The reduction for qualifying homeowners could amount to monthly savings of up to 35 percent on mortgage payments, Bank of America said in a news release on Monday evening.

The principal reduction offers from Bank of America Home Loans are the result of a $25 billion settlement agreement earlier this year with 49 state attorneys general as well as federal authorities who had been investigating allegations of abuses over the handling of foreclosures.

“To the extent principal reduction and other modification tools help us turn mortgages headed for possible foreclosure into long-term performing loans, it will be positive for homeowners, mortgage investors and communities,” Ron Sturzenegger, a legacy asset servicing executive, said in the statement.

The bank said it planned to contact more than 200,000 homeowners who could be candidates for the offers, sending letters to a majority of them by the third quarter of this year.

To be eligible for the principal reductions, however, homeowners will have to meet certain criteria, including: having a loan owned or serviced by Bank of America; owing more on the mortgage than their property is worth; and being at least 60 days behind on payments as of the end of January.

In the statement, the bank said it had started making such offers in March to a narrower group of homeowners — those who were already in the process of seeking mortgage modification. The bank estimated that the earlier wave of trial reduction offers to about 5,000 people could amount to more than $700 million in forgiven principal. But homeowners have to make at least three timely payments for the reductions to become permanent.

There is a story told that in the mid-19th century, during the largest voluntary migration of humans in world history, Oregon Trail pioneers came upon an unassuming fork in the road located somewhere in Idaho. When the settlers reached this crossroads they had an important choice to make; go left to California, or go straight ahead to the Oregon territory.

A simple decision? Not really.

In California there was the enticement of quick and easy riches that came along with the discovery of gold. However, it was also a considerable gamble because the prospect of failure was a very real and likely possibility. In Oregon there was no gold, but there was the most fertile land this country had ever seen. And it was free for the taking. There would be no quick and easy riches in Oregon, and “making it” would involve a great deal of sweat equity. But the rewards found in the Oregon Territory were only limited by one’s own ambition and hard work.

Those that chose Oregon did so for very specific reasons, and it was these pioneering settlers and their descendants that have made Oregon, and its largest city of Portland, the unique place it is today.

Individualistic, courageous, hearty, natural leaders, hard workers, supporters of the underdog, liberal, fun-loving, outdoorsmen, and weird are just some of the adjectives that have been used to describe Portlanders.

My name is Scott Carlson and I am a 57-year old lifelong resident of Portland. I love history and I love traveling the world to experience firsthand the culture and the history of other people. I also love my hometown of Portland, Oregon. I am a project manager by day and a history buff by night and I have spent my entire life wanting to “be with history” on a daily basis, but never quite knowing how to make it happen. Then one day it came to me. I realized I could combine my love of history with my passion for my own hometown. On that day DiscoverPortland Weekend Walking Tours was born.

Held on weekends from May through September, DiscoverPorltand is far different from other Portland tours where you will be given just the guidebook facts. I call this tour “The Rest of the Story” and my intent is not to sell you on Portland; rather it is to tell you stories of people and events in Portland’s distant and not so distant past that will show you who we are and what makes Portlanders, well, Portlanders.

Have you ever wondered how the nation’s 29th largest city came to be run by a local bartender? Or do you know about the man whose courage and “uncommon” common sense saved the City of Roses from almost certain destruction? Have you any idea the role that “architectural envy” played in the design of a Portland icon? Or how about how our own SW Broadway Street irrefutably proves that Juliet was wrong? Yes that’s Shakespeare’s Juliet I am talking about. I will tell you these stories and more as I introduce you to many of the colorful people and events that make up Portland’s past.

Whether you are a resident or a visitor, please join me starting May 26th for a weekend walk through the heart of downtown and hear for yourself “The Rest of the Story.” Please visit DiscoverPDX.com for more information and to sign up for a tour of my hometown. I can’t wait to show you my Portland.

GARFIELD HEIGHTS, Ohio (Reuters) – Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.

But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

“We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010,” said Mark Seifert, executive director of Empowering & Strengthening Ohio’s People (ESOP), a counseling group with 10 offices in Ohio.

“Last year was an anomaly, and not in a good way,” he said.

In 2011, the “robo-signing” scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

Five major banks eventually struck that settlement with 49 U.S. states in February. Signs are growing the pace of foreclosures is picking up again, something housing experts predict will again weigh on home prices before any sustained recovery can occur.

