After ditching home-buying business, Zillow Group partners with rival Opendoor

Zillow Group still wants to help people quickly sell their home.

The Seattle real estate giant announced a partnership with Opendoor that allows homesellers on Zillow’s platform to request an instant cash offer from Opendoor, one of the leading “iBuyer” companies that aim to make real estate transactions more seamless.

Zillow last year decided to shut down its own iBuyer business, Zillow Offers, marking a surprising end to an ambitious home-flipping bet that resulted in a $405 million write-down and a 25% workforce reduction. Zillow was unable to accurately forecast the price of homes and said the business ultimately required too much capital.

Now, Zillow users will still be able to get an instant cash offer for their home, but the transaction is facilitated by Opendoor. Zillow will get a referral fee when a customer sells to Opendoor.

Zillow CEO Rich Barton said the deal expands the company’s addressable market, allowing it to create a suite of seller services.

“This isn’t just a lead-gen distribution deal,” Barton said on a call with analysts Thursday. “This is going to be a deep integration.”

Barton said Zillow will take advantage of the investment it made developing Zillow Offers. More from Barton on the call:

“We invested quite a bit of time and treasure and IQ figuring out how to integrate the cash offer into our home details page and our user flow, to attract sellers to interact with us. All of those learnings can be brought to bear on this partnership. It’s interesting because it involves deep integration of the Opendoor offering into our set of services. That gives us the opportunity to quarterback the process and introduce our customers who request an Opendoor cash offer to Premier Agents, mortgages, Zillow closing services, and a myriad of other things that we have our hands on.”

Homesellers will be able to compare the cash offer from Opendoor to a traditional open-market sale that can be facilitated by a real estate agent from Zillow’s Premier Agent program.

Customers “can evaluate their selling options and easily package it with other Zillow services to buy and finance their next home,” Zillow Chief Operating Officer Jeremy Wacksman said in a statement.

Opendoor reached a $62 million settlement this week with the FTC, which said the company used misleading marketing practices and deceived customers “into thinking that they could make more money selling their home to Opendoor than on the open market using the traditional sales process.”

(Bigstock Image)

Zillow says the partnership with Opendoor builds on its strategy to offer a “housing super app,” described by executives earlier this year as a digital experience that “connects all the fragmented pieces of the moving process and brings them together on one transaction.”

“Building out a suite of complementary seller offerings over time opens up meaningful opportunities for us across agent transactions and adjacent services like mortgage and title & escrow,” Barton wrote in a shareholders letter Thursday, which you can read below. “When it’s fully rolled out, this will create another way for Zillow to serve potential sellers across more than 50 U.S. markets, while growing our business in the capital-light manner we described when we exited iBuying.”

Founded in 2014, Opendoor went public in 2020 and reported revenue of $8 billion in 2021, up from $2.6 billion the year prior. It was one of the first to use the iBuyer model, which gives homesellers the certainty and immediacy of an all-cash offer in exchange for paying a fee. Redfin and Offerpad also have their own iBuyer businesses.

In addition to fees, which are similar to real estate commissions, Opendoor also makes money on the difference between what it buys and sells a home for. It also offers ancillary services including home repairs and mortgage. The company acquired Seattle startup Pro.com last year. Its market capitalization is just below $3 billion, down from around $8 billion last year.

“For parents looking to upsize, a young professional moving for a new job, and millions of others who regularly use Zillow to explore their home selling options, we will provide them with the ability to move with a tap of a button,” Opendoor President Andrew Low Ah Kee said in a statement.

Zillow shares were down more than 10% Thursday after announcing its second quarter earnings report. Zillow’s stock is down nearly 40% this year. Its market capitalization is more than $9 billion.

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https://www.geekwire.com/2022/after-ditching-home-buying-business-zillow-group-partners-with-rival-opendoor/

Second Quarter of 2022 Homeownership Rate at 65.8%

The Census Bureau’s Housing Vacancy Survey (CPS/HVS) reported the U.S. homeownership rate at 65.8% in the second quarter of 2022, which is statistically unchanged from the last quarter reading (65.4%). The national rental vacancy rate slipped to 5.6%, while the homeowner vacancy rate stayed at 0.8%. Both rental and homeowner vacancy rates are hovering near historical lows, reflecting tight housing market conditions.

