate taxes, and 62,000 properties are headed to the Wayne County tax foreclosure auction, according to Loveland Technologies., a Detroit consultancy that maps land ownership in cities. More than half will wind up at a Wayne County foreclosure auction this fall, where they will be auctioned off at $500 each to the

highest bidder. About half dont sell and revert back to the city of Detroit. The city of Detroit owns 97,000 properties; these are properties that didnt sell at the Wayne County auction.

This is both a massive problem and a massive opportunity, said Alex Alsup, chief product officer at Loveland Technologies. Theres two ways of looking at this: Detroit cannot recover as long as tax foreclosures continue in its current form; this is the existential threat to the city. The revival of 7.2 square miles around downtown is very impressive, but its not going to sustain 132 square miles that are empty. It cant.

Alsup said that in Detroit alone, 75,000 properties owing $326 million in delinquent taxes, interest and fees are set to be foreclosed. Some 25,000 Wayne County property owners have paid their back taxes. Another 25,000 delinquent homeowners have worked out some sort of payment plan. And 25,000 are headed for the tax foreclosure auction this fall.

Every fall, the Wayne County treasurers office auctions off tax-delinquent properties. This fall, 31,000 properties face a tax foreclosure by the Wayne County treasurers office, according to the Detroit Free Press. If no one bids, the Detroit Land Bank takes possession of the homes, demolishes the rundown ones and auctions off those that are salvageable to qualified bidders.

Continued Next Page

18

June 2015Its a devastating problem, said Alsup, referring to the tax foreclosure deluge.

Antoine Benjamin, broker/owner of Benjigates Estates, LLC in Detroit, is one to the top buyers at the Wayne County tax auction properties. He and his two partners Eugene Broadway and Keith Hudson buy hundreds of Wayne County auction properties each year, many for the minimum bid price of $500. Last year, they purchased over 200 properties at the Wayne County auction.

Benjigates then fixes up the properties, sells them to investors or rents the properties to the former owners or renters.

The Triple WinSince 2008, weve helped over 700 people to become homeowners, said Benjamin. Its a triple win: Its a win for the person moving into the property. Its a win for the investor. And its a win for

the city itself.

Benjamin said Detroit has some of the nations highest property tax burdens. He also worried that too much emphasis was being placed on the redevelopment of downtown Detroit at the expense of the surrounding neighborhoods.

Im bullish on Detroit, said Benjamin. Weve got great leadership in the new mayor. But we need some additional help in the neighborhoods surrounding downtown. We need to put some attention on the less prominent parts of town. I commend them for what they are doing downtown. But we cannot forget about the neighborhoods. Weve got to make this where everybody has a shot to be successful.

Why Cities Decline Downtown Detroit once buzzed with activity, but the city went from being one of Americas most prosperous cities to one of the most distressed.

Detroit, Michigan

Antoine BenjaminCEO/Broker/Owner

Benjigates Estates, LLC Detroit, Michigan

Im bullish on Detroit. Weve got great

leadership in the new mayor. But we need

some additional help in the neighborhoods

surrounding downtown. Weve got to make this where everybody has a shot to be successful.

Priced to sell, this north Detroit invest-ment property has two bedrooms and one bath. Agent: Antoine Benjamin, Benjigates Estates, LLC, (313) 915-8780, http://www.bgedetroit.com/

WHAT: 2-bedroom homeHOW MUCH: $25,000

THREE FOR SALE Continued Next Page

This 1,049 square foot red brick home has four bedrooms and three bath-rooms. Agent: Antoine Benjamin, Ben-jigates Estates, LLC, (313) 915-8780, http://www.bgedetroit.com/

WHAT: 4-bedroom homeHOW MUCH: $45,000

Located in west Detroit this single-story red brick Ranch home has three bed-rooms and one bathroom. Agent: An-toine Benjamin, Benjigates Estates, LLC, (313) 915-8780, http://www.bgedetroit.com/

WHAT: 3-bedroom homeHOW MUCH: $35,000

19

June 2015

Once a crowded urban center, Detroit has been hemorrhaging population for five decades. Between 1950 and 2015, Detroit lost half of its population. Detroits population has plummeted from a high of nearly 2 million in 1950, when it was the 5th largest city in the country, to an estimated 688,700 people today and the 18th largest city, according to the Census Bureau. Two trends suburbanization and deindustrialization accelerated the staggering depopulation of Detroit. Today, one-third of its population lives in poverty. Detroits median family income is $26,325, about half the U.S. average.