Mortgage servicing provider Lender Processing Services reported in early March that U.S. foreclosure starts jumped 28 percent in January.

More conclusive national data is not yet available. But watchdog group, 4closurefraud.org which helped uncover the “robo-signing” scandal, says it has turned up evidence of a large rise in new foreclosures between March 1 and 24 by three big banks in Palm Beach County in Florida, one of the states hit hardest by the housing crash

Although foreclosure starts were 50 percent or more lower than for the same period in 2010, those begun by Deutsche Bank were up 47 percent from 2011. Those of Wells Fargo’s rose 68 percent and Bank of America’s, including BAC Home Loans Servicing, jumped nearly seven-fold — 251 starts versus 37 in the same period in 2011. Bank of America said it does not comment on data provided by other sources. Wells Fargo and Deutsche Bank did not comment.

Housing experts say localized warning signs of a new wave of foreclosure are likely to be replicated across much of the United States.

Online foreclosure marketplace RealtyTrac estimated that while foreclosures dropped slightly nationwide in February from January and from February 2011, they rose in 21 states and jumped sharply in cities like Tampa (64 percent), Chicago (43 percent) and Miami (53 percent).

RealtyTrac CEO Brandon Moore said the “numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed.”

One big difference to the early years of the housing crisis, which was dominated by Americans saddled with the most toxic subprime products — with high interest rates where banks asked for no money down or no proof of income — is that today it’s mostly Americans with ordinary mortgages whose ability to meet payment have been hit by the hard economic times.

“The subprime stuff is long gone,” said Michael Redman, founder of 4closurefraud.org. “Now the folks being affected are hardworking, everyday Americans struggling because of the economy.”

“HARD TO CATCH UP”

Until December 2010, Daniel Burns, 52, had spent his working life in the trucking industry as a long-haul driver and manager. When daily loads at the small family business where he worked tailed off, he lost his job.

Unable to cover his mortgage, Burns received a grant from a government fund using money repaid from the 2008 bank bailout. That grant is due to expire in early 2013 and Burns is holding out on hopeful comments from his former employer that he might get his job back if the economy recovers.

“If things don’t pick up, I will be out on the street,” he said, staring from his living room window at two abandoned houses over the road in the middle-class Cleveland suburb of Garfield Heights, the noise of traffic from a nearby Interstate highway filling the street.

Underscoring the uncertainty of his situation, Burns’ cell phone rings and a pre-recorded message announces that his unemployment benefits are due to be cut off in April.

A bit further up the shore of Lake Erie, Cristal Fell, who works night shifts entering data for a trucking company in Toledo, has fallen behind on her mortgage a second time because her ex-husband lost his job and her overtime was cut.

“Once you get behind it’s so hard to catch up,” she said.

Fell, a mother of four, hopes the economy will gather enough speed to help her avoid any risk of losing her home. Her ex-husband has found a new job and she is getting more overtime, so she hopes she can catch up on her mortgage by the fall.

Burns and Fell are the new face of the U.S. housing crisis: Middle class, suburban or rural with a conventional 30-year fixed mortgage at a reasonable interest rate, but unemployed or underemployed. Although the national unemployment rate has fallen to 8.3 percent from its peak of 10 percent in October 2009, nearly 13 million Americans remain jobless, meaning many are struggling to keep up with their mortgage payments.

Real estate company Zillow Inc says more than one in four American homeowners were “under water” or owed more than their homes were worth in the fourth quarter of 2011. The crisis has wiped out some $7 trillion in U.S. household wealth.

“We’re seeing more people coming through who have good loans with reasonable interest rates,” said Ed Jacob, executive director of non-profit lender Neighborhood Housing Services of Chicago Inc, which provides foreclosure counseling. “But in many households only one person works now instead of two, or they had their hours cut.”

“The answer to the housing crisis now is job creation.”

EARLY SIGNS OF UPTICK?

Zillow expects the resurgence in foreclosures this year, combined with excess inventory of unsold, bank-owned homes will contribute to a 3.7 percent national decline in prices before the market hits bottom in 2013 and stays there until 2016.

“The hangover from this crisis will far outlast the party of the boom years,” said Zillow chief economist Stan Humphries.

Getting through the remaining foreclosures and dealing with the resulting flood of homes on the market in the wake of the bank settlement is a necessary part of the healing process for the U.S. housing market, he added.

According to leading broker dealer Amherst Securities, some 9.5 million homes are still at risk of default and in February it said it expected to see the uptick in foreclosures start to hit in March and April.