The covid-induced data collection restrictions have ended in all areas as of the last quarter of 2021. However, technical issues involved with data collection changes limit useful comparisons of the data during the pandemic with the prior data series. We have especially noted the homeownership rate data for the last three quarters of 2020 with separate dots below to denote these technical issues. We encourage readers to consider these data points separately from the remaining data series.  Nonetheless, the first three quarters of 2021 likely return the series to a more apples-to-apples comparison with the prior history of the series.

The homeownership rates of adults ages less than 35, 35-44 and 44-54 increased over the last year, while the remaining two older age groups experienced decreases. The homeownership rates among households ages less than 35 registered the largest gains among all age groups, from 37.8% to 39.1%, followed by households ages 45-54 with 1.2 percentage point increase from 69.4% to 70.6%. Households ages 35-44 experienced a modest 0.6 percentage point increase. However, homeownership rates of households ages 55-64 and 65+showed a decline of 0.3 percentage points.

 

While the total housing inventory estimates were unaffected by the data collection changes during the COVID-19 pandemic,  the estimates of homeownership rates, vacancy rates, and the components of housing inventory were affected severely until the second quarter of 2021 when in-person interviews were allowed in 99% of the country. The housing stock-based HVS revealed that the count of total households increased to 128.0 million in the second quarter of 2022 from 126.3 million a year ago. The gains are largely due to strong owner household formation (1.6 million increase), while renter households only increased by 81,000.

 

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More Prospective Buyers Are Actively Searching for a Home

The share of prospective home buyers who are actively engaged in the process to buy a home rose to 49% in the second quarter of 2022, after declining for three straight quarters.  The pivot is likely driven by less competition from buyers who have exited the market, which has encouraged many of those remaining to become active buyers.

Except for the South, the share of prospective buyers actively searching for a home rose in every region between the first and second quarters of 2022: Northeast (50% to 54%), Midwest (40% to 51%), and West (46% to 57%).

In the second quarter of 2022, the share of active buyers who have been looking for a home for 3+ months fell to 63%, down from 67% in the previous quarter.  The share is at its lowest point in almost two years (since the third quarter of 2020, when it was 62%). Before the pandemic (between the first quarters of 2018 and 2020), fewer than 60% of active buyers shopped for a home for 3+ months.

**Results come from the Housing Trends Report (HTR) – a research product created by the NAHB Economics team with the goal of measuring prospective home buyers’ perceptions about the availability and affordability of homes for-sale in their markets.  The HTR is produced quarterly to track changes in buyers’ perceptions over time.  All data are derived from national polls of representative samples of American adults conducted for NAHB by Morning Consult.  Results are seasonally adjusted.  A description of the poll’s methodology and sample characteristics can be found here.  This is the fifth in a series of six posts highlighting results for the 2nd quarter of 2022.

 

Proposed Updates to HUD Manufactured Home Construction and Safety Standards

WASHINGTON, D.C. – The Department of Housing and Urban Development announced today its proposals for updating the Manufactured Home Construction and Safety Standards, commonly referred to as the “HUD Code.” The proposed updates were published in the Federal Register and are the largest set of changes to the HUD Code in over two decades. The updates support the Biden-Harris Administration’s priority of expanding the supply of manufactured housing as a component of its efforts to address the nation’s housing supply challenges.

“Manufactured homes are an important element of the nation’s affordable housing supply,” said Assistant Secretary for Housing Julia Gordon. “These proposed updates, when final, will help to expand the availability of safe and affordable homes that align with current design trends and construction methods.”