Detroits downtown is compact, but the city is enormous, encompassing 139 square miles, said Darren Johnson, broker/owner of Johnson Premier Realty in West Bloomfield, Michigan. Like Benjamin, he said more emphasis needs to be placed outside of downtown Detroit.

In the suburban areas prices are going up, said Johnson, a 17-year real estate veteran and investor. But when you get into the city of Detroit prices are still pretty low. In the city of Detroit, there are pockets that are doing pretty good, including historic neighborhoods like Rosedale Park, Sherwood Forest, Indian Village and Palmer Woods. These are middle-class areas that are well maintained.

Johnson said an inventory shortage has put a pinch on his business. He added that well capitalized, out-of-state Wall Street hedge funds have been buying up huge swaths of Detroit residential real estate with cash.

Our market is being dictated on what Wall Street hedge funds do, said Johnson, an REO broker who sells HUD and Fannie Mae-owned properties. Wall Street controls our real estate market. I dont know if its good or bad. But they play a major role. My cheese is gone. The hedge funds ate my cheese.

Hedge funds, which invest billions of dollars on behalf of wealthy individuals, pension plans and college endowments, are circling the Detroit distressed market, buying large pools of HUD, Fannie Mae-owned and bank properties, said Johnson.

One of the hedge funds active in Detroit is run by James C. Paine, a partner at West Realty Advisors in San Diego, California. Paines firm has bought, renovated and flipped hundreds of Detroit properties. He said his firm buys large pools of 500 to 3,000 properties directly from the banks.

While the rest of the country isnt looking, a movement is quietly underway to entirely reinvent Detroit, said. And that is why we are investing in Motor City with everything weve got.

Paine said an upswing in completion in Detroit has forced him to invest in other

markets, including Chicago.

Detroits recovery is starting now, said Paine, referring to the exciting resurgence of Detroits downtown and the entrepreneurial ecosystem flourishing there. That means it has miles to climb and many junctures along the way for us to cash in our investment. For those willing to buy and hold, the potential for returns is higher than anywhere else in the United States. Make no mistake, the city parks will be cleaned up, the fountains will be turned on, and major corporations will put their names on the citys skyscrapers. We want to see that city back on its feet and were confident that it will be soon. There is still time to be an early adopter of Detroit investment, but that window will close, its just a matter of when.

Detroits decline is extreme, but its not unique. Many other aging cities in the northeast and Midwest Baltimore, Buffalo, Cleveland and Pittsburg, to name a few are similarly experiencing depopulation and urban decline. Even New York City, which teetered on

Continued Next Page

James C. PainePartner

West Realty Advisors San Diego, California

Detroits recovery is starting now. For those willing to buy and hold, the potential for returns is higher than anywhere else in the United States.

20

June 2015

the brink of bankruptcy in the 1970s, rebounded and today Manhattan is thriving.

Can Detroit Find the Road Forward?Andrew Hargreaves, a top producing broker with Coldwell Banker Preferred in Plymouth, is sold on Detroit.

Whats interesting about Detroit is that years ago everybody left the city and went to the suburbs, said Hargreaves, who sold 290 properties last year. Now, Millennials are selling their suburban homes and moving to downtown Detroit. Or, if theyre still living with their parents, theyre flocking to the five or six micro bubbles downtown that are hot right now like the University District, Brush Park and Midtown. They want to be part of that urban environment. People want to go there now.