There is other evidence that many of the foreclosures that did not happen in 2011 will happen this year.

A January report by the Neighborhood Economic Development Advocacy Project in New York found that in the first half of 2011 the number of 90-day pre-foreclosure notices in New York City outnumbered court foreclosure actions by a ratio of 14 to one, indicating that while proceedings were initiated against many homeowners, they were left incomplete.

“Now the banks have a settlement, foreclosure numbers for 2012 are going to be high,” said NEDAP co-director Josh Zinner.

A recent survey by the California Reinvestment Coalition, an umbrella group of nearly 300 non-profit groups in the state, of member agencies found 75 percent of respondents expected increased demand for their foreclosure prevention services in 2012 but more than a third had to scale back services because of funding cuts.

“Funding is a major concern given what our members expect for this year,” said associate director Kevin Stein.

All this has non-profits intensifying calls for the Federal Housing Finance Agency to drop its opposition to allowing the government-backed mortgage giants Fannie Mae and Freddie Mac it regulates to reduce principal for underwater homeowners.

Principal reduction involves reducing the amount borrowers owe in order to make a loan modification affordable for struggling homeowners. Republicans and the FHFA oppose principal reduction because of the risk of “moral hazard”- that homeowners who do not need help will seek to abuse largesse and have their mortgages reduced too.

ESOP in Ohio engages in “hits” on Chase branches — they say Chase is the least accommodating major bank when it comes to working with struggling homeowners — where they try to hand letters to bank mangers calling on chief executive Jamie Dimon to lobby FHFA head Edward DeMarco for principal reductions. A Chase spokeswoman said the bank has made “extensive efforts” to work with homeowners, helping 775,000 borrowers stay in their homes since early 2009, avoiding foreclosure “more than twice as often as we have had to foreclose.” Housing groups like ESOP maintain, as they have throughout the housing crisis, that unless the FHFA embraces widespread principal reduction, many more under water borrowers face losing their homes.

“Until banks engage in meaningful principal reduction as a matter of course,” ESOP’s Seifert said after a recent protest at a Chase branch in Cleveland, “this crisis will not end.”

(Reporting By Nick Carey; Editing by Martin Howell and William Schomberg; Desking by Andrew Hay)

With the shaky economy and the burst of the housing bubble, many homeowners and potential homeowners are looking for ways to save money on their living expenses. But what should you do when you want/need to move, but can’t decide whether to buy new or used? If you have wrestled with factors such as cost, appliances, etc. then please consider the following suggestions when making your new/used decision. Although there isn’t a right or wrong answer to the question, there are better choices for certain people. If the following reasons are important to you, then you should consider buying a new home.

If you’re afraid of a hefty mortgage accompanying a new home, then listen up. Contrary to popular belief, new homes do not have to come with a higher price tag than used homes. Remember the mantra “location, location, location?” Depending on where your property is sitting, you very well could find a new property that meets all of your requirements and costs less than plenty of resales, simply because it’s in a newer neighborhood.

Other economic factors to consider are maintenance and energy efficiency. These hidden costs in resale properties will not have near the same impact when choosing a new home. With a new home you are buying more than a new roof, carpet, and walls. You’re making an investment in the appliances, hardware, and structure of your house. Purchasing new means less home improvement and repairs, which absorb both time and money. Many new appliances and building techniques can also be much more efficient than older forms of energy conservation. By using the proper insulation, HVAC, and building protocol, a new home will be much more efficient at conserving energy than a resale. This efficiency ultimately manifests itself in a reduction of gas, water, and electricity consumption, which means lower monthly utility bills!

Should you decide to buy a new home, there is one area that you must not overlook- and that is the need for a professional inspection. Though your home may be new, there is still the possibility of existing problems that passed the required of building codes, but could have potential consequences for homeowners. A home inspection is important for both new and used homes, so make sure you don’t skip this important step.

Whether you decide to buy new or used, having a Realtor guide you through the process is one of the best ways to make sure that your home purchase goes smoothly. And in case you didn’t know, Realtor’s commissions are paid by the seller/builder. This means that their fantastic services are available to you, the buyer, at no cost! For more information about buying new versus used, or about real estate in general, be sure to contact Phyllis Ghazi, today.

Real estate websites serve as an important platform to help buyers find their next home, and certainly help sellers expose their listings to those buyers.

But in our view, real estate websites are a starting point, not the ultimate decision engine.

