TR-HNR-May-2019

THINKREALTY.COM/HNR MAY 2019 VOL 13 ISSUE 5

IN PARTNERSHIP WITH ATTOM DATA SOLUTIONS

The New SOLAR ECONOMY A Hazy Path

Toward Harnessing the Power of the Sun

PAGE 6

MY TAKE What is Real Estate Data as a Service? 20

DATA IN ACTION Markets with the Biggest Home Seller Gains in 2018 27 LOCAL MARKET SPOTLIGHT Phoenix is Basking in the Desert Sun Once Again 28 T S Spring and Summer Home Sellers Bare Biggest Sale Premiums 35 BIG DATA SANDBOX Spring and Summer I Home Sellers Bare Biggest Sale Premiums 34 DATA IN ACTION Markets with the Biggest Home Seller Gains in 2018 24

MY TAKE What is Real Estate Data as a Service? 16

LOCAL MARKET SPOTLIGHT Phoenix is Basking in the Desert Sun Once Again 20

Contents

While the push for greener energy continues to rise with the sun, the path toward going solar is anything but sunny – or, at least not without some obstacles. New mandates, financing hurdles and undefined costs related to solar energy are impacting housing policies, prices, affordability, and potentially buying trends moving forward. As we examine emerging options, the only thing that’s “clear as day” is the realization that we still have a lot to work out. The concept of data as a service is emerging as an innovative solution for businesses to quickly and efficiently leverage the power of data without the time consuming and costly process of building data management capabilities in house. Richard Sawicky, chief data officer at ATTOM Data Solutions defines what data as a service entails and discusses how ATTOM Data is changing the game and making property data available in the cloud. 20 MY TAKE: WHAT IS REAL ESTATE DATA AS A SERVICE? 06 FEATURED ARTICLE: THE NEW SOLAR ECONOMY: A HAZY PATH TOWARD HARNESSING THE POWER OF THE SUN Remnants of the arctic chill that laid waste to the Phoenix real estate market at the height of the national foreclosure crisis have all but melted away. As of year-end 2018, the presence of foreclosures and other distressed real estate have diminished significantly, leaving behind faint memories of the Great Recession and the impact it had on the Valley of the Sun. Much has changed in the metro’s economic development, making Phoenix once again a place for investors to stake their claim, although in an environment that is a lot more competitive than it was during the recovery. 28 MARKET SPOTLIGHT: PHOENIX IS BASKING IN THE DESERT SUN ONCE AGAIN Home sellers in the United States made more money on their homes in 2018 than they had in 12 years, reaping a typical profit of 32.6 percent over what they originally paid. This is according to ATTOM Data Solutions year-end U.S. home sales report, which is helping to showcase those markets where the housing market is hot. The highest returns on investment were almost exclusively in western states, with concentrations along areas of the West Coast. 24 DATA IN ACTION: MARKETS WITH THE GREATEST HOME SELLER GAINS IN 2018

FEATURED ARTICLE

The New Solar Economy: A Hazy Path Toward Harnessing the Power of the Sun

AVERAGE FAIR MARKET RENT FOR A 3-BEDROOM IN CALIFORNIA

$2,000

$1,865

$1,799

$1,737

$1,800

$1,657

$1,579

$1,534

$1,525 $1,553

$1,600

$1,494

$1,491

W ith the ongoing certainty of sunrise, the use of renewable energy is becoming cheaper, more attractive, and more common. The promise of free fuel coupled with better technology is changing the energy economy by reducing our need for oil, natural gas, coal, and nuclear power. Every Tesla and Prius you see on the road, along with every wind farm, dam, and solar array you see or read about, represents less demand for traditional fuels. As these changes begin to take hold, it’s little wonder that the price of BY PETER G. MILLER, STAFF WRITER

$1,452

$1,395

$1,400

$1,275

$1,234

West Texas Intermediate crude fell from $141.95 a barrel in 2008 to just $55.80 in early March 2019. The essential benefit of re- newable energy – with sunlight virtually everywhere – is that it can replace much of the coal, oil, and natural gas we now extract, transport, and burn. The glob- al, political, and environmental implications are substantial and undeniable. After all, nobody wants another oil spill, or political conflicts over fuel. And, if energy costs can be reduced at the same

time, that’s a very pleasant bonus. But, how do we move forward in effectively harnessing the power of the sun? While the increasing use of renew- able energy is inevitable, the path forward is unclear. Yes, a lot of free fuel is out there, but there’s a huge difference between the promise of sunny days with billowing winds and the certainty of reliable power. At stake are future revenues and profits worth hundreds of billions of dollars as well as entirely new approaches to power generation and distribution.

