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Inside Real Estate (Aug 15th, 2019)

Hello Inside Real Estate Readers,

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Have a productive day!
Deidre 

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1. FlyHomes, one of the first startups to help buyers make cash offers, has raised $120 million in debt financing to purchase homes. Flyhomes also brought in $21 million in a Series B round to fuel expansion, bringing its equity total to $40 million. Flyhomes is currently active in just a handful of cities including Seattle, San Francisco, and Boston. In Seattle and San Francisco, it has started a service called Trade Up in which it cleans up a home, lists it and attempts to sell it within 90 days. If it doesn't sell at or above the agreed-upon price, Flyhomes purchases the home. Flyhomes has helped buyers close on approximately $1 billion worth of homes. It also operates a mortgage branch and has closed 300 loans.  We first covered Flyhomes back in 2017 when it raised $2 million and had 150 transactions under its belt. — GEEKWIRE

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2. There are currently over 1.5 million vacant homes and condos in the U.S. according to ATTOM Data's Q3 2019 Vacant Property and Zombie Foreclosure Report. The report shows that 304,000 homes were in the process of foreclosure. Since 2016, the number of homes in foreclosure has dropped by nearly 22 percent and the amount of vacant homes is down by nearly half. New York had the highest actual number of vacated foreclosures known as zombie properties (2,428), followed by Florida (1,634). New York City has taken an active position in finding zombie homes, recently building out a task force to locate them and turn them into affordable housing. — BUILDER
 

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3. Throwback Thursday:  A town built of cemesto. When building materials are in short supply, people get innovative. The 1930s saw the adoption of cemesto, a building material made of sugar cane fiber sandwiched with asbestos and cement. The material was developed into low-cost housing by putting cemesto panels into wooden frames. This system was designed by the John B. Pierce Foundation and Celotex.

The use of cemesto moved rapidly. A prototype was displayed at the 1939 World's Fair in New York City, and by 1941 it was in use for employee housing at the Glenn L. Martin Aircraft Company near Baltimore, Maryland in a project known as Aero Acres. Architecture firm Skidmore, Owings & Merrill designed gable-roofed Cape Cod houses. A total of 600 homes were built at Aero Acres in 1941, and another 400 were created at another Stansbury Estates, a nearby development, in 1942.

But that was small potatoes compared to the construction of the town that later became Oak Ridge, Tennessee. From 1942 to 1945, the town first called "Clinton Engineer Works," or "CEW was a secret planned city, designed by Skidmore, Owings & Merrill. Approximately 3,000 cemesto homes were quickly constructed. Cemesto excited the minds of architects at the time and legends such as Donald Barthelme, Edward Durell Stone, Charles Eames, and Frank Lloyd Wright were among those who experimented with cemesto. 

Because cemesto contains asbestos, there are different opinions on how to handle it. There are many cemesto houses throughout the country, and many have been re-sided or had the cemesto replaced. Others are intact and lived in today. 

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4. First Redfin and Opendoor teamed up on iBuying, now Keller Williams and Offerpad are joining forces. Keller Williams has a new iBuyer program called Keller Offers and will partner with Offerpad in Phoenix and Dallas. The program could expand to 10 markets by the end of the year. As part of the arrangement, Offerpad can provide a cash offer through a Keller Williams agent. If the seller accepts the offer, then the agent receives a one percent commission. If Offerpad doesn't make an offer, Keller Offers can also make an offer. Offerpad has raised $975 million in debt and equity capital and is currently buying homes in 14 markets. — CURBED

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5. The Department of Housing and Urban Development has finalized the Federal Housing Authority's new condominium loan policies to make it easier for first-time condo buyers to get an FHA loan. The new rules will increase the allowable number of FHA loans in a single project as well as allowing loans on projects without FHA approval. Last year, only 17,792 FHA condo loans were originated but the updated guidelines mean that as many as 60,000 more condo units a year could qualify for financing. The rules have been under discussion for over a decade. The new ruling comes as more buyers seek out condos as affordable alternatives to single-family homes. The rules go into effect in mid-October.  — HOUSINGWIRE

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6. Sacramento, California, is the latest city to enact rent control. The Sacramento City Council passed the Tenant Protection and Relief Act, which keeps rent increase for apartments below six percent each year. The law will be in effect for five years. It does not include single-family homes and includes allowances for inflation. The ordinance also states that if a tenant has lived in a residence for over a year, the landlord cannot terminate the rental agreement except for certain reasons involving tenant behavior. Local landlords have fought the change, saying that they already are coping with rising expenses. In Southern California, Culver City's city council approved a rent control measure that will limit rent increases to three percent in buildings built before February 1, 1995. — CBS SACRAMENTO

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7. Billionaire Li Ka-shing's company, CK Asset Holdings, has delayed the marketing of luxury condominiums at 21 Borrett Road in Hong Kong. The first offering of 115 residences was to be priced at HK$100 million (around $12.7 million) each. Ongoing political protests have paralyzed Hong Kong and led real estate investors and residents to look elsewhere. An analysis from Refinitv estimates that HK$446 billion ($56.9 billion) in market value has disappeared from the nine largest Hong Kong real estate companies since April. This includes CK Asset which has lost HK$80 billion ($10.2 billion) in market capitalization since its highest point earlier this year.  Hong Kong was once the world's most expensive real estate market. — BLOOMBERG

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8. Seattle will spend $50 million of affordable housing as part of Mayor Jenny Durkan’s “Housing Seattle Now” initiative. The funds will come from a new rule allowed by the passing of HB1406 that let the cities use sales tax revenue for housing initiatives. Seattle currently provides housing for approximately 2,000 people but a recent homelessness count found that at least 11,199 people are experiencing homelessness in the area. — KOMO NEWS

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9. Home sales in Houston, Texas, his a new record in July with 8.953 single-family home sales sold. Most of the homes sold were priced below $400,000. The Houston Association of Realtors announced that the median home price in July was $250,000. Houston may beat last year's sales record. Inventory for July was 4.3 months but luxury homes were on the market for significantly longer. Houston was also recently ranked the top “buy” market for multifamily real estate by Ten-X Commercial. The report forecasts that Houston's average effective apartment rent will rise by 15.9 percent by 2022. Although millennial homeownership is increasing, many younger people are expected to continue to rent. — HOUSTON CHRONICLE

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10. An EXP Realty agent in Chicago is the latest to use a song paradox to draw attention to his business. Cochran's version of the Garth Brooks song "Friends in Low Places" turns into a paean to his inspector who goes to "low places where the radon glows, and the mold chases most agents away.” Cochran is new to real estate and first tried to do a parody based on “Part of Your World" from "The Little Mermaid, but it got little attention. While Cochran himself prefers rap and R&B, he may have found a niche in country parodies. His next video will be a version of the Kenny Rogers classic, “The Gambler.” — CRAINS CHICAGO

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Written and curated by Deidre Woollard. Deidre has a background in real estate public relations and runs the largest Facebook group for real estate press opportunities. Tips welcome at deidre@inside.com.

Editor: Kim Lyons (Pittsburgh-based journalist and managing editor at Inside).

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