Homes near Trader Joe’s, Whole Foods worth twice as much as other houses

Whole Foods Market at University Commons (Bob Shanley/The Palm Beach Post)
Whole Foods Market at University Commons (Bob Shanley/The Palm Beach Post)

Homes close to Trader Joe’s or Whole Foods locations gain value more rapidly than houses farther from the trendy retailers, an analysis by Zillow finds.

At the end of 2014, homes within a mile of either store were worth more than twice as much as the median home in the rest of the country, according to a new analysis in the paperback edition of Zillow Talk: Rewriting the Rules of Real Estate published Tuesday.

RealtyTrac last year analyzed price appreciation near Trader Joe’s and Whole Foods stores in Palm Beach County and declared Trader Joe’s the clear winner.

“Like Starbucks, the stores have become an amenity in their own right – a signal to the home-buying public that the neighborhood they’re located in is desirable, perhaps up-and-coming, and definitely improving,” says Zillow Group Chief Economist Stan Humphries. “Like a self-fulfilling prophecy, the stores may actually drive home prices. Even if they open in neighborhoods where home prices have lagged those in the wider city, they start to outperform the city overall once the stores arrive.”

No amount of data analysis can answer this question: Are Whole Foods and Trader Joe’s the cause of rapid appreciation, or are they simply locating in affluent neighborhoods that would see price increases anyway? Zillow punts, saying stores and home prices are “definitely related.”

“The grocery store phenomenon is about more than groceries,” Rascoff says. “It says something about the way people want to live – in the type of neighborhood favored by the generations buying homes now.”

Palm Beach County’s hottest neighborhoods? They’re not where you expect

A property for sale in West Palm Beach's Parker Ridge neighborhood.
A property for sale in West Palm Beach’s Parker Ridge neighborhood. Photo by Jeff Ostrowski/The Palm Beach Post.

Pop quiz: Which Palm Beach County neighborhood can expect the heftiest price appreciation this year?

You’re probably thinking of an obvious choice — the oceanfront estates of Palm Beach, perhaps, or a quaint historic section of Delray Beach, or maybe a ritzy gated community in Palm Beach Gardens, Wellington or Boca Raton.

Wrong on all counts. According to Zillow, the fastest-gaining neighborhoods this year will be low-priced areas mostly passed over by the housing rebound.

In Zillow’s forecast for South Florida’s hottest neighborhoods of 2016, four of the top five are in Palm Beach County:

  • Villages of Oriole, the 55-and-older community at the northwest corner of Atlantic Avenue and Jog Road west of Delray Beach. Zillow forecasts 3.5 percent growth. The neighborhood is dominated by homes priced at less than $100,000.
  • Parker Ridge, the area just east of Interstate 95 and north of Forest Hill Boulevard in West Palm Beach: Zillow projects 2.6 percent growth.
  • Palm Beach Lakes, the area just west of I-95 between Okeechobee and Palm Beach Lakes boulevards in West Palm Beach: 2.2 percent appreciation.
  • Roosevelt Estates, a neighborhood east of I-95 and south of Palm Beach Lakes in West Palm Beach. Zillow projects 1.7 percent growth.

“In some of the more obvious markets that have been hot in the past, home values has risen pretty far, and demand for housing has diminished to some extent because they’ve gotten so expensive,” says Svenja Gudell, Zillow’s chief economist. “People are looking for more affordable housing, so we expect demand to increase for these kinds of neighborhoods.”

Zillow expects South Florida home prices to fall 0.4 percent this year, so cracking the top five required only a modest projected gain.

“It’s nothing to write home about,” Gudell says.

How much will Fed rate hike raise mortgage payments?

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With the Federal Reserve all but certain to boost rates on Wednesday, home shoppers are left to wonder how the first such move in nearly a decade might affect their housing costs.

Here’s one educated guess: $29 a month. That’s assuming 30-year mortgage rates rise to 4.25 percent from 4 percent, and that you borrow $200,000 on a $250,000 home. (You can run your own numbers on our mortgage calculator.)

A survey released Tuesday by Zillow says 70 percent of home shoppers will be undaunted if rates rise to 4.5 percent, which is where economists expect they will be by mid-2016.

“If the Fed does decide to raise rates this week, as we expect them to, there is no need for future homebuyers to feel that they’ve missed the ideal window of time to purchase a home,” says Erin Lantz, vice president of mortgages for Zillow Group. “It’s important to remember that while a hike would result in higher rates than we have been accustomed, they are still historically low.”