$1,200

$1,000

$800

$600

$400

$200

2006

2007

2008 2009

2010

2011

2012

2013

2014 2015

2016

2017

2018

2019

SOURCE: RENTDATA.ORG

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FEATURED ARTICLE: The New Solar Economy: A Hazy Path Toward Harnessing the Power of the Sun

($35 x 12 months x 290,000 units) equals $121.8 million. But, is $8,400 the full system cost or merely the expense to be financed? At 6 percent interest over 20 years, the monthly expense for principal and interest is $60.18. That’s more than the $35 per month in projected utility savings. The total repayment expense over 20 years is $14,443 ($60.18 x 240 months). And that’s still not the full amount a buyer will pay. The instal- lation of a solar system may create additional costs. For instance, a system represents a property improvement, one which can result in a higher assessment and greater property taxes. Additionally, during the life of the system there can be expenses for maintenance, repairs, and cleaning.

happens if carrier underwriting policies simply don’t cover solar in- stallations. A homeowner who has recently installed solar might not be renewed or their policy could be canceled. In either case, the home- owner will have to get replacement coverage if they have financing because mortgage agreements require property insurance. CHANGING TECHNOLOGY Buying a solar system today locks in not only current instal- lation prices, but also current efficiencies. It’s like buying a terrific car in 1999 with the last payments due this year. Over time, solar systems tend to get more ef- ficient and thus relatively cheaper. SolarPowerRocks.com says a single

two percent lower than it was just a year ago, and solar panel system costs are continuing to fall.” Before tax credits, EnergySage reports that a six-kilowatt system will cost $18,300. In 2019, says the National Asso- ciation of Home Builders (NAHB), “a $1,000 increase in the median new home price would price 127,560 U.S. households out of the market. In other words, 127,560 households would qualify for the new home mortgage before the change, but not afterwards.” NAHB estimates that with each $1,000 price increase, California will have 9,897 households priced out of the market. If solar-enhanced prices rise by $8,400 then roughly 83,000 households will no longer see new construction as affordable. Many, no doubt, will stick with exist- ing homes, properties not required to have a solar installation. Meanwhile, watching with great interest, other jurisdictions are tracking the California experiment to see if they should follow suit. STATE-BACKED FINANCING It should come as no surprise that solar installers want to be paid for their work, a common desire among us all. What may be sur- prising is that the financing of solar

Property insurance costs can increase as well. Property insur- ance coverage is an issue which homeowners also need to check before any solar roof installation. Jason Vaughan with Affordable Home Insurance in Miramar Beach, FL., points out that insurance com- panies may or may not welcome rooftop solar installations. He said some installers require homeown- ers to have a $1 million liability policy in place before they will allow workers on the roof. Policy costs are also an issue. “When the system is installed,” says Vaughan, “it increases the cost to replace the home or property. So, an increase in premium would be likely and that increase would depend on the cost of the system.” Lastly, there’s the matter of what

In 2019, the average national solar panel cost is $3.05/watt. The average solar panel system size in the U.S. is approximately 6 kilowatts (kW), therefore an average solar panel system would cost $12,810 after tax credits. That’s more than two percent lower than it was just a year ago, and solar panel system costs are continuing to fall.” ENERGYSAGE.COM

solar panel typically produced 320 watts in 2018, up from 200 watts in 2010. In March 2019, SunPower (NASDAQ: SPWR) introduced a new series of solar panels that pro- duce as much as 415 watts, panels it claims are “the highest-power solar panels available today for the residential market.” Research from the National Renewable Energy Laboratory (NREL), part of the Energy Department, shows that in 2010 it cost $7.24 to install a watt of solar capacity, an expense which fell to $2.80 in 2017. Equally important, we may be on the verge of something new, using solar cells for more than electrical production. In Belgium, scientists have shown that it’s possible to manufacture hydrogen with a combination of solar panels and moisture, potentially a future source of residential heating as well as home-grown fuel for hydro- gen-powered vehicles. HOME SALES AND PRICING IMPACTS We don’t know how the California mandate will impact new home sales once it goes into effect. Some buyers will surely want to pay for the opportunity to have solar power. Some will not. Part of the

issue is that the mandate applies to all new homes, regardless of sale price. Presumably, the buyer of a $1.5 million property will be in a better position to buy a solar sys- tem than a purchaser who strug- gles to pay $200,000. It’s also unclear whether $8,400 will be the typical price. CNBC estimates that buyers will pay an average of $9,500 while The New York Times says the average price will range from $8,000 to $12,000. “In 2019, the average national solar panel cost is $3.05/watt,” according to EnergySage.com. “The average solar panel system size in the U.S is approximately 6 kilowatts (kW), therefore an average solar panel system would cost $12,810 after tax credits. That’s more than

PACE programs allow a property owner to finance the up front cost of energy or other eligible improvements on a property and then pay the costs back over time through a voluntary assessment. The unique characteristic of PACE assessments is that the assessment is attached to the property rather than an individual.” ENERGY DEPARTMENT