Accurate data and up-to-date listings are very important, but ultimately, we believe the expertise provided by a real estate professional is a far better indicator of true market value than an estimate derived by machine.

That’s why we only display REAL PRICES on homes for sale on REALTOR.com®. Real prices that have been established between a seller and the listing broker, not a mechanized estimate.

Estimates may be OK if they’re used as a reference point to gather general information, but we feel placing mechanized estimates on an active listing that’s been priced by a local professional familiar with the market is misleading.

At best, these estimates are confusing to consumers. At worst, they create the perception of market conditions that don’t accurately reflect reality.

That’s why we don’t do it.

The real estate market is not a “paint-by-numbers” animal. Local market conditions can vary drastically from zip code to zip code, neighborhood to neighborhood, and can change at a moments notice.

Foreclosures and short sales – or the removal of distressed inventory all impact what’s actually happening.

Estimates that are placed on listings that already have an established sale price not only create a recipe for inaccurate information, they also create a strain on real sellers and a strain on the agents who work hard to create CMAs and pricing strategies based on what’s actually happening.

Sellers deserve better than that. Buyers deserve better than that.

Lost in the machinations and histrionics that permeate the discussion about listings and accurate data is the one thing that should be crystal clear:

Real Estate is NOT a game.

It’s a serious business with significant financial and emotional ramifications for the parties involved in every transaction.

And at REALTOR.com®, we have a responsibility to provide accurate information and accurate representations of what’s actually happening in the market – so consumers get the REAL story about what’s happening in their market.

And we do this by displaying real prices from real professionals in every market we serve.

That’s the thing that can really help consumers get a flavor of what’s happening locally, and that’s what we deliver.

By Alyssa Abkowitz | SmartMoney – 1 hour 35 minutes ago
….
SmartMoney Magazine: The calculations behind online estimates are adding confusion to an already tricky housing market.

Jason Gonsalves worked hard to turn his 6,500-square-foot stucco-and-stone home in the suburbs of Sacramento into the ultimate grown-up party pad. Inside are the game room, home theater and custom wine cellar. Outside, there’s the recently added piece de resistance — a wood-burning pizza oven, kegerator and searing station, all flanking an infinity-edge pool that overlooks the lapping waters of Folsom Lake. A spread like that doesn’t come cheap, of course, so when interest rates fell recently, Gonsalves, who runs a lobbying firm, looked into refinancing his $750,000 mortgage. That’s when he got some startling news — even as he was putting the finishing touches on his home, it had dropped more than $200,000 in value over a seven-month stretch.

Or at least, that’s what one popular real estate website told him. Another valued Gonsalves’s pad at a jaw-droppingly low $640,500. And these online estimates left him all the more confused when a real-life appraiser, assessing the house for the refi loan, pinned its value at $1.5 million. “I have no idea how those numbers could be so different,” Gonsalves says.

[Click here to check home loan rates in your area.]

Right or wrong, they’re the numbers millions of consumers are clamoring for. In a housing market that’s been mostly a cause for gloom, so-called home-valuation technology has become one of the few sources of excitement. After years of real estate pros holding all the informational cards in the home-sale game, Web-driven companies like Zillow, Homes.com and Realtor.com are offering to reshuffle the deck. They’ve rolled out at-your-fingertips technology via laptop and smartphone to give shoppers and owners an estimate of what almost any home is worth. And people have flocked to the data in startling numbers: Together, four of the biggest websites that offer home-value estimates get 100 million visits a month, and one, Homes.com, saw traffic jump 25 percent in the three months after it launched a value estimator in May. “Consumers used to use us for home buying and move on,” says Jason Doyle, vice president of Homes.com. “Now we can stay engaged with them.”

Real estate voyeurism aside, the stakes are high for many of the sites’ visitors. Homebuyers use the estimates to get a feel for what’s on the market and, later on, to figure out whether their bid will entice a seller to play ball. Vigilant homeowners like Gonsalves check their values to help decide whether it’s worth the hassle of refinancing, while others who are ready to sell use them to gauge if they’re priced right for the market. Real estate agents, meanwhile, say they’re increasingly resigned to spending more time answering questions — or arguing — about the estimates. “It’s an evolution for consumers,” says Gary Painter, director of research at the Lusk Center for Real Estate at the University of Southern California. Banks and other lenders are piggybacking on the trend as well, with some even showcasing the upstarts’ estimates on their own websites. While lenders say they don’t use the estimates to make final decisions about loans, they say Zillow in particular has become a go-to tool for their preliminary research on homes. “I use it every day,” says Zach Rohelier, a mortgage banker at LendingTree.