For Mark Binelli, author of Detroit City Is the Place to Be, the Motor City is a vast, enormous canvas where anything imaginable can be accomplished.

Its a place so unspooled, ones wildest experiments, ideas that would never be seriously considered in a functioning city, might actually have

a shot here, wrote Binelli, referring to the dreamers who are flocking to Detroit to rebuild something new from the crumbling, semi-majestic ruins of a half-century of industrial, economic and political decline. The ongoing catastrophes had, in a strange way, bequeathed the place an unexpected asset, something few other cities of its size possessed: a unique sense of possibilities.

No American city has fallen so far, so fast. But is Detroit a modern-day hellacious, smoldering Pompeii or will Detroit re-invent itself into a smaller, more nimble city?

Surely, Detroit will come back, Hakim, Binelli, Benjamin, Hargreaves and other optimists argue. But it will take time. Like all of Americas older cities, Detroit has unique problems and unique promise. Detroit is a city both desperate and hopeful.

Im a huge believer in Detroit, said Hargreaves. The early adapters are going to take it all the way to the bank.

It will come back.

Andrew HargreavesBroker

Coldwell Banker Preferred Plymouth, Michigan

Millennials are selling their suburban homes

and moving to downtown Detroit. Or, if theyre still living with their parents,

theyre flocking to the five or six micro bubbles downtown that are hot

right now like the University District, Brush

Park and Midtown.

THE LATEST INDUSTRY NEWS AND TRENDSwww.RealtyTrac.com/Content

21

June 2015BOOK REVIEW

Using Big Data To Track New Real Estate ClientsBy Octavio Nuiry, Managing Editor

Increasingly, real estate agents are using big data to track down clients. A recent Wall Street Journal article chronicled how tech-savvy agents are reaching out to data companies to electronically farm for new business opportunities. To target prospective clients in competitive markets, tech-savvy agents are buying data subscriptions and teaming up with firms that use data-crunching

algorithms to identify likely home sellers and buyers.

Sophisticated data

collection is increasingly becoming crucial to the growth of new business development in real estate brokerages. Today, data mining is getting a 21st century makeover. Searching for life changing events like a deceased homeowner, job changes, divorce, homeowners with no mortgage, high-net worth homeowners, upside down borrowers and others are clues of a potential impending sale.

To learn more about these fast-moving new techniques, agents and brokerages need to be on the cutting edge of big data technology. Enter Big Data Revolution: What Farmers, Doctors and Insurance Agents Teach Us About Discovering Big Data Patterns, (Wiley), 272 pages, $19.99, a new book by Rob Thomas and Patrick McSharry.

In Big Data Revolution, authors Thomas and McSharry document the ever-widening impact that big data is having across the business world. The authors argue that companies who fail to adopt these methods will be overtaken by more data-savvy competitors.

Data is the new intellectual property, they write in the introduction. It can be harnessed for advantage or ignored at peril. Organizations that do not manage to utilize their data assets will eventually become extinct.

Thomas is vice president of product development in IBM Software Group and McSharry is a senior research fellow at the Smith School of Enterprise and the Environment at Oxford University. They provide a detailed look at how data is transforming different industries and distill these stories into an overview of the methods used to derive insights from data.

Unfortunately, many have a vested interest in resisting the data revolution due to their fears about the impact it will have on their own professions, write Thomas and McSharry. It is likely that such resistance will be futile and that those who actively embrace the oncoming disruptive change will benefit most from the opportunities offered.

Today, with the rise of big data, agents are finding new and creative ways to track new business leads. And Big Data Revolution reveals how businesses can harness this new marketing tool. Scanning obituaries for leads and foreclosure auctions have long been a tactic for agents looking for new business.

In the 20 chapters covered in Big Data, Thomas and McSharry reveal that big data can be a powerful tool for creating effective business solutions with innovative and efficient use of technology.

