Housing Bubble In 2017? (Here’s what the data tells us)

Housing prices may be appreciating at a seemingly unsustainable rate once again in some markets around the country, but Christopher Thornberg believes the nation’s economic fundamentals will continue to be much more sound in 2017 than when the market began to implode back in 2005.

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Originally published here:  Realtytrac   

“There’s no housing bubble. Not even close,” assures Thornberg, Founding Partner of Beacon Economics LLC in Los Angeles. “There are three basic worry indicators and all three were very scary in 2005 and all three today suggest, if anything, that the housing market is still in the process of recovery instead of being near a new bubble.

A Matter of Apples vs. Oranges

The state of the nation’s economy and the economic variables that eventually led the country into the Great Recession were vastly different back then compared to the more stable trends that currently exist.

While overheated home prices may have been a contributing factor to the housing bubble, they alone were not the needle that finally burst the overinflated bubble after prices peaked in 2006.

Prices are an important contributing factor, but Thornberg cites three more crucial economic factors he believes led to the market’s final undoing and the loss of so much equity so quickly.

Those three factors were: declining affordability, the overbuilding of housing supply, and the abuse of leveraged debt.


Back in 2005 while affordability was falling, Thornberg explained, home price increases were being driven by markets on the periphery instead of the nation’s big markets which remained relatively cool.

At the same time, the pace of home construction was out of control, with builders adding roughly 2 million housing units instead of the 1 million he estimates the market actually needed at the time.

Plus the number of outstanding home mortgages were growing exponentially thanks to some creative financing vehicles such as so-called “no doc” loans and sub-prime financing.

“It was a leverage-driven bubble,” Thornberg says. “If you’re using leverage then you’re swinging for the fences.”

By contrast, Thornberg maintains that current indicators suggest that the U.S. housing market is still in the process of recovering.

“Homes in the U.S. are still very affordable from a long-term perspective. Prices have been constrained and construction has been constrained. Now there’s very little build up in leverage. We don’t have loose credit this time around.”

Affordability Down But Not Out

Attom Data Solutions in Irvine, Calif., reported in December that the nation’s affordability index hit 103 during the fourth quarter of 2016, its lowest level since the 102 reported for the same quarter of 2008.

As Daren Blomquist, senior vice president of Attom Data Solutions (parent company of RealtyTrac) explains it, when the housing affordability index for any market hits below 100, that means the market is in some sort of bubble, but not necessarily a bubble that is ready to burst.


“It just means that a lot of local buyers are locked out of the housing market. We need local buyers to be able to afford to purchase homes in order to ensure sustainable growth in that market for the long term,” Blomquist says.

Of the 447 counties studied, the firm’s Q4 2016 Home Affordability Index reported that 29 percent of local markets were less affordable than their historic averages, the highest share since the third quarter of 2009.

For purposes of its report, Attom took publicly recorded sales deed data it collected and average wage data from the U.S. Bureau of Labor Statistics in all those counties with a combined population of more than 184 million people.

The firm’s affordability index is a measurement based on the percentage of average wages needed to make monthly house payments, including property taxes and insurance, on a median-priced home with a 30-year fixed-rate mortgage and a 3 percent down payment-.

“Rapid home price appreciation and tepid wage growth have combined to erode home affordability during this housing recovery, and the recent uptick in mortgage rates only accelerated that trend in the fourth quarter,” Blomquist says.

“The prospect of further interest rate hikes in 2017 will likely cause further deterioration of home affordability [this] year. Absent a strong resurgence in wage growth, that will put downward pressure on home price appreciation in many local markets.”

Blomquist is quick to point out, however, that Attom’s affordability data is not comparing markets to each other, but instead comparing a market to itself, historically speaking.


“We thought it was more fair to compare a market to itself because in some places people have always been willing to spend more of their income on housing because of the location,” he notes.

Still, a scarcity of housing supply around the country has led to very strong home price growth compared to lackluster wage growth in many markets, and that is causing the current decline in affordability. In all, Attom reported that annual home price growth outpaced annual wage growth in 363 out of the 447 counties (81 percent) surveyed.