Containing new and updated standards, including 88 standards incorporated by reference, the proposed rule will bring the HUD Code in line with more recent manufactured housing industry standards and further improve the quality and safety of manufactured home construction. Proposed changes in the rule will facilitate innovation and greater production of manufactured homes with features that are sought-after by consumers and that are common consumer needs for modern living, including: multi-unit dwellings; ridge-roof designs; open floor plans, truss designs, specifications for attics, and accessibility improvements, among others.

When final, the updates contained in the proposed rule will enact a significant number of recommendations made by the federally-mandated Manufactured Housing Consensus Committee. Further, the updates will eliminate the need for manufacturers to obtain alternative construction approvals for frequently requested features and materials that already meet or exceed HUD standards.

The proposed updates are available for public comment for 60 days. Comments must be submitted via the methods described in the proposed rule.

Fact Sheet
Proposed Updates to HUD Manufactured Home Construction and Safety Standards
July 19, 2022

22 million people live in manufactured homes throughout the country. The Biden-Harris Administration views manufactured homes as a priority solution for solving the nation’s affordable housing challenges. Proposing updates and additions to the Manufactured Home Construction and Safety Standards, commonly referred to as the “HUD Code” is one way HUD is playing a leading role in fostering increased production and broader consumer acceptance of manufactured housing as a viable, affordable, and comparable alternative to a site-built home.

Summary of HUD Code Updates Contained in the July 19, 2022, Proposed Rule

Key proposed additions and updates included in the proposed rule will allow:

  • Materials that facilitate modern design approaches and improve quality: Updates to reference standards for materials (wood, steel, piping) and products will align with other building standards, will allow the use of more modern design approaches and installation of alternative materials, and will improve the quality and safety of homes for consumers.
  • Ridge roof designs: Revising definitions and regulatory language will allow certain specified roof ridge designs (peak cap and peak flip roof assemblies) without a requirement for specific on-site inspections by a HUD-approved agency, except for certain exclusions. This type of roof installation is common throughout the industry and uses technology that is time-tested. This will be beneficial for manufacturers and consumers by incorporating more recent design practices into the regulations and eliminating unnecessary inspections and associated costs.
  • Multi-unit manufactured homes: Proposed changes to regulatory language address multi-unit dwellings, proposing allowance of up to three units while assuring comprehensive fire safety to multi-unit occupants by adding benchmarks and guidelines that meet Manufactured Housing Construction and Safety standards. This may help to further leverage manufactured housing as a means of addressing affordable housing needs.
  • Open floor plans, truss designs, and specifications for attics: The updated requirements for exterior door separation and structural design requirements will improve allowances for open floorplans while maintaining fire safety, clarify unclear provisions, and allow potential for optimization of truss design. In addition, the proposed rule will include more clarity regarding structural design requirements for attics.
  • Accessibility improvements: Modifications to standards for accessible showers will comply with nationally-recognized disability standards for roll in showers. This will eliminate the need for HUD alternative construction approval and reduce cost and burdens for manufacturers and consumers.
  • Modern and energy-saving appliances: Updating and adding new standards will allow for the use of more modern and energy efficient appliances, including gas-fired tankless water heaters, eliminating the need for HUD alternative construction approvals for use of such appliances.
  • Additional process efficiencies that save time and reduce costs: Improved language stipulating prerequisites for the process of obtaining installation licenses will increase flexibility for installers; updates to water system piping testing procedures will decrease on-site testing time; and utilization of appliance QR codes for manuals and information will reduce paperwork and bookkeeping.

About the Manufactured Home Construction and Safety Standards (HUD Code)

The National Manufactured Housing Construction and Safety Standards Act of 1974 (the Act) authorizes HUD to establish federal standards for the design and construction of manufactured homes to assure quality, durability, safety, and affordability. Effective in 1976, HUD established the Manufactured Home Construction and Safety Standards, commonly known as the HUD Code, which has worked to transform manufactured homes in quality, safety, durability, and affordability.

HUD standards may preempt state and local laws that do not conform to the HUD standards. HUD’s Office of Manufactured Housing Programs enforces standards directly or through State Administrative Agencies that have partnered with HUD, monitors inspections of factories and retailer lots, regulates installation standards for the homes, administers a dispute resolution program for defects, establishes and collects a fee for each home built, authorizes a certification label to be placed on each section of a home that meet the HUD standards, and pursues a civil or criminal action for violations of the Act.