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FEATURED ARTICLE: The New Solar Economy: A Hazy Path Toward Harnessing the Power of the Sun

installations around the country is enormously contentious. Typically, when someone wants to finance a big-ticket home im- provement, they pay for the work in cash, with a credit card, a home equity line of credit (HELOC), a second lien, or an installment loan, say 36 months to pay off a $7,000 HVAC system. In each of these cases, any existing mortgage financing secured by the property is undisturbed. If the property is foreclosed, the mortgage is the first debt which must be fully paid after taxes. However, in the world of renew- able energy, a different funding approach has been introduced: Property Assessed Clean Energy (PACE) financing. “PACE programs,” says the En- ergy Department, “allow a property owner to finance the up front cost of energy or other eligible improve- ments on a property and then pay the costs back over time through a voluntary assessment. The unique characteristic of PACE assess- ments is that the assessment is attached to the property rather than an individual.” According to PACENation, “Prop- erty owners across the U.S. are using PACE financing because it lowers utility bills and may make their buildings more valuable. PACE pays for 100 percent of a project’s costs and is repaid for up to 20 years with an assessment added to the property’s tax bill. PACE financing may stay with the building upon sale and is easy to share with tenants.” As of May 2018, says the group, financing worth nearly $5.2 billion has been used with 220,000 residen- tial properties while more than $850 million has been raised for commer- cial projects. California, which hopes to generate all of its electricity from renewable sources by 2045, is home

to the largest PACE program. As of mid-2018, financing worth approxi- mately $3.34 billion had been raised in the state to improve more than 146,000 properties. PACE BENEFITS The PACE concept creates a lot of winners. Additional renewable energy is generated within a juris- diction. New jobs are created. The Solar Foundation says in 2018 there were 242,000 solar jobs nationwide. The need to consume coal and oil – and the pollution they produce – is reduced. Property owners benefit be- cause monthly utility bills decrease. Bondholders are also winners. PACE loans are considered a gov- ernmental “special assessment” which means they have priority in the event of a foreclosure; that is, they must be paid off in full before any money can be paid to mortgage holders. Securities firms benefit from the fees and charges pro- duced from the sale of PACE bonds. PACE RESERVES California has established a $10 million reserve to protect PACE bondholders. But, is this enough? So far, the reserves re- main untouched. The program was launched in 2014 and as of October 2018, there were no claims against the reserve fund. The catch is that past per- formance does not necessarily guarantee future results. How far will $10 million go with a program that has more than $3.3 billion in outstanding obligations? What happens if there are $11 million in claims? Or $40 million? According to the state’s Public Resources Code, Section 26056, “This chapter does not create any liability or obligation upon the State of California and none shall be in-

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FEATURED ARTICLE: The New Solar Economy: A Hazy Path Toward Harnessing the Power of the Sun

The issue in each case concerns the way PACE loans are originated. Because they’re financed through a governmental body, they come first in the event of foreclosure and that means they come before mortgage loans. According to the Federal Finance Housing Agency (FHFA), “The pro- grams in California and elsewhere look principally to the value of prop- erty to support a loan, rather than

the ability of a homeowner to repay, as was mandated in the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010. The focus on the ability to repay, by no means a new concept, is aimed to correct the asset-based lending that contribut- ed to the financial crisis that began in 2007. In addition to undertaking asset-based lending, the counties or municipalities may charge up to 10 percent for administrative fees and

other charges as imposed by admin- istrators; these numbers are gener- ally well beyond what a second-lien mortgage loan would contemplate.” PACE borrowers do default. Accord- ing to The Wall Street Journal , some 1,100 California borrowers defaulted in 2017, setting up the potential for foreclosure. However, in response to the WSJ article, PACENation points out that “PACE programs have foreclosed on none. Zero.”

CALIFORNIA FORECLOSURE ACTIVITY

DEFAULT AUCTION REO

9,000

8,000

curred by the authority beyond the extent to which monies shall have been provided under this division. The authority shall not create any debt, liability, or obligation on the part of the State of California payable from any source whatsoev- er other than the monies provided under this chapter.” According to the state of Mis- souri, the creation of financing districts under a PACE program has made it possible for proper- ty owners to finance renewable onsite generation installations and energy efficiency improvements through a special assessment on their property tax bills that is re- paid over a period up to 20 years. “This voluntary assessment is se- cured by a senior lien on the prop- erty and does not require up front payment. The lien provides debt collateral in the event a property owner defaults on the assessment. In most cases, the assessment PACE IMPACT ON MORTGAGE LENDING

and the lien are transferred upon sale,” said the state. PACE lending sounds like pretty bland stuff and to date there isn’t much of it. The Mortgage Bankers Association (MBA) estimates that mortgages worth $1.63 trillion will be originated in 2019. The PACE pro- gram, with some $5.2 billion in resi- dential funding as of last May, is just a tiny part of the real estate lending business and yet it has managed to stir substantial opposition. HUD | In late 2017, HUD adopted a policy stating that properties encumbered with PACE obliga- tions would no longer be eligible for FHA-insured forward mort- gages. In addition, HUD also stated that properties that will remain encumbered with a PACE obligation would not be eligible for an FHA-insured HECM (a home equity conversion mort- gage or a reverse mortgage). Fannie Mae | Fannie Mae has stated that it will not purchase mortgage loans secured by proper-