But for figures that carry such weight, critics say, the estimates can be far rougher than most consumers realize. Indeed, if the websites were dart throwers, they’d seldom hit the bull’s-eye, and they’d sometimes miss the board entirely: Valuations that are 20, 30 or even 50 percent higher or lower than a property’s eventual sale price are not uncommon. The estimates frequently change, too, for reasons that aren’t always easy for homeowners to discern. According to the companies themselves, some quotes have swung by hundreds of thousands of dollars in as little as a month as new data gets plugged into the algorithms the sites rely on. (Those algorithms also change, as happened this summer when Zillow made adjustments that affected all of the 100 million homes in its database.) And while the sites say it’s probably rare that individual homeowners (or real estate agents, for that matter) game the system, they do acknowledge that people can enter information that might push estimates higher. Put it all together, say pros, and you’ve got numbers that have become head-scratching legends in one community after another: a Hollywood Hills aerie losing 47 percent of its value in one month (with no earthquakes or mud slides to explain the drop); a century-old home in Louisville, Ky., that, according to local lore, served as the inspiration for Daisy’s home in The Great Gatsby, quadrupling in value over 30 days; and one townhouse in Brooklyn, N.Y., listed now for $5 million, valued at a whopping $31 million in the midst of the real estate crash — at least according to Zillow.

Zillow says the Brooklyn valuation was an error that it subsequently corrected. And make no mistake, all of the competitors go out of their way to make it clear their numbers are guesstimates, not gospel. “A Trulia estimate is just that — an estimate,” says a disclaimer on that site’s new home-value tool. Zillow deploys similar language and goes a step further, publishing precise numbers about how imprecise its estimates can be. And every major site urges home-price hunters to “always consult with a real estate agent or house appraisal specialist,” in the words of Homes.com. Indeed, these sites say they have strong relationships with the real estate business in general; they get a significant share of their revenue from the industry, in the form of advertising and subscriptions.

[Click here to buy or sell a home.]

But when the real estate version of Pandora’s box is opened, homeowners don’t necessarily pay attention to disclaimers. Consumers and pros alike say many Web surfers put enough faith in the estimates to sway the way they shop and sell. “I’m constantly explaining to clients that those numbers don’t come from a person,” says Mindy Chanaud, a real estate agent in Greenwich, Conn., who launched into what she calls her Zillow spiel when shown a Zestimate of one of her listings. Frank and Sue Parks, former owners of the Gatsby house in Louisville, watched as the site put a $331,000 value on the dwelling in May; by July it had climbed to $1.5 million. (Zillow says the lower estimate reflected errors in its statistical model.) The couple got some potential buyer referrals from the site, but they had to fend off a stream of lowball offers before they sold their place this fall. They’re convinced that the estimate roller coaster accounted for some of that. Says Sue, “It really affected our ability to move the place.”

For most of real estate history, of course, determining a home’s value has been an appraiser’s job. Appraisal involves gathering data on recently sold homes in the area and comparing them with the “subject property” on matters like size, condition and characteristics, before coming up with an estimate of the home’s worth. If the property has, say, a swimming pool, but most recently sold homes don’t, the appraiser might add a premium to the sale value. Still, the exercise involves as much art as science, as appraisers acknowledge. The more unique or luxurious a property, the harder it is to accurately value. “Imported marble and a view of the ocean are going to be more or less valuable depending on market conditions,” says Susan Allen, a vice president at CoreLogic, a data and analysis provider in California. And critics have accused a few appraisers of inflating the value of properties or rubber-stamping other people’s estimates to ensure that deals went through.

The response, beginning in the late 1980s, was the rise of the machines. Economists started developing automated valuation models, or AVMs; instead of having a person visit the property and crunch calculations, these computer models sync the math with data about comparable sales, square footage, number of bedrooms and the like, all in a matter of seconds. Rob Walker, a managing director at AVM purveyor Lender Processing Services, says the models sped up the approval process for second mortgages and home-equity loans; indeed, for years, the tools were mostly reserved for in-house nerds at lending banks. It wasn’t until 2006 that Zillow took them to the masses, with its Zestimate. The company runs data on more than 100 million homes through its own algorithms that recognize relationships between property characteristics, tax assessments and recent transactions. “Humans don’t make these decisions,” says Stan Humphries, chief economist at Zillow.