About the Manufactured Housing Consensus Committee

The Manufactured Housing Consensus Committee (MHCC) is a statutory Federal Advisory Committee body charged with providing recommendations to the Secretary of HUD on the adoption, revision, and interpretation of HUD’s Manufactured Home Construction and Safety Standards and related procedural and enforcement regulations. The MHCC was also charged with developing and proposing model installation standards to the Secretary of HUD, so HUD could enact model manufactured home installation standards and implement an installation program for the manufactured housing industry. By regulation, HUD also engages the MHCC in the process of revising the Manufactured Home Model Installation Standards and Installation Program Regulations.

 

Source: https://www.hud.gov/press/press_releases_media_advisories/HUD_No_22_133

Tips for avoiding Foreclosure

Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?

If you are unable to make your mortgage payment:

1. Don’t ignore the problem.

The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem.

Lenders do not want your house. They have options to help borrowers through difficult financial times.

3. Open and respond to all mail from your lender.

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

4. Know your mortgage rights.

Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.

5. Understand foreclosure prevention options.

Valuable information about foreclosure prevention (also called loss mitigation) options can be found online.

6. Contact a HUD-approved housing counselor.

The U.S. Department of Housing and Urban Development (HUD) funds free or very low-cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender, if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.

7. Prioritize your spending.

After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses–cable TV, memberships, entertainment–that you can eliminate. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage.

8. Use your assets.

Do you have assets–a second car, jewelry, a whole life insurance policy–that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don’t significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

9. Avoid foreclosure prevention companies.

You don’t need to pay fees for foreclosure prevention help–use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month’s mortgage payment) for information and services your lender or a HUD-approved housing counselor will provide free if you contact them.

10. Don’t lose your house to foreclosure recovery scams!

If any firm claims they can stop your foreclosure immediately and if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional or a HUD-approved housing counselor.

Real Estate Settlement Procedures Act

Real Estate Settlement Procedures Act1 The Real Estate Settlement Procedures Act of 1974 (RESPA) (12 U.S.C. 2601 et seq.) (the Act) became effective on June 20, 1975. The Act requires lenders, mortgage brokers, or servicers of home loans to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process. The Act also prohibits specific practices, such as kickbacks, and places limitations upon the use of escrow accounts. The Department of Housing and Urban Development (HUD) originally promulgated Regulation X which implements RESPA. Congress has amended RESPA significantly since its enactment. The National Affordable Housing Act of 1990 amended RESPA to require detailed disclosures concerning the transfer, sale, or assignment of mortgage servicing. It also requires disclosures for mortgage escrow accounts at closing and annually thereafter, itemizing the charges to be paid by the borrower and what is paid out of the account by the servicer. In October 1992, Congress amended RESPA to cover subordinate lien loans. Congress, when it enacted the Economic Growth and Regulatory Paperwork Reduction Act of 1996,2 further amended RESPA to clarify certain definitions including “controlled business arrangement,” which was changed to “affiliated business arrangement.” The changes also reduced the disclosures under the mortgage servicing provisions of RESPA. In 2008, HUD issued a RESPA Reform Rule (73 Fed. Reg. 68204, Nov. 17, 2008) that included substantive and technical changes to the existing RESPA regulations and different implementation dates for various provisions. Substantive changes included a standard Good Faith Estimate form and a revised HUD-1 Settlement Statement that were required as of January 1, 2010. Technical changes, including streamlined mortgage servicing disclosure language, elimination of outdated escrow account provisions, and a provision permitting an “average charge” to be listed on the Good Faith Estimate and HUD-1 Settlement Statement, took effect on January 16, 2009. In addition, HUD clarified that all disclosures required by RESPA are permitted to be provided electronically, in accordance with the Electronic Signatures in Global and National Commerce Act (E-Sign).