ties with an outstanding PACE loan unless the terms of the PACE loan program do not provide for lien priority over first mortgage liens. Freddie Mac | Freddie Mac’s po- sition is that any property sub- ject to a lien that has, or may take a priority position is not eligible for sale to the company. This includes Property Assessed Clean Energy (PACE) obligations that may result in a first lien priority at delinquency. VA | According to the VA, a “property may be subject to the full PACE obligation; however, the property shall not be subject to an enforceable claim (i.e., a lien) superior to the VA-guaran- teed loan for the full outstanding PACE obligation at any time.” USDA | Because PACE loans must take a first-lien position in the event of a foreclosure, properties with existing PACE loans typically are not eligible for a USDA pur- chase or refinance mortgage.

7,000

6,000

5,000

4,000

3,000

2,000

1,000

- Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17

“Fueling the demand for more PACE loans is Wall Street’s appe- tite for bonds backed by them,” said the National Consumer Law Center (NCLC) in 2017. “As of the third quarter 2016, more than $3.3 billion in PACE bonds had been issued. PACE industry executives forecast that the current PACE financing will double by 2018, making it the fastest-growing

form of financing in the nation. In turn, many of the PACE bonds are packaged and securitized with the new securities being snapped up by Wall Street investors.” The NCLC also argued that a “su- per-priority lien position and high interest rates combine to create an attractive investment. According to the NCLC, these dynamics are cre- ating a push to originate loans with-

out underwriting in the same way that Wall Street fueled the improvi- dent lending that led to the financial crisis. Wall Street may not be at significant risk from PACE loans due to the senior position of loans that are small relative to the value of the property. But the impact on home- owners may well prove to be similar to the impact of the subprime loans of the mid-2000s.”

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FEATURED ARTICLE: The New Solar Economy: A Hazy Path Toward Harnessing the Power of the Sun

U.S. COMPLETED FORECLOSURES

AVERAGE U.S. HOME OWNERSHIP TENURE (YEARS)

Attorney Richard J. Andreano, Jr., with the Ballard Spahr law firm, explains that “among other items of information,” the CFPB wants to know about current underwriting standards, whether the consum- er’s ability to repay is considered, how applications are approved or denied, and the role of state or local governments in the origination and underwriting process. PACE financing changes the risk level faced by traditional mortgage investors because it has a senior position in a default situation. More risk, in turn, can justify higher mort- gage rates and thus hurt borrowers. For the mortgage industry, the big question is this: if renewable energy systems can be financed through local governments then why can’t other projects? How about roof repairs after a storm? Foundation improvements in earthquake zones? New construction where it floods? The problems faced by homeowners receiving unaffordable PACE loans and obtaining limited or misleading information, the looming spread of PACE loans throughout the country, and the hidden way in which PACE loans have developed outside our consumer protection framework have brought us together to urge the Bureau to initiate rule-making." 2018 CFPB LETTER

1,200,000

1,050,500

1,000,000

918,376

861,664

800,000

600,000

404,849

400,000

268,532

200,000

2006

2007

2008

2009

2010

“PACE loans,” says the Mortgage Bankers Association, “are consum- er loans secured by real property – with all the attributes of a mortgage product – yet they are not subject to related federal consumer protec- tions. Unfortunately, they have been cleverly classified as a tax assess- ment rather than a loan.” According to the National Asso- ciation of Realtors (NAR), “PACE loans are not typically accompanied by federal Consumer Financial Protection Bureau disclosures and protections associated with home mortgages, as PACE financing has been classified as a tax assessment rather than a loan. Borrowers may not fully understand the conse- quences of assuming an increased financial obligation on their tax bill. Thus, the lack of adequate disclo- sures increases the risk of borrower delinquency, which could lead FHA to incur higher mortgage defaults

with a PACE lien in place. That means owners simply cannot sell without addressing PACE financing. There are options, says attorney Hugo V. Alvarez with the Coral Ga- bles law firm of Becker & Poliakoff. “Property owners can pay off their PACE assessment prior to sale or at closing,” Alvarez told the Housing News Report. “FHA, Fan- nie Mae, and Freddie Mac will not insure mortgages with PACE liens which is why they are to be paid off if an owner decides to refinance.” As an example, seller Smith can walk away with $100,000 from closing. However, to settle a $20,000 PACE obligation, she instructs the closing agent to pay $20,000 to the PACE lender and then gets a closing check for $80,000. In this situation, there is no longer a PACE lien on the property. The buyers can finance as they like. This is the same as paying off any debt from closing funds.

and increased systemic risk.” In a joint 2018 letter sent to the Consumer Financial Protection Bu- reau (CFPB), and signed by groups as diverse as the American Bankers Association and Public Citizen, it is argued that PACE financing should be regulated in the same way as other forms of consumer lending. “The problems faced by home- owners receiving unaffordable PACE loans and obtaining limited or misleading information, the looming spread of PACE loans throughout the country, and the hidden way in which PACE loans have developed outside our consumer protection framework have brought us togeth- er to urge the Bureau to initiate rule-making,” said the letter. The CFPB has heard the call. In early March it opened a 60-day comment period that could lead to expansive PACE regulations under the Truth-in-Lending Act.