Scores like these have helped build successful business models for some companies — Seattle-based Zillow, for one, just raised $69 million in an initial public offering. And they’ve become weapons in the arsenal of consumers like Terence Avella, an attorney in Eastchester, N.Y. After he and his wife became enamored of a four-bedroom Victorian with an asking price of $650,000, Avella consulted Zillow, finding a much lower valuation: $510,000. He says the Zestimate reinforced his belief that the house would need extensive renovations — and he put up a lowball bid. By the time the process was over, Avella had settled on an offer of just $580,000 (though the negotiations later fell through). Indeed, in a market where listing prices often reflect hope more than reality, some agents and consumers say that online tools are a useful reality check. Simms Jenkins, an Atlanta marketing executive, says he’s recently relied on sites like these to both buy and sell homes. “I can’t imagine 25 years ago, when people would just go out and spend their entire Saturday looking at homes,” Jenkins says. “You don’t have to do that now.”

But what’s a godsend to Jenkins is an ongoing mystery to Mike Battaglia. Battaglia lives in a Frank Lloyd Wright inspired mansion in Louisville, on a historic street, across from a lush park. But his neighborhood is decidedly eclectic — homes like his sit near much smaller starter homes — making it a challenge, local appraisers and agents say, to figure out how much each home is worth. Among the online estimates, that difficulty plays out in real time. Homes.com valued the manor at $761,700, but that figure dropped $85,000 in a month. Zillow pinned its worth at $1.1 million in December 2010, then posted no Zestimates at all for several months — only to peg its value at $327,000 in May, a 70 percent haircut. By fall, it was back up to $1 million.

Battaglia, a business consultant, says he knows the numbers are only estimates, but he still thinks that notion doesn’t register with people: “It’s the perception of value that affects people’s psychology.” Zillow says its wide range of estimates was a result of volatility in the local market. Homes.com’s Doyle declined to comment specifically on Battaglia’s house, but says that a home in a neighborhood like his could definitely be vulnerable to inaccuracies. “If there’s a transaction next door and someone just gave away a house, it will throw off the model,” Doyle says.

Indeed, appraisers and real estate consultants say that those models veer off target with alarming frequency. Typically, data for valuation models come from two sources: records from tax assessors and listing data for recent sales. Middleman companies — the dominant ones are CoreLogic and Lender Processing Services — gather this data from more than 3,000 U.S. counties and license them out to the Web sites and other model-builders. Collection is itself a challenge, because not every county tracks properties the same way. In North Carolina’s high-tech Research Triangle, anyone can get data directly from the Wake County website, while in rural Wright County, Mo., tax rolls are available only on paper. The size of a home could be reported by square footage or by the size of each bedroom and bathroom, so data companies must “scrub” the data to make it uniform. Even then, the data isn’t always useful in the field, say real estate pros. County assessors often use AVMs in newer subdivisions where floor plans don’t vary much. But with custom homes or neighborhoods going through gentrification, the models can go haywire. “You cannot use a computer model in certain areas and expect the value to come out right,” says John May, the former assessor of Jefferson County, Ky.

Some properties’ data can be too tough a nut for any computer model to crack. On a quiet street in one of Brooklyn’s grander old neighborhoods stands the brownstone that, according to Zillow, was worth $31 million in 2007. “I don’t even know if there’s ever been a home in Brooklyn worth that much,” says a spokeswoman for The Corcoran Group, the agency that now lists the property on the market, for $5 million. Zillow declined to discuss why its earlier estimate was so high, but a look at the house’s records suggests one potential reason for the enormous spread: Although the address is a two-family townhouse, the current owners use the entire house, giving them square footage that’s off-the-charts big by New York City standards.

Public records are hardly the only problem. Automated models aren’t designed to account for the unique details that often make or break a deal — something their designers readily acknowledge. AVMs usually can’t capture data that determines the condition of a property, such as whether there’s been a ton of wear and tear. Is a home right next to the railroad tracks or a golf course or a landfill? AVMs can’t always answer those questions, say industry pros, though GPS technology is improving things on that score. Models also can’t decipher the motivations of a buyer or seller, says Leslie Sellers, a past president of The Appraisal Institute. A couple who’s going through a nasty divorce, for example, may have taken the first offer that came along just to unload the property. For all these reasons, says Lee Kennedy, managing director of AVMetrics, a firm that audits and tests industrial-grade AVMs, the models that banks use often add a “confidence score” to their value estimates, with a low score signaling that it’s best to send in a human appraiser.