Additionally, Blomquist explains that the demand for housing is another contributing factor to the affordability issue. Potential first-time homebuyers are facing increased competition not only from other owner-occupant homebuyers, but also from institutional buyers from Wall Street – as well as hedge funds – and from foreign buyers. Those institutional and foreign buyers are willing to pay more for whatever homes are available than the first-timers.

When it comes to new home construction, the National Association of Home Builders is projecting 873,000 single family starts this year, a 13 percent increase compared to 2016.

“There doesn’t appear to be any real evidence of a housing bubble looming on the horizon,” says Rick Sharga, executive vice president at Ten-X, an online real estate marketplace based in Irvine, CA.
“Lending standards make it difficult for all but the most highly-qualified borrowers to even get a loan, and in most markets, we’ve seen price appreciation slow down when home affordability starts to become an issue. That said, home prices have outpaced wage growth for most of the past decade. So while we may not be in ‘bubble territory,’ it’s possible that home prices may be due for a correction in some of the more expensive markets.”

Originally published here:  http://www.realtytrac.com/news/home-prices-and-sales/are-we-headed-for-another-bursting-housing-bubble-in-2017/ 



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Bank Owned Properties still represent one of the greatest opportunities for saavy Real Estate Investors in the market today. See how it works from the inside out. This 5 part series is an entire REO Investing Course in disguise, so take advantage of these implementable strategies! 

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When I started in this business in 2000, the majority of the real estate deals were coming to us through distressed owners. We would market to the homeowner directly and attempt to negotiate a deal that would help all parties. We would advertise in the Yellow Pages, newspapers, and put out bandit signs to get the homeowner to call us directly. There was a very human element to it as many of those deals were made at the seller’s kitchen table. It’s called Buyer to Seller Direct. This is still a great method to use in today’s market.

In 2007, when the bottom dropped out of the market and the foreclosure crisis started, acquiring bank-owned homes proved to be the greater opportunity. Sud- denly, there were more properties on the market than ever before at prices lower than they had ever been before. Smart investors started scooping up ridiculous deals. In Florida, we started paying $30k for properties that would have sold for $125k just a few months earlier. Today, there are a ton of properties available, but limited financing and lending available. This leads to a “perfect storm” for cash investors able to scoop up good deals.

But you can’t just choose any old property. You have to know what you are doing. To be successful in identifying, acquiring, and selling these properties you need to have a system. This book will equip you with a proven system and set you on the path to success.

Consider this your Investment Boot Camp.

shutterstock_265994051You need to jump into this thing full force. Tackle one obstacle at a time and take it down hard. This isn’t the fun part (that comes later when you start cashing checks), but developing a solid knowl- edge base is crucial to your success. Bust through this information, memorize it, and then move forward.

Terms and Definitions:

I know vocabulary was your favorite part of grade school, right? Well, you are in luck (at least I won’t make you spell them)! It’s important that you don’t skip over this section. You may even want to go back and review these terms a few times. You want them to become part of your vernacular. Memorize these terms and you will drastically reduce the number of times you look stupid in front of more seasoned professionals. Nothing is worse for your business than clearly not knowing what you are talking about. Don’t be that guy! I have boiled it down to the most common and important terms for you. Here we go!


Professional service provided by a registered, licensed, or certified appraiser or real estate licensee to produce an estimate of value.


Worth established for each unit of real property for tax purposes by a county property appraiser.


Person to whom a right or interest is transferred.


Written instrument that serves to transfer the rights or interests of one person to another.


Person who gives his or her legal rights or interests to another person.


The supply of available properties exceeds the demand.


The relationship between the net income from a real estate investment and the present value.


Final settlement between the buyer and seller; the date on which title passes from the seller to the buyer.


Any defect, valid claim, or encumbrance that serves to impair the title or curtail an owner’s rights.


compensation paid to a broker or sales associate for successfully concluding a real estate transaction.


An informal estimate of market value performed by a real estate licensee for the seller to assist in arriving at an appropriate listing price. Or if working with the buyer, an informal estimate of market value to assist the buyer in arriving at an appropriate offering price.