But, not all purchasers require financing. A property with PACE financing can be sold to a cash buyer with PACE financing in place. This can be done by transferring the PACE financing balance to the new owner. For those buyers who do require financing, an alternative approach is to finance with a portfolio lender who will not sell the loan to Fannie Mae, Freddie Mac, or an investor. Alvarez explains that “non-federally backed mortgages such as those held by private lenders may choose to allow the PACE assessment to remain on the property upon purchase.” In oth- er words, a portfolio lender can have underwriting requirements which differ from FHA, VA and conforming loans. This might allow PACE financ- ing to remain in place. PACE loans generally do not include prepayment penalties. However, according to the South Florida Sun-Sentinel , some older

PACE IMPACT ON HOME SALE TRANSACTIONS

PACE financing is attached to the property rather than an individual requesting the funds. That raises the question of what happens in a sale situation. Most real estate buyers purchase with new financing. According to the National Association of Realtors, 88 percent of all existing home purchas- es in 2018 were financed and the typical down payment was 13 percent. We can expect that many, if not most, PACE properties will be sold one or more times during the projected 20- year term of a PACE lien. Figures from ATTOM Data Solutions show that in mid-2018, the typical home was owned a little more than eight years. The problem is that property owners cannot generally refinance a property while a PACE lien remains in place. Similarly, buyers cannot typically finance a home purchase

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FEATURED ARTICLE: The New Solar Economy: A Hazy Path Toward Harnessing the Power of the Sun

Project Sunroof can estimate the electrical generation for individual residential addresses. In addition, the system can show solar po- tential by zip code. For example, Google reports that 85 percent of the rooftops in my warm and sunny Florida zip code are suitable for solar financing. That’s a total of 10,700 homes that – so far – in- cludes just 56 solar installations. There’s a disconnect. Cell phones quickly became popular because even though relatively expensive, their value was obvious. With solar, the concept is attractive but the financial advantage is simply not as clear. If you save $35 monthly in utility bills but have an additional $60 per month in financing cost, then solar really doesn’t make financial sense. Add in a greater home value which leads to a bigger assessment, along with higher property taxes and more to insure. Suddenly not everything solar seems quite so bright. But there is an alternative, and it’s no further than the nearest outlet. Public utilities have been around for generations, their distribution systems are in place, and they have the potential to greatly change the current conversation. Perhaps most importantly, they have the benefit of scale. The cost to put up a rooftop solar array and the cost for the same energy generated from an industrial solar farm are vastly different. Utilities have a lot of incentive to go renewable. You just can’t build a traditional generating station anymore and older units are being retired. Future production has to come from somewhere. Wind and sunlight are free. With improved efficiencies, it’s becoming cheap- er and cheaper to get help from nature – and it’s politically correct. Cities and states are increasingly committed to renewable energy goals; several communities have

rotary-dial phones. Solar is a way for utilities to hold onto their monopo- lies – and expand into new areas.

production to Gulf Power. Visit Saufley and you see row after row of photovoltaic panels stacked five high and at an angle. All the panels are easy to maintain or replace, an important feature if panels fail and as more efficient replacement panels become avail- able. They’re oriented to collect the maximum amount of sunlight when the system is most in need of power. There are no industrial odors, rail yards, or pipelines; the

PACE liens may have such clauses, with penalties of perhaps 5 percent of the outstanding loan balance. For details, check with the PACE lender. If there is a penalty, ask if it can be waived. So, what if you’re selling a home, don’t have the cash available to pay off your PACE financing, and don’t want the PACE lien to become a transaction issue? One option is to use funds from an existing HELOC to pay the debt. Another approach is to apply for a bridge loan, short- term financing generally used to buy a replacement property. Speak with lenders for details and costs and be sure to explain the loan’s purpose. The real issue with solar instal- lations in a sale situation is how they should be valued. If there are two like properties, each val- ued at $300,000, and one has a $20,000 solar array and the second does not, is the first house worth $320,000? This is very much a mat- ter of negotiation. In a seller’s mar- ket, the owner will do better than in a buyer’s market, and vice versa. Premiums for “green homes” ranging from 2 percent to 8 percent have been noted by the Appraisal Institute. However, a “green home” must have six features: good water efficiency; energy efficiency; indoor air quality; materials; and opera- tions and maintenance. Just like other home components in a home for sale, solar systems should be examined to assure their condition is satisfactory to the buy- er. A solar contractor can be hired to do this work. SOLAR IMPACT ON VALUATION

from approximately 600,000 photo- voltaic panels. That’s enough ener- gy to power some 7,400 homes. Land at Saufley has been leased from the Navy by Gulf Power, the local electric utility in the northern part of the state and – along with Florida Power & Light in south Florida - a part of NextEra Energy (NYSE: NEE). In turn, the Saufley land has been subleased to Coronal Energy. Coronal Energy developed the site grid and sells the electrical

already reached 100 percent. No less important, electricity is also powering more cars and trucks. The International Energy Agency expects to see 125 million electric vehicles on the road worldwide by 2030. A lot of them will be in the US. The local electric company in the fu- ture could increasingly be your filling station, either through your home or with stand-alone commercial char- gers. Local gas stations as we now know them will slowly go the way of