Readers are guided through tried-and-true methodologies for getting more out of data, and using it to the utmost advantage. This book describes the major trends emerging in the field, the pitfalls and triumphs being experienced, and the many considerations surrounding big data.

Big Data Revolution

By Rob Thomas and Patrick McSharry

(Wiley, 272 pages, $19.99)

Rob Thomas

Continued Next Page

22

June 2015

Thomas and McSharry argue that many business owners even doctors and Realtors will become data scientists, collecting, processing and analyzing data. They argue that in the new data era a new paradigm shift will emerge where decisions are made not by intuition and opinion but through data. Businesses will shift away from opinion-based decision making to a future based on hardened data analysis.

The book is organized into three sections: Part 1 illustrates nine industries that are being transformed with data, including farming, medicine, insurance, retailing, customer relations, intelligent machines, government, corporate sustainability and weather forecasting. The second part of the book chapters 10 through 12 outlines pattern recognition in big data. The authors identify 54 specific big data patterns. Finally, the third part of the book chapters 13 to 20 focuses on how to create a big data revolution in your own organization.

The big data revolution today is not about the quantity of data that is revolutionary. The big data revolution is that now we can do something with the data, the authors argue.

The revolution lies in improved computational methods, not in storage capacity, they explain. New ways of linking datasets have played a large role in generating new insights. And creative

approaches to visualizing data have helped humans see patterns that computers may miss, they claim.

The true competitive advantage will come from those that manage to overcome the challenges of volume, velocity and variety the three Vs of big data when harnessing big data

for decision-making, Thomas and McSharry conclude. Volume refers to the fact that more data (SMS, emails, voice, video, social media, etc.) is being created than can be stored and that sophisticated computational techniques are required for processing this vast quantity of data. Velocity is a challenge as we attempt to cope with high-frequency data that require data-stream algorithms to transform this flow of data into real-time decision support to enable organization to respond immediately to threats and opportunities. Variety is a key component for describing big data and highlights the need to consider both structured and unstructured sources of data, ranging from official business

and government statistics to satellite imaging to social media channels such as Twitter and Facebook

Big Data Revolution is a fascinating, enthusiastic view of the possibilities of vast amounts of big data and the entrepreneurs who are taking advantage of the new information society.

THE LATEST INDUSTRY NEWS AND TRENDSwww.RealtyTrac.com/Content

Patrick McSharry

State Rank

State Default Auction REO Total 1/every X HU (rate)