A real estate loan that is neither FHA-insured nor VA-guaranteed.


A rejection of the original offer by proposing a new offer, thereby terminating the original offer.


A type of conveyance; a written instrument to transfer title to real property from one party to another.


Earnest money or some other valuable consideration given as evidence of good faith to accompany an offer to purchase or rent.


Tax required on all deeds or other documents used as conveyances. The charge is based on the total purchase price. Also called Doc Stamps.


Insures mortgage loans made by FHA-approved lenders on homes that meet FHA standards in order to make mortgages more desirable investments for lenders


A court process to transfer title to real property used as security for debt as a means of paying the debt by involuntary sale of the property.


A secondary mortgage market institution that buys and sells conventional, FHA, and VA loans


Title to real property that is absolute and unencumbered, no mortgage


The price paid for the use of borrowed money.


An agreement that does not convey ownership but does convey possession and use for a period of time and for compensation.


A claim on property for payment of some obligation or debt.


An alternative, hybrid business entity with the combined characteristics and benefits of both limited partnerships and S corporations.


Relationship between amount borrowed and appraised value (or sale price) of a property.


The most probable price a property will bring from a fully informed buyer, will- ing but not compelled to buy, and the lowest price a fully informed seller will accept if not compelled to sell.


An arrangement among members of a real estate board or exchange that al- lows each member broker to share listings with other members so that greater exposure is obtained and a greater chance of sale will result.


Profit from property or business after expenses have been deducted; effective gross income less operating expenses.


The resulting amount when all operating expenses are subtracted from effec- tive gross income.


An intentional proposal or promise made by one party to act or perform, pro- vided the other party acts or performs in the manner requested.


Title insurance issued for the total purchase price of the property to protect the new owner against unexpected risks.


The demand for available properties exceeds the supply.


shutterstock_269104652The Cycle of an Reo Property

Now that you understand the terms, this will help you understand how the REO process flows:

Every REO was at one point owned by an individual or an entity other than the bank. The owner was likely unable to make the mortgage payment and so went into default. (At this point many people decide to pursue a short sale in order to avoid foreclosure.)

After the owner misses several payments (how many depends on the lender), the property is offered at auction. If the property does not sell, the bank takes possession of the property and assigns it to an asset manager. The asset manager typically works directly with the REO Broker, a Realtor who special- izes in foreclosures. The REO Broker lists the property and makes it available to the general public, including investors.

Stay tuned for part 2 coming soon!



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House Flipping At 10 Year High (but some think a crash is coming)

ATTOM Data Solutions, just released its 2016 Year-End U.S. Home Flipping Report, which shows that 193,009 single family homes and condos were flipped — sold in an arms-length transfer for the second time within a 12-month period — in 2016, up 3.1 percent from 2015 to the highest level since 2006, when 276,067 single family homes and condos were flipped.

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Home flips in 2016 accounted for 5.7 percent of all single family home and condos sales during the year, up from 5.5 percent in 2015 to a three-year high but still well below the peak in 2005, when 338,207 single family homes and condos were flipped representing 8.2 percent of all sales.

For this report, a home flip is defined as a property that is sold in an arms-length sale for the second time within a 12-month period based on publicly recorded sales deed data collected by ATTOM Data Solutions in more than 950 counties accounting for more than 80 percent of the U.S. population (see full methodology below).

The report also shows that 126,256 entities — including both individuals and institutions — flipped homes in 2016, up less than 1 percent from 2015 to the highest number since 2007, when 143,266 entities flipped properties.

Meanwhile, the share of flipped homes that were purchased by the flipper with financing increased to an eight-year high of 31.5 percent in 2016 while the median age of homes flipped increased to 37 years — a new high going back to 2000, as far back as data is available — and the median square footage of homes flipped decreased to 1422 — a new record low going back to 2000.

“Home flipping was hot in 2016, fueled by low inventory of homes in sellable or rentable condition along with a flood of capital — both foreign and domestic — searching for the returns and stability available with U.S. real estate,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “The combination of more home flips and a greater share of financing for flip purchases resulted in a 19 percent jump in the estimated dollar volume of financing for home flip purchases, up to $12.2 billion for the flips completed in 2016 — a nine-year high.”