GOING SOLAR IN FLORIDA A massive effort is now underway to harness renewable energy in Flori- da, long known as the Sunshine State. Saufley Field, a Navy facility just west of the Gulf Coast city of Pen- sacola, is home to a 366-acre solar farm that churns out 50-megawatts

Saufley Field Photo: Peter G. Miller

THE UTILITYALTERNATIVE The market for residential solar installations is enormous. Google’s

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FEATURED ARTICLE: The New Solar Economy: A Hazy Path Toward Harnessing the Power of the Sun

Saufley Field Photo: Peter G. Miller

NEW HOME PRICING By creating a solar requirement for homes built after 2020, Cal- ifornia denies new home buyers the option of not going solar. It also increases the price per unit for new homes, creating an ad- ditional cost disadvantage when compared with existing houses. Building solar installations one by one is more expensive than building on an industrial scale. Utilities can buy panels in huge quantities and obtain substantial discounts as a result. According to the National Renewable En- ergy Laboratory, in 2017 it cost $2.80 to install a watt of direct current in a residence versus $1.03 in a utility-scale facility. RESIDENTIAL VERSUS INDUSTRIAL PRICING have PACE financing programs available for homeowners. The March decision by the CFPB to examine such financing and how it’s sold, as well as PACE op- position by some of the largest players in Washington, suggests that program changes are a very real possibility. First, homeowners can simply finance a solar installation the same way they might underwrite any major household improvement. They can use such options as pay- ing in cash, or applying for either a HELOC, or a second loan. In each case, property owners will have to The alternatives to PACE financ- ing come in two forms. FINANCING Both California and Florida

panels, the cost per kilowatt, and the amount of space required to generate a given amount of power will all decline. The reason is that solar panels are constantly becom- ing more efficient. According to EnergySage.com, homeowners regularly receive quotes featuring solar panels with 19 to 21 percent efficiency from solar installers. The company notes that these high-efficiency panels can produce 25 percent more elec- tricity than the lower-tier economy panels that made up the majority of the market in past years. In addition to utilities and rooftops, some situations call

for non-utility solar farms. A big electric user might build a cap- tive facility. Disney, for example, has constructed a 270-acre solar facility in Florida that churns out 50 megawatts – enough to power two theme parks. FLORIDAVERSUS CALIFORNIA The big question is which solar strategy will become more popular in the years ahead: California with its new home requirements, or Florida where choice is more open? In pondering that question, the big issues look like this:

entire facility is as quiet as a corn field. Every so often, there’s a set of big boxes on a skid, equipment that converts energy from the solar panels to power for distribution through the electrical system. Saufley is part of a quickly growing energy revolution, the mass production of electricity from renewable sources such as so- lar and wind. The enormity – and speed – of what is about to happen will significantly change the energy matrix. Florida Power & Light, as one example, says it will install more than 30 million solar panels by 2030. Going forward, the number of

consumption, reduce pollution, and increase the use of renew- able energy. We may start to see property owners seeking the option with the lowest cost and the fewest headaches regardless of where they live.

their renewable energy genera- tion, there will be pass-through benefits to homeowners simply paying their monthly electric bill. That means no loan application. No credit issues. No barriers to a sale or refinancing. Financing at the utility’s cost as opposed to putting the burden on the consumer. No worries about inefficiency, system maintenance, insurance, assess- ments, or squirrels on the roof. California and Florida have com- mon goals in mind, but different approaches to reaching them. They both want to cut carbon-based fuel

Peter G. Miller is a nationally-syndicated newspaper columnist, the author of seven books published originally by Harper & Row (one with a co-author), and for many years a Washington-based journalist.

compare costs and terms. Second, homeowners can

increasingly get the benefits of solar energy and not bother with financing at all. As utilities expand

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MY TAKE

What is Real Estate Data as a Service?

receive the files, they usually upload them back into their own database so they are able to access and ana- lyze the data in an efficient manner. That is especially true in the world of real estate data, where a small cadre of data providers have been operating in the flat file world for decades with little innovation. But why not cut through this antiquated process and provide the data to customers in a database — its natural habitat — that is man- aged and curated for them? That’s what DaaS can do. Here’s how DaaS does that in slightly more detailed and tech- nical language: DaaS is a private instance of a fully managed SQL server database hosted in the cloud and provisioned for customer use. In this solution, no files are extracted, downloaded, or ingested by the cus- tomer; the customer simply access- es the database directly in the cloud.