Credits: HUD

Read the entire article – https://files.consumerfinance.gov/f/201308_cfpb_respa_narrative-exam-procedures.pdf

Agricultural Land Conservation Easement Program

The Agricultural Conservation Easement Program (ACEP) protects the agricultural viability and related conservation values of eligible land by limiting nonagricultural uses which negatively affect agricultural uses and conservation values, protect grazing uses and related conservation values by restoring or conserving eligible grazing land, and protecting and restoring and enhancing wetlands on eligible land.

Benefits

Agricultural Land Easements protect the long-term viability of the nation’s food supply by preventing conversion of productive working lands to non-agricultural uses. Land protected by agricultural land easements provides additional public benefits, including environmental quality, historic preservation, wildlife habitat and protection of open space.  Additionally, ALE easements leverage local partnerships to match NRCS funding and local partners are responsible for the long-term stewardship of the easement.

Visit here – https://www.nrcs.usda.gov/wps/portal/nrcs/main/national/programs/easements/acep/

Who is eligible?

  • Eligible partners include American Indian tribes, state and local governments and non-governmental organizations that have farmland, rangeland or grassland protection programs.
  • Eligible landowners include owners of privately held land including land that is held by tribes and tribal members.
  • All landowners, including required members of landowner-legal entities, must meet adjusted gross income (AGI) limitations and must be compliant with the HEL/WC provisions of the Food Security Act of 1985.

What land is eligible?

Land eligible for agricultural easements includes private or Tribal land that is agricultural land, cropland, rangeland, grassland, pastureland and nonindustrial private forest land. NRCS will prioritize applications that protect agricultural uses and related conservation values of the land and those that maximize the protection of contiguous acres devoted to agricultural use, including land on a farm or ranch.

Eligible Land Types and which also meets one of the four following land eligibility criteria:

  1. Parcels enrolled to protect Prime, Unique, or Other productive soil.
  2. Parcels enrolled to provide protection of grazing uses and related conservation values.
  3. Parcels containing historical or archeological resources.
  4. Land that furthers a state or local policy consistent with the purposes of ACEP-ALE.

The downsides of Airbnb contracts

Adding a rental agreement to your booking flow on Airbnb doesn’t come without its pitfalls and downsides, which are well worth considering before you choose to proceed further:

Friction

Adding a rental agreement that your guests must sign and return to you adds considerable friction to the booking process.  And, any additional friction will ultimately reduce your booking rate – which is worth thinking long and hard about.

How much friction will it add, and how many potential bookings will you lose because of it?

Who knows, but this is certainly worth weighing up before blindly plowing ahead.

Airbnb doesn’t have your back

This rental contract is between you and your guests and has nothing to do with Airbnb the company whatsoever.

Therefore you won’t be getting any help from them as an intermediary in the case of any disputes.

Instead, any disputes will need to go through the regular legal process, often involving lawyers and courts, which can get expensive.

Workload

If you’re a busy host (which I hope you are), then building a new contract for every new booking that comes in can be a bit of a headache.

Plus, on top of that, there’ll be a lot of chasing guests for signed contracts along the way too.

Please ensure you seek the advice of an attorney before finalizing any legally binding document. Your agreement should be revised and updated habitually to adhere to any changing local or state laws.

Housing Market Forecast 2022: Will It Crash or Boom in 2022

Mortgage rates at record lows and a lack of available inventory are sustaining the US housing market’s demand. While affordability concerns continue to grow, low mortgage rates, increased savings, and a strengthening job market all contribute to making homeownership more accessible to a wide number of prospective buyers. However, will the housing market ever crash? Let’s look at the most recent trends in 2021 and housing market predictions for 2022.

In 2020, the number of home sales increased significantly and surpassed 2007 levels. Despite the economic uncertainty caused by the pandemic, many buyers took a more serious approach to homeownership than ever before. It resulted in a massive, but brief, increase in homeownership as a result of drastically reduced spending. The housing market has been particularly robust this year, with high demand for homes in almost every area of the nation.