“Investors in search of flipping returns are increasingly willing to move to secondary and tertiary housing markets and neighborhoods with older, smaller properties that are available at a deeper discount,” Blomquist continued. “Given that many of these markets are more affordable, we are also seeing a higher share of the flipped homes sold to FHA buyers, with that share reaching a four-year high of 19.6 percent in 2016.”

Home flipping profits reach new record high in 2016

Homes flipped in 2016 sold for a median price of $189,900, a gross flipping profit of $62,624 above the median purchase price of $127,276 and representing a gross flipping return on investment (ROI) of 49.2 percent. Both the gross flipping dollar amount and ROI were the highest going back to 2000, the earliest home flipping data is available for this report.

Among 117 metropolitan statistical areas with at least 250 home flips in 2016, there were 11 with an average gross flipping profit of $100,000 or more in 2016: San Jose, California ($145,750); Boston, Massachusetts ($140,000); San Francisco, California ($140,000); New York, New York ($127,250); Los Angeles, California ($127,000); San Diego, California ($111,000); Oxnard-Thousand Oaks-Ventura, California ($105,000); Seattle, Washington ($102,000); Vallejo-Fairfield, California ($101,000); Baltimore, Maryland ($100,500); and Washington, D.C. ($100,000).

“Our strong wage growth is still supporting rising home prices, which when combined with the historically low number of homes for sale in Seattle, gives home flippers substantial returns on their investments,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “I believe flipping serves as a negative for any housing market because it further erodes housing affordability, but if there’s a demand for it in the market, it’s a trend we will continue to see.”

Highest gross flipping returns in Pennsylvania, Ohio and Louisiana metros

Among the 117 metro areas analyzed in the report, those with the highest gross flipping ROI were East Stroudsburg, Pennsylvania (241.5 percent); Pittsburgh, Pennsylvania (130.0 percent); Cleveland, Ohio (116.2 percent); Philadelphia, Pennsylvania (107.1 percent); Toledo, Ohio (102.0 percent); and New Orleans, Louisiana (101.2 percent).

Along with Pittsburgh, Cleveland, Philadelphia and New Orleans, other metro areas with a population of at least 1 million and a gross flipping ROI in 2016 of 75 percent or higher were Baltimore (96.6 percent); Cincinnati (87.2 percent); Buffalo (85.8 percent); Rochester (76.2 percent); Oklahoma City (76.1 percent); Chicago (75.9 percent); Jacksonville, Florida (75.8 percent); Memphis, Tennessee (75.6 percent); and Grand Rapids, Michigan (75.0 percent).

Highest home flipping rates in Tennessee, California and Florida metros

Among 117 metropolitan statistical areas with at least 250 home flips in 2016, those with the highest home flipping rate as a percentage of all home sales were Memphis, Tennessee (11.7 percent); Clarksville, Tennessee (10.1 percent); Visalia-Porterville, California (10.1 percent); Tampa-St. Petersburg, Florida (9.9 percent); and Deltona-Daytona Beach-Ormond Beach, Florida (9.9 percent).

Along with Memphis and Tampa-St. Petersburg, other metro areas with a population of at least 1 million and a 2016 home flipping rate of at least 7 percent were Las Vegas (9.2 percent); Miami (8.8 percent); Orlando (8.3 percent); Phoenix (8.0 percent); New Orleans (7.9 percent); Jacksonville, Florida (7.7 percent); Virginia Beach (7.6 percent); Baltimore (7.4 percent); Birmingham (7.4 percent); St. Louis (7.1 percent); and Nashville (7.1 percent).

Biggest increase in home flipping rates in Pennsylvania, Nebraska, and New York metros

Among 117 metropolitan statistical areas with at least 250 home flips in 2016, those with the biggest year-over-year increase in the home flipping rate were Reading, Pennsylvania (38.8 percent); Lincoln, Nebraska (38.6 percent); East Stroudsburg, Pennsylvania (36.6 percent); Rochester, New York (31.8 percent); and Allentown, Pennsylvania (29.3 percent).