what DaaS is not. First, DaaS is not just a new data delivery method. Given the afore- mentioned definition of DaaS, it might be tempting to think of it as the newest and spiffiest delivery method that’s better than the flat file delivery method. On the con- trary, DaaS is a publishing system at heart; it’s not just a delivery method. It’s vibrant. It’s alive. It’s updated daily. It also allows a data provider to push out code to clients. For example, if an ATTOM data licensing client wants query code to identify the most recent update on a property — which can be challenging given that ATTOM is tracking myriad changes to the 155 million U.S. properties in its data warehouse, including sales, mort- gages, property value, and much more on a daily basis — ATTOM can proactively push that code to the customer in the DaaS environment. That code becomes a turnkey solu- tion not only for that client but for other clients using DaaS. Secondly, DaaS is not an API (Ap-

plication Program Interface). Some have conflated the two services given that both help companies avoid the hassle of managing a massive database. API solves the database management challenge by serving up individual data elements and combinations of data elements needed just in time for the client or end-user to use, typically in a soft- ware environment. The API solution is ideal for companies that need to auto-fill an online application or serve up specific property details for an end-user in real-time. But an API isn’t a database that companies can query for use in robust analytics, modeling, and machine learning. All of that, how- ever, can be accomplished in DaaS using data analysis tools such as R, Python or Java. In short, DaaS provides analytics-ready data. ANALYTICS-READY DATA The analytics-ready component of DaaS is especially relevant in the world of real estate data,

which is awash with derivative data designed to show market trends — from more common derivatives such as median prices and AVMs (Automated Valuation Models), to more niche derivatives such as home flips and home equity. Many data licensing clients don’t want to rely on the assump- tions made for those standard derivatives; instead they want to analyze the record-level source data directly and use their own assumptions to create their own versions of those derivatives — not to mention additional data-derived metrics that aren’t readily available from other sources. DaaS provides quick and convenient access to the record-level data, allowing cus- tomers to get analytics in minutes rather than the days or weeks it would take to ingest the flat files and build the tables needed to run those same analytics. The analytics-ready nature of DaaS also appeals to clients who are “drowning in data.” These clients are spending so much energy keeping

BY RICHARD SAWICKY, CHIEF DATA OFFICER, ATTOM DATA SOLUTIONS

A s the world increasingly runs on data, the concept of data as a service is emerging as an innovative solution for businesses to quickly and efficiently leverage the power of data without the time-consuming and costly process of building data management capabilities in-house. Data as a Service (Daas) is partic- ularly attractive for businesses con- suming real estate data. Many of the most disruptive companies who need property data to grow their busi- nesses — whether that’s powering an online real estate portal, building targeted marketing campaigns, or fueling analytic models — lack the infrastructure and expertise required to build and maintain a robust data

management operation. Real estate DaaS can be an ideal solution for companies who want to focus on their data-fed core compe- tencies without having to divert pre- cious resources to data management. Simply put, DaaS is good. WHAT IS DAAS? Before getting to some concrete benefits and use cases for real estate DaaS, a definition is in order. At its core, DaaS is data in its natu- ral habitat: a database. Many companies now access data through antiquated flat files extracted from a database and then delivered to them via FTP. Once they

WHAT DAAS IS NOT It’s also important to understand

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MY TAKE: What is Real Estate Data as a Service?

their heads above water, they aren’t able to efficiently apply the real estate data to help their businesses. For those clients, DaaS represents a high-powered boat equipped with the latest high-tech navigation equipment to traverse across deep data waters. SINGLE SOURCE OF TRUTH Access to record-level property data is great, but it can get messy. New data is constantly coming in, changing, and in some cases, cor- recting information in the database. That dynamic nature of real estate data — and most other data — means that managing the data is not a one-and-done exercise of inges- tion. It requires proactive, continuous monitoring to make sure the data- base reflects the most up-to-date and accurate truth about the 155 million U.S. property parcels. With flat files, much of the re- sponsibility for maintaining a single source of truth

comes to collaboration around data. Real estate data licensing clients are able to add on their own data- sets —and discover, disrupt, and innovate off of creative mashups. This collaborative, non-siloed approach is really the approach of the future. Modern use cases for real estate data typically require integration of more than one data source. Complex solutions might require more than one provid- er — sometimes competitors and customers might be partners. DaaS is custom-fit for these scenarios. COST SAVINGS While it might be implicit in some of the previously mentioned bene- fits, it’s worth noting explicitly that DaaS can represent cost savings for many data licensing clients. DaaS can be set up so the client pays for just what it needs — right-sized for the client’s use case with the ability

common refrain is, “I wish I would have had this sooner.” Other feedback has given ATTOM the ability to illustrate the power of DaaS. In one case, a customer needed a que- ry to detect when data changed, and ATTOM was able to push them a query for that through the DaaS platform. In another case, a customer’s query was running slow and ATTOM was able to create an index, again pushed through the DaaS platform, that dramatically sped up that query. From our initial customer engage- ments, it’s apparent that DaaS has a broad appeal to a wide variety of real estate verticals. Clients testing DaaS include those in the settlement ser- vices space — title, escrow, closing — along with the commercial real estate space, mortgage space, and others.