Just to be clear, the Federal Reserve doesn’t determine mortgage rates. But rising short-term rates, which the Fed does control, typically affect prices on home loans.

The verdict on Redfin’s new Zillow rival? I like the extra $60,000 on my home value

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Redfin just launched a pricing algorithm to compete with industry leader Zillow. Glenn Kelman, head of Seattle-based Redfin, said the broker’s newly unveiled software spits out values that are more accurate than Zillow’s love-em-or-hate-em Zestimates.

At first glance, I like Redfin’s values, if only for selfish reasons. Redfin says my house in Lake Worth is worth $393,485. Zillow rates it at a puny $331,867.

The trend is the reverse for the home of Florida Realtors President Andrew Barbar. Redfin pegs the value of his Boca Raton crib at $415,639; Zillow says it’s worth a loftier $494,065.

At second glance, Redfin’s tool might not be ready for prime time. The site offers no estimate for the mansion on Versailles Boulevard in Wellington owned by Redfin agent Delray Valle. Zillow says it’s worth $1.23 million.

The same goes for West Palm Beach Mayor Jeri Muoio’s house. Redfin doesn’t have an estimate; Zillow says it’s worth $1.76 million. Michael Jordan’s manse in Jupiter? Redfin gives no estimate; Zillow pegs it at $22.3 million.

Redfin says it has cataloged only 2 million homes in Florida.

Intriguingly, Redfin hazards a guess at the value of Palm Beach County’s priciest mansion: It says the oceanfront spread at 515 N. County Road in Palm Beach is worth $181 million. Zillow takes a pass on that property.

Kelman announced his new valuation tool late Wednesday; he said Redfin’s access to multiple listing service data lets it create more accurate estimates.

Redfin promises a “median error rate” of 1.96 percent for homes on the market and 6.23 percent for off-market properties; Zillow cops to an error rate of 7.9 percent. In a news conference late Wednesday, Kelman couldn’t resist a dig at his rival; Kelman said Redfin’s estimates are more “transparent.”

“We’re in the business of selling houses,” Kelman said. “We have to stand behind those estimates.”

However, Zillow says its larger database makes accuracy more difficult.

“It’s important to note that the two cannot be compared on a apples-to-apples basis because the Zestimate is computed on a much larger footprint,” says Zillow spokeswoman Camille Salama. “There are Zestimates on more than 100 million homes across the entire country whereas Redfin Estimates cover 40 million homes in 35 major metros.

Redfin acknowledges that its Florida estimates aren’t perfect. Values on 90.7 percent of them are within 10 percent of the true value; the other 9.3 percent are off by more than that.

 

For South Florida renters, buying is a great deal — but saving down payment is an obstacle

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Buying a house in South Florida is a great deal compared to renting, Zillow says.

In Palm Beach, Broward and Miami-Dade counties, the median monthly mortgage payment eats up just 20 percent of monthly income, Zillow calculates. Renting is substantially more expensive, chowing down 44 percent of income.

So why aren’t more first-time buyers snapping up homes? Blame a combination of a lack of entry-level inventory and tight lending standards.

“Unfortunately, many current renters aren’t able to realize the savings that come with homeownership because as home values and rents keep rising, it’s getting increasingly difficult to clear the down payment hurdle,” says Zillow Chief Economist Svenja Gudell.

South Florida mortgage market loosens for everyone but black borrowers

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As lenders loosen the purse strings, it’s easier to get a mortgage in South Florida for all racial groups except African-Americans. That’s according to research released Thursday by Zillow.

The breakdown for mortgage applications in Palm Beach, Broward and Miami-Dade counties:

  • For all mortgage applications, the denial rate was 21.2 percent in 2013 and 19.5 percent in 2014.
  • For black applicants, the denial rate rose from 29.2 percent in 2013 to 30.3 percent in 2014.
  • For white applicants, the denial rate fell from 17.9 percent in 2013 to 15.6 percent in 2014.
  • For Hispanic applicants, the denial rate fell from 23.6 percent in 2013 to 21.5 percent in 2014.
  • For Asian applicants, the denial rate fell from 21.9 percent in 2013 to 20.4 percent in 2014.

South Florida bucks the national trend, which saw black applicants denied less frequently in 2014 than in 2013.

As Palm Beach County prices bounce back, fewer homes underwater

IMG_0321-0In the dark days of the housing crash, fully 44 percent on Palm Beach County homeowners owed more than their houses wre worth. Now, though, the percentage of underwater homeowners has dropped to 13.7 percent, according to Zillow.

Condos remained more likely than houses to be underwater in South Florida in the second quarter, Zillow says.

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