% from April 2015

% from May 2014

U.S. Total 32,563 49,413 44,892 126,868 1,041 0.79 15.52

29 Alabama 0 792 514 1,306 1,668 -12.64 17.24

37 Alaska 42 58 37 137 2,238 -6.16 -2.84

20 Arizona 0 1,126 928 2,054 1,392 26.01 9.96

41 Arkansas 0 221 251 472 2,798 -15.26 20.72

15 California 5,090 3,593 3,341 12,024 1,142 -8.34 -5.18

25 Colorado 0 1,078 361 1,439 1,545 41.08 91.36

27 Connecticut 359 129 426 914 1,627 21.87 -48.59

11 Delaware 240 89 79 408 1,000 -21.39 -17.74

District of Columbia 0 13 10 23 12,971 -23.33 4.55

1 Florida 3,929 8,041 10,038 22,008 409 3.90 6.74

12 Georgia 0 1,797 2,199 3,996 1,025 -5.24 17.98

30 Hawaii 172 39 102 313 1,668 96.86 48.34

32 Idaho 160 136 101 397 1,688 -6.59 2.32

8 Illinois 2,055 2,966 1,892 6,913 765 -9.11 3.16

9 Indiana 868 1,205 835 2,908 963 -0.45 -14.47

16 Iowa 372 434 318 1,124 1,193 51.08 4.85

42 Kansas 76 241 124 441 2,802 -26.50 2.32

39 Kentucky 82 478 278 838 2,303 -1.41 10.70

43 Louisiana 248 60 333 641 3,080 -38.95 -38.78

35 Maine 196 112 78 386 1,870 42.96 -48.74

4 Maryland 1,605 1,433 1,458 4,496 531 11.90 17.42

36 Massachusetts 798 382 269 1,449 1,938 0.42 2.48

24 Michigan 0 1,324 1,612 2,936 1,543 -35.56 26.23

40 Minnesota 0 486 482 968 2,432 -24.38 -1.93

45 Mississippi 0 188 92 280 4,563 36.59 204.35

33 Missouri 0 813 761 1,574 1,724 -3.32 39.91

49 Montana 0 12 24 36 13,425 -43.75 89.47

38 Nebraska 155 76 120 351 2,280 -41.40 237.50

5 Nevada 684 536 775 1,995 590 -5.98 22.09

31 New Hampshire 0 200 166 366 1,681 14.38 4.27

2 New Jersey 4,125 1,835 1,418 7,378 483 23.03 69.14

6 New Mexico 675 214 353 1,242 726 249.86 163.14

23 New York 3,402 1,075 1,033 5,510 1,472 -2.46 16.22

13 North Carolina 1,703 1,104 1,416 4,223 1,030 14.82 93.54

50 North Dakota 2 2 5 9 36,079 -18.18 350.00

7 Ohio 1,419 2,289 3,008 6,716 763 11.04 5.51

18 Oklahoma 440 427 474 1,341 1,245 -35.75 78.32

22 Oregon 170 520 464 1,154 1,454 -15.52 0.79

14 Pennsylvania 1,297 1,873 1,833 5,003 1,112 -4.34 -9.95

26 Rhode Island 0 159 131 290 1,595 7.41 -9.94

10 South Carolina 1,119 590 462 2,171 987 -7.14 -13.40

47 South Dakota 0 23 25 48 7,619 92.00 23.08

3 Tennessee 0 4,590 1,227 5,817 485 33.36 658.41

34 Texas 2 2,844 2,706 5,552 1,814 7.60 44.10

21 Utah 234 255 202 691 1,431 -37.01 -9.91

46 Vermont 0 17 34 51 6,332 4.08 64.52

28 Virginia 0 1,520 546 2,066 1,637 14.52 31.34

17 Washington 48 1,431 874 2,353 1,232 -10.43 21.66

48 West Virginia 0 17 74 91 9,681 -8.08 -18.75

19 Wisconsin 796 522 589 1,907 1,377 -5.87 -19.67

44 Wyoming 0 48 14 62 4,243 -15.07 -21.52

May 2015 State-by-State Foreclosure Activity Summary

Rank Metro

Housing Units Per

Foreclosure Filing (Rate)

1 Miami, FL 347

2 Tampa, FL 357

3 Baltimore, MD 491

4 Philadelphia, PA 577

5 Chicago, IL 594

6 Riverside, CA 675

7 Atlanta, GA 853

8 New York, NY 945

9 Washington, DC 1,108

10 Seattle, WA 1,136

11 St. Louis, MO 1,139

12 San Diego, CA 1,281

13 Los Angeles, CA 1,310

14 Dallas, TX 1,330

15 Phoenix, AZ 1,396

16 Detroit, MI 1,403

17 Minneapolis, MN 1,764

18 San Francisco, CA 1,887

19 Houston, TX 1,909

20 Boston, MA 2,388

TOP 20 Foreclosure rates in the

Nations 20 largest metros in May 2015

Housing News Report is a monthly publication dedicated to helping investors succeed by providing them with timely and relevant information about the housing market.

EXECUTIVE EDITORDaren Blomquist

MANAGING EDITOROctavio Nuiry

WRITERSDaren Blomquist, Octavio Nuiry, Peter Miller

ART DIRECTIONEunice Seo

CONTACT USPhone: 800.306.9886

LETTERS TO THE EDITORE-mail: editor@foreclosurenewsreport.comMail: Housing News Report 1 Venture Plaza Suite 300 Irvine, CA 92691