Managing rental properties requires time, experience, and expertise. Just like your other major investments, professional management helps you get the best return. In property management, shorter vacancies, more efficient processes, and avoiding costly mistakes will all add to your bottom line. Real Property Management has the experience, resources, technology, training, staff, and local expertise to truly manage your rental properties and help you get the best return on your investment. Our team is prepared to manage your property 24 hours a day. PROTECT AND INCREASE YOUR INVESTMENT INCOME Your rental property is a high-value investment— poor management will put your asset at risk

As Chief Data Officer of ATTOM Data Solutions, Richard Sawicky is responsible for the design and foundational architecture of

when it comes to the database falls on the data licensing client. But with DaaS, the single source of truth is maintained by the data provider, and that same source

to scale up or down based on demand to meet changing processing require- ments. The DaaS service eliminates the need for client IT staff to maintain the database, server and

the ATTOM Data Warehouse, as well as fostering strategic partnerships to engineer the next generation of data platforms for ATTOM’s customers. Richard’s experience spans more than 10 years of developing enterprise data products encompassing data capture, transaction processing and analytic solutions for numerous Fortune 500 companies, including Weyerhaeuser and Fluor Corporation.

• Comprehensively-trained staff • Transparent online reporting with 24/7 access • Centralized accounting

• Efficient, reliable maintenance • Decreased vacancy rates • Strict credit screening

• Quick management of delinquent payments and evictions • Single-family and small multi-family units

of truth is available simultaneously to all clients. Because DaaS is a

manage updates. Furthermore, if a client’s

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fully managed database solution curated directly by the data provid- er, the burden of managing flat files and applying updates is eliminated. The client database will reflect data in the provider’s data warehouse automatically. CONNECTING THE POSSIBILITIES Because it’s a cloud-based database, DaaS opens a whole new world of opportunities when it

data needs change over time, DaaS can evolve with those changing needs. A client who no longer needs a na- tional property dataset won’t be stuck with that mammoth dataset. On the other hand, a client who is expanding to more markets can quickly scale its data to those markets. DAAS IN ACTION ATTOM premiered its DaaS prod- uct with some data licensing clients with an encouraging response. A

If you are interested in learning more about the ATTOM DaaS Solution, make sure to visit ATTOM Data Solutions and download the free white paper.

Visit RealPropertyMgt.com or call 888.806.7088

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having sufficient historical data. The highest returns on investment were almost exclusively in western states, with concentrations along areas of the west coast. Continuing trends seen in 2016 and 2017, 15 of the top 25 areas reaping the highest

profit margin were in Washington, Oregon, and California, where the majority had a median home sales price in 2018 of at least $350,000. The below chart represents the Top 10 housing markets having the greatest home seller gains in 2018.

GREATEST HOME SELLER PERCENT GAINS IN 2018

108.8% SAN JOSE-SUNNYVALE-SANTA CLARA, CA 78.6% SAN FRANCISCO-OAKLAND-HAYWARD, CA 70.7% SEATTLE-TACOMA-BELLEVUE, WA 66.4% MERCED, CA 66.1% SANTA ROSA, CA 61.3% SALEM, OR 60.4% SANTA CRUZ-WATSONVILLE, CA 58.4% PORTLAND-VANCOUVER-HILLSBORO, OR-WA 57.9% MODESTO, CA 57.6% BOSTON-CAMBRIDGE-NEWTON, MA-NH

DATA IN ACTION

It’s All About the Gains

areas where the 2018 median home sales price was more than $350,000, reaping an average gain of 52.3 percent. Gains were progressively lower in less expensive areas, down to MSAs where the median price last year was less than $150,000. In those areas, profit margins aver- aged only 16.5 percent.

BY ATTOM DATA SOLUTIONS

H ome sellers in the United States made more money on their homes in 2018 than they had in 12 years, reaping a typical profit of 32.6 percent over what they originally paid. This is according to ATTOM Data Solutions year-end U.S. home sales report, which is helping to showcase those markets where the housing market is hot.

The national 32.6 percent sell- er gain equated to a dollar gain of $61,000 in 2018. Nationwide, the in- creases resulted from an overall me- dian sales price of $248,000 that was $61,000, that was more than what the homeowner originally paid for the property. But those gains ranged widely, with sellers in the most ex- pensive areas of the county typically

earning more than three times as large a profit margin as those in the most modest communities. The last time home buyers reaped bigger windfalls on home sales nationwide came during the height of the last real estate boom in 2006, when the typical sale resulted in a 43.3 percent profit. However, home sellers made the most profit in

MARKETS THAT ARE HOT Among the 217 metropolitan statistical areas with a population greater than 200,000 as well as

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