Along with Rochester, other metro areas with a population of at least 1 million and an annual increasing in home flipping rate of at least 10 percent were New Orleans (up 26.5 percent); San Antonio (up 25.2 percent); Dallas (up 20.9 percent); Boston (up 16.4 percent); New York (up 16.0 percent); Columbus, Ohio (up 14.6 percent); Oklahoma City (up 13.8 percent); Philadelphia (up 11.6 percent); Cincinnati (up 11.5 percent); Grand Rapids, Michigan (up 11.3 percent); Charlotte (up 10.5 percent); Kansas City (up 10.4 percent); and Cleveland (up 10.2 percent).

39 zip codes where at least one in five home sales was a flip in 2016

Among 5,625 U.S. zip codes with at least 10 homes flipped in 2016, there were 39 zip codes where at least 20 percent of all home sales during the year were home flips, including zip codes in Texas, Tennessee, Florida, California, Ohio, Virginia, Pennsylvania, Missouri, Washington, the District of Columbia, Maryland, New York and New Jersey.

Originally published here: http://www.realtytrac.com/news/real-estate-investing/2016-year-end-u-s-home-flipping-report/


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Foreign Investors Pile Into US Real Estate

2016 might later be called the peak year in terms of commercial real estate, or even the post-peak year, depending on the metric. Overall office sales in 2016 fell 7% from 2015, to $140.5 billion, according to JLL research cited by CommercialCafé, a sister company Yardi Matrix. And leasing activity was hampered by office tenants that were “reluctant to make any major moves pending the conclusion of the presidential election.”

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Originally published here: http://www.businessinsider.com/foreign-investors-pile-into-us-real-estate-2017-3 

 The market has become a haven for offshore investors, who are pumping record amounts of capital into US office assets, especially in primary urban cores. According to JLL research, foreign office investment surpassed $20 billion in 2016, accounting for 16% of the overall acquisition volume.And while, historically, Canadians have been the most active foreign players on the market, Asian and German investors are now stealing the spotlight.

Of the 50 largest office deals that closed in the US in 2016 – the trophies that get global attention – offshore buyers accounted for 43%! And those from Asia alone accounted for 16%:

  • Mixed foreign and US: 9 deals for $7.1 billion, 19% of total
  • Asian: 8 deals for $6.0 billion, 16% of total
  • European: 5 deals for $2.3 billion, 6% of total
  • Canadian: 1 deal for $914 million, 2% of total

Notable purchases by foreign entities included China Life’s $1.64 billion purchase of 1285 Avenue of the Americas in New York, in a joint venture with RXR Realty (New York); and Hong Kong Monetary Authority’s $1.15 billion acquisition of 1095 Avenue of the Americas.

So how is their market timing?

The Greenstreet Property Price Index in February was flat for the fourth month in a row. You have to go back to the early 2000s to find a flat spot this long. During the Financial Crisis it peaked, and without dilly-dallying around, it plunged, and then, fired up with the Fed’s free money, it soared. But this time, there is no crisis. It just hit the ceiling.

Year-over-year in February, the index rose only 2%, not even keeping up with consumer price inflation, a bitter disappointment after nearly eight years of a blistering boom during which the index soared 107%:

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As the chart shows, CRE is highly cyclical. Even the Fed, which rarely worries about asset bubbles and has a passion for inflating them, is officially worried about the CRE bubble and what its implosion might do to the lenders. Its efforts to make monetary policy less accommodative are in part targeting the CRE price bubble. So it is unlikely that the plateau of the past four months will just remain a plateau.

The biggest culprit was the apartment segment. The sub-index fell 3% in February and is down 4% from a year ago. The office sector still rose 2% for the month and 5% year-over-year. Self-storage which had been white hot, having surged nearly 160% since the trough in 2009, declined in February for the first time since that trough, but was still up 8% year-over-year.