Consumers, however, don’t get to see a confidence score; instead, they get disclaimers, some of which are eye-opening. Zillow surfers who read the “About Zestimates” page find out that the site’s overall median error rate — the amount the estimates vary from the actual fair value — is 8.5 percent, and that about one-fourth of the estimates wind up being at least 20 percent off the properties’ eventual sale price. In some places, the numbers are far more dramatic: Gibson County, home of the West Tennessee Strawberry Festival, has a 57 percent error rate; in Hamilton County, Ohio, where the Cincinnati Bengals play, it’s 82 percent. Site users are always one click away from this data, but agents say few homebuyers read it (on Zillow’s homepage, the font for the “About Zestimates” link is slightly smaller than the main home-data type — and quite a bit fainter).

The sites argue that, over time, edits and corrections will help them perfect their numbers — and many of the corrections will come from their customers. On Homes.com, for example, anyone who knows certain specifics, like a homeowner’s surname and the year the home was last purchased, can edit the details to reflect, say, a sprawling two-bedroom addition. Zillow also allows site visitors to modify its property details, and in four years, it has accepted revisions on 25 million homes — perhaps the strongest testament to how seriously consumers take the estimates. Today, Zestimates are helpful enough, says the site, to give consumers an accurate sense of any home’s value. In the meantime, says Humphries, the company’s economist, “We’re always tweaking the algorithm or building a new one.”

But in the eyes of some skeptics, that tweaking only increases the potential for off-base estimates. Steve Levine, a real estate agent in Shrewsbury, Mass., says he recently changed his home description on one site, adding the fact that he has a finished basement. Over the next six months, his home rose from $516,000 to $558,000 — a healthy 8 percent — while a neighbor’s nearly identical home sank in value. Levine says he has no way to tell how big an impact his update made, “but being able to change the facts is one more tool for manipulating the system.” The sites say they believe intentionally wrong changes are rare, but acknowledge they can only go so far policing those tweaks. “It’s not 100 percent bulletproof,” says Homes.com’s Doyle.

In the end, some critics say, the sites’ business models may pose a bigger problem for consumers than their algorithms. Even their flaws help to sustain the buzz around the estimates, drawing curious visitors. The online firms earn significant revenues from advertising, and the more traffic they get, the greater that ad revenue is. Zillow says 57 percent of its revenue comes from display ads from the likes of home-supply store Lowe’s, realty franchisor Century 21 and builder KB Home. Realtor.com’s parent company, Move Inc., generates 42 percent of its sales from listings by local agents, while Homes.com says advertising is its fastest growing revenue area. Trulia expects its traffic to grow now that it has launched a beta version of an online estimator, says head of communications Ken Shuman; after all, he adds, “consumers asked for it.” As long as they keep asking, say industry insiders, stumbles in reliability aren’t especially important. “It’s not about being accurate or precise; it’s about being sticky,” says Kennedy, of AVMetrics. For their part, the sites say stickiness matters to their business plans, but that they take the estimates very seriously; otherwise, as a Zillow spokesperson put it, “we wouldn’t have a team of Ph.D.s trying to make them better all the time.” They depict the estimates as an ongoing experiment that is likely to achieve a very high degree of accuracy — someday. (At least for now, one site is deferring to agents in the home-value game: Realtor.com says it removes its estimates from homes once they actually go on the market.)

In the future, of course, homeowners may look at today’s estimates the way they look at those enormous console televisions from the 1940s — as an awkward early phase for what became a ubiquitous, reliable technology. But in the meantime, many are content to use them, flaws and all, whether in earnest or as entertainment. In an exurb outside Phoenix, Mike Lang, a commercial-property manager, has seen his home jump almost 20 percent in value on Zillow in the past few months — he’s not sure why. Though he’s not moving any time soon, he’s enjoying his time at the top of the real estate heap. “I’ve got the most expensive house in the neighborhood,” Lang says.

When it comes to cities, Portland, Ore., is a unique urban playground of high-end culture, green living and DIY arts scenes. But for a taste of Portland’s best, natives point to the city’s downtown area. There’s independent live theater, beautiful parks, the largest independent and used bookstore in the country and some of the best doughnut shops on the Pacific Coast (not to mention a plethora of Portland’s celebrated food trucks).