The real estate market has emerged as a boon for sellers and a source of worry for buyers in the middle of this epidemic. Home prices have been increasing in the mid-single digits for many years. Recent double-digit price rises reflect the convergence of exceptional demand and chronically low supply. Prices are increasing as a result of enough money on the sidelines and very low mortgage rates.

The improving economy and the approaching peak homebuying years of millennials are driving a residential housing boom. The housing supply is now at its lowest level since the 1970s, due to millennial homeownership and other factors such as rising building prices and real estate speculators snapping up starter homes.

The Census Bureau has released its most recent quarterly report, which includes data through the third quarter of 2021. Seasonally adjusted, the homeownership rate for Q3 is 65.4 percent, down from 65.4 percent in Q2. Additionally, the nonseasonally adjusted Q2 figure is 65.4 percent, which is unchanged from the Q2 2021 figure.

Low mortgage rates, coupled with more work-from-home possibilities created by the pandemic, have also fuelled a rise in housing demand, especially in lower-density suburbs. Detached single-family houses continue to be in great demand. These properties provide greater living space and separation from adjacent houses than attached properties provide.

We’ll examine current real estate trends, including price and rent increases, housing sales and supply, mortgage rates and delinquencies, and other key industry takeaways and insights into the US housing market.

The Housing Market’s Current Trends: Crash vs Boom?

In November, the housing markets are demonstrating signs of rebalancing, as evidenced by a steady pace of transactions and more moderate price growth. As more homeowners list their homes for sale, these homes remain on the market for longer periods of time. Despite this, buyers must be prepared to act quickly, even if they get a few additional days to decide. While the housing market remains largely a seller’s market due to demand still outpacing supply, it is clear that things are changing. More homes are coming on the market, and the number of bidding wars has decreased significantly.

Forecasting home price appreciation is a challenging task. While inventory has increased slightly, it remains significantly below pre-pandemic levels and is simply unable to meet current demand. The latest housing news has Zillow revising its 2022 real estate forecast. They released a bullish 2022 forecast in September, predicting that home prices in the United States would rise another 11.7 percent over the next 12 months.

However, the real estate listing site now claims that their previous forecast was too pessimistic. They published a new report predicting that home prices in the United States will increase 13.6 percent between October 2021 and October 2022, and to end 2021 up 19.5% from December 2020.

While Zillow’s forecast is bullish, it is also a bit of an outlier when compared to CoreLogic’s forecast for a 2.2 percent increase in US home prices. On the other hand, Freddie Mac’s forecast is more bullish than Zillow’s. The FMHPI is an indicator for typical house price inflation in the United States. It indicates that home prices increased by 11.3 percent in the United States in 2020 as a result of robust housing demand and record low mortgage rates.

Growth is expected to slow to 7 percent in 2022, according to their latest forecast. The pace of home sales has cooled since the first quarter of 2021 when it was at 7.2 million. Freddie Mac predicts home sales to hit 6.8 million for the full years 2021 and 2022. Additionally, they forecast house price growth of 16.9% in 2021. However, they expect house price growth to slow to 7.0% in 2022.

Strong house price growth is expected to lift home purchase mortgage originations from $1.9 trillion in 2021 to $2.1 trillion in 2022. With a higher mortgage rate forecast for 2022, they anticipate refinancing activity to soften, with refinancing originations declining from $2.6 trillion in 2021 to just below $1.0 trillion in 2022. Overall, Freddie Mac predicts that total originations will decline from $4.5 trillion in 2021 to $3.1 trillion in 2022.

Real Estate Market Values Spike in the Second Quarter

The latest Federal Reserve Z.1 Financial Accounts of the United States, i.e., the “Flow of Funds”, show that in the second quarter of 2021 the aggregate market value of all owner-occupied real estate in the United States registered the largest quarterly increase in the last 21 years of data. From $33.8 trillion in the first quarter of 2021, real estate rose by $1.1 trillion in value to $34.9 trillion, making it the largest quarterly increase on record. As a previous post details, the second quarter also saw unsustainably high home price appreciation due to lack of inventory.