The remaining segments – industrial, mall, strip retail, health care, and lodging – were essentially flat year-over year, except malls where the index still eked out a gain of 3%, despite the store-closing and bankruptcy turmoil taking over the brick-and-mortar retail industry.

Commercial real estate loans have not yet seen any such plateau, and leverage has continued to soar, even as valuations have hit the ceiling, and even as transaction volume declined last year. In February, commercial real estate loans at all US commercial banks increased once again, to hit a new all-time record of $1.99 trillion:


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So thank you, foreign buyers, for stepping in at these red-hot prices when we need help the most. But foreign buyers were obviously not the only ones still buying.

The largest office building transaction was the $1.93 billion purchase of the AXA Equitable Center at 787 Seventh Avenue in Manhattan, by CalPERS in California, the largest public pension fund in the US. The deal was one of CalPERS’ largest ever investments. It closed in January 2016, before the dark clouds had started to waft over CRE. AXA Financial was the seller.

CalPERS is counting on 7% annual returns every year, for all years to come, and even then it is woefully underfunded. So it’s going out on a thin limb to get those returns, and a glitzy office complex, acquired at peak dollars after seven years of booming prices, is one of its efforts in that direction.

And borrowing money to fund these transactions is going to get more expensive, which makes the equation tougher to solve for potential buyers. This is an issue for commercial as well as for residential real estate. “Many fear the Fed is behind the curve. The market is even further behind: This is clearly a dangerous situation.”

Read the original article on Wolf Street. Copyright 2017. Follow Wolf Street on Twitter.



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Trump To Lift Community Bank Regulations (and what that means for house flippers)

President Donald Trump held a listening session Thursday to talk to leaders of community banks. In the session, also attended by Treasury Secretary Steven Mnuchin and Gary Cohn, head of the National Economics Council, Trump promised lenders that soon they would be safe to loan and create jobs, according to an article by Renae Merle for The Washington Post.

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From the article:

During the hour-long meeting, Trump encouraged Mnuchin and Cohn to address the regulatory burdens mentioned by the bankers within six months, according to an industry official who attended the meeting. He also said the White House is “very, very close” to announcing a nominee for a Federal Reserve Board seat reserved for a community banker, a position that has been vacant for more than two years, the official said.

And the banks provided positive feedback about the listening session and their impression of Trump.

From the article:

“It was really clear, he is a businessman, he understands the relationships between lenders and borrowers,” said Camden Fine, president of the Independent Community Bankers of America. “He really drilled down and was very knowledgeable about several of the regulations the bankers brought up. He could empathize with them.”

“The whole tone of the meeting was we want to help the community banks on main street,” he said.

But Trump wasn’t the only one talking about loosening regulations. White House Press Secretary Sean Spicer also brought up the administration’s commitment to rolling back regulation and reforming Dodd-Frank on Thursday.

Spicer once again reinforced this during the White House daily briefing on Thursday afternoon.



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HUD is Broken (here’s how secretary Carson plans to fix it)

With the full Senate scheduled to vote on Ben Carson’s nomination to lead the US Department of Housing and Urban Development, it is worth considering one question that must be on Carson’s mind: Is HUD working?

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There can be no question that HUD has enormous impact. With an annual budget of more than $30 billion, it provides financial assistance or direct housing to more than four million Americans.

We’d argue that HUD works well in helping low-income households find places to live. A HUD subsidy helps these Americans make ends meet and provides a lifeline that prevents people from homelessness.

But what kind of impact does HUD make on American cities? HUD’s budget also includes roughly $4 billion a year devoted to cities, largely through the Community Development Block Grant (CDBG) program. Local governments and community organizations use these funds for emergency repairs, street work, parks and infrastructure.

Carson may want to consider whether this money is being used as it is intended. In the past several decades, HUD has handed over much of the responsibility for the identification of urban problems to states and cities. Credit and blame for whether those investments worked to solve those problems also fall to states and cities. Evaluating HUD’s success in this arena then becomes quite a challenge and requires looking at more than just federal investments, but also at the ways those investments have been directed on the ground by local and state agencies.

We have been researching cities in distress for many years and went looking for innovative ways to measure the success of HUD’s CDBG program.