We located the country’s most alluring downtowns with the help of travel experts from Frommer’s and Livability, a travel and analysis site that focuses on mid-sized or smaller towns. While Livability’s own list of best downtowns helped us narrow down the playing field, we ultimately considered a wide variety of factors including attractiveness, accessibility, diversity of offerings, shops, restaurants, proximity of parks and cultural options.

“We embraced the subjectivity that is inherent in a list like this, while still striving for benchmarks and criteria that we think make a great downtown,” said John Hood, a Livability spokesman. Among those criteria they considered: entertainment options, navigability, attractive architecture and a thriving downtown.

Some cities, like Santa Monica, made the list because they both offer a lively downtown and have the luck of being located in a beautiful setting. Located on one of the most enviable stretches of the California coastline, Santa Monica has a strong concentration of high-end shops and inventive restaurants that help lure residents and visitors away from shore. But it’s not just the rich and famous that can enjoy Santa Monica’s downtown – there are enough single-family homes and apartments spread out through the area to ensure that a lively mix of people can live and work near the downtown area. “All of Santa Monica is pretty walkable and compact,” says Jason Clampet, senior online editor for Frommers.com. “And it has some of the best views in the Los Angeles area of the ocean.”

There are smaller towns on the list as well, and they often earn their spot due to easily navigable downtown areas and unparalleled attractiveness. In Georgia, Savannah’s stately mansions, historic downtown area, and restored Victorian-era homes draw in millions of tourists who wander through the downtown streets, often hopping on or off the trolley, or touring the cobblestones by horse-drawn carriage. Yes, there are charming restaurants and attractive shops, but its architecture, often partially obscured by moss-covered old trees, that pulls the crowds in with their magnetic southern charm.

As for a downtown among the country’s biggest cities, none come close to Chicago for its range of offerings and combination of stunning architectural monuments, waterside views, shopping options and recreational opportunities. Stare up at the austere exactitude of Mies van der Rohe’s buildings (such as the black tower of the IBM Plaza), wander through the packed halls of the Chicago Institute of Art to view its impressive collection, or catch a speedboat off Navy Pier to tour the Lake Michigan waterfront. Endless things to do and places to eat, all in a walk-friendly area, make it one of the best downtowns in the United States.

The author is a Forbes contributor. The opinions expressed are those of the writer.

If you’re interested in LEED certified or new “green” homes in Portland, call me today, 503-421-2407, and I’ll email you a list of homes that fit your criteria.

Side #1: The housing recovery has begun

A 3.6% increase in housing prices in one quarter is substantial in any market, but it is particularly compelling given that housing prices had fallen for three consecutive quarters, prior to the Q2 numbers. If we were experiencing a small blip caused by market anomalies, we would anticipate a much smaller increase. Furthermore, the S&P/Case-Shiller national index is not the only index to pick up on the trend. A separate city-by-city index found a 1.1% increase in June alone (the last month for which data has been collected), which means not only are prices increasing, but the rate of increase is accelerating. Finally, the percentage of investment-driven real estate deals is increasing. Investors are always the first to smell a recovery, and they are coming back in droves. These are textbook recovery conditions.

Side #2: The housing recovery has not yet begun

While the 3.6% increase is promising, it must be placed in context of sagging values for the last several years. Prices are still down almost 5% year-over-year, and from a statistical standpoint, substantial increases are less significant when they are preceded by substantial decreases. More importantly, data reflecting increasing prices was collected in June. Since then, we have endured a credit downgrade, GDP downward revisions, and a European debt crisis. Whatever seeds of growth were planted in the early summer were trampled on by mid-August. Expect prices to return to a downward skid in the next quarter.

Scoring the debate

No matter what side you come down on, one thing is clear—prices have upward pressures for the first time in a long time. This is good news for homeowners. However, it is also true that bad news in the global economy threatens to counteract the positive movement experienced in the last quarter. Ultimately, a housing recovery is inevitable, though it’s timing remains up in the air. We should know more when Q3 numbers are released in November.

5043 SE Reedway St. – Priced to sell at $229,999!

Built in 2005
3 Bedrooms, 2 1/2 baths
1,485 sf
Gas fireplace
1 Car attached garage
Stainless steel appliances and washer & dryer included
Gorgeous hardwoods and high ceilings throughout main
Vaulted master bedroom with double closets and bath
Private fenced backyard with patio and covered deck

See pictures on the My Listings page of my website, www.PointClickandPack.com.
Call me today for your personal showing, 503-421-2407.