What we found is that listening to the social media posts of millions of urban residents can help weave a nuanced story of how this federal agency of 8,400 employees really works – or doesn’t.

Urban social listening

We began by listening to the “digital crumbs” generated by our collective internet searches and postings to social media like Twitter.

We developed an approach called “urban social listening,” which offers a systematic, rigorous collection and analysis of these “crumbs.” This kind of careful listening can offer useful insights into understanding cities and the government’s role in addressing urban problems.

Research shows a solid correlation between positive sentiment and health indicators and outcomes. One study of every county in America showed that Twitter sentiment was a better predictor of cardiovascular disease than any of the conventional countywide indicators like smoking or socioeconomic characteristics.

Our own work in New York City found that neighborhoods with the lowest sentiment (as expressed by the use of negative words like “sad,” “angry” and “upset”) also had the highest diabetes rates, self-reported rates of high anxiety and overall poor mental health.

While public health researchers have understood these relationships for decades, the availability of social media data from areas like neighborhoods, or even smaller blocks, can help cities address and manage problems and evaluate interventions.

housingREUTERS/Mike Blake

Low cost data dump

Digital crumbs are an attractive data source for the student of cities. They offer unparalleled volumes of data at a relatively low cost. Using millions of tweets from cities across the US, we have been creating rankings of the general attitudes and opinions expressed by the people who live in each city. We used a lexicon-based analysis of all words containing some form of sentiment.

For instance, the word “elated” generated a positive score, while the word “disgruntled” generated a negative one.

We used a lexicon developed by data mining researcher Finn Årup Nielsen at the Technical University of Denmark that includes more than 3,000 words precoded for sentiment on a scale of -5 to +5. After totaling up all scores, we ranked the cities according to the degree to which the people in each city were expressing positive or negative sentiments.

One obvious limitation is that such an analysis relies on Twitter users. And Twitter users tend to be younger, more highly educated, urban and have higher earnings than the general public. Twitter users are also slightly more likely to be male and are disproportionately comprised of African-Americans and Hispanics. The data we collected will likely overrepresent the opinions of members of those groups.

We selected a sample of 65 medium-sized cities in the Northeast and Midwest US that met certain characteristics, including having populations between 30,000 and 250,000 people. We found that people in these cities are, generally speaking, expressing positive sentiment on Twitter. For the average city in this group, the ratio of positive tweet scores to negative was more than three to one.

The highest score was 11 in Minnetonka, Minnesota. The lowest was three in Reading, Pennsylvania. That means that in Minnetonka’s Twitter posts, we found a ratio of 11 positive words to every negative one. In Reading, there were three positive words for every negative one. While imperfect, analyzing sentiment words provides a window into a city’s overall happiness or quality of life. Although such an approach has limits, it’s certainly no worse than other more conventional indicators we tend to use like income or wealth.

baltimore ghettoUrban decay in Baltimore. Commons

Any nudge from HUD?

Turning back to HUD, we next asked how might we measure the impact of HUD’s programs on these cities? Most of HUD’s Community Development Block Grant spending goes to cities with the poorest, youngest, least educated and employed residents. Examples include Altoona, Pennsylvania and Elmira, New York.

Using total CDBG dollars spent in each city, we looked at what impact that spending has on people’s sentiment online. In other words, do residents of cities where HUD spends more money send more happy tweets?

The answer is not so much.

Twitter sentiment is least positive in the highest poverty cities. In this limited data analysis, we didn’t see an effect of CDBG funding levels on people’s mood. In future research, we could get a more sophisticated understanding of that relationship with better longitudinal data and more elaborate statistical analysis.

In Carson’s confirmation hearing to lead HUD, he said “I believe we need to ensure that the help we provide families is efficient and effective.”

One way for Carson’s new HUD to monitor how its funding impacts the lives of people is to do urban social listening. This kind of receptiveness would be a good start for Carson’s plans to put the billions of dollars spent on HUD to better use.

Originally published here:    http://www.businessinsider.com/ben-carson-hud-housing-secretary-2017-3



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